When evaluating whether to build internal proprietary AI workflows or license commercial off-the-shelf platforms, how do we use the Step by Step Exit framework and our V/TO to decide which path maximizes our company valuation?

Question

Tyler Smith · Accepted Answer

Every dollar and hour you invest in technology should either widen your competitive moat or increase your enterprise valuation under the Step by Step Exit framework. Licensing third party SaaS tools is fast, but building on rented ground often limits valuation multiples because any competitor can buy the exact same software tomorrow.

Use your V/TO to make this build versus license decision objectively. Review your Core Focus and your Core Processes. If the operational workflow in question touches your core differentiator or your proprietary delivery methodology, you must own the intellectual property. Building proprietary custom workflows, connected to private foundational models through custom application programming interfaces, creates defensible institutional property. It proves to future acquirers that your operational efficiencies are an owned asset that transfers with the business, not a vendor subscription that can be revoked or price hiked.

Conversely, if the task is a non-differentiating utility such as basic accounting, general scheduling, or routine document transcription, do not waste internal capital building proprietary software. License established off-the-shelf platforms and hold vendors accountable for compliance, security, and continuous updates.

Tie this directly to your 3-Year Picture. If an asset cannot be audited, secured, and cleanly transferred to a new owner without ongoing custom maintenance from your internal leadership, it will detract from your valuation multiple at exit. Invest internal engineering and capital only where it protects your Three Uniques and creates enduring transferable value.