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development economics

Zero Marginal Cost Software Development

Timeframe: Already happening, will accelerate over next 2-3 years

What's Changing

The cost of writing software is approaching zero due to AI code generation, enabling previously uneconomical software projects

Driving Forces

AI agents capable of generating production-ready code

Self-correcting development workflows

Reduced need for specialized development skills

Faster iteration cycles

Winners

  • Companies building custom debugging tools
  • Personal software creators
  • Businesses with niche automation needs
  • Entrepreneurs with distribution but no coding skills

Losers

  • Traditional software consultancies charging high rates for simple applications
  • Companies that haven't adopted AI development tools
  • Developers who refuse to integrate AI into workflows

How to Position Yourself

1

Focus on problem-solving rather than technical complexity

2

Build disposable, specialized tools for specific use cases

3

Compete on speed and customization rather than features

4

Create distribution-focused software applications

Early Signals to Watch

Companies building custom tools for one-time useIncrease in throwaway software applicationsRise of personal software marketplacesShift from feature-based to outcome-based pricing

Example Implementation

Developer needs to debug a complex data migration. Instead of using generic debugging tools, they use AI to build a custom visual interface showing exactly their migration state, use it once for the project, then discard it - total development time: 30 minutes instead of days of manual debugging.

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