In the early-ish days, maybe even as far as $10m-$20m in ARR, as you talk to larger prospects you’ll have a lot of “Build vs Buy” discussions.
“Oh, our IT team could build it.”
Or “We’ll try to hack the functionality using a product we already have.”
You’ll hear somewhere between a little and a lot of this until (x) you have a very well established brand and (y) an extremely feature-rich product.
No doubt, in the early days it’s sort of true. If your three engineers spent 6 months building a hack — of course, another 3 great engineers could do the same. In fact, they can do it faster and better than you did. Because you’ve already built a roadmap to get started in your app.
But ultimately, it’s a false choice:
- Even if your prospect does build it themselves, they can’t maintain it. The engineer that built it, or hacked it together on Slack or whatever, will leave. Or move on to another project. Or something. Who will maintain this custom solution in Year 2 and Year 3? Almost always — no one.
- Even if they can maintain it — they can’t evolve it. Not like you can. Your 5 engineers will grow to 10 and then 50, and they will be doing nothing but making your product better. An in-house solution can never replicate that richness of feature set and experience. Those go stale in a few years, at least, almost always.
- They usually aren’t on the hook enough. Even if your customer can build it, who will wake up at 2 am to solve the issues? Who will go the extra yard to make sure the app is tuned to do what the customer really needs? Only you. Your customer’s internal team goes home at 5 pm and for the weekend.
- Your customer’s needs almost always evolve faster than their internal team does. Even if they can build it now … they probably can’t next year. Or the year after.
So net net — consider a lost “build vs buy” decision just an opportunity with a longer sales cycle. You’ll get them in a year or two. Or even more likely, in 3-6 months when the internal project stalls out.
As it usually does.
So be cool if you lose a deal to an internal project. Follow up regularly. See if it’s all going according to plan. And especially — don’t break the relationship if you lose the deal initially. Tell them you understand, and if and when they do need an outside vendor — you are there for them. Always and forever.
(note: an updated SaaStr Classic post)