After recently sharing some?foundational thinking around Vertical Software (VSaaS)
,?I’ve had a number of (inspiring) conversations with founders and investors alike, all of which have helped me create a mental model to evaluate and work alongside VSaaS companies:
?Although this model is fairly self-explanatory, a few nuances to call out:
- Companies/products rarely fit squarely into any one category -although most will have a strong bias towards one (as illustrated by a few sample logos)
- The momentum of VSaaS today is towards the right (in other words, a company that may have started out as a "system of record" is likely to build features or products that take them into "systems of intelligence" or "systems of action")
- As such, legacy VSaaS companies tend to be more on the left and newer entrants in the middle and on the right
- As companies move the the right, they tend to embrace the data moats that VSaaS companies are uniquely positioned to build quickly, thereby unlocking "intelligence" and "action" which can also be catalysts for new revenue streams or pricing tiers
- There are many ways to win: where a company sits on this chart isn't inherently "better" and we are seeing winners in every category.
- This is version 1.0 and, like any good product, will be a permanent work in progress. I’d love to hear how others are looking at VSaaS and how the value these products deliver continues to evolve – from features to revenue models to the integration of AI/ML and fintech products.?If you're building or investing in the space, let's connect!
