Linear #015: Unbundling Big Horizontal Companies, Lessons From Hiring 100+ People, The Story Of ClickFunnels
One vertical SaaS breakdown. One biz story. One 'how to'. In your inbox once a week.
One Vertical SaaS Breakdown:
Unbundling Massive Horizontal Companies
Unbundling and 'verticalizing' massive horizontal companies has resulted in $400+ BILLION worth of startups. It's happened with Craigslist, TV, Xcel, and Uber, to name a few.
How BILLION $$ companies are created with this approach:
Unbundling TV: Streaming is verticalizing television and disrupting cable as we know it. TV is being broken up into hundreds of Apps, each represented by a different media platform. We're seeing it turn into an iPhone style of delivery before our eyes.
Unbundling Spreadsheets: This has been a GOLDMINE for SaaS builders. Project Management tools like ClickUp, Notion, and Airtable are worth $20B+ Dashboard platforms including Grow, Sisense, and Tableau are worth $30B+ & so so many more...
Now here's the thing, when these massive horizontal companies grow,
their submarkets grow too
value proposition gets decomposed
more use cases are added
more filters are required
Thus, their product gets pulled into a million different directions.
So users get annoyed with an experience of a business that caters to the lowest common denominator. With such diverse traffic, it becomes harder for these business to provide specific offerings. They try to work for everyone but don't do enough for specific segments.
They try to appeal to customers from every category instead of a specific group. And suddenly, what was previously too small a market to care about is now a place for massive new startup.
Simply put, horizontal companies often become a victim of their own success. With their growing user base, the broad horizontal focus eventually breaks. This gives birth to attractive vertical opportunities.
In 2012, half of all mobile phone users had smartphones & it has only been growing since. So services had to go mobile, companies had to go niche & Craiglist had to be unbundled.
Airbnb, Uber, Behance, Fiverr, Lyft, and 100s of others came out of the unbundling of Craigslist. Uber & Lyft were the first mobile-first startups, providing on-demand services from grocery delivery to cab bookings.
Craiglist wanted to be the go-to place for every category & many entrepreneurs identified the inconvenience. This also led to the ‘Uber for X’ boom.
People started building startups based on this model for every vertical. From Uber for dry cleaning to Uber for dairy products, we've seen it all.
Why? The average 'Uber for X' Series A deals were 38% larger than a regular Series A. Investor funding to ‘Uber for X’ startups reached almost ~$1.5B, including startups like Shyp, Breather, & Favor.
In the last few years, billion dollars companies like Youtube, LinkedIn, and Zillow are being attacked as well. YouTube, a monster video platform, has seen the rise of:
Twitch
Overtime
Tiktok
MasterClass
OnlyFans
The same happened with the horizontal job platform space of LinkedIn, giving rise to:
Remote jobs (remote ok)
Freelance gigs (upWork)
Engineering (Hired)
Blue collar (Merlin, Wonolo)
Oil services (RigUp)
Hospitality (Pared, Instawork, Qwick)
Finance (Paro)
In the case of Craigslist, this was undoubtedly right: the more people that posted, the harder it became to find relevant information.
As I said, this happens with most of the broad horizontal products. They help the vertical niches to grow & give birth to more companies that provide specific services, building a user experience & business model that works better for their specific customers.
Looking at verticals within the broad horizontal platforms that are near their 'breaking point' is a cheat code. If you’re paying attention, you can identify a big start-up opportunity within a massive horizontal business. Even eBay had the same thing happen decades ago:
What big horizontal company is next to be unbundled?
One ‘How To’:
Lessons from Hiring 100+ People Over The Last 3 Years
