SaaStr 842: The 90/10 Rule for AI Agents: What to Build vs Buy...

Full Title

SaaStr 842: The 90/10 Rule for AI Agents: What to Build vs Buy with SaaStr's CEO and CAIO

Summary

This episode revisits the "build vs. buy" discussion for AI agents and applications, emphasizing the importance of a 90/10 rule (buy 90%, build 10%) for founders.

The hosts discuss recent experiences building custom AI solutions, highlighting when it's justified and the evolving capabilities of AI development tools like Cloud Code.

Key Points

• The 90/10 rule dictates that founders should buy 90% of their needs off-the-shelf, only building the remaining 10% when no suitable solution exists or when proprietary data necessitates a custom approach.
• Building custom AI applications is becoming increasingly feasible with new tools, but it comes with significant risks and requires careful consideration of maintenance, security, and compliance.
• The "jaw-dropping" factor of a product is crucial for success in the age of AI; if an app isn't revolutionary, it risks being displaced by more innovative solutions.
• Recent advancements, particularly with tools like Cloud Code, have lowered the barrier to entry for building sophisticated AI agents, enabling more founders to create custom solutions.
• The decision to build should be driven by clear needs, such as handling proprietary data or adding AI functionality where none exists, rather than simply the ability to build.
• The hosts showcase two recently built AI tools: an internal AI BPM for marketing and an external-facing sponsor portal, illustrating different motivations for custom development.
• Security and compliance are significant concerns when building custom applications, and while platforms are improving, robust security audits remain essential.
• The accelerating pace of AI development means that what is impossible today may be commonplace tomorrow, urging founders to stay at the cutting edge to avoid displacement.
• The economic justification for building an app should be carefully weighed against the cost of buying; the value derived from a custom AI solution must outweigh its development and maintenance expenses.

Conclusion

Founders must continuously evaluate their products for a "jaw-dropping" AI factor and innovate to stay relevant in the rapidly evolving AI landscape.

The "build vs. buy" decision for AI agents requires a strategic approach, focusing on unique needs and proprietary data rather than simply replicating existing solutions.

The accelerating pace of AI development necessitates a proactive stance; staying at the cutting edge is crucial to avoid being disrupted or displaced.

Discussion Topics

• How can founders effectively balance the 90/10 build vs. buy rule for AI agents in their specific industries?
• What are the most significant risks and considerations when building custom AI applications, beyond just the technical development?
• In the age of rapid AI advancement, what are the key indicators for founders to determine if their product is still "jaw-dropping" and worth investing in further?

Key Terms

AI Agents

Software programs designed to perform tasks autonomously, often using artificial intelligence to understand context and make decisions.

Cloud Code

A suite of AI-powered coding tools that assist in building applications and agents.

SaaS (Software as a Service)

A software distribution model where a third-party provider hosts applications and makes them available to customers over the Internet.

AI BPM (Artificial Intelligence Business Process Management)

A system that uses AI to automate, manage, and optimize business processes.

Single Sign-On (SSO)

An authentication scheme that allows a user to log in with a single ID and password to any of several related software systems.

ICP (Ideal Customer Profile)

A description of an ideal customer for a business, including demographics, psychographics, and behavior patterns.

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