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Jacob Cow, known as the Nerd of the Street, talks about compiling software from source. He emphasizes the benefits of open source software, where source code is available for download. While most programs are installed from binary packages, there may be times when you need to compile a program from source code to run it. This involves translating the code into a binary that your computer can execute. Compiling from source may be necessary for programs not available in binary form.