Squeezing the Balloon
In the tech industry, profits shift like air in a squeezed balloon. Chris Dixon explains this phenomenon, drawing on Clayton Christensen's "law of conservation of attractive profits." When one layer of a tech stack becomes commoditized, another layer becomes profitable. Google’s strategy exemplifies this; by creating free or open-source products across various layers (Android, Chrome), they protect their lucrative search business. This “commoditize your complements” approach, coined by Joel Spolsky, allows tech giants to control their destiny. As Dixon notes, "Google doesn't even need to make money on Android. It just needs that part of the mobile market to be commoditized" to safeguard its search profits. In this high-stakes game, companies aren’t just competing within layers, but across the entire tech stack.