AI is redefining the potential of vertical SaaS. Markets once deemed too small, like laundromats, chiropractors, and veterinary clinics, are now becoming viable and scalable with the help of AI. As James da Costa and Angela Strange explain, AI can replace labor with software, boosting lifetime value per customer and reducing customer acquisition costs. This allows VSaaS companies to streamline entire workflows — from sales and marketing to back-office operations. Learn more about how AI is opening untapped markets in this week’s Enterprise newsletter 👇
… very interesting. I was contemplating two additional potential benefits to the value of these types of businesses. First, Peter Theil’s theory of complex coordination dovetails with this idea. He suggests that new businesses that include complex business workflow reengineering (requiring years of process development) are often undervalued and have a significant moat because they don't gain traction instantly, and tremendous development effort is required for competitors to catch up. Second, specific industries, like banking and finance (nCino), also may have increased potential because organizational design, culture, and regulation stifle bank development of significant workflow improvements. The incumbents and their existing downstream software providers may be stuck in a frozen business model. In both cases, the enterprise value of a new business that can “streamline industry-specific workflows, resulting in “winner take most” market may be supercharged.
Nagesh Nama
1w
This analysis on AI's potential to unlock niche markets is thought-provoking. One area worth exploring is the use of AI in veterinary services. For instance, AI-driven diagnostic tools can assist vets in identifying health issues faster and more accurately, thus enhancing operational efficiency and reducing labor costs. Additionally, integrating AI with customer relationship management can personalize client communications, leading to better customer retention. The potential for AI to transform these small" markets into lucrative opportunities is indeed exciting.
Fundamentally agree with VSaaS being exponential, if focused correctly. At Evise.ai, we are laser focused on consulting and advisory and see lots of opportunities.
At Tensorlinks we are transforming clinic work flows using AI agents as guided in article ...https://tensorlinks.com/
The real revelation isn't just about cost reduction. It's about making meaningful B2B engagement possible at a scale that was previously unimaginable (see Delfy.ai). AI isn't just improving existing processes, it's fundamentally changing what's economically possible in marketing.
The point about AI expanding the TAM by replacing labour resonates deeply with what we're building at Regsearch AI. By automating traditionally manual and labour intensive regulatory compliance processes, we’re seeing firsthand how AI can unlock underserved markets and significantly increase customer lifetime value. Thank you for sharing these thought provoking perspectives, Angela Strange James da Costa
Love the VSaaS market! Look at the headlines VSaaS company ServiceTitan made today during its Nasdaq IPO!
AI is transforming Vertical SaaS, unlocking "small" markets by increasing LTV and reducing CAC. But challenges remain:: - Customization vs. scalability - Limited data availability - Adoption barriers in less digitalized sectors The potential is huge, but success will require collaboration and strategic focus.
Amen to VSaaS! Totally agree with the ability to serve smaller more targeted markets nowadays. At MyTrip.AI we are doing this with variations of our SaaS for different segments of the market, ie OTAs and Hotels.
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