Hugh asks how come there aren’t any opensource billionaires. Actually, I think there are a number of opensource billionaires.

When hardware meant money, there were hardware billionaires. They made money Shifting Tin, and gave software away for free. And one day there wasn’t any margin left in hardware.

Software ruled.

When software meant money, there were software billionaires. They made money Shifting Code, and gave services away for free. And one day there wasn’t any margin left in software.

Services ruled.

When services meant money, there were services billionaires. And so on and so forth.

Infrastructure commoditises and is itself commoditised. Otherwise it wouldn’t be infrastructure. When you dominate a market, you run the risk of becoming part of the infrastructure, and margins collapse as people look for differentiation beyond that infrastructure.

This process of active commoditisation takes place in every economic cycle, changing scarcities to abundances and, in the process, creating new scarcities. The latest scarcity is talent, human ingenuity. Not something that is going to be commoditised in a hurry.

Google and Amazon and eBay and Skype may not like being called Services, I just couldn’t find a better word. One thing’s for sure. These businesses created billionaires.

Billionaires who made money because of opensource, not with opensource.

I quote from Doc:

I’m especially interested in exploring what I’ve been calling the because effect. This is what you get when your new business isn’t just about inventing and controlling technologies and standards, but about taking advantage of the new opportunities opened up by fresh new technologies and standards. For example, making money because of blogging, or RSS, or desktop Linux, or whatever â€” rather than just with those things. The because effect is a kind of jujitsu. While other people look to make money with something, you’re finding ways of making money because of something. Prime example, because of search, Google and Yahoo make money with advertising. Another: because of Rivendell, Salem Communications saves money with its core business, which is broadcasting. Because of his blogging, Thomas Mahon makes more money with his tailoring business.

There’s something peculiarly satisfying about starting a post with Hugh and ending it with Thomas Mahon …. feels like a whole nine yards of Savile Row there.

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