IR Fireside Chat Series: Visual Studio, GitHub, and Azure - The Microsoft Developer Cloud

Who: Thomas Dohmke, Chief Executive Officer, GitHub

Amanda Silver, Corporate Vice President of Product, Developer Tools

Brett Iversen, GM, Investor Relations

Event: IR Fireside Chat Series: Visual Studio, GitHub, and Azure - The Microsoft Developer Cloud

Date: June 14, 2022

Brett Iversen:  Welcome everyone. I'm Brett Iversen, General Manager of Invest Relations. This is the sixth in our series of quarterly videos focusing on strategic areas that are top of mind for our investors. Today's discussion will cover the developer space, including GitHub and Visual Studio. We brought together two of our key leaders to answer your most frequently asked questions. We have Thomas Dohmke, CEO of GitHub, and Amanda Silver, CVP and Head of Product for the Developer Division, which includes Visual Studio, .net, and our Azure application platform as a service. As always, please reach out to our invest relations team directly with any feedback you might have after you view the video. And with that, let's kick things off. Thank you both for being here. And Thomas, maybe just start, what can you tell us about the developer landscape today and how you've seen it evolving?

Thomas Dohmke:  Yeah, I'm not only the CEO of GitHub, I'm a developer at heart and have been a developer for the last 30 years. And if I look back over the 30 years, the world has changed so much. We are now so dependent on software, whether it's in your car, whether it's obviously in your work life, even my lawn mower has software running on it and you often pick services and companies you buy products form based on the software they offer to you. The way we are seeing this is that every company is becoming a software company, and so that means every company needs to employ software developers and work with them to create innovation for the market to grow. And so if we look at those companies and what they need, we have realized that they need to modernize their software development workflows and ultimately move to the developer cloud. Old and new companies want to adopt the same practices than the companies that have been born in the cloud and they want to modernize their workflows to be more agile, more efficient, more productive, and ultimately more creative in their value generation workflow.

Brett Iversen:  Yeah. I'm sure you've seen a ton of transformation. I bet. So Amanda, on the developer importance of Microsoft in general, how would you help our audience think about that as well as the associated opportunity?

Amanda Silver:  Well, in a lot of ways, Microsoft has always been a platform company.

Brett Iversen:  Absolutely.

Amanda Silver:  And what I mean by that is that developers are always extending the applications and the services that we build and they're also building their applications and their services out of building blocks that we deliver to them. We're also, as a result, a dev company. That means that basically developers are the ones that are extending our platform and they often use Visual Studio as the mechanism to do that. We have 31 million developers that use a Visual Studio product every month to develop applications. And in a lot of ways, the wind is at our backs. There's been incredible growth over the last few years. The Visual Studio family growth is up over 60% over the last 18 months.

So it's also a really exciting moment in time for the developer community because what we're seeing is that developer workloads themselves are actually moving into the cloud. This is a huge shift for companies that are more traditional companies that have managed their own on premises software and hosting their developer infrastructure. So this is a huge opportunity for us as well. And so what we're trying to do is to basically build tools and platforms that will make it easier to migrate that developer workload into the cloud so that it makes it easier for developers to go from their idea to the code, and then ultimately from that code to the cloud.

Brett Iversen:  Love it. I love the vision. I'm sure it's evolved a ton. So Thomas, you're coming in with GitHub. What would you share in terms of where GitHub is today, and I always love to hear the journey and what that experience is like for you and the team?

Thomas Dohmke:  Yeah. So GitHub was born in 2008 and originally GitHub offered Git source code management, a way to manage all your source code in a depository on a cloud platform like github.com. And very fast, developers started adopting GitHub for all their projects, for open source projects, for private repositories, for all the code that they were writing, and they were collaborating with each other in the cloud. And the fascinating thing about this collaboration model is that you don't care who the developer is. You don't care where they are, what their title is. All you care about is the code and what value that adds to your project. And so GitHub has been growing and going over the years. And since the acquisition through Microsoft, we have added a number of new features to GitHub that expands GitHub from just the source control management platform to a whole DevOps suite or DevSecOps suite, adding features like CICD, continuous integration, continuous delivery, and package management and Codespaces and Copilot.

And so we have expanded the feature set of GitHub to offer everything a developer needs to manage their projects and we're really proud about the goals that we've been seeing. In 2018 when we announce the GitHub acquisition, GitHub was at 28 million developers and we are now at 83 million developers with over 4 million organizations, 90% of the Fortune 100. But really, every developer has some dependency on GitHub. We see that oftentimes when GitHub has a technical issue, how many people really depend on GitHub because they're frustrated about it. And they're frustrated because they want to download a package from GitHub, they want to download a dependency, they want to install a new version of the Linux operating system, and somehow in that process is a dependency on GitHub. So really, every developer is a GitHub customer, and that obviously comes with a huge responsibility for us, but also with a huge opportunity for us.

Brett Iversen:  Yeah, I'm sure it's an expansive group of folks, for sure. Shifting back to Amanda, I know you announced developer cloud recently. What else could you share with our audience on that and the associated market opportunity that you see?

Amanda Silver:  Yeah, so I think we have some of the most broadest set of developer offerings of really any company. And the way that I always think about it is that I'm empowering developers to keep them in the zone so that they can focus on writing the code that only they can write. And so that means that we need to make our developer tools much more productive and allow people to focus on their code. We may need to make it easier for them to collaborate with other developers and even other disciplines as well, and we also need to make it easier for them to find the building blocks that they might need to use to build those applications. And so when I think about the developer cloud, there's really three different main components.

There's the Visual Studio family of products, which is in some ways the place where developers do the code authoring, it's really where they are doing the software development, how they build those application building blocks, and all of the applications and services that they build. GitHub is really the place where developers can come together to collaborate, to find one another, to submit contributions to one another's code bases, to be able to learn from the broad community of developers that are building. And then Azure really provides the hosting infrastructure and a lot of the application foundation that allows developers to quickly assemble these building blocks into services and ultimately the applications that they deliver to their users.

And so from our perspective, what we're trying to work on is to make sure that we have the best in class tools that allow developers to collaborate, especially given that teams are increasingly geo distributed and geographically remote, and then also we really need to meet our customers and developers where they are in their journey because while some teams are really advanced and they use continuous integration, continuous deployment to do their application development, a lot are still just getting started on that. And so what we want to do is to make sure that we're providing the tools and the services that allow the devs to focus on the value that they're adding to their organization, but not have to work on boiler plate code or code that we could help build for them.

Brett Iversen:  Makes sense. Our investors will be super interested to hear that you mentioned Azure, so we'll come back to that. They're always honest about Azure information. So back to you, Thomas. Developer at its heart is innovation, but what's some of the latest innovation on GitHub that you would share with the group?

Thomas Dohmke:  Yeah. Amanda mentioned boilerplate code and we want to make developers more efficient. We want to keep them in the flow on the wave surfing into the sunset. And one way to do this is to make them really more productive in their editor when they're writing code. And so we announced a new product last year called Copilot, which helps developers to do that. Copilot is an ML model that was trained on open source code, and when developers type code in their editor, it proposes the next word, the next line, or a full method of code. And oftentimes, for boilerplate code, that is really efficient in the way it does this. In fact, when we look at our telemetry, we see that in files where Copilot is enabled, Copilot writes up to 35% to 40% of the code, and that's a mind blowing productivity improvement.

If we look back the last five or 10 years, no other product has enabled developers to have this productivity gain. But more importantly, it enables developer happiness. And the way it does that is that because it keeps the developer in the workflow. You have your first coffee in the morning, you start your work, you look at up a GitHub issue, you know what you're working on, and then you start typing and you get stuck relatively quickly. There's always so much APIs and new features in the programming language that you never can remember all these things to type. And so what you do is you go into your browser until you have an immediate distraction from your work. Instead of typing more code, you're looking up things, you get distracted by arguments on the internet.

There's lots of those. And 20 minutes later, you're back in your editor and you forgot what you actually wanted to do. So Copilot keeps you in that flow. It keeps you productive during the time of the day when you are the most creative and that makes you more happy. That makes you more happy because you can build the things you want to build instead of get distracted and stuck. And if you think back 20, 30 years ago before the time of the internet, that was the biggest problem being a developer, is that you had a problem and all you had was a couple of books available to you and you couldn't ask anyone, you couldn't look it up because there was no internet available to you. And so you got frustrated and you got into this mode of not being able to do the things you wanted to do.

And so Copilot, in that journey, really gets developers into the next level, into the next stage of innovation as a software developer. And then as Copilot is an ML model that requires lots of GPUs, it naturally runs in the cloud. It runs on Azure. It needs to run on Azure. Even as your GPU in your Surface Book gets more powerful, we need hundreds or thousands of GPUs in the cloud to run a large language model like Copilot. And so with that transition, we think also that the whole dev environment is transitioning to the cloud. So instead of your developers on their first day on the job, or when they switch the team, installing all the tools or the dependencies compilers, often developers spend a day or two installing all the things they need to and then often they have to find the right developer that knows where the howto is and the Wiki article that's outdated or the new guy has to update that Wiki article.

Instead of doing that, they can just spin up a virtual machine, a container in the cloud that has everything installed and ready to run, and quickly made the change they want to make, and then send back a pull request to deploy to production on their first day, maybe on their first hour. And the cool thing about this is not only if you get onboarding down, and at GitHub, we moved 800 employees to Codespaces and get onboarding down from 45 minutes to 10 seconds. That's obviously great. As an engineering manager, you get your onboarding really fast. But you also can now have multiple of those environments next to each other to get an infinite laptop in the cloud, if you will.

And that's not only great for new team members, it's also great when you switch between different projects, when you try to contribute back to another project within the company. For example, between GitHub and the developer division, we work on lots of projects together like TypeScript where it's great if I can spin up just an environment, get everything up and running really quickly, and can make the small change I can make. And so yeah, Copilot and Codespaces together in the developer cloud, that's where the innovation is going. And we believe this is going to elevate innovation for so many of our customers in the next five years.

Brett Iversen:  It's super interesting. Satya loves, I'm sure the two of you know, he loves himself some Copilot. So when I hear the productivity gains and happiness, both associated with that, it helps me understand a little bit why, and I'm sure you all spend plenty of quality time with him on the topic. Amanda, same question for you. From an innovation standpoint, what are a couple things that you would highlight?

Amanda Silver:  A couple of weeks ago, we had our big annual developer conference, Microsoft Build, and there were two announcements that we made there that I think are really touching on both the developer workload and the application workload. On the developer workload front, Thomas was talking a little bit earlier about Codespaces, which really allows developers to have an instant access developer box hosted in the cloud really quickly. And that's fantastic for developers who are working on web solutions, Linux based solutions, solutions that are hosted in GitHub as the hosted source code control. But for those developers who need a Windows developer box or hosted in a different source code control, we introduced Microsoft Dev Box, which is basically a way that you can get a hosted dev box, a Windows based dev box that's optimized for developer users.

So you can get all of the high powered GPUs and CPUs that you need, high powered SSDs and things like that, as well as allowing it to be optimized for the use pattern that is common to developers so that it can wake up in the morning when you wake up and get to work and shut down at night. And so this really is along the pattern of virtualizing the developer workstation. The other big announcement that we made was the GA of Azure container apps, and that really kind of builds on this microservices, container based, cloud native application development pattern that we're seeing that allows developers to super easily go from either source code or container image to host it directly in Azure and get their application available to their users as quickly as possible.

Brett Iversen:  So security is top of mind for all of our customers. It will continue to be for a long time. As it relates to GitHub, how do you and the team think about security? What sort of role do you play for our developer community? What can you share there?

Thomas Dohmke:  Yeah. Obviously, security underlies everything we do. It has to. And the most obvious one is that we have to protect our customers code that all our major customers that's there, they store their private source code, their most important assets, on GitHub. So security underlies everything we do. We have a really strong security team that secures our platform that also helps open source maintainers to find security vulnerabilities in their source code through the GitHub Security Lab. And then we also provide solutions to our customers that helps them to create more secure software. With GitHub Advanced Security, we have technologies that allow you to scan code for vulnerabilities, to scan code for secrets, passwords, tokens, all the other things that we can no longer afford to store on source code, and that helps them to make sure that all the dependencies or the open source components that are naturally used in your projects are up to date.

So they have the latest security patches and you didn't miss the one component somewhere upstream in your dependency tree that then leads to an attack of your production services. And the way we think about this is that the developer needs to solve those issues as early as possible in the life cycle. We call this shift left. We want to not have security issues happen in production environments. That's typically very costly not only from an engineering perspective because you have to find the issue, you have to deploy all those servers, but it's a PR nightmare, it's often a customer relationship nightmare.

So we want to shift this left from the production environment to the pull request, and even further left into the editor where the developer quickly, while writing code, can apply best practices, can use Copilot to get suggestions about better code. And then when they send the pull request, the pull request captures, it's the first line of defense running checks, running CICD, running code and secrets, making sure the developer has not made a mistake using pair programming and code reviewers to have a human, second and third pair of eyes, look at this, and then finally merging into the main branch and then deploying to production. So security really is underlying everything we do.

And with GitHub Advanced Security, GitHub Copilot and Codespaces. And I forgot to mention with Codespaces, obviously if your dev environment moves to the cloud, you can apply exactly the same practices that you have in your production environment as in CICD, automatic dependency updates, nightly builds. All of that you can apply to your dev environment so you no longer have to run behind hundreds of developers making sure they have updated their tools, sent them emails saying, "If you don't upgrade to VS22 or some dependency library or whatnot, you're behind in the security workflow.

Brett Iversen:  So Amanda, go back to you. So you touched on dev and app workloads a little bit earlier, what else would you highlight there? And then specifically from an investment thesis, Azure's obviously one of the topics we hear a lot about. So why is that topic so important to Azure? How would you help people relate it?

Amanda Silver:  Yeah. So just going back to the developer workload and the application workload, which both of these are super important to us, the developer workload I think about as everything that a developer needs and a development team needs that's pre-production. So in other words, it's that software development life cycle. I need a code editor, I need a way to collaborate with the other developers on my team, I need security checks as a part of doing that software development life cycle, I need test infrastructure to actually make sure that the quality of the product that I'm building is good. And so all of that relates to what we call the developer workload. And as I had talked about a little bit earlier, the really exciting part of this is that we have an opportunity to migrate that into the cloud and to host that on behalf of our customers so that they can get started super, super quickly with this secure engineering system that they can have confidence in that also delivers more happiness and more productivity to the developers.

And so for the developer workload itself, that move to the cloud is certainly one huge opportunity that we see. We also can continue to grow our base. While I said we have a ton of developers that use visual studio and GitHub today, it's by no means all of the developers out there, and we have still a lot of room for growth in terms of bringing more Java developers onto our tools, Python developers, as well as data scientists, which is a new category that's adjacent to developers that what we're seeing is that data is increasingly being used in the process of software development and we have an opportunity to actually bring those into our developer environment as well and make that a part of the usual workflow. But then shifting gears, thinking about the application workload, which is basically everything that runs in production, it's everything that you might think of as after the application or service that you've been building has been deployed to your customers, to your end users, what does it take to actually operate that service? You can think about it as the COGS for our customers.

Brett Iversen:  Okay. Finance terms, I like it.

Amanda Silver:  Yeah, yeah, exactly. And so the bottom line there is how can we bring more devs to Azure? How can we introduce them to Azure tastefully? We have many, many, many Visual Studio customers that have not yet used Azure. We have many, many, many GitHub customers that have not yet used Azure. And so we want to make it really easy to allow them to take their idea, to put it into code, to create an application and a service, and then ultimately to deploy that into our cloud. And so that's one big area that we've been working on. And then also, this trend of cloud native development, the application patterns that developers are building these days is evolving with the presence of the public cloud. It used to be that the traditional application pattern was what we would call a client server architecture where I'd build the client that the end user would use and I'd build the server that would host all of the interfacing for that client portion of the application.

But now in a cloud native app architecture, it tends to be much more distributed, much more dependent on microservices and other services that the cloud can provide to app developers. And so what we're seeing is a pattern towards what we call cloud native development, which really starts with what we call microservices. So you can think about microservices as being, we call them APIs, that's programming interfaces, that are basically ways to invoke another service as a part of your application. And so this microservice architecture and providing infrastructure to host that microservice architecture is a huge opportunity for us.

Some people might have heard of something called Kubernetes, they might have heard of containers, and so that's some of the core infrastructure that we can provide to developers so that they can focus, again, on the code that only they can write, and they don't have to worry as much about the infrastructure and the management of what it takes to actually operate it once it's deployed. And then the other thing that's really important here is being a developer is increasingly like being a systems integrator in that you are using all of these different services to assemble together into a single solution. And so one really amazing category of cloud infrastructure that we've been working on is called Enterprise iPaaS.

So it's basically the integration platform as a service. How do you take all of these different APIs that are available, developed inside of your company, developed in the public market that you might use externally, developed by other developers out there, how do I assemble all of these things so that I can modernize the systems that I have so that I can create new applications more quickly, and how can I make sure that I'm providing governance and compliance to make sure that any time that I'm calling an API, I have the confidence that the right people are accessing the data that that API has access to. And so in a sense, our huge opportunity here is to marry the experience of our developer tools to our Azure business, where we can take the huge momentum that we've built up with both GitHub and Visual Studio and introduce developers to what we can offer with Azure?

Brett Iversen:  It's a fascinating space. I'm getting sad because we're already starting to get to the wrap up and I'm learning a ton from the two of you. So it's interesting the themes of productivity I expected, but I love that each of you mention happiness as part of what we're trying to solve for the different communities and that we work with and support. That's great to hear. So maybe as we move to wrap, and I know we looked at a few look ahead topics already, but in terms of what we would want the developer community to think about as coming or what's next for that group, either summarizing things we've already mentioned or anything else you would add, I'd love to hear from you both on that. Maybe Thomas, you can start.

Thomas Dohmke:  Yeah. I think as the world builds more and more software and the projects become more and more complex, we need to constantly focus on allowing developers to learn and grow. There's always another new stack, new technology, new programming languages. There's always another next thing. And if you just look back how far we have come over the last 10 years and how our life has changed within our phones in our pockets that are way more powerful than the computers that I had as a kid, the projects become more complex, but the developers need to constantly learn and evolve with their projects. And otherwise, we are all landing in this nightmare of too much spaghetti code, too many dependencies, and no overview where, as managers and leaders of those groups, we lose track of where we are actually going.

And it's that challenge that I think we want to solve with the developer cloud enabling small and large teams to be innovative, to be creative, and ultimately be happy. Because if our developers are not happy, they're not delivering the value that we need them to. And we believe with Copilot, with Codespaces, with Visual Studio and Visual Studio Code, with the developer cloud and of course with Azure, we can achieve this goal and get software development to the next level because we need to get to the next level absolutely to create the human progress that we all want to achieve.

Brett Iversen:  Love it. Amanda? Take us home.

Amanda Silver:  Yeah. I think what's so exciting about the next chapter that we're in is that we're seeing enterprises really want to become more agile and we're seeing the cost of a startup dramatically decreasing because there's so many existing building blocks that are already there in terms of your engineering systems, what it takes to actually outfit a development team, as well as the building blocks for hosting and assembling the applications that you ultimately want to build. And so that means that also startups can scale like an enterprise really quickly. And so I think this is just an era where we're going to see incredible amounts of productivity.

Brett Iversen:  I love it. Well, thank you both for the time. I really appreciate it. I probably could keep you here another half an hour, and we thank everyone for watching. We're really excited about significant opportunities that lie had for developers at Microsoft and we appreciated having some time to talk with you about it today. So thank you. Thanks again.

Thomas Dohmke:  Thank you.

Amanda Silver: Thanks.