The build vs. buy decision shapes your company’s trajectory far beyond technology choices alone—it's fundamentally about aligning strategy, stage, and growth objectives. Early-stage companies prioritize speed, often favoring proven off-the-shelf solutions to accelerate market entry and preserve critical resources. As companies mature and shift toward building defensible intellectual property, bespoke systems become strategic assets that enhance valuation and investor appeal. This article guides CEOs through a structured framework, evaluating critical factors like core business alignment, stage-specific goals (fundraising, growth, efficiency), integration complexity, and adoption risk. Ultimately, making the right choice between building and buying is less about immediate functionality and more about making timely, strategic investments that drive sustainable long-term growth.
Every CEO I’ve worked with eventually faces the same tough question: Should we build technology in-house, or buy a ready-made solution off the shelf? On the surface, the decision seems straightforward. Underneath, it's a complex strategic calculation that profoundly impacts future valuation, operational effectiveness, and speed to market.
Let’s simplify it. Your decision hinges on three clear strategic elements:
The debate isn’t about features. It’s fundamentally about future value and your ability to scale quickly and efficiently.
To make the right decision, step back and understand your company’s strategic goals. Are you focused on scaling rapidly, acquiring market share, creating defensible IP, or optimizing internal efficiencies? Each goal distinctly shapes the build vs. buy calculus.
When you're raising capital—especially in Series A or B—investors focus intently on your strategic assets. Custom-built technology, if defensible, increases your valuation significantly.
For example, consider Square Foot, a Hong Kong real estate platform. The CTO and I debated deeply whether building a bespoke CRM would truly enhance valuation. It quickly became apparent: if our core strategy revolved around basic CRM functions, a proprietary solution wouldn’t offer strategic value. But if our CRM expanded into an analytics-driven Customer Data Platform powered by AI—something investors clearly value—that would differentiate us dramatically.
However, there's a risk here. Investors performing due diligence often uncover technical debt, bugs, and inefficiencies. If your custom-built technology isn't polished, it could hurt your valuation. In this scenario, a proven external solution, integrated effectively, could shield you from such risks.
CEO Takeaway: If your tech doesn’t clearly add investor-facing strategic value, strongly consider buying a proven solution.
At the growth stage, your primary goal is rapid scale: more users, more revenue, faster market entry. The key strategic question becomes: Which path gets us to market quicker?
Let's unpack this:
For instance, consider the decision to use machine learning. At early growth stages, building your own AI models from scratch is costly and slow. Leveraging existing ML platforms (like AWS, Azure, or OpenAI) can significantly speed up your product development cycle. You learn faster, iterate quicker, and validate market fit without draining resources.
At this stage, your technology stack should empower speed and execution. Buying solutions allows you to test quickly, pivot when needed, and achieve scale without major disruption.
CEO Takeaway: For rapid scale, buy proven technology to maintain velocity and conserve resources.
When efficiency and cost-reduction dominate your strategy, technology decisions must actively reduce complexity and overhead. If revenue growth slows or product usage declines, your first instinct might be to optimize costs. But before cutting back, ensure you've identified the underlying issues—is it product-market fit, user experience, or market saturation?
If efficiency truly is the goal, two key factors emerge:
Here’s a practical example: companies frequently spend enormous amounts maintaining internally built data analytics tools. Shifting to a specialized analytics SaaS tool can cut maintenance costs by half or more, reallocating resources toward innovation rather than upkeep.
CEO Takeaway: At this stage, SaaS is often your friend. Choose external solutions to reduce complexity, conserve resources, and sharpen focus.
Launching new products presents unique challenges. The build vs. buy decision hinges on whether the product or feature is core or context:
Consider developing a "super app" that includes banking, E-Commerce, messaging, and digital asset management:
What you must control is the integration layer—the connective tissue that ensures seamless user experiences across these systems. Building and owning this layer allows flexibility, reduces vendor lock-in, and ensures strategic control over critical interactions.
CEO Takeaway: Clearly define what’s core and context. Build strategically essential tech; buy everything else.
The reality is, the build vs. buy decision is rarely static. It evolves alongside your company's lifecycle and market demands. In early stages, speed and agility typically trump control. As companies mature, owning critical infrastructure can deliver competitive advantage and valuation uplift.
Always align your tech choices with strategic business outcomes. Technology should accelerate growth—not slow it down. If you’re stuck maintaining complicated, bespoke systems, innovation suffers. Conversely, if core functions rely solely on external vendors, strategic risk increases.
Ultimately, the decision comes down to prioritization:
Fundraising/IP Valuation Stage: Build defensible IP; focus on technology that investors value.
Growth Scaling Stage: Buy proven solutions to accelerate scale and adoption.
Operational Efficiency Stage: Audit high-cost systems and transition to efficient SaaS solutions.
New Product Launch Stage: Build core differentiators; buy commoditized, peripheral solutions.
I’ve seen countless CEOs agonize over the build vs. buy dilemma. Often, it boils down to speed versus control. Early in your company's lifecycle, speed is crucial—you must move fast, iterate quickly, and reach users efficiently. Buying established solutions typically helps you achieve this.
But as you grow, strategic control becomes equally important. Owning core differentiators allows you to shape your trajectory and narrative effectively. Yet even mature companies risk drowning in complexity if they build everything themselves.
The best CEOs I know continuously ask: “What moves us faster toward our strategic goals?” They ruthlessly prioritize, recognizing that every technology choice has trade-offs. Buying doesn't mean losing control—it means leveraging external expertise so you can focus on what truly differentiates your company.
The bottom line? Always align your technology decisions with your strategic vision. Whether building or buying, let technology accelerate your company—not slow it down.
