Industry-specific cloud software companies don’t get as much attention as their horizontal brethren like Salesforce or Workday. Why? It’s been assumed that the markets they serve are simply too small and sleepy. We think that’s misguided.
While companies like ACV Auctions, athenahealth, DealerTrack, Guidewire, Mambu, Procore, Restaurant365, and Veeva, don’t get much fanfare in the press, they are solving real problems in each of their industries. And they have quietly grown to become multi-billion-dollar publicly-traded companies.
This is just the beginning. We’re convinced that many more industries—from banking to mining to agriculture—will be transformed by ditching their legacy vendors and migrating to the cloud.
Drivers behind this new software revolution
There are a few important drivers that make the opportunity to build industry-specific software larger than ever before:
1. There’s a changing philosophy amongst buyers.
The executives in charge of purchase decisions are a new generation of technology-savvy buyers. They understand that technology is a critical source of competitive advantage. This dynamic can fuel an industry arms race in which all companies in an industry are forced to adopt software as it quickly moves from a nice-to-have to table stakes.
2. Businesses live amongst winner-takes-most dynamics.
This creates a unique opportunity for those that do succeed. Industry insiders talk to each other. They attend the same conferences and run in the same circles. When it comes to software, they typically buy what their peers buy. This creates a virtuous cycle of adoption—resulting in winner- takes-most market share for leaders. And once established as the “gold standard,” the door is open for leaders to cross-sell additional applications.
3. Cloud and mobile have made software more useful than ever before.
Software is now used in the field via mobile devices, in a collaborative web environment, in conjunction with other web services, in consumer-like user experience, and in a way that doesn’t require a dedicated IT support staff. This has dramatically increased the number and types of cloud and mobile capabilities customers that can be served by industry software.
For more insight into building vertical SaaS companies read the founder's guide to success. And if you are building the next vertical category killer, please reach out by emailing me at firstname.lastname@example.org.