#122: When To Go Multi-Product, Vertical Software Summit Keynote Speaker #1, Vertical AI Agents Will Dominate 2025
One vSaaS breakdown. One biz story. One 'how to'. In your inbox once a week.
Today's newsletter is sponsored by Orbital, the Zoominfo for companies selling to SMBs.
Get your TAM in a box, find contacts not on LinkedIn, and enrich vertical-specific attributes using our AI platform. Today, Orbital powers the fastest growing vSaaS companies across any SMB vertical – from home services to fitness & wellness.
Check it out: withorbital.com
Alright, let’s get to it…
One vSaaS Breakdown:
When To Go Multi-Product
One of the two biggest challenges vertical software founders have is DECIDING to go multi-product, then it’s deciding WHEN to go multi-product.
Everyone will give you a different answer but I thought I’d share my view…
On deciding to go multi-product.
I’m not going to spend a bunch of time here because it is pretty much consensus that to build a big business in vertical software YOU HAVE TO GO MULTI-PRODUCT. Usually your TAM’s too small to avoid it. The folks that have been able to just do one product really well are often incredibly large horizontal tools that could pull it off. I think the time’s even changing for them with AI, it’s so easy to copy items that you have to become a suite sooner than later. People just don’t want a bunch of point solutions anymore. That is especially true in vertical SaaS. Additionally, you will get eaten by the ERP if you stay in feature or single-player product land forever. The ERP’s and management systems of your space will take you out.
On deciding WHEN to go multi-product.
Ok, so you’re convinced that you need to go multi-product. The next natural question is when to. I think there are a few “levels” to think about.
Level 1. Your Initial Product is Churn Inducing
We all have to eventually cross this chasm but the reality is after you launch your product and your first few customers are happy you naturally try to scale it to a bunch of others. That’s when you enter danger zone. You quickly realize your product needs a lot of work to not have a churn cascade begin. Obviously — you should NOT go multi-product at this stage. It becomes a lot about narrowing down your ICP - maybe you started with focusing on SMB’s but you quickly realize it’s SMB’s that have a certain ERP or CRM. You need to graduate above churn inducing but narrowing down the ideal customer, getting very specific, and solely targeting those folks.
Level 2. Your Initial Product is Tolerant
At a certain point your product starts to sell, people aren’t happy but their not mad either. A lot of founders have midlife crisis at this point. I definetly did. It felt like every conversation I was having folks weren’t calling my baby ugly but they didn’t necessarily like it either. Maybe their ok with it but it’s not driving as big of an impact as they had hoped for. This, is also another time to NOT go multi-product. This is a big chasm to cross - you start focusing more on adding to your wedge product exactly what is going to move the ROI needle. This is a painful stage because you have to graduate to “good”, and there isn’t always a real clear roadmap. Stick with it, keep iterating, and you’ll find out when you’ve hit it with your customers.
Level 3. Your Initial Product is Good
Congratulations your customers like your product, they see the ROI, it’s working at the vast majority of them BUT it’s not at a point where their calling all of their friends and telling them to use it (without you paying them or giving them equity :-)). I moved to multi-product at this stage. I think that was a mistake. I’d hang in there and keep iterating and improving until I’d get to level four.
Level 4. Your Initial Product is a Referral Fly Wheel
When your product takes off like lightning, and everyone in the industry is telling all of their friends, when your inbound goes up 100%, when customers are churning very infrequently, when your getting high-fives on the conference floor. That’s when you’re ready to blitz on product #2.
//
Now one big caveat to ALL OF THE ABOVE is if you’re already past your initial product I think the answers are VERY different. People know you, competition is creeping in from all sorts of directions. You know what’s important next? Getting multi-product and FAST.
If I’ve got one product at Level 4, I’d get my next product to level 2 or 3, than add another one. I’d rinse and repeat that while slowly pulling all of my products out of the churn inducing category. This is like walking on a tight rope and it’s incredibly challenging but the best nail it here. The Toast’s, the Housecallpro’s, they all managed this very well.
//
This may seem obvious when you read through it BUT I promise you it’s an incredibly challenging thing that most of us get very very wrong. You have to actually put items in place to measure which level each of your products are at. You have to be intellectually honest to the extreme. I meet CEO’s that just assume their product is in level four while their entire team says otherwise. That’s a really bad sign of things to come.
Every product you launch will likely walk through these levels, figure out how to measure it quantitatively with ZERO room for bias. Align on it with your management team and your employees. Make everyone bring data and evidence that PROVES their view. Here is a chart that I had the management team agree on EVERY QUARTER when it came to our products:
We then would create 1-2 initiatives to improve one product from one level to the next. We had to pick, it was a tough exercise but incredibly fruitful.
Then communicate that initiative down to employees. It may seem scary but employees will love you for it — they will see that you’re willing to look yourself in the mirror, address where the cracks are, and solve them to create a better experience for them and your customers. The best entrepreneurs are psychotic when it comes to this — think Jobs, Gates, Bezos, etc.
One Exciting Update:
Announcing Our First Keynote Speaker…
If you missed last week’s episode I’m super excited to launch the Vertical Software Summit — coming to Miami this October.
Tickets sold like hot-cakes so would reccomend getting yours soon before they run out. I only have a venue for ~150 folks so when they’re gone, well, they’re gone.
I wanted to do a quick update on who are keynote speaker is…
Drum roll…..
Ilir Sela, the Founder & CEO of Slice.
Slice is a billion dollar vertical software business that is the operating system for independent pizza shops. He’s run the full vSaaS playbook and implemented an incredible product line that’s helping independents fight back against the Dominos and Papa Johns of the world. He also has a services component that helps pizzarias stock up on supplies. I’m particularly excited to dig into that in more detail with him.
If you want to go deeper on Slice you can go check out a write-up I did on them on X.
But in all seriousness, THANK YOU TO ILIR for making time. I’m so so excited to dig into the business with him and all the hard-fought battles they’ve won and lost along the way.
So go grab your tickets and see Ilir live and in person !
I’ll continue to announce more and more speakers over the coming weeks. And PS - if you have any interest in helping sponsor the event feel free to reply to this email. Will help make it world class if it’s not only coming out of my checkbook :-)!
One Biz Story:
Vertical AI Agents Will Dominate 2025 (AIM Research)
I stumbled upon a great piece on vertical AI that folks over at AIM Research put together. Wanted to reshare here as I believe you all will enjoy it…
The AI space is evolving faster than anyone anticipated, and 2025 is shaping up to be the year when Vertical AI Agents take center stage. These purpose-built systems are not just enhancing workflows—they’re completely transforming how industries operate. Forget the hype around broad, catch-all AI solutions; the future belongs to AI that knows your business inside and out.
Vertical AI Agents excel where general-purpose tools fall short. Designed to automate entire processes, they’re bringing precision and efficiency to tasks that have long relied on human effort. From optimizing debt collection strategies to revolutionizing customer support, these systems are engineered for impact.
The numbers tell the story. The Vertical AI market, valued at $5.1 billion in 2024, is projected to soar to $47.1 billion by 2030 and could potentially exceed $100 billion by 2032. With the ability to save companies millions in labor costs and scale operations without ballooning headcounts, the economic potential is enormous.
Investors are taking notice, too. Tom Biegala, co-founder of Bison Ventures, sees Vertical AI as a natural next step for the AI industry. “In 2025, the AI hype cycle will give way to the rise of domain-specific, specialized AI and robotics. Products will be faster and more efficient while delivering immediate, tangible value compared to general-purpose solutions”
How Vertical AI Mimics—and Surpasses—SaaS
If SaaS transformed the software world by making tools accessible and scalable, Vertical AI goes a step further. Where SaaS enables better management, Vertical AI automates entire workflows. It’s the difference between having a tool to help and having a system that gets the job done for you.
In the early 2000s, SaaS companies like Salesforce reshaped industries by moving software online. Today, Vertical AI companies are following a similar playbook, but with an even greater economic impact. By replacing teams with efficient, scalable AI agents, they offer not just better software but fundamentally better operations.
Why Startups Are Thriving in This Space
The rise of Vertical AI has created a fertile ground for startups. These young companies aren’t bogged down by legacy systems and can innovate faster than traditional firms. Startups are also leveraging their domain expertise to tackle repetitive administrative tasks that larger companies often overlook. This laser focus on solving specific problems has allowed them to gain traction quickly, even in competitive markets.
Outset
Founders: Aaron Cannon , Michael Hess
Outset is transforming the survey and insights industry with its vertical AI agent, leveraging large language models (LLMs) to analyze data and deliver actionable recommendations. Its AI-moderated research platform enables dynamic conversations to test concepts, uncover opportunities, and gain in-depth understanding. By scaling customer interviews up to 20x and engaging users with targeted follow-up questions for detailed insights, Outset provides unparalleled efficiency and precision. Clients report saving over 120 hours on single projects and significantly accelerating delivery times, showcasing how its purpose-built AI agent redefines research processes with scalability and intelligence.
Apriora
Founders: Aaron W. and John Rytel
Apriora is redefining recruitment with its vertical AI agent, Alex, an advanced two-way AI interviewer that automates and personalizes the hiring process. Alex conducts live video interviews tailored to specific roles, industries, and company needs, delivering predictive hiring signals by analyzing multimodal interview data. Operating tirelessly without the limitations of human schedules, Alex handles everything from real-time interviews to résumé reviews and scheduling, significantly reducing recruiting overhead while increasing candidate engagement. By eliminating biases, managing tedious tasks like calendar invites, and ensuring integrity through AI-powered monitoring, Apriora empowers HR teams to focus on strategic decision-making while providing candidates with an equitable and interactive experience.
Salient
Founders: Ari Malik and Mukund Tibrewala
Salient transforms the loan servicing industry with its vertical AI agents designed to streamline customer interactions and loan management processes. These AI agents operate across voice, text, email, and web chat, handling tasks like payment collection, due date changes, insurance updates, and customer queries in real-time. Fully compliant with CFPB, FCRA, TILA, and UDAP regulations, Salient’s AI ensures secure, efficient, and transparent operations, boasting a 60% reduction in handle times and processing over $561 million to date. Seamlessly integrating with loan management systems and payment processors, these multilingual agents offer unparalleled scalability and compliance, making them an essential tool for modern loan servicing.
Sweetspot
Founders: Andrew Arkhipov, Philip Kung, and Sachin Subramanian
Sweetspot is an AI-powered platform transforming the government contracting process by simplifying every stage of contract bidding for businesses. Sweetspot offers an end-to-end procurement solution featuring an AI search engine for identifying relevant government contracts and grants, intelligent decision support for quick bid/no-bid analysis, and AI-assisted proposal writing. Its semantic search capabilities analyze over 20 billion tokens, delivering unmatched accuracy and efficiency in matching businesses with opportunities across federal, state, and local agencies. By automating compliance matrices, proposal drafts, and capture management, Sweetspot empowers businesses to scale their public sector operations while ensuring regulatory compliance, serving clients like Flexport and Vannevar Labs.
ShowandTell
Founders: Daniel Bessonov and Justin Zhou
ShowAndTell transforms dental patient care by integrating AI-powered agents into treatment coordination, enhancing both efficiency and empathy in dental practices. Their platform creates a dedicated AI agent for each patient, delivering personalized, interactive treatment plans that clearly explain diagnoses, procedures, and financing options. These agents also manage proactive outreach, maintaining consistent communication and building trust between patients and dental staff. With case health analytics, the system tracks treatment acceptance rates and streamlines operations by automating manual tasks, allowing practices to unlock up to 50% of revenue tied up in unapproved or stale treatment plans. By partnering with coordinators, ShowAndTell empowers practices to close more cases while ensuring patients receive the care they need
Avitor.ai
Founder: Wen Wang
Avitor.ai is the first generative AI platform revolutionizing private jet bookings by offering specialized vertical AI agents tailored for the private aviation industry. Designed for charter companies, brokers, and online travel agents (OTAs), the platform features a 24/7 AI assistant capable of managing customer inquiries, qualifying leads, and providing tailored responses with unparalleled speed and accuracy. Leveraging its proprietary Knowledge Hub—built on 2 million flight records and over 25,000 sales queries—Avitor.ai delivers precise, industry-specific insights that go beyond generic chatbots. The platform streamlines operations with automated quoting, fleet and crew management tools, and marketing support for empty leg flights, improving conversion rates by 50% and boosting efficiency by up to 80%. With additional features like crypto payments and AutoML for refined price estimates, Avitor.ai empowers the private aviation sector with expert-level AI solutions for enhanced productivity and customer engagement.
Vertical AI Agents represent a transformative leap in B2B software, with the potential to outpace SaaS in market size. Unlike traditional SaaS, which delivers software services, AI agents extend their value by automating operations, enhancing efficiency, and significantly reducing costs. For industries burdened by repetitive, manpower-intensive tasks, these agents offer tailored, domain-specific solutions that drive measurable impact. While challenges like adoption resistance and the need for deep expertise remain, the opportunities are vast. Early adopters stand to gain a critical competitive edge, as Vertical AI Agents redefine efficiency and scalability across sectors, shaping a future where technology works smarter.
Friendly reminder to go check out MeetingHero.AI for free!
MeetingHero.AI automatically analyzes your digital calendar, and sends you meeting prep insights on the person(s) you’re meeting with via email and/or calendar. It’s crazy powerful and very helpful - and it’s available 100% FREE for 7 days to our readers.
Have a product or service that would be great for our audience of vertical SaaS founders/operators/investors? Reply to this email or shoot us a note at ls@lukesophinos.com