Should You Build Your Own Tech?

There’s an aphorism going around these days that every company is a technology company. In the most pure sense, it’s likely true. Every company uses technology heavily in their day to day operations, and many companies put tools together to create a competitive advantage.

This is different from being a company that should build its own technology. Should you? Here are two questions to frame the conversation:

• Is the technology you’re building a part of your core competency / core value proposition and a differentiator? Don’t gloss over this question with a quick “yes, of course it is!” If you really dig in on this question, many times you’ll realize that what you think you should be building actually adds no value, and often times creates negative returns due to all of the issues associated with being in the software business.
• Does your tech create additional, high multiple enterprise value? If someone showed up with a big, fat check at some point in the near future and wanted to buy your company, would they care about and assign the proper value to the tech you’re building? If you don’t know the answer to this question, you need to do your homework. Think about possible buyers and the story you’d want to tell. Would they buy your people, your tech, both, none?

If you can answer both of these questions with an authoritative “YES!” you’re in the software product business. If either one is a “No”, especially the last one, you should explore every other option for getting to market before you build your own thing.