Amazon's acquisitions - why sometimes it is better to buy then to build
I was working in couple of companies where, when I wanted to have something new (either new product, feature or tool) I always heard the same sentence from the CTOs:
"We will build it internally."
God - hate that sentence so much, even more than "It works for me".
Hard to believe, but once I wanted to install Google DCM (Double Click management tool) while working in a tech company, and I have heard that the team can "build a better tool internally" (wow!). Didn't know if I should laugh or cry then.
Not sure if this is mentality, self confidence in own skills, or maybe lack of understanding the business. Personally, I think that mixed of all of the above, but mostly the last one.
Programmers quite often doesn't speak "business language". In business you have to work smarter not harder, and if you can get from the market what you need, get it! Don't work your ass off on building something what you can buy NOW. Especially that in a business world - TIME IS MONEY! Every delay in delivering the product/feature/tool cost money.
I understand that to some extend it is good to build things internally since than you have a full control on a code and also can maintain the quality but.. from my experience:
If you want to build everything internally, in a lot of cases you will not build most of it at all (or you will build something not in 6 months but closer to 6 years)
Managing the quality internally is more difficult than externally (Yes, trust me. You can put SLA to the agreement with third party but not to the agreement with your employees. And.. you pay third party for delivering, you don't pay your employees for that (salary is not enough in those days to keep people motivated))
Why to invent the wheel if someone already did it? That is silly
If you want 100% control you can always buy an external company or invest in one :))
The last point is slightly funny, but this is the main point about which I want to talk about.
Big players are not building everything in house, they are often buying from the market! Of course, I am talking mostly about development, not maintaining existing business (however, sometimes it happens, especially when the company wants to scale or enter new markets). The crucial think here is how to integrate the technology/company which you bought into your own system/portfolio (or not integrate at all and keep as a separate brand - that is also the option).
To show you the scale I chose Amazon as an example. Hugely successful, always trying to find new revenue streams. And.. do you think that they are building everything internally? No! They are buying a lot! They are investing a lot as well (for sake of this article I didn't enclose the list of investments but trust me - is as long as acquisitions list below! (available on Owler).
Other examples are: PayPal (the company's Venture Capital arm is really active lately), also Naspers (which is one of the most active company VC in a FinTech space).
Coming back to Amazon - long story short - they are shopaholics (over 60 companies), mostly in the areas: warehouse improvements technologies, movies, eCommerce (eShops, marketplaces), gaming, wearables, home devices and a lot more... Check below what Amazon bought since 1998 when they acquired IMDB - their first acquisition, only 4 years after establishing company in 1994. The company bought IMDB for $55M.
Worth to notice here that Amazon didn't raise a lot of money - only 2 rounds, in total $56M. First one - Series A - 8M (July '95), second one it was IPO (May, '97) - 48 mln.
Below source links are not-clickable - however all sources can be found here: https://www.owler.com/company/amazon