Internal tools often make bad startup ideas

Usefulness as an internal tool is an overrated signal

Just saw YC updated their request for startups page, and they’re asking for startups inspired by internal tools:

We would like to see more startups created that are inspired by…homegrown tools, because it’s likely that if it's very useful at one company, it's very useful at others.

Although a tool may be valuable for many companies, software engineers — who are often influencers in a purchase decision — are strongly incentivized to build instead of buy. They like building stuff, and even if they didn’t, you’ll find “Built system that cut costs” much more often than “Purchased software that cut costs” in a successful promotion packet.

A corollary of this is that internal tools that require developers to do unpleasant work or learn a non-career-advancing skill are more promising candidates for startups. Integrating with existing systems, especially legacy ones, is a nice example of work developers hate doing. Build your internal tool startup there. You can also bet that a full stack js dev would rather buy your Kafka wrapper than learn Scala, which will do nothing for her career prospects.

This may change as we exit the zero interest rate period and companies face more pressure to create value. As that happens, companies may stop naively believing engineers who say they can build what a vendor is offering in 2 weeks and still promote them after it took twice as long.