Whether you like it or not, software tends to commoditize—including yours. This is a key reality to understand if you’re building a software company.

Imagine a new market, say, one based on AI. You might be among the first companies to dive into AI-generated UI. Everyone’s impressed by this novel need you’re addressing, and it’s tempting to believe you’re uniquely positioned to dominate the market. But you’re not. Your company lacks an economic moat. You’re easy to replicate.

As I mentioned in If a business can be open source, it'll be open source, an open-source solution is likely to emerge. It might take longer, but when it does, it will probably limit your ability to capture value—most likely due to its fairer pricing and superior product. Open source can afford to do this with far less capital involved.

Some companies try to defend against this by expanding their offerings. There’s no better example than CI (continuous integration) companies, which now provide a suite of development tools—from caching to test analysis—to stay competitive. But once again, many of these solutions are easily replicable in open source. Even more surprisingly, some don’t require a server at all. This expansion can be a tricky move: you risk drifting from what your users know you for, reframing yourself as something more comprehensive. That shift can take years for people to grasp. In fact, it’s a challenge we’re currently facing at Tuist, where people still see us as just a project generation tool.

Another approach companies take is capturing value through infrastructure. The software has value, but without well-managed infrastructure, that value isn’t fully realized. This depends on the type of software. For a native app with self-contained value, it’s trickier—though people are also less incentivized to open-source it in the same form. Your advantage lies in maximizing platform capabilities. You’ll always have an audience there, but don’t expect endless growth. Just ask Sketch. Betting on something other than the web might give you an early edge, but it can leave you at a disadvantage in a world that favors collaborative solutions over individual ones. People crave connection—they love the Figmas, Notions, and Slacks of software.

That said, providing value through infrastructure is easier to replicate if you’re up against a cloud giant like Amazon. All they need is enough incentive to target your market. That’s why Google acquired Firebase and Fastlane—they saw an opportunity in the mobile space, though it didn’t fully pan out as expected. I wouldn’t be surprised if Firebase gets sunsetted in the coming years. A strong example of capturing value through infrastructure is Supabase, which we use at Tuist. The software has value, but there’s even more in managing and scaling your database—something they handle for you. It’s not something we’d ever consider doing ourselves because we’re focused on building our product.

A better model is creating an ecosystem and a community around it—one built on long-term incentives, not short-term gains. This distinction matters because it’s easy to create the illusion of an ecosystem or community by throwing money at it. But the best ones take time to nurture. You can tap into basic human needs and desires—like the pursuit of higher status—but that only works until people realize meritocracy is a dystopian mirage. Take the “indie developer” dream, for instance. We all fantasize about making a living from our software. Many products target these communities, feeding the illusion that their tool is the key to success, just like the stories they’ve heard. But as YouTube has shown, it’s more complicated than that. It might work briefly, but it can quickly turn into deception.

In my view, the best model is the one GitHub, Strava, and, to some extent, Spotify have mastered. These platforms amass social capital that makes leaving emotionally unthinkable. A GitHub profile is a developer’s CV. A Strava profile showcases a healthy life and connections with others. Spotify’s profile curates your musical tastes with recommendations no one else can match. This model is incredibly hard to replicate today. It’s not just about a critical mass of users—you need a product designed to capture that value fast, before anyone else does. Years ago, who’d have thought our profiles on these platforms would become so valuable?

In a tech world moving at breakneck speed, where society grows more individualistic despite collaboration yielding better outcomes and more happiness, I believe open source—and its community component—offers a sustainable alternative. The economic moat lies in its community value, rooted in the idea of building shared commons, rather than struggling to stay afloat in an industry that commoditizes itself.