Build vs Buy
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The 7Cs Framework

A systematic approach to making Build vs Buy decisions, developed by Sue Nallapeta based on her experience as a tech executive.

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Prioritization Tiers
Not all factors are equal. The framework organizes the 7Cs into three tiers of importance.
Tier 1

Critical Factors (3x weight)

Core Capability, Cost, and Competitive Advantage. Start here - they have the biggest impact on your decision.

Tier 2

Important Factors (2x weight)

Complexity and Cohesion. Consider these if Tier 1 doesn't give a clear answer.

Tier 3

Additional Factors (1x weight)

Competence and Culture. These can often be worked around, but they provide valuable context.

The Seven Cs Explained

1. Core Capability
Tier 1
Is this central to your product and value proposition?

Build Signals

  • • This is what your product is fundamentally about
  • • Customers choose you specifically for this capability
  • • You'll need deep customization for your customers

Buy Signals

  • • This is a supporting function, not your core business
  • • Standard solutions work fine for your needs
  • • Your competitive advantage lies elsewhere

At Trusted Health, connecting nurses with jobs is core - they built it. Customer support tools are not - they bought Zendesk.

2. Cost
Tier 1
Total cost including development, maintenance, hosting, licensing, and opportunity cost.

Build Signals

  • • Long-term maintenance cost of buying is too high
  • • Licensing fees would eat into margins
  • • Your team can maintain this efficiently

Buy Signals

  • • Development cost exceeds years of licensing
  • • Opportunity cost of building is too high
  • • Vendor provides better economies of scale

Think beyond initial build vs buy price. Include maintenance, hosting, upgrades, training, and what else your team could be building.

3. Competitive Advantage
Tier 1
Can building this provide a significant competitive edge in your market?

Build Signals

  • • Building creates a unique selling point
  • • Custom solution creates barriers for competitors
  • • Customers would pay premium for your version

Buy Signals

  • • Competitors use similar off-the-shelf solutions
  • • Building won't differentiate you meaningfully
  • • Market expects standard solutions

Zoosk built their own billing system because operating in 35 countries with complex chargeback handling gave them a competitive edge.

4. Complexity
Tier 2
How complex are your operational needs compared to standard solutions?

Build Signals

  • • Your requirements are significantly unique
  • • You operate across multiple regions/regulations
  • • Off-the-shelf covers less than 80% of your needs

Buy Signals

  • • Your needs are fairly standard for your industry
  • • Existing solutions handle your complexity well
  • • Customization options cover your edge cases

Netflix built their own CDN because their streaming requirements were too complex for existing solutions.

5. Cohesion
Tier 2
How well does the solution need to integrate with your existing systems?

Build Signals

  • • Deep integration with proprietary systems needed
  • • Real-time data sync is critical
  • • Standard APIs are insufficient

Buy Signals

  • • Standard integrations (APIs, webhooks) work fine
  • • Vendor has connectors for your tools
  • • Data can flow through established patterns

Consider your CRM, analytics, auth systems. If you use Salesforce and need deep integration, factor in whether vendors support it.

6. Competence
Tier 3
Do you have the right people and skills to build and maintain this?

Build Signals

  • • Your team has the required expertise
  • • You can deliver faster by building
  • • You can retain talent for ongoing maintenance

Buy Signals

  • • Building requires significant hiring/training
  • • Vendor expertise is valuable and hard to replicate
  • • Time-to-market is critical

It's not just about technical skills - consider opportunity cost and whether your engineers should focus on this vs. your core product.

7. Culture
Tier 3
What's your organization's mindset towards building vs. buying?

Build Signals

  • • Culture values innovation and control
  • • Engineering team motivated by building
  • • Leadership supports internal investment

Buy Signals

  • • Culture prioritizes speed-to-market
  • • History of successful vendor partnerships
  • • "Not invented here" syndrome is a risk

Culture can override rational analysis. Understand your org's biases and either align with them or consciously challenge them.

De-risk with POCs
When the decision isn't clear-cut, proof of concepts can help validate your choice.

In cases where the cost of failure or adoption is very high, test things out first:

  • •High switching costs: Test extensively before migrating (e.g., customer support software, DevOps tools)
  • •Uncertain business results: Use the tool as a playground to validate assumptions before building
  • •Hybrid zone scores: When your evaluation lands between Build and Buy, a POC clarifies the path
Key Takeaways

1. Stage matters: At different stages, focus on product-market fit, differentiation, and profit margins differently.

2. Strategic vs Opportunity: If building creates customer value, do it. If it's a one-off, buy it.

3. It's rarely pure Build or Buy: You'll often buy and build on top to customize for your needs.

4. Decisions aren't permanent: Revisit past decisions as your company evolves. What made sense then may not now.

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