School, Neighborhoods, Houses, Communities and Companies are bought, built and sold over time. Although the question is most often used in relation to housing, we all have the opportunity to buy or build certain aspects of our life and our community. For the items that are most important in your life: Are you buying or building?
Companies, especially in the tech sector, are often faced with the dilemma of when to build out a product or simply acquire a smaller company that is already doing or making something similar. While Apple often develops its products in-house, occasionally it buys firms and uses their skills and tools to expedite the developmental process. Apple purchased Siri, Inc in 2010 to help develop their voice recognition software. Although Apple could have started competently from scratch, they chose to take Siri, Inc’s product and develop it into their own iOS operating system. In essence, they chose to buy instead of build their own solution.
As individuals, we are often faced with balancing the satisfaction and customization of building with the conveniences and immediacy of buying. We don’t have the time, will and ability to build everything. So we are forced to make choices on what we are willing to build. The advantages to building are simple: you get just what you want, better customization, often less expensive (especially if you DIY), greater flexibility, and ownership satisfaction. The advantages to buying are: things are typically ‘move-in-ready’, less effort, convenient and known.
Looking For Good Bones
Warren Buffett is known for many things but one of the most unique aspects about his business is the ability to recognize a successful failing company. Berkshire is known for taking struggling companies, removing inefficiencies and turning them into profit machines. The true value is simply recognizing companies with good bones. If you have a company with a bad product or bad people, it is rare that a change in structure or management can cure it in the short term. Similarly, when I’m looking for a house, my goal is to find an ugly house with good bones. I enjoy the process of making improvements to a house but there are some structural things that may be impossible or cost prohibitive to adjust in a home. So, I am looking for an inexpensive home that I can update to make it more functional and liveable with the money and skill set that I possess. Taking a partially flawed house and making it better gives me the flexibility to customize the parts I want and generally make the entire property much more appealing.
Where to Build?
So, in what areas of your life do you enjoy building? For one, this blog has been a fascinating experiment in building. Sure, I could have done some freelance writing for other personal finance blogs, but creating my own digital home gives me full control over the style, delivery, community and content. I also truly enjoy taking clubs, organizations and even my collegiate fraternity to a better place. But it is often important to start somewhere. I actually prefer taking an existing organization that has a pretty good structure and building upon it rather than a full working one with a completely new start-up.
My collegiate fraternity was a great example. Although I had the opportunity to join older, more established fraternities, I instead chose to join a smaller (at the time), fraternity with a good group of core guys, dedicated alumni base and a nice house location. Because of its size, I was able to help recruit several good friends and really influence the direction of the entire organization. Similarly, if you started working at Facebook when there were ten employees your voice carried a lot more weight than jumping in after 10k had been hired. Sure, the machine works well and there are fewer hiccups on the last hire, but there is some deep satisfaction about building something.
We are often faced with similar choices when moving into a neighborhood, school district or any home. Do you enjoy developing community? Do you enjoy getting the neighbors together? Are you willing to volunteer with your children’s school or build programs within the district? Do you have the time and ability to develop the things around you? For me, I gain a deep satisfaction from building organizations but it is important for me, at the very least, that there are some decent structures (bones) in place to make the building faster and more efficient.
Where We Buy
Where do we buy? I think we enjoy looking for communities with great opportunities. The place we currently call home, Athens, GA, has a unique structure that we have bought into. Our community already has plenty of civic engagement, active academics, big time sports and a nice transportation infrastructure. I enjoy being able to bike anywhere I want, but I’m still actively engaged in the process of getting our community to put in even more bike lanes. The church we attend, while much larger than when we joined, has processes and structures that allowed us to jump right in with ease.
The company I work for is a well oiled machine that has had 10,000s of employes over the years. While something in me still wants to make everywhere I live, work and play a better place, I still enjoy the benefits of a great employer at the moment. I’m sure it would be nice to build my own business- and some day I probably will- but it is also possible to enjoy ‘buying’ into a good job for some.
If we had unlimited time and resources, we would often spend the time to build and customize the things around us. However, fully built out things are often priced accordingly. Like the property in the great school district, a fully developed community or a perfectly updated house all have cost premiums associated with them. Do you enjoy spending your time building your company so you can buy everything else? Do you enjoy working less so you can spend time at PTA meetings and working with teachers to help your kids in school and engage within the community? Do you prefer spending all of your time volunteering at a church, mosque or synagogue? How do your priorities influence what you build and buy?
A Place to Call Home
I truly enjoy building things and I’ve done my fair share of buying. I’ve especially enjoyed the financial aspects of getting a great value on things (or organization) that can be purchased inexpensively and built or grown into an excellent value. So, what are you helping build up in your life? Does sending your kid to a school that needs a little work scare you? What about buying an ugly house with good bones? Can you make your community, neighborhood, place of worship or company better? You don’t have time for everything, so, where are you building and buying? And, where do you find the most value in building vs. buying?