SaaS revolutionalized how software is built, delivered, and consumed.
But, 99% of the people in SaaS don't realize SaaS itself is getting disrupted.
Huge career implications.
Here is what anyone working in software should know 👇
Most of the SaaS companies today are Horizontal SaaS (hSaaS).
In 10 yrs, many such companies will be disrupted by Vertical SaaS (vSaaS).
✅ Pick Vertical SaaS for career growth
Here's why👇
1/ hSaaS vs vSaaS - the difference?
hSaaS - Generic software that mainly solves 1 problem and serves multiple industries. Eg - CRM, Payroll software
vSaaS - Highly specific solution that serves 1 niche industry and focuses on workflow automation. Eg - Veeva @ $600M ARR
2/ What's wrong with hSaaS?
Each industry has unique workflows.
• Sales process that is unique
• Pricing its services that is specific
• Customer touchpoints that are unique
• Types of data captured that is specific
hSaaS has no awareness of any of the above.
3/ Implication to customer
Companies spend a lot of "human time" figuring out how to customize each step, integrate various parts and make it work.
❌ Larger headcount → $$
❌ Frustrated employees → low CSAT
❌ Mistakes due to data staleness → $$
Is there a better solution?
4/ Enter vSaaS
vSaaS focuses on the customer's ENTIRE workflow.
💡 Vertically integrate and automate the entire workflow → Drive outsized RoI for the customer.
5/ How vSaaS works?
Everything is customized:
✅ Unique sales process → Customized CRM
✅ Specific pricing → Customized pricing engine
✅ Unique touchpoints → Customized user experience
✅ Specific data needs → Customized database design/capture
6/ vSaaS enable insane ROI for the customer
✅ Integration of workflow → Lower headcount
✅ Satisfied customers → high CSAT/NPS
✅ Data accuracy → Lower waste from mistakes
7/ vSaaS drives huge competitive moat
All the customizations become a competitive advantage
Become mission-critical for your customer!
✅ For the customer to quit you, they have to find an alternative that replaces the entire process → Insane LTV
8/ vSaaS is more capital efficient
Being in a niche simplifies GTM.
Marketing, Sales can be super focused on the niche market.
✅ A Smaller team is needed → Faster profitability.
e.g. @veevasystems only raised $7M, spent only $3M, got profitable and grew to $600M+ ARR
9/ vSaaS grows TAM by replicating the process across adjacent verticals
After vertically integrating workflow in 1 industry, look for adjacent industries with similar workflows.
E.g. Yembo (I'm CEO) is building the cloud for all home services (moving, painting, insurance).
10/ tl;dr
• Vertical SaaS is going to eat Horizontal SaaS
• Joining a hSaaS company in the 2020's is like joining an on-prem company in 2010's
• Many hSaaS companies that will outlast this decade will evolve into vSaaS - e.g. Rippling
Achieving Product-Market fit in vSaaS is different/more challenging than hSaaS.
I've studied many successful vSaaS companies - there is 1 primary approach to P/M fit (and one that I'm also using at Yembo)
Will be covering in my next thread. Follow me → @siddharthm83