It’s been a brief workweek here in the States, but don’t let that fool you. There’s been plenty to chew on. Today, I’m serving up some musings on the future of vertical SaaS, a peek into what the latter half of 2023 might mean for Israeli startups, and a dash of founder well-being.
Now, let’s talk about vertical AI. It’s the next step in the evolution of vertical SaaS, or so says Paris Heymann, partner at Index Ventures, in a recent TechCrunch+ piece. The idea is simple: companies have been snapping up cloud-based software tailored to their industry, and now they’re going to do the same with AI applications. These applications will use foundational models and infrastructure to meet their business needs.
Sure, some AI applications will be horizontal, usable by any industry. But Heymann is betting that many will be vertical, industry-specific. Both types can boost business efficiency, but Heymann argues that AI-enhanced software applications will truly shine when they’re deeply rooted in end-user workflows and have access to valuable industry-specific training data.
Let’s take a closer look at vertical AI. It’s the next logical step for vertical SaaS. The AI category is morphing rapidly, but it’s shaping up into three layers: foundational models, AI infrastructure, and AI applications.
Heymann’s perspective resonates with me, and the examples he cites show that the market is already hungry for vertical AI. Take international law firm Allen & Overy, for example. They’ve recently teamed up with Harvey, a startup backed by the OpenAI Startup Fund that’s using AI and LLMs to tackle legal work. An A&O exec called it a “game-changer that can unleash the power of generative AI to transform the legal industry.” And who am I to argue with that?