When does Buy beat Make?

Everybody wants more budget. Money makes our lives easier. Its promise is freedom. If we only had this or that, then we could… well, kind of and no. Once we have that desired freedom, we use it. We become less careful, less rigid, less disciplined in our decision making. Quickly, we grow our team or build cool features simply for the sake of comfort. We become lazy, relatively speaking. Because we start pampering our problem-solving skills. Instead of coming up with creative solutions, we start adding more resources and building something new or creating an over-engineered something. The once painful filter that successfully forced us to focus and perform with excellence is gone. Too bad.

Vertical integration sounds awesome and owning all the IP rights of every aspect of our product appears super sexy at first. Like, when we aim for unicorn status and are targeting that historic blockbuster IPO. Much less though if we operate in a small team, with a tight budget and early-stage unit economics (= making losses for the foreseeable time), facing high demands on quality combined with the need for speed? This allows us to feel very special. Nobody has done this before. Nobody feels the struggle like we do. Truth is, we are just like all the other startups, worldwide. From a corporate’s perspective, we have a problem. But if we are a startup (or any agile team), we face it and embrace it. There is no need to build everything from scratch. We focus on the problem, define a solution and ship it. As fast and as lean as possible. Often, we can augment our core solution with off-the-shelf tools to deliver a viable solution to the user, solving their problem. If we can make money with it as well, it’s sellable, turning our users into customers. And within a few further iterations we will have our version 1.0 up and running.

Building from scratch requires research and development, trial and error, learning. It’s an unpredictable path. The only certainty is that it will be expensive. The number of unknown unknowns will catch us every time we build something from the ground up. We lose speed and money and potentially won’t be able to meet our quality standards either. As soon as we achieve it, the maintenance effort will ask for our attention. All these factors are actual costs in hindsight. But, instead of learning everything from scratch, we can leverage existing market experience. Buying good enough 3^rd party solutions only appears expensive at first, because we (always) underestimate the project at first. With our focus on our core value proposition and unique selling point(s), we augment our core capabilities with tools that we can buy. Later we may pull more features and teams in-house, when economics of scale give it reason, and potentially also to improve our IP power.

What are poor expenditures during early days? Possibly all tasks that are not our core USP, not in our field of expertise, and those tasks that distract our team from creating and capturing customer value fast. A question for guidance that helps me to navigate: If we can buy it already, why would we want to build it?