An AI plumbing company?
Yup, you heard that right...

& the founder just raised $25M to continue his acquisition spree...

Let's dive in (↓🧵): Meet PipeDreams - an AI first roll-up founded in 2021 by Dan Laufer, who previously led growth and product marketing at Nextdoor.

His inspiration stemmed from observing high usage of Nextdoor for finding HVAC providers and identifying gaps in consumer experience.

Tidemark just dropped their 2024 Vertical SaaS Benchmark Report.

Some highlights, thoughts, and the full report.

Dive in below 👇 Tidemark, a vertical SaaS focused growth equity firm just released a beautiful report that I was happy to partner with them on.

1/ Tidemark (and myself!) believes there is a very clear playbook to build a big enduring Vertical Software company. The approach?

This guy has built 7 different BILLION DOLLAR companies.

How? By turning boring industries into billion dollar gold mines.

This is the INSANE journey of under-the-radar billionaire, Brad Jacobs: Meet Brad Jacobs, a business titan who turns boring industries into billion dollar gold mines through a combination of vertical SaaS and M&A.

This strategy has led him to take over multiple industries and landed him at a net worth of $4B+

Let’s dive into his journey....

Vertical Software is applicable to EVERY industry BUT that doesn't mean it can create a billion dollar outcome.

So what market factors are early stage investors looking for in vertical SaaS companies?

I teamed up with early-stage VC fund @yorkgrowth to answer the question: Inefficiency and High Costs:

Industries that have high operational costs or strong waste in certain areas. The restaurant industry is a good target here -- where every minute of downtime creates revenue loss.

Example:
Science on Call -> automated IT support for restaurants.

Hadrian is a fascinating business.

They aim to verticalize U.S. based small manufacturing shops.

How?
->Buy SMB Manufacturing companies.
->Implement modern hardware / software / talent.

The result? Parts delivered 10x faster and >40% more efficient.

Let's go deeper: First off, what types of companies are they buying?

SMB manufacturers - shops that creates parts. These parts can be made of metal, plastic, wood, ceramic, & more.

These parts are typically sold to manufacturing companies - folks who are making aircrafts, cars, ships, etc.

I'm seeing 4 sets of vSaaS companies today...

Classic: Selling SaaS into one industry
Digital Franchises: SaaS + Business In A Box + Ops Support
Vertically Integrated: M&A led + SaaS + Ops Takeover
Hybrid: SaaS + M&A + Selling their SaaS to other companies

Let's go deeper... #1. Classic
100% SaaS businesses building an industry specific software platform and selling it to businesses within that sector.

Examples:
>CourseKey (Trade Schools)
>Toast (Restaurants)
>OpenGov (Local Governments)

The former CEO of SquareSpace is "verticalizing" the restaurant industry with his all-in-one SaaS platform for Coffee Shops.

Slice did it for Pizza Parlors.
Odeko is doing it for Coffee Shops.

Let's dive in: Odeko is an operations SaaS that helps independent cafes order supplies and manage inventory.

They offer overnight deliveries from their own warehouses in 16 markets.

Instead of independent shops figuring all of this out on their own, Odeko offers a turn key solution.

The common, and in my opinion, wrong path of starting a business is to

a) come up with an IDEA
b) line up customer interviews
c) ask leading/bias questions that just validate your concept

There is a better way ⬇ Step #1. Find an industry & understand how big it is

There are roughly 1,000 industries defined, tracked, and monitored by the U.S. Census.

You can find a list of all one thousand industries and their total operating revenue directly on their website.

In 2011 this guy was selling phone systems to dental practices and 9 years later had grown it into a BILLION dollar business.

But he didn't even get an invite to the company's IPO...

This the crazy story of Weave: Weave is a leading CRM for small and medium-sized healthcare businesses.

You can think of it like the "Salesforce" for Dentists.

It build software that connects the entire customer journey from the first phone call to the final invoice and every touchpoint in between.

This guy started a BILLION dollar company while living in a shipping container in Kabul, Afghanistan.

This "boring" business creates cloud software for government.

This is the incredible story of OpenGov:



OpenGov is a cloud software company whose mission is to power more accountable and effective government.

They offer a suite of software for public sector accounting, planning, budgeting, citizen services, and procurement.

Their products are purpose-built for the sector.

These guys set out to build a lifestyle business and ended up with an $8 billion software juggernaut.

Together they are going to take home ~$4 BILLION in the largest software IPO in recent years.

Here's the scoop on Klayvio 🧵 In 2012, Andrew Bialecki set out to build a lifestyle business - a website devoted to cataloging the dates and locations of running races.

Bialecki found out the data he was looking for wasn't really available online.

He needed race organizers to provide it.

3 MIT grads founded the ULTIMATE boring business.

Providing software for manufacturing businesses, the company was recently acquired for $4 BILLION.

This is the story of Epicor: Epicor is a software company that provides ERP solutions for various industries.

It was founded by three MIT graduates who wanted to create a better way to manage business processes.

They were inspired by the concept of “epicor”, which means “the best of everything” in Latin.

Industry-specific vertical software companies will eat some of the most iconic internet businesses of the last decade.

And it all starts with a laundromat.

The impending vertical software tsunami and what I call ‘The Laundromat Problem’ 🧵 If you look at the world of software, the general goal is to build products that solve broad industry-agnostic problems for a large number of companies.

That’s what Docusign, Paypal, and ADP do.

But there’s a problem with software that’s designed for market-agnostic problems.

For too long companies have suffered the pain of duck-taping together multiple software tools and trying to 'make it work'.

The answer? Vertical Market Software -- a huge and growing category.

Bessemer's 10 lessons from 10 years of vertical saas investing 🧵 Lesson 1: To achieve market leadership in vertical software, you need to attack an underserved market, address an overlooked problem, or unseat sleepy incumbents.

You also need to leverage platform shifts and technology catalysts to gain an edge over the competition.

10 years ago, these guys founded a software business by scribbling an idea on the back of a napkin in Brazil.

That "idea" has evolved into a software empire, used by 20,000+ hotels across 157 countries.

The amazing story of the Cloudbeds 🧵 Back in 2012, Richard Castle and Adam Harris were traveling in Brazil and discovered just how difficult it was to book local accommodation.

The modern guest experience that we've come to expect simply wasn't available to independent property owners.

They found WHITE SPACE.

These Harvard classmates built a $500M company by creating the 'connective tissue' of the education industry.

60% of students in the United States login to their platform every month.

The wild story of Clever, a company you've probably never heard of 🧵 Industry-specific 'connective-tissue' is a beautiful business model.

Meet Clever, the integration layer of the education space.

Clever offers a single platform where students, instructors, and faculty can log-in and access all of their EdTech applications.

This guy went from selling snowboards online to leading a $73 BILLION dollar e-commerce empire.

It is perhaps the greatest business pivot of all time.

The wild story of Tobi Lütke and Shopify 🧵 Shopify was founded in 2006 by Tobias Lütke and Scott Lake after attempting to open Snowdevil, an online store for snowboarding equipment.

Dissatisfied with the existing e-commerce products on the market, Lütke, a computer programmer by trade, decided to build his own.

What do Bank of America, Barclays, & US Bank all have in common?

They run on the same vertical software platform built exclusively for banks.

The story of nCino, a $3B vertical SaaS company you've probably used without even knowing it 🧵 nCino is a software company founded in 2011 that provides white-label cloud software for banks.

It's tools do A LOT, including:

-Enable bank customers to open deposit accounts or take out loans
-Compliance & Content Management
-Workflow Tools
-Loan Portfolio Health Analytics

Tech giants are racing to build platform-level general AI.

But there is a BIG opportunity in AI that is not being addressed by them or talked about.

Why industry-specific/private data from vSaaS companies is the most exciting & non-obvious opportunity of the AI arms race 🧵 You can't go a day without hearing the latest developments in the world of Artificial Intelligence / AI.

Google, Facebook, Microsoft, & Amazon are all in an insane arms race to build the next platform / operating system that sits on top of AI.

Bain Capital Ventures just released their Top 50 Emerging Vertical SaaS Companies List.

The list, company breakdowns, and some highlights are included.

Dive in below👇 Before I get into the list, a few highlights / thoughts:

Two brothers built a ~$3.8B software platform for Weed Shops.

Earlier this year, they were ousted in a hostile takeover.

The WILD story of Dutchie, the app for Cannabis businesses 🧵 Dutchie was founded in 2017 by two brothers, Ross and Zach Lipson.

Prior to Dutchie, Ross founded a food ordering company that he sold to Just East for ~$30M.

Zach credits Dutchie's success to learning at his prior startup “how to bring tech into a retail environment".