#127: The Vertical AI Opportunity, TrunkTools, 5 Quick Things To Grow Faster This Year
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:
The Vertical AI Opportunity
We are at the precipice of a major computing shift my friends…
I compiled a few interesting slides from external sources to illustrate just how big of an opportunity that is unfolding RIGHT NOW.
#1. Turning Services Spend To Software Spend Will Unlock Large TAMS
Vertical AI will shift billions (probably trillions) of dollars from W-2's to Software Spend…
#2. Study Industries, Then Study SPECIFIC JOBS Within Specific Industries
IMHO the best Vertical AI opportunities are companies building for a specific job in a specific industry.
Go any more widespread and it's not going to work. DO NOT build Vertical AI for healthcare. Build Vertical AI for Nurses. Even better, build Vertical AI for a specific type of nurse. Nail that, and actually prove your technology can replace a W-2 role before expanding elsewhere
#3. Don’t Forget To Study Industries GTM Motions
It is IMPERATIVE that you think about which industries have done well when it comes to vSaaS and what the customer acquisition motions looked like. Too many GREAT founders get trapped in industries that are absolutely horrific at adopting software. Stay away from these or you’ll spend 10-15 years and success will be a small to medium PE outcome.
Underserved is typically NOT because people didn’t try, it has a lot to do with really tough GTM motions. Roll up plays are FAR MORE successful here to short cut challenging customer acquisition motions.
#3. Look at existing Vertical AI solutions
What is working? Who is capitalizing on hype? AVOID THE HYPE.
#4. Get to building and GO FOR IT
Don’t let this moment pass you up. History is our best teacher. Most of the country use to work in farming. Now we’ve automated so much that less than 4% of our population works in farming. I believe something similar is going to happen with desk-based administrative jobs. Take advantage of the moment!!
Get Your Ticket To The Vertical Software Summit 2025 :-)
I have capacity for ~200 folks and we’ve already blown past ~110!
I think this sells out 4 months ahead of time.
Stoked at the demand.
But don’t miss out.
Grab your ticket before they go — vSaaS founders / operators / investors only!
One Biz Story:
Trunk Tools: Vertical AI for Construction
Continuing the theme today of Vertical AI, I came across a company that I felt was very intriguing and a strong example of what good looks like when it comes to Vertical AI.
Trunk Tools is building Vertical AI for large scale Construction projects.
Large scale construction companies use vertical software - Business Management Systems like Procore and Autodesk BUT when you’re IN THE FIELD and you are trying to find some information navigating through these systems can be incredibly challenging.
Imagine you are literally project managing ten construction workers, and they stop to ask you a question. You’ve literally got to pull out your tablet, navigate through a sh*t load of documentation in your ERP to get the right answer.
Enter Trunk Tools, and a beautiful case for Vertical AI.
They’ve created a mobile application that looks just like ChatGPT, but it’s filled with all of the data from the ERP. It enables that Project Manager to quickly ask a question with voice or text and get back the answer with out sifting through the entire ERP.
Now the obvious challenge here is when the ERP/Business Management Systems add this in, does TrunkTools become irrelevant?
If you’re building Vertical AI you should think of the above solely as your wedge product. It gets you in the door quickly and effectively at hundreds of businesses. But do not rest on your laurels.
My belief, is that you must expand into true agentic systems to avoid being crushed by the ERP.
What do I mean by true agentic systems? You need to think about AI that automates workflows, not just answers questions. How can you deploy an agent that actually goes into the ERP and fills in information?
AI is really good at reading PDF’s, extracting information, and actually doing the data entry piece (this part is relatively new btw AND WILL CHANGE EVERYTHING — see Manus AI as an example).
Per the graphic below, it seems that TrunkTools is thinking about this…
There is no playbook written for this yet and there is a lot of debate about whether or not incumbents or new entrants will win the Vertical AI arms race.
What do you think?
One ‘How To’:
5 Quick Things To Do To Grow Faster This Year
I get asked this question ALL THE TIME, so mapped out a few ideas for you…
Do a customer conference this year — even if it’s in a cheap hotel or your friends office space. You can do this on a budget AND IT WILL accelerate your revenue.
Go on a road show — This ALWAYS WORKS. Set up 20-30 f2f meetings with existing or prospective customers. You will be amazed at how much additional ARR you can add.
Set up a tier bonus plan tied to your ARR goals — show me the incentive and i’ll show you the outcome. Too many founders don’t have bonus plans tied to their ARR north star. I PROMISE YOU what you will pay out will be worth it if everyone is rowing in the same direction.
Go visit your top 20 customers — Get on an airplane and take EVERY ONE of your top 20 customers out to a fancy dinner. Figure out what is working, what’s not, and ASK THEM what you can build for them that they need. Actually build said thing and watch the cross sell take effect.
Spin up a website for onboarding — Do you have a website for customers where they can see how long onboarding is taking? Where they can punch in the pain pre-implementation and the results post-implementation? They are busy and are not thinking about you, give them a website they can see everything on. Send them a link to it every 30, 60, or 90 days. PROVE YOUR ROI CONSISTENTLY and via documentation. Churn will decrease. I promise.
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