Blings ignored the common startup advice to focus on a single vertical. This led them to discover that "loyalty" was a powerful horizontal use case applicable across many industries like banking, travel, and retail. This broad appeal became a key growth driver.
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Pendo's CPO explains that while vertical products (e.g., for banking) can gain deep insights from a small user group, horizontal platforms must develop discovery processes that can handle immense complexity and scale across diverse industries and maturity levels.
The founder predicts that hyper-specific vertical AI solutions are too easy to replicate. While they may find initial traction, they lack a durable moat. The stronger, long-term business is building horizontal tools that empower users to solve their own complex problems.
Conventional wisdom to 'stay focused' is flawed. Breakthrough growth often comes from making many small, exploratory bets. YipitData's success wasn't from perfecting one thing, but from the one small, tangential bet each year that drove 90% of the growth while others failed.
Horizontal SaaS companies fracture their customer knowledge across diverse industries, forcing generic messaging. Vertical SaaS companies build compounding knowledge with each customer within a niche. This leads to deeper insights, stronger competitive secrets, and more effective, specific messaging over time.
A company with modest growth experimented with niche content for a small user segment, revealing a massive, underserved market. This led to a second, separate app that quickly surpassed the original product's revenue and drove hyper-growth, challenging the "focus on one thing" dogma.
Counter to the "niche down" mantra, Missive's horizontal approach became a key strength. With their largest customer segment representing only 6% of revenue, they are highly insulated from industry-specific downturns. This broad, long-tail customer base provides a stable and defensible foundation.
Analyzing over 200 investments, TinySeed observed that vertical SaaS companies consistently achieve stronger exits, grow further, and have lower churn than horizontal SaaS. This data-driven insight has shifted their investment thesis toward more defensible, niche-focused companies, as they have proven to have distinct advantages.
Although Moonshot AI's platform can optimize any digital experience, the company deliberately targets only e-commerce as its initial market. This "laser focused" beachhead strategy allows the early-stage startup to concentrate resources and build a strong foundation before expanding into other verticals.
Warp was initially known as an "AI terminal," a niche market focused on command-line assistance (Docker, Git). The company's growth dramatically accelerated when they pivoted to launching a great coding agent. This addressed the much larger market of core development activity, where most developers spend their time.
Contrary to typical advice, ElevenLabs targeted multiple customer segments simultaneously. This worked because they first built a best-in-class foundational AI model, attracting diverse users. They then hired founder-type leaders to own and grow each vertical-specific product, treating them as separate business units.
