Linear #166.5: Lessons from ~20 Episodes of VERTICALS
One vSaaS breakdown. One biz story. One 'how to'. In your inbox once a week.
Since launching Verticals late last year, we’ve had the honor of hosting ~20 founders, operators, and VCs who have collectively built billions in vertical enterprise value.
And honestly? It’s been one of the most fun quarters of content I’ve ever been a part of.
Not because it’s flashy.
Because it’s real.
It’s operators talking about what worked, what didn’t, and what they’d do differently if they had to build the same business again—except now the whole world is screaming “AI!” while you’re just trying to ship product, close deals, and not blow up retention.
If you’ve been watching on YouTube or listening on Spotify, you’ve already caught a bunch of these moments in real time. This post is a look back at the best ones—and the patterns that keep showing up.
First, a quick word from our sponsor
Verticals is made possible by Parafin—embedded capital for your merchants.
If you’re building a vertical platform, embedded finance isn’t just “another product.” It’s one of the most consistent ways we’ve seen to drive retention and unlock a meaningful new revenue layer (without trying to squeeze blood from a seat-based pricing stone).
They’ve powered financing inside platforms at massive scale (yes, the big guys) and the core idea is simple: help your customers access capital inside the workflow they already live in.
The big meta-lesson: vertical AI isn’t “a category,” it’s a forcing function
One thing keeps coming up across episodes:
AI isn’t killing vertical SaaS.
It’s exposing vertical SaaS.
If your product is a thin point solution with no distribution advantage, no workflow ownership, and no credible path to becoming a true platform… it’s going to feel rough out there.
If you’re building something that sits on top of the system of record, owns the workflow, and compounds into payments / capital / services / network effects?
You’re going to look back and realize this was the best possible time to be building.
That’s why we spent an entire episode debating the “SaaSpocalypse” framing. The bears say SaaS is dead. We disagree. The market is expanding—but the winners will look different, and “distribution” is back on its throne.
Episode 1: Ilir Sela, Slice — “Independent, not alone” is the whole game
Ilir basically gave us the thesis for the show in Episode 1.
Slice is the “reverse franchise” model in its cleanest form: give independent operators the shared stack and economies of scale of a Domino’s without forcing brand uniformity.
The moment I can’t shake is his voice ordering point.
Slice’s AI voice ordering hit ~90% transaction completion, but humans were still at 98%. That 8-point gap doesn’t sound like much until you realize it’s the difference between a profitable shop and a failed shop in low-margin land. So until AI clears the bar, humans stay in the loop.
That’s the kind of cold pragmatism more “vertical AI” decks need.
Also: Ilir’s pricing and ACV progression is a masterclass. Slice started with a performance-based model—$2 per order—then layered into payments and additional products over time.
If you’re building in a fragmented SMB market and you’re not thinking “reverse franchise / business-in-a-box / outcome-aligned pricing”… what are we doing?
Episode 2: Jeremy Yamaguchi, Cabana — AI roll-ups are three businesses in a trench coat
AI-first roll-ups are one of those ideas that sounds simple on Twitter and is brutally complicated in real life.
Jeremy put it plainly: you’re running three businesses at once—an operating company, a tech company, and a PE shop.
That’s why this model is so misunderstood. People argue “VC vs PE” like it’s ideological. In reality, it’s operational: can you source deals, integrate teams, standardize workflows, and still ship product fast enough that your “AI margin uplift” isn’t a powerpoint fantasy?
The upside is clear though: if you own the P&L, you can force adoption in verticals that might otherwise resist software change for a decade.
Episode 5: Todd Saunders, Broadlume — community can be a moat (if you earn it)
Todd’s story is one of the best reminders that “boring vertical” is often where the real enterprise value hides.
Broadlume built a real platform in flooring by leaning into community, content, and first-party data—and doing it with a level of vertical intimacy that generic SaaS teams just don’t have the patience for.
And importantly: this wasn’t a story about avoiding risk. Todd talked openly about making painful calls and enduring major pivots to build something durable.
Broadlume ultimately became valuable enough that Cyncly entered into an agreement to acquire it, highlighting the strategic value of owning the digital marketing + visualization + business management stack in a vertical with thousands of dealers and manufacturers.
If you’re early, the question is: are you building “software,” or are you building an institution in your vertical?
Episode 8: Sam Youssef, Valsoft — “small TAM” is often where the compounding machine lives
Sam runs Valsoft—130+ acquisitions and ~$750M+ revenue—and his view on market selection is beautifully contrarian.
The bigger the vertical, the less interesting it often is.
Why? Big markets attract irrational competition and giant venture checks. Smaller verticals tend to stay rational—pricing, competition, budgets, expectations.
And Sam’s also refreshingly honest about the reality that even great acquirers don’t bat 1.000. A meaningful chunk of acquisitions underperform.
That’s not a reason to avoid vertical. It’s a reminder to respect it.
Vertical is not easy mode.
Vertical is a different sport.
Episode 10: ServiceTitan fintech — do customer value first, take rate second
One recurring theme across the best platforms: the fintech layer is where your model can go from “good SaaS business” to “category-defining company.”
But the sequencing matters.
The best operators don’t wake up and say “let’s add payments so we can juice ARPU.”
They say: let’s obsess over customer pain, solve the workflow, earn trust, and then monetize money movement because it’s the natural extension of the system.
In other words: value first, take rate second.
If you try to reverse that, you’ll feel it in churn and NPS long before you see it in attach rate.
Episode 13: Scott Wolf, Levelset — SMB is often a disguise for enterprise economics
Scott’s episode is one every vertical founder should watch if you’ve ever heard the sentence: “Your customers are too small.”
Levelset sold to subcontractors, sure—but Scott made the nuance crystal clear:
At exit, their SMB ACV was roughly $4.5k–$5k, and they had enterprise supplier contracts that were seven figures.
Say whaaaaaaaat.
That’s the play: wedge with the persona that gives you distribution, then monetize deeper in the value chain where budgets and leverage live.
Also, his M&A framing is evergreen: “Great companies are bought, they’re not sold.”
Build something strategically unavoidable and the market comes to you.
Episode 14: Nate Baker, Qualia / Fractal — TAM isn’t fixed, it expands as you earn workflow
Nate challenged one of the most persistent objections in vertical: “the TAM is too small.”
He’s built Qualia at real scale—500K+ professionals served and ~600 employees—and he’s helped start 150+ vertical SaaS companies through Fractal.
His point is the one I wish more founders internalized earlier:
In vertical, TAM expands when you create new layers of value.
You start with a wedge, you earn the workflow, you become the system of record, then you layer payments, capital, services, and ecosystems.
That’s how the “small market” becomes a monopoly-like outcome over time—Nate even points out that vertical SaaS can reach 50–70% market share in a category.
And yes, he had a nuclear quote: every business that isn’t reevaluating its product offering right now is going to be cooked.
He’s not wrong.
Episode 15: EvolutionIQ — the exit story everyone forgets: it often starts tiny
One of my favorite reminders from the show is that many great companies start with what looks like nothing.
One design partner.
A tiny first contract.
A painfully manual workflow.
Then the wedge hardens, the platform emerges, and the market wakes up.
EvolutionIQ is now part of CCC Intelligent Solutions—CCC completed the acquisition and explicitly framed it as expanding AI capabilities like medical summarization and “next best action” for claims management.
Founders: don’t let today’s “revenue bar” narratives trick you into thinking you need perfection at inception.
You need a wedge that earns trust.
Episode 17: Darren Fike, Santé — AI isn’t just product, it’s a GTM weapon
Darren had one of the most tactical insights of the entire season:
Use AI to collapse switching costs.
If your prospects have been on the same system for 10+ years, the biggest competitor is not the incumbent. It’s inertia.
Santé uses AI to pull prospect data and show the platform pre-populated during the demo, reducing the psychological distance between “this looks cool” and “we can use this tomorrow.”
And yes, the episode write-up notes they closed 30 deals in a single month with zero feature requests—which is one of the cleanest “PMF signals” you’ll ever see.
If you’re building vertical AI and you’re only thinking about “AI inside the product,” you’re leaving a weapon on the table.
Episode 18: Nick Tippmann, TipTop VC — distribution is back, and it never left
In the middle of the “SaaS is dead” discourse, Nick came on and brought the conversation back to earth.
Yes, public markets can evaporate hundreds of billions in weeks.
Yes, AI changes pricing models.
But the question isn’t “will software survive?”
It’s “who wins?”
And the winners tend to do the boring stuff religiously: instrument RevOps early, sell revenue-connected wedges, build trust in the industry, and get distribution right.
You can have the best model in the world.
If you don’t have distribution, it doesn’t matter.
One final thought
On behalf of the whole VERTICALS crew: thank you for reading, watching, listening, sharing, and DM’ing us your ideas.
At least in my career, there’s been no more exciting time to be part of vertical software and vertical AI.
New episodes drop every Wednesday.
If you haven’t yet, please do us a favor and subscribe to Verticals here:
YouTube: Verticals channel
Spotify: Verticals on Spotify
And if you’re an operator building something new in Vertical AI, send it our way.
We love this stuff.
You’ve got this!
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