It’s been over a month since our podcast with our CTO, Justin Anderson, but I keep coming back to one idea he raised: the economics of building your own technology are changing fast. What used to be a premium option—reserved for firms with deep tech stacks and big budgets—is now more accessible, more flexible, and in some cases, cheaper than relying on vendors.

For years, building internal tools came with a steep price tag—not just in dollars, but in time and risk. You needed engineering talent, infrastructure, and the discipline to maintain custom code over time. Most companies, especially outside of core tech businesses, opted to buy off-the-shelf solutions because it was faster, safer, and often more cost-effective.

That tradeoff is evolving, and it’s part of a much broader macro trend.
Across industries, digital transformation and rapid AI adoption are reshaping the competitive landscape. Global spending on AI and automation is accelerating, with sectors like financial services, healthcare, and manufacturing investing heavily in technology to drive efficiency and adaptability. This shift is not just about keeping up—it’s about redefining operational excellence in a world where technology is a core differentiator.

AI-assisted software development is lowering the cost of building and maintaining customized solutions. In many cases, it’s now faster and cheaper to layer tailored functionality on top of existing systems than to bend operations around the limitations of a vendor’s interface. As a result, companies with strong internal engineering and adaptable architecture aren’t just innovation leaders—they may now be more cost-efficient than their vendor-dependent peers. That challenges the long-held belief that customization is only viable for deep-tech firms. It won’t apply universally—constraints like regulatory overhead or limited tech capacity still matter. But where those barriers are low, building in-house can deliver better performance at lower cost, prompting firms to revisit assumptions around outsourcing, vendor lock-in, and the true meaning of operational efficiency.

Legacy vendors may face mounting pressure. Thanks to AI tools and easier ways to connect different systems, it’s getting faster and cheaper for companies to build their own solutions. That puts pressure on vendors—especially those still charging premium prices for features that are no longer hard to replicate.

Behavioral and Organizational Barriers
Despite these shifts, many organizations remain anchored to legacy systems and vendor relationships. This inertia is often driven by behavioral biases:

• Status quo bias: A preference for maintaining existing processes, even when change could yield better outcomes.
• Sunk cost fallacy: Reluctance to abandon legacy systems due to past investments, regardless of future benefit.
• Risk aversion: Overestimating the risks of change while underestimating the risks of standing still.

Forward-thinking leadership is required to overcome these barriers. Organizations that foster a culture of adaptability—where experimentation is encouraged and failure is seen as a learning opportunity—are better positioned to capitalize on new technology economics. Conversely, firms that cling to outdated assumptions risk falling behind, both operationally and competitively.

For investors, these shifts have meaningful implications for portfolio construction and sector allocation:

• Companies investing in internal technology capabilities may achieve greater cost flexibility and operational resilience, potentially leading to higher margins and stronger competitive positioning.
• Firms slow to adapt—those still tied to legacy systems or vendor lock-in—may face margin compression, higher costs, or even disruption.
• Evaluating a company’s tech strategy is no longer just a back-office concern; it’s a core input to business value and risk assessment.
• Investors should scrutinize not just what technology a company uses, but how it’s deployed, maintained, and integrated into the broader business model.

This raises a broader question for anyone assessing businesses today: Which companies are still tied to outdated assumptions about what’s too costly or complex to build? Who’s overspending on legacy systems? And which vendors are relying on defensibility that no longer holds?

These are no longer just questions for CTOs. They belong to investors, executives, and anyone evaluating a company’s ability to adapt (e.g., board directors). As the economics of technology evolve, so do the definitions of efficiency, resilience, and strategic edge.

For investors, that means rethinking how you evaluate cost structure, vendor reliance, and technical agility. Tech strategy isn’t just a back-office issue anymore—it’s a core input to business value.