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Buy-vs-build for an early stage startup

If you start an early stage tech company today, it's kind of crazy how many hosted services there are out there, trying to help you build your product for a monthly fee. You can get a service for support tickets, and hosted outgoing email, and error logging, and managed Wordpress hosting, and private IRC servers, and continuous integration, and reporting dashboards, and automated billing, and almost everything else. Of course, if you whip out your credit card and sign up for twenty different services right off the bat, you've set yourself down the path of paying a meaningful chunk of cash every month. You might be reluctant to do that. But I think, if anything, you should err on the side of spending a little too much money on hosted services to help you focus on your product.

For a lot of good programmers, these kinds of decisions aren't really natural. They got into the business in part because they love building, and they pride themselves on being able to handle whatever technical challenge they come across. The last thing they want to do is morph into some middle manager who's so out of touch that he only knows how to throw money at problems.

But here's the thing: If you're an early stage startup, you absolutely do not have the time to solve most problems well. As the saying goes: Startups don't starve, they drown. In a typical day you'll have to take care of 20 things, and you'll only be able to do one or two pretty well. So pick which ones are the most important, and for the other things, you should seriously consider paying a hosted service. Even if the solution isn't exactly what you would've built. Even if it's a bit more expensive than seems reasonable.

The only reason that an early stage company has for existing is to prove that customers want the product that it's building. That's what investors will be looking at when you try to raise--not whether you saved $100 a month by managing your own brochure site. If you pay a little too much for a customer tracking service, that's not going to kill your startup. But you know what will kill your startup? Being too busy fiddling around with half-assed DIY solutions to figure out what your customers want in the first place.

And, in a related note: You will never be able to hire all the programmers you need. The hiring arms race marches on, and will probably only get worse, for, say, the next decade or two? Yeah, there may be little bubble burstings here and there, but generally speaking you should thank the heavens for every great programmer you can get to be an employee of your company. You should know that you might not get to hire another person that great for a long time.

So--to compare programmers to servers--try to scale your team up, not out. Meaning, it's actually going to be very hard to just turn on a switch and hire more engineers of the same caliber. It's easier to make the same engineers more productive by enhancing their work. One way to do that is with a judicious mix of the right hosted services--which are just a complicated way of paying the other engineers who work for those services. (Often living in cheaper cities, so you get some nice wage arbitrage too.)

By now you might be saying "that sounds nice, but I just don't have the cash." If that's the case, repeat after me, about a thousand times: The biggest expense for a startup is your time. Not your laptop, not your hosting bill, not your office, but the hours in your day. Even if you're living on ramen and not taking any wages, your time is still expensive in terms of the wages you are giving up from another company. It is also expensive in terms of the giant ticking alarm clock floating over your head. Because if you fuck around for too long, one day that alarm is going to go off and you're going to realize you're sick of living in poverty, and you're going to go back to working full-time for somebody else.

Of course, this isn't to say that every hosted service is a slam-dunk. There are many times when you should build it yourself. Some hosted services are actually way too expensive, and some products do actually suck. There's the non-trivial problem of startup SaaS vendors going bankrupt or getting talent-acquired. Some business logic is so core that you need to change it all the time, or it's so specific that nobody else will ever build a product that does what you need.

But there are many times when you're going to have to look at somebody's product, and think "I would've built a better product and charged less for it, but I don't have the time to prove that. So instead I'm going to pay you money for doing it worse than I would've done it." And when that happens, it's your responsibility to hold your nose and pull out your credit card.

I'm starting to think that building an early-stage product is an exercise in intentional, selective perfectionism. You have to pick the 1% of the problem that will make your product stand out from the competition, and then polish it until it positively gleams. But if you look one inch to the left of that, you'll see some substandard ticketing system or error reporting system, and maybe it'll drive you absolutely up the wall. And I guess the best you can do in those times and to take a deep breath and tell yourself that you'll get to that one day.

And to some extent, even our own inspirations can be a bit misleading. It's easy to walk into the Apple store and see how beautifully they designed everything, and then think that the way to be the next Apple is to be completely perfectionistic about everything all the time. But Apple is a 35-year-old company. For a very long time, they had to put up with their beautiful products being sold in other people's crappy stores.

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Tagged: startups, saas

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