We are in an era of un-bundling in the software world. In the early 2000s, the name of the game was horizontal domination. Build a SaaS product that works well across multiple industries and get as many customers as possible (Slack & Shopify are a great examples here).
But these days, software companies are niching down and going "vertical" in 1-2 industries rather than "horizontal" across dozens of industries.
This allows for deep specialization, but isn't always ideal as some software companies try to be "all-in-one" solutions with closed ecosystems, forcing customers to use their software for every part of their business from inventory management and online orders to payments and insurance. We see this style of "vertical" SaaS with companies like Toast (Restaurants), Airbnb (short term rentals), and Dutchie (cannabis). Then there are the companies that also try to be hybrid marketplace + SaaS (ie. Doordash, Weedmaps, etc) which carries it's own list of issues.
But there is another way to do vertical that isn't closed off. You can pick a group of closely related business functions and stay narrow. A great example of this happening right now is in the restaurant space with companies like Thanx, Owner.com, BentoBox, and Lunchbox. All 4 of these companies are "vertical" SaaS that focus on restaurants and specialize in 3 main areas:
1. E-commerce (online orders)
2. Loyalty (rewards)
3. Marketing (email, sms, push, etc)
And at the same time, these companies stay open to integrate with other restaurant tech platforms such as POS and payments, allowing customers to essentially build a tech stack that works for them, rather than forcing them into a closed ecosystem.
We're going to see this new type of vertical SaaS continue to gain steam across industries in 2024 and beyond. One big area of opportunity I see is in the short term rental space with specialized software by property type (ie. Park for campgrounds) that allows operators to move away from the currently dominate marketplaces.
But beyond that, I expect to see this type of software focused vertical-ization in many, many industries including highly regulated ones like cannabis and alcohol.
This is a great case study! Wayflyer's quote about Charm being their "primary data source" is impressive. Sounds like a valuable tool for e-commerce businesses.