> An example from another industry: when I worked at a small chip startup, we had in-house capability to do end-to-end chip processing (with the exception of having its own fabs), which is unusual for a small chip startup. When the first wafer of a new design came off of a fab, we'd have the wafer flown to us on a commercial flight, at which point someone would use a wafer saw to cut the wafer into individual chips so we could start testing ASAP. This was often considered absurd in the same way that it would be considered absurd for a small software startup to manage its own on-prem hardware. After all, the wafer saw and the expertise necessary to go from a wafer to a working chip will be idle over 99% of the time.

This paragraph from the article reminds me of the recent HN discussion about resilience. In this particular example idling 99% of the time is cheaper, but even if idling 99% of the time is slightly expensive, it might still be a good idea not to outsource due to resilience. What if the vendor goes bankrupt? What if the vendor's vendor is unable to perform their contractual duty due to a disease outbreak? Or a geopolitical risk? You avoid these risks if everything is in-house, so these risks need to be priced in when determining whether to outsource. But more often than not, these risks are priced at exactly zero.