Founders - Buy or build?

Question

When you are trying to add new functionality to your product, how do you pick between buying an existing tool and integrating it vs. building that tool from scratch?

Graeme O’Connor · Accepted Answer

Is it a core part of your value proposition and defensibility? If yes, build it, if not buy it!

Vedran Rasic · Answer

Great question @solomon_bush @solomon_bush1

1. First, I evaluate how long it will take me to build it in-house. 
2. Then I multiple that x1.5.
3. Then, I turn those months into $ value by multiplying months with our monthly (entire) team costs.

Now that I know my cost (+ some opportunity cost), I can evaluate outsourcing or/and acquiring.

Then the point of discussion becomes do I care about the speed or precision or $.

Do I like the team I am talking to?

What's the edge, and why are they selling?

Are there any red flags?

Etc.

Maxwell Davis · Answer

We try and build where the function will directly add to the product as a feature.  Anything non-core we'll buy in.

sachin chandra · Answer

Buy any day if it is not our core competency.

Solomon Bush · Answer

@maxwellcdavis Okay that makes sense. That's actually the best advice on this topic I have heard.

Solomon Bush · Answer

@vedranrasic Okay this is great advice!

So the x1.5 multiplier is just to hedge against possible scope creep?

Also, in your opinion what would an example of a red flag be?

Vedran Rasic · Answer

@solomon_bush "scope creep" precisely :) 
I was looking to buy a product and it was all great; I performed a simple search on google and the guy resold the same code base multiple times. Sometimes you don't care. While in that case I did and I just left the call.

Another red-flag if they keep raising price on you for BS reasons.

Just like when buying a used-car or a house... you probably wanna do an inspection.

Solomon Bush · Answer

@iamgoconnor I like that you mentioned 'defensibility.' So by this, you mean, your ability to defend your value prop?

Graeme O’Connor · Answer

@solomon_bush yes and ability to do something not easily replicated by others!

Answer

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Solomon Bush · Answer

Thats a great point. I have been screwed on used card purchases plenty when I was younger, lol. I can't imagine buying a bust piece of software or license. So much sunken costs that are irrecoverable.

Vedran Rasic · Answer

@sachin_chandra1 do you then have to buy the team as well? If it's not your core competency. Thx

Founders - Buy or build?

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