System of ActionUniverse

Thanks to Al, vertical software is evolving from a system of record that documents the work into the system of action that does the work, creating a 10x bigger prize.

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By Dave Yuan, Founder and Partner12 essays in 4 sections

The Premise

How to become the industry platform in the age of agents.

Start here, then follow the acts in order

Tidemark was founded on the belief that vertical software companies are uniquely positioned to transform their industries. Six years ago, that belief inspired the Vertical SaaS Knowledge Project.

That conviction holds. But agents have changed who becomes the industry platform and expanded what an industry platform can be.

Agents need an application layer to deliver on their promise, and the foundation models won’t build it for most industries.

Applications must provide what customers want: agents embedded in their existing workflows, with permission to use their tools and systems, and to read and write to their data.

Applications must also provide what agents need to act and improve: input data, a context layer, a harness, and a learning loop.

Providing both builds moats, and providing what customers want, and what agents need compounds on each other. That makes this a winner-take-most market.

This series explores what it takes to become that industry platform: the System of Action. Native AI challengers and Control Point incumbents both have a shot. But as these advantages compound, the window to win is closing.

This work grew out of hundreds of conversations with founders and operators. Please share it with others who could benefit, and let us know what we got right and wrong at [email protected].

The Saga

The series, act by act

12 essays in 4 sections

Prologue

Introduction

01Now showing

AI Needs an Application Layer

Why customers need an application layer, why the Foundation Models won't build it in most industries, and why the prize is 10x the software opportunity.