#095: Step By Step Guide To Building A Vertical SaaS, Call For Startup, Vertical AI For Drive Thrus
One vSaaS breakdown. One biz story. One 'how to'. In your inbox once a week.
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Alright, let’s get to it…
One vSaaS Breakdown:
Step By Step Guide To Building a Vertical SaaS
I don’t do podcasts often but my friend Greg Eisenberg invited me on his and we had a good time jamming on exactly how to build a vSaaS.
Super tactical and actionable insights in here. Nothing hand-wavy.
Here’s the video:
If you don’t want to sit through an hour of me blabbering (I don’t blame you), I asked here is the summary / key points:
Vertical SaaS isn't just another buzzword. It's a methodical process to build industry-specific software that solves real problems. It’s a science, not an art.
Step 1: Choose your industry wisely.
Don't start with a product idea. Look for markets with high revenue and a good mix of small, mid-market, and enterprise businesses.
Example industry: Machine shops - $240B revenue, 22,000 companies. Perfect target for vertical SaaS. Why? High revenue, good segmentation, and ripe for innovation.
Step 2: Map the customer journey.
Understand every operational process in your chosen industry. This is where opportunities hide.
Pro tip: Analyze P&L statements of public companies in your target industry. They reveal spending patterns and potential areas for software automation.
Step 3: Focus on key business drivers. Build software that:
Increases revenue
Decreases costs
Prevents customer churn
Maintains compliance
These are your tickets to SaaS success.
Step 4: Study the competition.
In most industries, you'll find:
Established legacy providers
Non-industry-specific solutions
Businesses still using paper (yes, really)
Your opportunity? Be the modern, tailored solution they need.
Case study: Machine Shops (A prime vSaaS opportunity)
Use various software: CRMs, ERPs, CAD, manufacturing, monitoring
Many still rely on pen and paper for critical tasks
AI opportunities: predictive maintenance, optimized scheduling, automated QC
Step 5: Validate your ideas with potential customers.
Many industries, like machine shops, require a sales-led approach. Build relationships to understand their needs.
Step 6: Implement the 'Wedge Product' Strategy:
Start with a focused solution for a specific pain point. Build credibility and customer base. Expand into a comprehensive platform.
Case Study: Roofr.com
Started with a proposal tool using Google Maps for real-time quotes. Expanded to offer a full CRM for roofers. Lesson: Solve one problem exceptionally well, then grow by offering more to the customers who trust you.
Step 7: Integrate payments to scale.
Toast, the restaurant software company, exploded their market size by adding payment processing to their platform. Grow to be the one-stop-shop your customers need.
Step 8: Use value-based pricing.
Consider the cost of the problem you're solving. Start at 50% of the perceived ROI and adjust down or up based on market feedback. Remember: If you're saving or making them money, you can charge more. Quantify your value proposition clearly.
Key takeaway: Vertical SaaS is a goldmine. With the right industry, product strategy, and pricing, you can build a $1M+ business solving real problems for specific industries.
That’s it! Hope you enjoyed.
One ‘How To':
Call For Startup
There is BIG opportunity to build an AI Co-Pilot for giant, legacy ERP's.
Epicor for example, is a MASSIVE business.
In recent years, the company has grown through acquisitions and now serves over 20,000 customers in more than 150 countries. They have over 4K employees and generate $900M+ in annual revenue.
Just look at their UI for gods sake...
An AI Co-Pilot is a really interesting way to take on an ERP, by living in the browser via a chrome plug-in you can allow big companies to WAY BETTER utilize their big shitty piece of software they can’t get rid of.
There’s a lot of examples of AI Co-pilots, here is a video of a basic one below. But this is an incredible starting point for someone ambitious enough to try and EAT THE ERP of a particular industry.
What do you do after you’ve built the co-polot? Expand into all the areas they are not touching, then just build your own ERP eventually.
Your customers will know you, they should love you, and a few will be willing to take the initial leap, then a few more, and if you do this for 5 years you’ll have a pretty significant copy on your hands.
Who is taking this approach right now?
I want to talk to you :-)
One Biz Story:
Vertical AI For Drive Thru’s
I recently stumbled across Lilac Labs, a company building Vertical AI for drive thrus. I thought it was a great use case, and wanted to do a brief overview for you all:
Drive-Thru.ai was founded with the vision of revolutionizing the drive-thru experience using artificial intelligence. The company emerged in response to the growing need for efficiency and automation in the fast-food industry, particularly in drive-thru operations. The founders recognized the potential of AI to streamline order processing, reduce wait times, and enhance customer satisfaction.
The company was founded by Tony Kam, who was previously a Software Engineer at Tesla and Intel.
Go-to-Market Strategy
Drive-Thru.ai’s go-to-market strategy focuses on partnering with major fast-food chains to integrate their AI solutions into existing drive-thru systems. They aim to demonstrate the value of their technology through pilot programs and case studies, showcasing improvements in order accuracy, speed, and customer satisfaction.
Product Suite
Drive-Thru.ai offers a comprehensive suite of AI-powered solutions designed to enhance the drive-thru experience:
AI Voice Assistants: These assistants handle customer orders, reducing the need for human intervention and minimizing errors.
Drive-Thru Timers: AI-driven timers provide real-time data on queue lengths, wait times, and drive-offs, helping restaurants optimize their operations.
Digital Menu Boards: Integrated with AI, these boards offer personalized recommendations and real-time updates based on customer preferences and inventory levels5.
Vision for the Future
Drive-Thru.ai envisions a future where AI-driven solutions are ubiquitous in the fast-food industry. They aim to continue innovating and expanding their product offerings to meet the evolving needs of their clients. Their long-term goal is to become the leading provider of AI solutions for drive-thru operations, helping restaurants worldwide enhance efficiency, reduce costs, and improve customer experiences.
What do you think? Will AI eat drive thru employees? My hunch says yes…
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