why big companies build their own software, and hire consultants to do it

But selling anything to big enterprises is hard. You are asked to meet with a dozen people in the organization, spending hours and hours trying to explain and persuade. Half the people you meet with are skeptics who are going to argue that your service won’t work. The other half are going to argue internally that the service is a good idea, but the enterprise should build it itself instead of buying it from you.

Internal politics always favors building rather than buying from you, because building enables some middle managers to expand their empires, while buying threatens someone with losing an empire. And even if the enterprise decides to buy rather than build, it will still think that buying from a small startup is too risky. I remember at Freddie Mac when we wanted to build a system to use credit scores automatically in our loan underwriting process, there was a small startup that already was doing that. After endless meetings with the small startup, Freddie Mac gave the contract to a big IT consulting firm instead, even though that firm had to figure out from scratch how to do the work.

🔗 A Successful AI Application