December 8, 2022
  • December 8, 2022

Vertical SaaS companies like ServiceTitan are growing rapidly

By on October 14, 2022 0

Hello and welcome to Protocol Enterprise! Today: why focusing on a vertical market is a winning playbook for SaaS companies right now, a look at a new business networking startup, and remember Mike Bloomberg?

The Rise of Vertical SaaS

There’s an age-old idea in the software industry that if you want to be big, you have to build a company that can meet the needs of every business.

But a litany of vertical software companies, from Veeva and Procore to Toast and ServiceTitan, are subverting that thesis by relentlessly focusing on niche industries — and winning.

Vertical SaaS companies have often been overlooked by investors because an industry-specific focus was seen as limiting by growth-obsessed venture capitalists.

  • “The orthodoxy back then was that you draw a box around a software category, then you do really well in that category, and then you try to sell it to as many customers as possible,” said Vahe Kuzoyan, co-founder. of ServiceTitan, which creates software for plumbers, electricians and other commercial businesses.

But investors missed the true value industry-specific software.

  • “What [investors] missed is that you can capture a large market share in [a] vertical much more than in any horizontal industry,” said Talia Goldberg, partner at Bessemer Venture Partners.
  • In the CRM space, for example, Salesforce dominates the market with around 30% market share. But “in software verticals, you can credibly get more than 50% market share,” she said.

Now vendors such as Salesforce, Microsoft and Google follow the movement.

  • The three cloud giants have launched industry-focused cloud products in areas such as healthcare, manufacturing or financial services.
  • “I think it’s very telling,” ServiceTitan’s Kuzoyan said. “For me, it actually reinforced the larger thesis that the future is vertical.”

It’s still early in the software vertical market, but the potential is enormous.

  • Several vertical SaaS companies have already gone public: Veeva at $2 billion in 2013, Procore at $8.5 billion last year, then Toast at $20 billion a few months later.
  • Others like ServiceTitan could be next: the company filed for an IPO confidentially earlier this year, according to Insider.
  • “I think the opportunities and scope of opportunities for vertical ISVs are just as great as for any horizontal SaaS business today. There’s no real difference,” Bessemer’s Goldberg said.

Great platformers can do a lot of things, but as the saying goes, if you’re a jack-of-all-trades, you can’t master any of them.

Read the full story here.

— Aisha counts (E-mail | Twitter)


Today, we expect instant results from everything we do, from calling an Uber to ordering a t-shirt. Businesses can no longer afford not to adopt technologies like automation. We now live in the automation economy – a new world that demands agility and a complete reinvention of the way we work.

Learn more

Wiggle in your hedge

An open-source software startup called Hedgehog came out of hiding this week with the tagline “SONiC Simplified.”

SONiC is an open-source, Linux-based network operating system that runs on more than 100 switches from major hardware vendors – Cisco, Arista, Juniper, and Nvidia among them – and application-specific integrated circuits, or ASICs. . Originally developed by Microsoft and now under the leadership of the Linux Foundation, SONiC was designed to meet the demands of hyperscaler cloud data centers.

CEO Marc Austin and CTO Mike Dvorkin, both Cisco veterans, co-founded Hedgehog with Josh Saul. They want to make SONiC accessible for widespread adoption and facilitate the deployment of cloud-native applications in a fully automated, low-cost infrastructure.

“[Hyperscalers] have teams of hundreds of people who can automate this stuff, but companies can’t afford to do that,” Saul, Hedgehog’s vice president of marketing, told Protocol. “There is a great opportunity for companies to save money by using SONiC and using the disaggregated hardware stack, but it’s difficult because the tools didn’t exist until now.”

But Hedgehog, with its open network fabric technology for the distributed cloud, is developing an enterprise-ready SONiC solution that frees businesses from a particular vendor while addressing supply chain constraints for compatible network equipment. SONic.

“What we’re aiming for is to create this turnkey experience – open hardware, open source software – so you can consider any hardware, any cloud-native, Kubernetes-enabled software, and you should being able to enable it in your data center, in your colocation, or even in your edge use case with little friction,” Saul said.

Hedgehog is optimized for data-intensive applications such as AI/ML, off-cloud Kubernetes, and edge use cases. His product is in its first field trials.

“Everything is born in the cloud these days, but what a lot of people realize is that the cloud doesn’t meet all of their needs,” Saul said. “There really isn’t a good physical networking solution designed specifically for the needs of Kubernetes workloads. There has to be a better solution to this. Why can’t we have an open and open platform non-proprietary source that does not make me loyal to a particular supplier?”

— Donna Goodison (E-mail | Twitter)

Mike Bloomberg in the defense tech spotlight on Monday

Former New York City mayor and 2016 Democratic presidential candidate Mike Bloomberg has been out of the spotlight for some time, but Monday is his glory day. That’s when the Defense Innovation Board, the Pentagon group charged with advising Department of Defense officials on integrating technology into their operations, will hold its first meeting with Bloomberg at the helm.

The DIB has been shrouded in mystery since Bloomberg was named chairman in February, during which time its members were unknown to the public. The members will be announced at Monday’s meeting, a spokesman for the Secretary of Defense told Protocol.

When Bloomberg was named head of the group in February, he stressed the importance of U.S. military partnerships with private-sector technology to “capitalize on its own first-mover advantages.” He wrote: “Rest assured, our rivals are racing to catch up to us – and overtake us.”

The main rival, of course, is China, as indicated by recent restrictions imposed by the Biden administration on sales of major semiconductor hardware and software in the hope of hampering the country’s ability to make advancing AI developments.

Eric Schmidt, an artificial intelligence and quantum software investor and former CEO of Google, first led the DIB from 2016 to 2020. When Schmidt left his post at the DIB in 2020, he praised the group’s efforts to the Pentagon is accelerating its software acquisition and implementation practices, as well as the Department of Defense’s creation of the Joint Artificial Intelligence Center, which has led the integration of AI-related work into the DoD.

Several AI technology companies serving everyday business customers already have contracts with the JAIC, including, DataRobot, Figure Eight Federal, Scale AI, Veritone, CrowdAI, Image Matters and Arthur. JAIC’s operations have moved to the new Chief Office of Digital and Artificial Intelligence, headed by Craig Martell, former head of machine learning at Lyft, Dropbox and LinkedIn.

Former DIB voting members included Meta chief business officer Marne Levine and Eric Lander, the former director of the White House Office of Science and Technology Policy, who resigned from his post in February amid reports that he had created a toxic work environment for his colleagues. POLITICO later reported that Lander and other OSTP staff were paid by Schmidt Futures, Schmidt’s tech talent.

-Kate Kaye (E-mail | Twitter)

Around the company

Nutanix seems to be on the market, according to the Wall Street Journal, as the sun seems to be setting on the “hyperconverged infrastructure” space given the adoption of hybrid cloud strategies by all major players.

The University of Washington’s already renowned school of computer science introduces a new curriculum focused on cloud computing.


Today, we expect instant results from everything we do, from calling an Uber to ordering a t-shirt. Businesses can no longer afford not to adopt technologies like automation. We now live in the automation economy – a new world that demands agility and a complete reinvention of the way we work.

Learn more

Thanks for reading – see you Monday!