diff --git a/README.md b/README.md
index 7cac8c97..92873a9b 100644
--- a/README.md
+++ b/README.md
@@ -19,20 +19,14 @@ The local server lets you to run the editor and serve the documentation from you
 
 The following commands perform a one-time setup after synching the repo on your machine.
 
-* See requirements for [pxt](https://github.com/Microsoft/pxt)
-* [clone this repo](https://help.github.com/articles/cloning-a-repository/) to your computer and go in the project folder
-```
-git clone https://github.com/microsoft/pxt-microbit
-cd pxt-microbit
-```
+* install node.js 8.9.4 or higher
 * install the PXT command line (add ``sudo`` for Mac/Linux shells).
 ```
 npm install -g pxt
 ```
-* install the dependencies
+* install the microbit target
 ```
-npm install
-
+pxt target microbit
 ```
 
 ### Running
@@ -41,39 +35,63 @@ Run this command to open a local web server (add ``sudo`` for Mac/Linux shells)
 ```
 pxt serve
 ```
+
 If the local server opens in the wrong browser, make sure to copy the URL containing the local token. 
 Otherwise, the editor will not be able to load the projects.
 
-If you need modify the `.cpp` files, turn on yotta compilation with the ``-yt`` flag (add ``sudo`` for Mac/Linux shells):
+The server assumes you have yotta installed. You can skip that requirement by adding ``--cloud``.
+
 ```
-pxt serve -yt
+pxt serve --cloud
 ```
 
-## Updates
+### Updates
 
 To update your PXT version and make sure you're running the latest tools, run (add ``sudo`` for Mac/Linux shells):
 ```
 pxt update
 ```
 
-More instructions are at https://github.com/Microsoft/pxt#running-a-target-from-localhost 
+More instructions are at https://github.com/Microsoft/pxt#running-a-target-from-localhost
 
-## Testing
+## Developer setup
 
-The build also automatically runs the following checks:
+If you need to make source changes to ``pxt`` and ``pxt-microbit``, follow these instructions:
 
-* make sure the built-in packages compile
-* `pxt run` in `libs/lang-test*` - this will run the test in command line runner; 
-  there is a number of asserts in both of these
-* `pxt testdir` in `tests` - this makes sure all the files compile and generates .hex files
-* run the TD->TS converter on a number of test scripts from `microbit.co.uk` and make sure the results compile
+* clone https://github.com/Microsoft/pxt
+```
+git clone https://github.com/Microsoft/pxt
+```
+* checkout the ``v0`` branch in pxt
+```
+cd pxt
+git checkout v0
+```
+* ``npm install`` and run ``jake``
+```
+npm install
+jake
+```
+* clone https://github.com/Microsoft/pxt-microbit
+```
+cd ..
+git clone https://github.com/Microsoft/pxt-microbit
+```
+* ``npm install`` and link to the ``pxt`` folder
+```
+cd pxt-microbit
+npm install
+npm link ../pxt
+```
 
-To test something on the device:
-
-* do a `pxt deploy` in `libs/lang-test*` - they should show `1` or `2` on the screen (and not unhappy face)
-* run `pxt testdir` in `tests` and deploy some of the hex files from `tests/built`
-
-The `lang-test0` source comes from the `pxt-core` package. It's also tested with `pxt run` there. 
+Both of those repoes are now ready to go. To start your local server, run
+```
+pxt serve
+```
+or, without yotta tools,
+```
+pxt serve --cloud
+```
 
 ## Repos