Commoditize Your Complement
Make a required input abundant so your core product can grow
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 91%
Amjad Masad uses the business concept “commoditize your complement” to explain why a company might open a valuable technology rather than sell it directly. The starting point is a core product that depends on another layer. If that complement remains scarce, expensive, or controlled by a supplier, it constrains the core. A company can instead make the complement cheaper, open, or widely available, reducing dependency and stimulating demand for what it does monetize. In the episode, Masad presents Meta's open-sourcing of Llama as an example of this logic: Meta uses AI inside its products and, in his account, does not want to depend on another AI provider. The framework only works when abundance in the complement truly strengthens the protected core.
Origin
Extracted from The Diary of a CEO
Core principles
- 01A product becomes easier to sell when its required complements are abundant
- 02Control of the core can matter more than profit from every adjacent layer
- 03Open access can reduce dependence on a powerful supplier
- 04The complement must genuinely increase demand for the core
How to run it
- 1
Identify the core
State which product, service, or layer captures the value you want to protect.
Pro tip Separate what customers pay for from what merely enables it.
- 2
Map the complements
List the technologies, data, distribution, and infrastructure the core needs to succeed.
Watch out Do not label a direct substitute as a complement.
- 3
Find the constraint
Locate the complement whose cost, scarcity, or supplier power most limits adoption of the core.
Pro tip Look for a dependency that customers also experience as friction.
- 4
Increase abundance
Open, subsidize, standardize, or otherwise make the complement easier to obtain and use.
Pro tip Choose the smallest intervention that changes the market structure.
Watch out Opening the wrong layer can surrender your actual advantage.
- 5
Measure core lift
Check whether the more abundant complement increases adoption, resilience, or value capture in the core.
Watch out Abundance without core lift is a giveaway, not a strategy.
In the wild
Masad argues that Meta open-sources Llama because AI is an input to its products rather than the service it principally sells. Making that input open can reduce Meta's dependence on another AI provider while supporting its own product development.
→ In Masad's account, the complement becomes more available while Meta retains control of its consumer products.
Common mistakes
Commoditizing the profit engine
If the opened layer is where the business captures its value, the move can destroy rather than strengthen the model.
Assuming open means strategically useful
The tactic matters only if broader access to the complement measurably helps the core product.
Is it for you?
Best for
Platform businesses whose main product becomes more valuable when an adjacent technology is cheap and widely available.
Not ideal for
Businesses where the proposed complement is itself the main source of differentiation or revenue.
From the transcript
“There's this concept in business called commoditize your compliment”
“They don't sell AI as a service. They use it to build products.”
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