Should I hire, buy or outbuild my competitor?

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There’s a chat service that I really enjoy called Intercom. The site modernized real-time interaction between businesses and their customers. I watched them come up from almost nothing to where they’ve started to gain some serious traction.

I wondered a lot about what other larger established chat systems thought about the appearance of Intercom. Could it be similar to how Blockbuster viewed Netflix in the early days? In boardroom meetings were they saying, “These guys are just a fad. We’re the 500 pound gorilla in the room, and we’ll easily outlast them. No big deal.”

When I saw Intercom, I knew it was the future, and I knew that they would eat the competition’s lunch one day. So in cases like this, should you hire, buy, or outbuild your competitor?

Hire your competitor

This option is favorable when you find the product at a very early stage. In this case, it’s usually not a company but more like an individual with a brilliant idea. So you can fold that individual into your organization. Talk to them. Make an offer to come over and bring their source code. Set up a nice little package, give them a solid contract, and hire that competitor into your company.

Many businesses do this really well by articulating with incubators or startup contests. Here you find a lot of smart entrepreneurial type developers. Companies pull those people into their organization to run the products. The business profits off of the developer’s idea quickly since it gets leverage from the company infrastructure (marketing, client base, etc.). Everybody’s happy since the company grows and the developer gets to let his passion fly.  

Buy your competitor

Of course, you don’t always catch sight of the startup when it’s just one person. Maybe they’ve grown to 3-10 people before they appear on your radar. In this case, should you outbuild them or buy them?

Let’s say the technology is truly disruptive. When you look at it you say, “Wow! This is the future.” Here, I would instantly make a decision to perform due diligence and seek to purchase even if I needed additional acquisition funding. As long as they pass the due diligence and their technology is stable, listen to your gut. If it’s a truly disruptive technology, I’d find a way to buy them. Otherwise I’m going to drive myself crazy trying to adapt my systems or create a new product team. If the technology is that far off from where I’m at, I would just simply buy them out.

Outbuild your competitor

If purchasing the technology is just not going to happen, I would immediately bring in two or three key individuals. I would look at our code, look at our platform, look at our product, and make a decision. I’d ask myself if this disruption is something we can enhance our product with, or if the technology is so disruptive that it’s entirely new.

Suck it up and make a move

Let’s return to the Intercom example. An older customer chat technology is offered by LivePerson. If I were a company with this older tech, I would’ve freaked out when I saw Intercom. I would see that it’s the future, and I would start investigating what the requirements were in order to pivot my software. Can my organization find a way to support some of the amazing features like real time smooth interaction and the backend management features?

For LivePerson, their systems are older, and it probably would be a huge task to pivot and maintain their current operation at the same cost. One thing they could do would be to find another company that can execute these large projects quickly with a high degree of success. Then I would have them build an entirely new product and start migrating my people over. You would only need to migrate the essential data over – if possible. Still, I wouldn’t even worry about it if it weren’t possible.

No need to abandon ship

When you’re an established brand in the industry, you have something the startup doesn’t: trust. Customers who like you or know about you will check to see if you have the same capabilities as the lesser known startup. If they’re already in your world, it’s much easier to transition them.

The moment LivePerson loses is when one of their customers notices Intercom and looks to see if Liveperson has the same capabilities. If they find they don’t, they’ll switch. People switch because of price or features. If you have a cheaper price and/or better features, people migrate to you.

A fine kettle of fish

Don’t look now, but there’s more. Enter Crisp Chat. This competitor bolted out and quickly spun up their own copy of Intercom – and undercut the cost big time. Crisp has all the same features, they look just as pretty, and they’re a quarter of the price. Liveperson faces a challenge with Intercom’s disruptive technology. Now intercom has to decide how to handle the Crisp price torpedo.  How’s Intercom going to play this? Outbuild, ignore (don’t!), or buy them up?

What should you do?

It’s not always clear when you deep in the situation. An editor proof reads even the most respected authors work, we are all human. I have experience that you can leverage. Tell me about your situation so I can help. To set an appointment with me simply click this link to reach out. Something else on your mind? Whatever you need, I’m here. Life is meant to be done together, just reach out.

Joel Beasley

Joel Beasley founded the Modern CTO Podcast in 2017 while writing his book, the Modern CTO book, with the goal of interviewing CTOs and sharing their experiences with others in the tech community.

Joel’s conversational style and insightful questions quickly gained traction, attracting high-profile guests such as Microsoft’s CTO, Kevin Scott, and T-Mobile’s CIO, Cody Stanford. With each episode, the podcast’s popularity continued to grow, and soon, Joel found himself with a waiting list of future guests.

Today, the Modern CTO Podcast has become the number one leadership and tech podcast in the world, with over 150k active listeners, including CTOs, lead developers, and rising tech leaders. Joel’s commitment to creating a conversational atmosphere for his guests to share their experiences has inspired a new generation of leaders and innovators.

As the success of the podcast grew, Joel founded ProSeries Media, a podcast production company that helps companies worldwide create their own podcasts. With a team of producers, content creators, and podcast bookers, ProSeries Media produces over ten shows, providing a platform for companies to connect with their audience and share their expertise.

Through his work on the Modern CTO Podcast and ProSeries Media, Joel Beasley has become a respected voice in the tech industry, inspiring others to share their knowledge and insights with the wider community. His passion for creating engaging content that informs, inspires, and entertains has made him a sought-after speaker and advisor on all things tech.



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