David Yuan’s Post

Tidemark was founded on a simple premise: if we build an incredible community around ourselves and do right by them, we’ll earn the right to invest in three to five companies in this community each year and (hopefully) create one hell of an investment firm along the way. Vertical SaaS was an obvious place to start since VSaaS companies have a superlative, multi-product business model. Beyond that, we love these companies because they’re life-changing for mainstream entrepreneurs. By digitizing and automating routine tasks, they allow founders on Main Street to focus on the things they do best. We think a world where it's easier to build a company is better, and Vertical SaaS makes that happen. As many of you know, the Vertical SaaS Knowledge Project (VSKP) was one of Tidemark's very first steps in this vision. What started as Saturday morning journaling several years ago has become a framework on Vertical SaaS that’s traveled globally. It’s safe to say that this project has far exceeded our expectations! We're excited to share several updates, including how we're doubling down on the VSKP in this post. Thanks for being on this Vertical SaaS journey with us! We look forward to continuing to serve this community in 2024 and beyond! https://lnkd.in/gvMMUZJT

Happy 4th! Grateful to my parents for all they did to enable me to live in this great country!

We started Tidemark fully remote during shelter in place in 2021. To create more surface area for people to get to know each other, we created the “Known Project” where everyone presents their life’s journey, what matters to them most, what fills their cup, and the hardest thing they’ve done. I’m grateful that my teammates have really leaned in and showed up with authenticity and vulnerability. Yesterday, we had three new colleagues present their Known Projects. Holy moly, these women are incredible —super talented with amazing depth and breadth! Grateful to work with an incredible team!

I've sat in on too many pitches where founders rush past the market size—if it's big, that's all that matters, right? Not quite. Your market structure dictates your strategy. Vertical SaaS is a game of knowing how many locations are available and what their sales cycle is like. If you know those things, you know what type of company to build, what capital to raise, and your product roadmap. We've published a guide with case studies on who has gotten this right for founders who want to figure this out. More here: https://bit.ly/3xYHUIB

Early-stage VCs tend to view startups as grand narratives. Later-stage funds view startups as spreadsheets–ratios and metrics. Both are right (but incomplete). Companies need both story and spreadsheet to build a great and enduring franchise.

We won’t apologize for the Vertical SaaS Knowledge Project being aspirational. We push Vertical SaaS builders to “extend through the value chain” to build network effects. These were concepts that felt foreign to many operators when I first started writing about them. Admittedly, there was only a limited list of existence proofs of our ideas when we first got started. Well, now there’s one more! My former portfolio company, Avetta, which builds supply chain risk management software, reportedly sold for three billion dollars, and they're only getting started.  By providing supplier information software, Avetta creates an information fabric for both clients and the client's suppliers for critical credentialing and insurance information. Because Avetta’s clients focus on vertical and regional suppliers, Avetta was able to build powerful local network effects that created unfair right-to-win deals, deep strategic moats, and high margins. Avetta’s success was highlighted by the recent $3B recapitalization.    I started working with Avetta in early 2018, and it has been an incredible privilege to be a small part of the company’s journey. I tried to capture some of what we learned in this conversation with Arshad Matin, the CEO of Avetta, and Indy Chakrabarti, former Chief Strategy Officer/CMO of Avetta.  Please enjoy! This interview took place on January 20, 2022, and has been lightly edited for brevity and clarity.

Big congrats to Avetta -- you built a beast of a business and platform!!! Huge victory lap for: The exec/ operators that made it happen: Arshad Matin John Herr Bill Stephenson, Indy Chakrabarti, Christopher Lewis Richard Parke Jeff Byal, CPA, CGMA Jitesh Chanchani Taylor Allis Aaron Wattam Jared Smith Adam Thier Adam Boyle Jeff Dalton John Theler Kevin Berens The fellow investor crew: Christopher Hooper Eric Lee Ian MacLeod & Jon Kossow, Shanti Atkins, Rob Arditi, Arnaud Cohade Alex Kerr Aaron Deutsch Kent Parker And most dear to me, the TCV crew who got the deal done & worked it post transaction: Scott Kirk Bob Solomon Rikhil Patel Rohit Iragavarapu

Rewriting the Tidemark VSKP 2.0 - Advanced Topics for this fall. Thinking through essays to write. "Picking your market" was one of our most popular posts (thanks again Bob Solomon). Naturally, we got a lot of questions of "how small is too small a market?" VSaaS is inherently multi-product and all that, but what's too small to invest your time and our dollars? Turns out there's a mathematical answer to that. Not sure if this an interesting topic to write up . If so, hit the comments and let us know! https://lnkd.in/gn-rwX82

An important initiative here at Tidemark we're launching with Stripe & Gusto!