Where Are The Opportunities in Vertical SaaS? Picking Your Market in 2025

The argument for why customers need an application layer to “do the work,” why the Foundation Models won't build it in most markets, and the size of the System of Action prize.

Adopting AI tools gets you 35% more throughput. Getting to 5–10x takes something else. After six months inside the software companies making that jump, we found it has almost nothing to do with which tools they picked and everything to do with how they reorganized.

Modern Control Points have a head start in the race to become the System of Action and can emerge stronger in the agentic future. But if you aren't running scared, you're already behind.

Bob Solomon returns to analyze how all 820 six-digit NAICS industries changed between the 2017 and 2022 Economic Censuses with the goal of helping founders spot new Vertical SaaS opportunities.

The Road to Control Point Badassery (Leadership & Product)

Most workers don't get to choose their tools. So how does a Native AI challenger win when the buyer isn't the person doing the work? The answer lies in targeting Sticky Jobs — and someone called Cousin Richie. Part 2 of our System of Action series reveals the alternative path to supremacy.

In vertical SaaS, the next battleground is the System of Action — where AI doesn’t just help run the business, it does the work. The winner gets the user, the workflow, and the economics.

For VSaaS companies, understanding your "Operational TAM" - not just “handwavy” market size - can be the difference between sustained growth and hitting an unexpected wall.

We are seeing a new control point pattern we call “Formation and Access,” which may be the most disruptive pattern we’ve seen in Vertical SaaS since the introduction of embedded payments.

We believe the franchise represents the archetype of what a Vertical SaaS Vendor (VSV) can do for its small business merchants. ‍ It also represents an enormous opportunity for the VSV.

The control point is the last tool to be thrown out before an owner ceases operations, and more importantly, you have the unfair right to offer most products a merchant needs. The result will be that one or two Vertical SaaS players may dominate in any market.

Let’s say you have read the VSKP and are convinced—you want to build a vertical SaaS company. The next logical question is what market you should pick.

Our goal is to help you move past jargon and be purely pragmatic, so we wanted to create a common language and establish key concepts as a foundation for our discussion.

Most people are saying that AI will be an extinction-level event for software companies. This is only sort-of true. Companies can survive this trend, but it will require a challenging evolution.