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Building an in-house version of a tool like Slack is nearly always a mistake, argues Redpoint's Logan Bartlett. Even if the direct engineering cost seems lower than a subscription, the true price is the immense opportunity cost of diverting top talent from the core, revenue-generating product.
Contrary to popular belief, launching a private community (like a Slack or Circle group) is often a mistake. Without dedicated management and clear value, they quickly devolve into spam and noise, ultimately failing. It's a high-effort initiative that is not suitable for most businesses.
"Vibe coding" platforms, which allow users to create apps from natural language, pose a direct threat to the B2B SaaS market. For simple workflows, it is becoming faster for a team to build its own personalized app than to navigate the sales, procurement, and integration process for an existing SaaS product.
Klarna's CEO publicly boasted about replacing SaaS vendors like Salesforce with a custom AI stack, only to suffer from poor customer service and "tremendous embarrassment." The costly and distracting experiment highlights the hidden complexities and risks of trying to recreate enterprise-grade software internally.
While it's tempting to build custom AI sales agents, the rapid pace of innovation means any internal solution will likely become obsolete in months. Unless you are a company like Vercel with dedicated engineers passionate about the problem, it's far better to buy an off-the-shelf tool.
The opportunity cost of building custom internal AI can be massive. By the time a multi-million dollar project is complete, off-the-shelf tools like ChatGPT are often far more capable, dynamic, and cost-effective, rendering the custom solution outdated on arrival.
For decades, buying generalized SaaS was more efficient than building custom software. AI coding agents reverse this. Now, companies can build hyper-specific, more effective tools internally for less cost than a bloated SaaS subscription, because they only need to solve their unique problem.
Founders can get lost building complex AI systems and automations. This can become a trap, a "procrastination machine," that feels productive but doesn't contribute to the primary goal of generating revenue. Always ask if the AI work is actually making the business money.
Building proprietary internal tools is a 'dumb thing to do when you're small, but it's the smartest thing to do as you scale.' Deel's CEO advises waiting until the company is on a clear path with strong, profitable growth. At that point, investing in custom infrastructure like a proprietary ticketing system becomes a strategic advantage that unlocks significant long-term efficiency.
With executive time valued at $1,000-$2,000 per hour, building a custom app that could be bought for $10,000 makes no financial sense. The justification to build must be a critical, strategic need for something unavailable on the market, not a desire to save on subscription fees.
The disruption to software isn't just about professional developers. It's about non-technical employees, like sales executives, using AI tools like Claude to build functional internal applications that replace paid SaaS products. This trend democratizes software creation and directly undermines the traditional SaaS business model from within customer organizations.