#130: A Business Owners Software Journey & Remembering WHAT THEY WANT, The Story of Drillbit: Vertical AI for Home Services
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Alright, let’s get to it…
A Business Owners Software Journey & Remembering WHAT THEY WANT
We talk a lot about software here; Vertical AI, Vertical SaaS, ERP’s, Business Management Systems, CRM’s, blah blah blah. I wan’t to zoom in further in. We need to look at all of this from the customers view. What actually matters to them?
Before we answer this question, I wan’t to take you through a business owners typical software journey, irrespective of the vertical/industry they are in…
Hang with me, it will all make sense :-).
Step #1. Adoption of Business Management Software ie. ERP, EHR, etc.
When you go into business irrespective of industry, you typically come to the conclusion that you need a Business Management System. A single place that you and your all employees can run the business from. This is a natural cycle that any business owner in virtually any industry comes to realize at some point. Whether they are a doctors office, a furniture store, a restaurant, or a laundromat.
Step #2. Adoption of Point Solution(s) ie. Payments, Forms tools, etc.
What comes next? You realize the power of software, and not living in spreadsheet hell anymore, and you decide, “We need a solution for X, because our system of record does not do it or it does not do it well.” You then adopt a point solution, then maybe another, and before you know it you probably have a hole host of point solutions in addition to your System of Record.
Step #3. Adoption of a BI Solution
Then you realize you actually have lost touch in what is happening in your business. Data is spread across your Point Solutions and your System of Record, so you realize you need a tool that pulls data from any system into a single place, so you can easily view dashboards and get back to understanding what is actually happening in your business.
Step #4. Adoption of an IaaS (Integration-as-a-service)
Then you throw your hands up in the air, because you realize your BI tool is not very accurate. You are still running your company semi-blind. So you adopt a tool that integrates all of your systems and passes data back and forth, so that your ERP is up to date. You adopt language like, “If it’s not in the ERP it doesn’t exist!”. You become a stickler. You fight against having point solutions left and right. As your ERP matures you find yourself trying to cut out all the apps around it as much as possible.
You feel like you finally have things somewhat straightened out. Your a seasoned software buyer, and you cut over to a new ERP that actually has everything you want. It’s modern, it works. The three years of pain it took to move over has finally been worth it.
Then goes what happens… Vertical AI comes along.
You begin to be pitched solutions that can replace 100% of employees. This is big, because the cost reduction looks real. But you’ve been through hell and back. It’s hard to decipher what to actually do with this technology. You start seeing people using ChatGPT and Claude all across your workforce. Emails all start to feel like they are being written by AI. You ask yourself, “Are people still working 40 hours a week?”. You ask yourself a question before you go to bed every night, “Is that Vertical AI vendor full of sh*t and selling me fairy dust or is this actually real?”
In all the discussions we have on operating playbooks, hot companies that are growing like crazy, big financing rounds, we do not lose sight of a key question…
What does the customer ACTUALLY WANT?
I can ensure you it’s not any of the above.
So what is the answer to the question? It’s probably as simple as what they set out to achieve from the very get-go…
ONE System that does it all -
A system that’s simple, powerful, effective.
So how do you become that system for a given industry? It’s an incredibly difficult path as the prior sentence is simple but EXTREMELY COMPLEX and crazy/insane/ludicrous to actually achieve.
WHO actually becomes that system will pan out very differently in every industry, and it will change/evolve with caliber of entrepreneurs, quantum of capital they can raise, the team they can hire, etc.
But what I can tell you is that I think in most industries, the vast majority of software winners will come from one of two places:
Existing business management systems that leverage their data set, build powerful AI agents on top of them, so their customers can capture the headcount savings being promised by the up-starts, and they don’t have to move off their existing platform.
Vertical AI solutions that build such a high quality product, that enables removal of W-2 employees, taps into business management systems data effectively, and then moves quickly into the ERP/system of record layer.
I think these are the only two ways to win the incoming Vertical AI war. Building point solutions and software around the ERP is going to be fine for lifestyle businesses but folks will only win markets with one of the above approaches. Businesses wan’t ONE system. They are in APP HELL today, and even with the promise of Vertical AI, we can’t forget this.
One ‘How-To’:
1 Week Left To Get Early Bird Pricing
(+ WE ARE ALMOST SOLD OUT)
You have eight days left to get your tickets cheap. They go up substantially shortly, so if your thinking about grabbing one do so before June wraps up.
I think we will sell out in the next ~60-90 days!
(vSaaS founders/operators/investors only).
One Biz Story:
Drillbit: Vertical AI For Home Services
Drillbit is a startup founded in 2023 by Alexander Seutin and Liam Osler. Alexander is the Founder & CEO, and Liam is the Co-Founder & CTO. They previously worked together on developing robots for industrial construction, and later recognized the need for better software in the home services industry.
Focusing on automating administrative and operational workflows for home service businesses using AI. With Seutin's background in computer science and AI from Stanford, and experience at companies like SpaceX and Apple, Drillbit aims to help contractors save time and focus on core work, potentially transforming the industry.
Product Suite Overview
Drillbit offers a robust suite of AI-powered tools:
AI receptionists handle missed calls, qualify leads, and add them to the CRM.
A quoting engine turns job requests into detailed, editable quotes quickly.
Opportunity identification uses job history to find new client opportunities, with approval for outreach.
Integrated payments automate requests and follow-ups, with low fees and no limits.
Lead and job management tools provide easy access to details, notes, and scheduling.
CRM integration links client and job data seamlessly. It does look like they are expanding into CRM, and have begun to offer their own (smart!).
A custom assistant offers 24/7 support via phone, email, and text.
These tools aim to streamline operations for home service businesses like plumbing, cleaning, and landscaping.
Market Size
The US home services market is estimated at approximately $870 billion in 2025, covering services like plumbing, HVAC, and landscaping, with growth projected due to increasing homeownership and digital platforms. It’s a massive market, but competition is brutal here (Housecallpro, Service Titan, are BIG businesses today).
Customer and Revenue Figures
The exact number of customers and revenue figures for Drillbit are not publicly disclosed, typical for a young startup. However, participation in Y Combinator and positive user feedback indicate growth, with potential for scaling in a large market.
Fundraising Details
Drillbit is early, and has only raised $500,000 in a Pre-Seed round on September 25, 2024, from Y Combinator, as per recent funding announcements. This funding supports platform development and customer base expansion, crucial for a tech startup in a competitive field. I’m guessing we will hear about a bigger round this year or next…
Future Outlook and Potential
The home services market, at $870 billion and growing, offers significant opportunities for disruption. Drillbit's AI focus could capture a niche, potentially scaling to serve thousands of customers. With competitors like ServiceTitan, success depends on innovation and execution. Given Y Combinator backing and early traction, Drillbit seems poised for growth, possibly generating substantial revenue if it reaches, say, 10,000 customers at $100/month, equating to $12 million annually.
The Voice AI angle is a beautiful one for customers that live and breathe on the phone, but can they move quickly enough before the big systems of record launch something similar?
Time will tell…
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
You nailed the journey/evolution