Software value underwent two-stage erosion. Open-source eliminated business-on-software-alone for common needs. LLMs eliminated it for simple custom needs. The only remaining value is in ecosystems: interconnected software, accumulated data, or user networks. ## Core Framework **Two-Phase Value Destruction**: 1. **Open-source phase** — Commoditized common needs. "Nearly impossible unless corrupt or monopoly." 2. **LLM phase** — Commoditized simple custom needs. Anyone can generate a script for file processing or image editing. **The Ecosystem Test**: Does your software have (a) interconnected software pieces, (b) accumulated data, or (c) an active user network? If standalone, perceived value collapses — "everyone will assume you built it with a single prompt." **Perception collapse**: Even well-engineered standalone products lose credibility because the default assumption becomes AI-generated. ## Cross-Domain Applications 1. **Software Product Strategy** — Standalone tools have negative defensibility post-LLM. Strategy must center ecosystem creation: integrations, data network effects, community. 2. **Open-Source Economics** — Open-source was the first commoditization wave; LLMs the second. Red Hat model (free software, paid ecosystem) provides the survival playbook. 3. **Career Strategy** — Portfolio signal shifts from "I built this" to "I maintain this ecosystem" — contributions to interconnected systems, not isolated projects. ## References - [[Because of open-source, software has lost a large fraction of....md]] — BURKOV, Twitter/X, November 2025 ## Connections - [[Distribution Beats Building in the AI Era]] - [[Service as Software Replacing SaaS]] - [[Jevons Paradox Applied to Software Development]] *Last updated: 2026-03-17*