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Alright, let’s dive in…
Vertical SaaS in Emerging Industries by Dave Juan from Tidemark (oldie but goodie)
MoldCo Raises $8m from Cantos & Collaborative Fund. Is this an underlooked / secret market? 25% of the population has “mold sensititivty”
Cool vSaaS for GC’s launches with incredible hype video
The huge potential implications of long-context inference from Epoch AI
If we can make very long-context inference practical (orders of magnitude beyond today), LLMs could continually learn from ongoing experience and enable much larger-scale RL (longer rollouts, better verification, richer synthetic environments).
This could dramatically boost real-world usefulness in vertical use cases, where proprietary data is high / context is key.
Todd Saunders,
Founder & CEO @ Broadlume
You know those founders who just seem to have cracked the code? Todd Saunders is one of them. Fresh off selling Broadloom to Cyncly for a killer exit, Todd’s journey from Google to building a vertical SaaS empire in the flooring industry is absolutely wild.
And here’s the crazy part – Todd actually introduced me to the company that ended up acquiring us. So I owe this guy a serious debt of gratitude. When someone like that agrees to share their playbook, you listen.
What we dug into during our conversation will honestly change how you think about vertical SaaS growth. This isn’t your typical “post some content and hope for the best” strategy. Todd pulled levers that most vertical SaaS companies have never even considered.
Picture this: you’re running a $10M ARR ad tech business. Not bad, right? But then you notice something interesting in your customer data. 30% of your business is coming from one vertical – flooring retailers. And these customers? They’re sticking around with 90% logo retention and 105% net revenue retention.
Meanwhile, your other customers are churning at 60% retention with 80% NRR. For most founders, this would just be a curious data point. For Todd? It was the signal that changed his entire trajectory.
But here’s where it gets really interesting. Making the decision to pivot wasn’t just about better metrics – it was about timing. They made the call to go all-in on flooring at the end of 2019. Then March 2020 hit.
COVID would have destroyed their ad tech business. Instead? Home improvement projects boomed, and they rode that wave from $3M back up to $12M ARR. Talk about great timing meeting smart strategy.
The Content + Community Playbook
Here’s where Todd’s approach gets really fascinating. Most founders think content marketing means posting some generic LinkedIn updates and running a webinar every few weeks. Todd went nuclear with content – but in a way that actually mattered to his customers.
Their content strategy was brilliant in its simplicity: help flooring retailers succeed at everything, not just use their software. Webinars on ChatGPT, PPP loans, account management tricks – anything to be a true partner.
But the real magic happened with their Facebook group. While other trade shows were showing the same beige carpet samples, Todd realized retailers came to network and share ideas, not see products. He personally answered every question, even ones not related to their product. He responded publicly when customers complained, often turning critics into advocates.
Todd also didn’t stop at the facebook group. He hired 2 fulltime video producers that churned out high quality content ALL DAY LONG. This was hyper critical.
The result? A distribution channel they owned completely. At any point, Todd could reach 4,000 flooring retailers instantly. That’s not marketing – that’s a moat.
FloorCon: When Software Becomes Culture
Most software companies throw user conferences. Todd threw FloorCon – and the difference is everything. While industry trade shows had people “petting carpet,” FloorCon featured Tim Tebow, Andrew Yang, and Joe Gibbs.
The message was clear: “We’re not just a software company. We will fight to the death on behalf of you and do whatever it takes.” That mentality created something most SaaS companies never achieve – customers who wanted to be part of what they were building tomorrow, not just what they had today.
That’s the power of community done right. They weren’t selling software – they were selling belonging to something bigger.
Going Beyond SaaS: The Transaction Play
Here’s where Todd’s story gets really interesting for vertical SaaS founders. Everyone talks about getting a percentage of the transactions in your vertical, but Todd actually did it – and in a totally unexpected way.
With 4,000 flooring retailer websites and 20 million consumers hitting those sites, manufacturers wanted access. Instead of just selling ad space, Todd convinced them to cut Broadloom into actual transactions.
This is the holy grail of vertical SaaS – moving from per-seat pricing to capturing a percentage of the actual revenue flowing through your market. But here’s the kicker: when they sold to PE, this transactional revenue got valued at 2x multiple because it wasn’t “recurring.” Then the PE fund remarketed it as recurring revenue at 8x.
The lesson? Know the game your buyers are playing, not just the game you want to play.
The Capital Stack Reality Check
Todd’s been through it all – angel, VC, growth equity, private equity. His take? You have to understand what game your investors are playing, not just the game you want to play.
This hits hard because it’s true. I lived this exact experience. Having an “escape hatch” isn’t pessimism – it’s the most likely outcome. And honestly? A 4-6x exit that sets you up for life beats grinding toward a unicorn valuation that never comes.
What’s Next: Where are Today’s Opportunities?
Todd’s take on the current market is fascinating. While everyone’s obsessing over AI phone agents for HVAC companies, he sees a different opportunity emerging.
His formula is simple: good product, real customer support, answer the phone in English, and become genuinely knowledgeable about your vertical. While PE-owned competitors optimize for cash flow over customer experience, that’s your opportunity.
Todd’s advice to founders obsessing over AI features? “These guys use pen and paper. Build a half-decent product, answer the phone, and become really good friends with them. Use AI internally to make yourself more efficient so you can spend more on R&D and customer service.”
Sometimes the best strategy is going backwards to go forwards.
Todd’s Playbook to dominate your vertical:
1. Follow the retention data, not your assumptions
Todd didn’t choose flooring - the unit economics chose it for him. Look for where your customers stick around longest.
2. Optimize for the escape hatch
Most vertical SaaS exits happen at 4-6x ARR via PE. Make sure that outcome is life-changing for you before you raise your next round.
3. Community > Product (at least at first)
Todd estimates 51% of their appeal was brand, 49% was product. In vertical SaaS, being trusted matters more than being perfect.
4. Go unscalably deep before you scale
Give out your phone number. Visit every customer. Become obsessed with the industry. You can’t fake authenticity.
5. Create content ALL THE TIME that actually helps
Stop doing generic B2B marketing. Create content that makes your customers better at their jobs, even if it’s not about your product.
6. Build relationships with other small vendors, then acquire them
When you roll up competitors, you’re buying their founder’s credibility and customer relationships, not just their code.
Final thought: Todd’s story reminds me why I love vertical SaaS. Yeah, the TAMs are smaller and a bunch VCs hate it albeit that’s changing. But when you get it right, you build something that actually matters to real people doing real work. Plus, the CEO actually answers the phone when you call him. Try getting Marc Benioff on his cell.
And that my friends, is worth more than any TechCrunch article….
Want to dig deeper? Check out the podcast or watch the Youtube episode and subscribe for a weekly drop. Todd and I covered a ton more ground in our full conversation - including his takes on AI in vertical SaaS, the different investor classes he worked with, and some wild war stories about deals falling through. The guy’s raised money from angels, VC’s, growth equity, PE, and sold to a strategic. He’s seen more on this journey than most ever have through the full capital stack and lived to tell about it.
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
