Vertical Saas replaced spreadsheets for many businesses.
- Vertical Saas replaced spreadsheets for many businesses. Why?
- Spreadsheets allow infinite flexibility.
- Vertical Saas is "spreadsheets in a trenchcoat."[l]
- A business could have made their own spreadsheet, and tweaked it to their workflows.
- Yet Vertical Saas in the last decade has become the norm.
- If you already have a spreadsheet to run your business, and it works for you, then moving into someone else's process would be like putting on a straitjacket.
- But if you're starting a new business, sometimes the straightjacket is comforting.
- Someone who knows the domain better than you, and has helped hundreds of similar companies, gives you a clear happy path to follow.
- Critically, that software creator has likely encoded important things about regulations in your state, taxes, etc, that if you had gotten wrong could have killed the business.
- Horizontal Saas, like Airtable, Notion, etc do not have this characteristic.
- Saas creation has to be done by someone more savvy than what the customer would have built.
- Before fintech / payments, there wasn't enough money in Vertical Saas to lead to it being created to the level of quality and savviness required.
- Payments margin plus being a supernaturally sticky system of record is a powerful business model.
- But once payments became a viable business model, it subsidized the Cambrian explosion of vertical Saas.