#072: Hadrian's Future Factories, Types of vSaaS w/ Examples, The Vertical SaaS Bible

One vSaaS breakdown. One biz story. One 'how to'. In your inbox once a week.

May 12, 2024

Today’s episode is brought to you by Kanmon, a leading embedded commercial financing solution for vertical SaaS companies.

Check out their post on financing for growth to see how the SMBs that use your vSaaS platform think about strategic expansion.

Alright, let’s get to it…

One vSaaS Breakdown:

Each Type of vSaaS Biz w/ Examples:

There are four types of Vertical Software Businesses.

Classic
Digital Franchises
Hybrid M&A / vSaaS
Vertical Integration

Heres a quick breakdown of each with ~5 sample companies:

Classic vSaaS: Sell industry-tailored software To businesses within one industry

🔨 Trade Schools: CourseKey

🧪 Life Sciences: Veeva

👷 Construction: Procore

⚒️ Field Services: Service Titan

💵 Banks: nCino

🌿 Dispensaries: Dutchie

✂️ Barbershops: Squire

🏫 Restaurants: Toast

🌯 Dental Practices: Weave

🏫 Local Government: OpenGov

🧷 Law Firms: Disco

🍎 Colleges: Blackboard

🧺 Laundromats: Cents

🏬 Storage Units : Storable

Digital Franchises: Sell software + business in a box ie operating playbooks, full stack IT management, etc.

🍕 Pizza Shops: Slice

☕ Coffee Shops: Odeko

🛀 Medspa: Moxie

🧠Mental Health: Alma

🩺 Primary Care: Greater Good

💊Dietitian: Nourish

👩‍⚕️Physical Therapy: Shasta Health

🧪IV Hydration: Hydreight

💭Autism : Tilly

Hybrid: M&A + Selling vSaaS to other businesses within a particular industry

🩺 Carbon Health: Primary Care

🥦 Electric Sheep: Landscaping

🛖 Roofer: Roofing Contractors

💰 Ledger Up: CPA Firms

🅿️ Metropolis: Parking Lots

Vertical Integration: M&A only + Tech transformation

⚙️ Hadrian: Manufacturing

🦷 Tend: Dental Practices

👙 Splash Ventures: Pool Cleaning

One Biz Story:

Hadrian: Modern Factories

Hadrian is a fascinating business. They aim to verticalize U.S. based small manufacturing shops.

How?

Buy SMB Manufacturing companies.
Implement modern hardware / software / talent.

The result? Parts delivered 10x faster and >40% more efficient.

First off, what types of companies are they buying?

SMB manufacturers - shops that creates parts. These parts can be made of metal, plastic, wood, ceramic, & more. These parts are typically sold to manufacturing companies - folks who are making aircrafts, cars, ships, etc.

Think of it like this, if Boeing needs 5M custom screws for an aircraft, they hire a machine shop to construct the particular part for them. There are also shops that work with entrepreneurs or SMB's to bring their physical products to life. Hadrian is focusing on the former.

So how big is the market? It's BIG. There are ~18,000 machine shops in the United States. Collectively, those 17K shops bring in $40+ BILLION of revenue. The average facility does $2M a year in revenue

Hadrian's strategy? They believe they can supercharge these mom & pop shops with technology, and automate a massive amount of the manufacturing sector.

Their vision is grand...

To build the worlds most efficient factories.

Machine shops are DOMINATED by SMB's. The average facility does $2.3M in revenue per year. The average age of a machinist in the mid 50-s.

If Hadrian can roll up a bunch of these , implement modern tech, processes, workforce, etc. they will build something MASSIVE. They are still relatively early in their journey.

The company was founded by Chris Power in 2020, who was operating a buy-out fund in the space and realized he needed to run a vc-backed playbook.

In April 2021, he raised a $9.5M Seed Round led by Lux Capital and Founders Fund. They accomplished A LOT with that Seed round...

In March of 2022, Hadrian raised a $90M Series A led by Andreesen and Lux Capital.

In February of 2024, they raised a $117M Series B, with Raytheon coming on board as a strategic investor and partner.

Hadrian has been staying relatively quiet. But there backed by the best of the best. I'm unsure how many factories they are up to today.

I'm fascinated by what their doing and excited to see this play out. The best part? Hadrian is also good for the country. Supply chain shortages plague our country. Better / faster / more efficient manufacturing has incredible down stream benefits to everyone. It's a win-win.

Great documentary on @HadrianSpace here:

Kudos to @2112Power and the team!

Excited to watch you all build something special!

One ‘How To’ Question For You:

Should I drop a Vertical SaaS Bible?

I’m thinking about aggregating 5 years worth of vSaaS Content into one place.
1000+ industries to go after, 100+ vSaaS company case studies, 100+ operating learnings, industry analysis, & more.

Basically a Vertical SaaS Bible.

Would you use something like this? Would you pay for something like this? Should I do it?

All feedback welcomed :-)