I'm interested in the mentality of some firms I see that want to build their own tech rather than simply invest in existing tech solutions.
Any thoughts on the positive and negative of each scenario?
Knowing whether to buy or build software is dependant on your understanding of where competitive advantage lies. By definition anything you buy is not a competitive advantage. Anyone else can buy the same functionality. In areas of commoditisation that does not matter; no-one is going to build their own word processor, or spreadsheet. The flip side is that in areas of pure innovation you will have to build your own, as it obviously does not currently exist. In the middle (and one should think of the business S curve) you have areas where software can be heavily customised to suit your particular needs. This might give you a temporary advantage. However any customisation that is applicable to a wider customer base will end up being incorporated into the suppliers base product. So advantage is fleeting.
So, at a fundamental level, if you buy your software it intrinsically will not provide you with a competitive advantage. However that is not to say this is a route you should not follow; how one exploits, leverages and optimises software can definitely be a competitive advantage. Everyone can use that aforementioned word processor, but there is only one Tolstoy.
Whether you buy or build software is only part of the equation; as ever technology is but a part of your value proposition.
Agreed on buying software so my question then is whether you "invest" in that technology @Antony_Slumbers.
Take this example popl.ink/Mn6hgW from the Build to Rent sector - have have taken a stake in a platform they are using.
A sensible alternative?
Can be a very sensible approach in my opinion, but not without risk for the tech start up.
Investing in new proptech innovations can be a win win for existing companies. They dodge the risk of the initial dev stages (time and money), but then get first dibs on it, together with the opportunity to influence direction of travel of future, iterations by virtue of their skin in the game.
For the proptech start up, it's potentially a quick route to scale up, with a customer sitting at the next desk. But they do need to chose their investing partner carefully. With such a fragmented market there is a risk of limiting the potential market share far too early on, and worse still what happens if the investing company decides this new tool is not for them? The 'next big thing' which the proptech company has sweated blood and tears developing could just end up being mothballed.
That's a generic question applicable to almost all industries and was asked/answered million times I guess. There is no straight answer. It really depends on the case.
Proptech is still very much in its infancy, but its growth is rapid. My personal suggestion to businesses wanting to develop their own tech stack is to shop around first. Innovative companies with recently developed systems may well be open to tailoring their offering to suit your needs, and their API could be easily integrated. This may prove a faster and more cost effective solution than building your own tech from scratch.
I remember andy at Coyote wrote a great piece about this subject a little while ago
There are so many facets to this fairly open question, some of which have been explored above. I'm going to focus my opinion specifically to differentiating business capabilities. If you're not buying commodity business capabilities, you're confused about what differentiates you from your competition and you have a bigger problem than buy/build/invest.
For the majority of 'traditional' property companies, I would dissuade building because the reality is there is no experience. You would have to buy that experience. Even if you bought that experience, a 'traditional' property company does not embody the culture required to keep that experience or ride the waves of difficulties that come with development. Failure is not a learning opportunity. It is a dirty word. Even if none of the above applies, it takes a special property company to recognise the cost associated with development and stay the course, even during hard times. It's not impossible, but improbable.
Well what about investing. As suggested above by @Sally_Holdway startups need to choose wisely because everything that glitters isn't gold. I fear for startups getting in bed with a 'traditional' property company. Unless that company has actually changed their culture or is siloing the investment from the day-to-day business, startups run the risk of getting short term requirements and undue pressure because the 'traditional' company doesn't understand the culture and nature of what is required to nurture that investment.
'Traditional' property companies, just buy off the shelf. You'll be able to maintain your status quo for the moment and at least gain some business efficiencies.
All a bit savage, but I mean well. 😁
I know we can delete on your behalf!