As LLMs have brought a massive wave of interest in the creation of applications, many of those new users are realizing that going from a prototype to production requires a lot more technical knowledge than they thought they would need. Rather than scare off users, this is bringing more attention toward developer-oriented products and services that offer a more curated and "hand-holding" experience, while still allowing users to follow best practices in deploying applications at scale.

The most interesting company in this space is Vercel. Its story is tied to open source, native cloud scaling, and "taste."

The key takeaway

For tech sales: In a market where many developer tools companies are struggling, Vercel has executed a successful pivot in the last 12 months, mostly due to v0 opening up a number of new accounts. The next 12 months will be critical - either they sustain the momentum and consolidate a leadership position or things will start to fall apart from a GTM perspective.

For investors: At $9B valuation, it's probably too late to get a "good deal." Next.js no longer represents a significant moat and there are several competitors offering a superior developer experience and better pricing for that specific component. The primary reason to bet on Vercel is because you would expect they get acquired at a higher valuation (which requires AWS-level deep pockets) or because you believe Guillermo will figure it out. v0 is a strong indication of that thesis, but the risk is obvious.

Next.js and Guillermo

Let's start with first principles.

While the majority of enterprise applications were essentially deployed locally, over the last 10 years we've had a significant shift toward cloud-based application development. More recently, this has evolved into edge computing, i.e. running code closer to users around the world for faster performance and better user experience, which has created entirely new runtime environments and competitive opportunities.

For all intents and purposes, modern web development lives on JavaScript. Over time, a number of frameworks and languages have been built around JavaScript that solve a variety of problems or make life easier for developers.

The most fundamental technology for front-end development (i.e., how stuff looks) is React, originally developed within Meta and still heavily maintained by them. Servicing millions (or even billions) of users is extremely difficult, so optimized frameworks are needed to deliver an experience that users would come back to. Another technology that's very popular is Node.js, which is basically the plumbing for the backend of these applications.

Source: 2025 Stack Overflow Survey on web frameworks

There is a meme in the industry that there is a new web development framework coming out every week. Some of the most popular open source projects today include React, Vue, Angular, Svelte, Astro, Qwik, and many others. Getting attention and staying power in this space is extremely difficult. For readers interested in a deeper technical dive into the broader JavaScript runtime ecosystem beyond just frameworks, Jamie's comprehensive analysis of the last decade's runtime explosion provides valuable context on how we got to this fragmented landscape.

In the previous paragraph, one of the most popular frameworks today is Next.js. It can be described as an opinionated merge of front-end (React) and back-end (Node.js) to allow full stack deployment of web applications. It was written by Guillermo Rauch (who nowadays walks around with a proud 80s mustache) and became the foundation to launch Vercel, the "best place to deploy and scale Next.js applications."

Now, when we say open source and widely adopted, we should also clarify that this is not a charity and Guillermo is very much a founder mode guy that wants to win.

I go deeper on Guillermo’s vision on the future of coding in v2.7 of “Selling Enterprise AI”.

As announced last week, “Selling Enterprise AI” will be a single product that combines both the weekly AI-focused content, as well as the the Tech Sales community with weekly group calls.

My goal is to help you win in tech sales, and for this to happen it’s important for you to have all relevant knowledge in an easy to access format. Now this can happen in a variety of ways such as watching a video, talking over DM or connecting on a group call.

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This is a great deep dive on the developer point of view for those who don't see Next.js as some sort of saving grace in the industry but as a very well monetized strategic product. I touched on the dynamics of open source last week, in particular the evolution in recent years toward "superstar" developers who are able to drive attention and funding toward every new project they work on. Guillermo is one of those players and Vercel is a reflection of his views and choices.

So what does Vercel sell today? Well, structurally the core customer base is focused on deploying Next.js applications end-to-end. This, however, doesn't mean that there aren't a variety of other "nuts and bolts" that Vercel is willing to sell separately when it makes sense. So one way to look at it: if you are deploying Next.js, you'll most probably have to do that on Vercel for the best experience. If you are looking for great developer tools but want to use another framework, Vercel is happy to support you with a (base cost + margin) product.

The edge computing timeline shows just how recent this entire market is - AWS Lambda@Edge only launched in March 2017, followed by Cloudflare Workers six months later, making this a 7-year-old market where first-mover advantages are still being established. Vercel's timing with their edge functions and v0 puts them in the second wave of edge innovation, which historically has been where the real winners emerge.

When we say (base cost + margin), we come to one of the most famous memes about Vercel, which is that the company is basically an AWS wrapper. The regular developer experience within the AWS console is not optimized in any shape or form for web applications, so for many, using Vercel is just a much more productive experience. The challenge for the Vercel team is that since almost all of the infrastructure is on AWS, their business model is compute cost + margin on top to survive. For the products that don't depend on AWS, well, they sit on top of Cloudflare. And since for Amazon "your margin is my opportunity," we are now even seeing a direct competitor under the AWS Amplify brand. However, the broader trend toward specialized JavaScript runtimes (Bun with JavaScriptCore, LLRT with QuickJS, WinterJS with SpiderMonkey) demonstrates that the 'one size fits all' Node.js era is ending. This runtime fragmentation actually benefits Vercel by validating their thesis that different deployment contexts need different optimizations.

The good news for Vercel is that a lot of their core recurring business is not large enterprises that would churn the first time somebody offers a slightly cheaper alternative. The problem is that the business will not grow unless they establish a strong enterprise motion.

Enter v0.

v0 is vibe coding for enterprises. The market has exploded recently with Loveable reaching $100M ARR (as well as other tools like Replit) and many companies are seeing the value of using AI to prototype MVPs and other software projects at scale. This is currently the best applicable use case for code generational tools focused around full stack applications.

In general, users with no experience would use tools to generate applications as side projects. They are unlikely to be monetized unless they convert their side project into a revenue generating product. Companies like Loveable have catered toward this audience with a business model that's both unprofitable and high churn.

Professional developers also use AI extensively but predominantly for accelerating their workflow. While leveraging code generation tools for creating full applications is usable for side projects, in their day-to-day they would stick to doing this with tools like Claude Code.

This leaves a large middle of "prosumers." Those are individuals working for companies where their efforts result in the creation of software products like business applications and websites. This can be product managers, designers, marketing teams, front-end engineers that want to quickly prototype ideas, etc.

They would like to use products that pass all of the corporate requirements (and Vercel is a very safe choice), while also being easy to use and generating applications they would actually like to use (taste). The big corpo alternatives like GitHub Spark have been panned by the community, while new entrants are very competitive but lack the sheer engineering talent and infrastructure experience that Vercel has.

This is the opportunity for v0. Benefit from a decade of experience of deploying web applications at scale, infrastructure that is able to scale on demand and a variety of optimized and opinionated agents that would write secure code for the prototype.

The tech sales opportunity

Remember when I mentioned that Loveable is at $100M ARR and unprofitable?

Originally Vercel was created under the name ZEIT in 2015 and essentially spent four years attracting developer adoption and not monetizing. Once they started experimenting with bringing in revenue and could raise a Series A, the company pivoted into the Vercel rebrand and started an aggressive expansion.

As of Q2 2025 the company has passed $200M ARR and has recently reached a valuation of $9B as part of shopping around for a Series F round.

As such v0 is not just a fun side business but the opportunity for Vercel to look beyond Node.js. Guillermo has made that very clear by going on an aggressive podcast tour to discuss v0 and the future of coding.

It’s important to keep in mind that this is a tool, best used in experienced hands that know what they are doing. Still, even providing barely any useful information in the prompt can produce interesting results.

So what is the feedback from the inside?

With 59% quota attainment on RepVue and 100% YoY growth, the current team seems to be doing well and is very bullish. The majority of reps seem to also have Vercel very prominent on their profile (including the ▲).

Engineering is a bit of a different situation. There is a strong recognition that there are many world-class developers working at Vercel. It also sounds like the current executive team can be very polarizing, starting with Guillermo himself.

So what is the path forward for Vercel? Currently there are only two plays - go for IPO or get acquired (which to be fair is normal for late-stage companies). If v0 becomes the dominant coding agent for prototypes in Mid-Market and Enterprise, then there is a strong tailwind of revenue and attention to get to IPO.

If they fail to execute or they get margin squeezed, they will probably have to take the sale. The obvious one is AWS if Matt takes a lesson from Microsoft and acquires the two leading paths for AWS with new developers - Anthropic and Vercel.

Unfortunately it doesn’t appear that the AWS leadership is currently aligned with such forward looking vision.

The second option is a bit unorthodox but my personal preference - Figma. The interesting thing about Vercel has little to do with cloud infrastructure optimizations (most of it is iterating on AWS and Cloudflare technology). Next.js was obviously a massive success for Vercel but there is always a new competitor around the corner that is grabbing developer attention (Svelte and Vue.js currently becoming widely adopted). The real "alpha" behind Vercel is taste. And Figma shares this trait in spades and ultimately tries to serve the same audience - prosumers who want to create great application experiences where most users live today, the web.

We are still in the early days of a new beginning for the Web. A Web that's faster for end-users and easier to build for developers.

This was the ending of Guillermo's announcement of the rebrand to Vercel. Priorities have shifted significantly since then and a big part of the core mission of Vercel is no longer a fit for this new reality. Adapting to the new landscape and providing an opinionated developer and designer experience for AI-powered applications is where the future opportunity lies.

The Tech Sales Newsletter #107: Vercel

The key takeaway

Next.js and Guillermo

The tech sales opportunity

The Tech Sales Newsletter #108: Situational Awareness revisited

The Tech Sales Newsletter #106: The end of GitHub