ChatGPT = More Vertical SaaS?

I had an interesting conversation with an early-stage founder who’s launching an AI company in San Francisco. He walked me through a demo of his MVP. Then he shared a prediction.

He believes ChatGPT will cause an explosion in vertical software solutions. Building is easy using ChatGPT, a fact that has aspiring founders flooding to build solutions using the service. The low barriers to entry and ease of building will likely prevent founders from scaling a solution that appeals broadly (i.e., horizontal software). There will be too much competition. Instead, founders will go niche. They’ll find small markets they can dominate. They’ll build solutions for painful problems that affect a smaller base of people but have been overlooked historically because of the small market size.

He also believes these companies will be able to scale faster because of ChatGPT. This, combined with the niche nature of the market, will make founders aim to sell earlier than we’ve seen historically and at less than unicorn (i.e., $1 billion) valuations (assuming they haven’t raised too much capital). 

This founder’s perspective is interesting and something I want to think about more.