I spoke at the Tidemark VSaaS Collective Live event in San Francisco last week. Over 100 vertical SaaS founders came to learn from each other and meet their peers.
Here are 5 things I learned at this event:
1) Some vertical SaaS companies can grow to $1B in revenue.
We heard from executive leaders at Toast, Service Titan, and Procore, each of which has grown to $1 billion in revenue. This is rare but not impossible.
They each had a formula for growing in a big and fragmented industry by stacking up products and services (editions, add-ons, payments, etc.) to keep growing their share of wallet after they won the market share game.
Tidemark is a growth equity investor that focuses on practical vertical SaaS businesses. They know most won’t grow massively, but some will. Base hits work too.
2) Most vertical SaaS businesses are founder-scale, not big VC-scale.
Even in Silicon Valley, most founders are practical and take little or no institutional funding in the early stages. They are trying to get to $10M ARR and see what happens. VCs with huge funds don’t invest in these companies.
Of course, most of the crowd were founders of vertical SaaS companies with ARR between $1M and $10M. Some were growing well; others were stuck and trying to find ways to keep growing. It’s tough out there, especially when your industry feels the economic slowdown first.
3) The all-in-ones are getting all-in-one-r.
Everyone plans to add other things to sell to their existing customers. This multi-product strategy is even more important in vertical SaaS, where there aren’t infinite customers to sell to, so you must make the most of every customer.
The formula was to build, buy, or partner to add other things to sell to customers who already love you. Be the platform and core system and grow out from there.
4) There isn’t much community for vertical SaaS founders…yet.
It’s ironic, right? The vertical of vertical SaaS hasn’t been well organized. Dave Yuan asked the group of 100+ founder attendees if any of them had ever been to a vertical SaaS event. Nobody raised their hand.
Kudos to David Yuan, Michael Tan, Courtney Mullin, and the Tidemark team for generously creating so much helpful vertical SaaS content and putting on this educational event. Most of these founders don’t need funding, but Tidemark is creating the new center of this community anyway. There was no talk of funding at this event.
5) San Francisco looks very normal again.
My hotel was near Union Square, and the event was held on Market Street. It’s quieter than it used to be 5 years ago, but it seems very normal again. Downtown felt clean, safe, and active, with people in restaurants and stores.
It was great to meet so many serious SaaS founders at VSaaS Collective Live this year. I know this event will be 2-3x bigger next year. Reach out to Michael Tan if you are a vertical SaaS founder.
