I was debating with someone if the vertical SaaS business model will persist in the world of AI.
- I was debating with someone if the vertical SaaS business model[anx] will persist in the world of AI.
- I think it will, but that the new businesses will fight over ever-smaller niches.
- The vertical SaaS business model is so powerful because of the opinionated, integrated operating system for a specific kind of business: a system of record that everything at the customer business revolves around.
- The opinion is part of the value; it can encode best practices discovered from all of the other customers in the vertical, guiding a given customer business to reasonable, effective defaults.
- The gravity of that operating system is extraordinarily powerful, and extremely valuable for the customer business, which makes the products very sticky.
- None of that power goes away in a world of AI.
- However, two things lead to ever smaller niches:
- 1) The maturity of the playbook in general; all of the good niches already have well established players.
- 2) AI makes it faster to write straightforward software.
- This means that it's cheaper for new entrants, which will drive competition further into niches than would make sense if software were still as expensive to write.