Build vs. Buy: A Framework for Growth-Stage Companies

It’s a common question that gets asked as a company is growing: should we build this or buy off-the-shelf software. The argument in favour of building usually tracks along the lines of: “What we’re doing is unique, our needs are specific, and how hard can it be anyway?” - the advent of AI coding tools and vibe coding has made this argument even more tempting.

Sometimes building is absolutely the right call. More often, it’s not. And the difference between the two isn’t always obvious until you’re six months and several hundred thousand dollars into a project.

Imagine you’re opening a restaurant. You need hot food. Do you build a food-heating system from scratch or do you buy a commercial oven?

The answer seems obvious. You buy an oven. Ovens are solved problems. Thousands of companies make reliable ovens, and your point of differentiation isn’t how you heat food, it’s what you cook and how you serve it.

The same logic applies to technology decisions. Your differentiation rarely comes from building your own CRM, payment gateway, or inventory management system. It comes from how you use these tools to serve your customers in ways competitors don’t.

When Building Makes Sense

That said, sometimes you genuinely need a custom oven. Here’s when building typically makes sense:

• You’re creating genuine competitive advantage.
  If the thing you’re building is core to what makes your business different, and doing it better than anyone else gives you a benefit, build it.
• The market solution doesn’t exist yet.
  If you’re doing something truly novel and there’s no vendor serving your need, you might have no choice. But you need to think critically and honestly. Is it really that unique, or are you just the first to look at the problem in this way?
• The economics clearly favour it.
  Sometimes the licensing costs for a vendor solution are so high relative to your current volumes that building makes financial sense. But you have to factor in the total cost of building including ongoing maintenance, updates, security patches, and the opportunity cost of your team’s time.

The Hidden Costs of Building

Here’s what tends to gets underestimated:

You’re not just building the feature. You’re committing to maintaining it, securing it, updating it, training people on it, and eventually replacing it. Software vendors have teams dedicated to all of that. When you build, that’s now your job forever.

Common Objections to Buying (And Why They Don’t Hold Up)

This is what goes through your mind when someone suggests buying the solution:

• “We’ve already started building this. Do we throw that away?”
  The sunk cost fallacy strikes again. The money you’ve spent is gone. The question is what you spend next.
• “Then we end up with fifteen different tools that don’t talk to each other.”
  Fair point. But here’s the thing - integrating vendor solutions is almost always easier than maintaining custom code. Most modern platforms have APIs, webhooks, and app marketplaces.
• “We can spin something up in a week with AI now. Vendor onboarding takes months.”
  True, AI tools have made building faster. But they haven’t made maintaining, securing, or scaling any easier. That week of coding can easily turn into months of overhead.
• “What if the vendor doesn’t do exactly what we need?”
  They probably won’t, at least not perfectly. But ask yourself: does it need to be perfect, or does it need to be good enough? Most vendor solutions are 80% of what you need out of the box. Customising the last 20% through configuration or light integration is usually cheaper than building 100% yourself. And remember to inspect your processes - it is sometimes easier to adapt what you do to a tool than adapt a tool to the way you work.

A Simple Framework

When you’re facing a build versus buy decision, ask these questions in order:

• Is this core to our competitive differentiation?
  If no, probably buy.
• Does a good-enough solution exist in the market?
  If yes, probably buy.
• Do we have the capacity to maintain this long-term?
  If no, definitely buy.
• What’s the total cost over three years?
  Compare honestly, including the opportunity cost.
• What’s the reversibility of this decision?
  Some choices are easier to undo than others.

The Real Question

Most build versus buy decisions aren’t actually about technology. They’re about identity and control.

I’ve worked in companies where the team believe that “we’re a tech company in the x space”. In reality, they need to realise that they’re an x company with technology as an enabler. They’re almost never actually technology companies.

Successful companies are the ones who know what to build and what to buy. They build the things that make them special and buy everything else, freeing up their teams to focus on what actually matters to customers.

The goal isn’t to build impressive technology. It’s to build an impressive business.

These decisions are rarely black and white. The grey areas - partial builds, vendor platforms you extend, build-then-migrate strategies - are where most companies actually operate. If you’re facing one of these decisions and want to talk through your specific situation, let me know.