ALL INPredictions
Last updated Nov 29, 2025
Episodes / E160: 2024 Predictions! Markets, tech, politics, and more
Back
Friedberg @ 00:32:39Wrong
techaiventure
In 2024, vertical SaaS companies (industry‑specific SaaS products) charging high per‑seat prices will see significant headwinds—such as churn, pricing pressure, or valuation declines—as enterprises increasingly replace them with cheaper, internally built solutions enabled by AI and low/no‑code tools.
Vertical SaaS companies, I think, are going to get smacked this year... I think this is a real threat to vertical SaaS businesses that can charge thousands of dollars per seat per year, that are getting disrupted by the ability for companies now to very cheaply and quickly build homegrown solutions using a lot of the generative tools that are out there.View on YouTube
Explanation

Available 2024–25 data shows vertical SaaS was not broadly “smacked” in 2024, nor was there evidence that enterprises at scale replaced expensive vertical SaaS with homegrown AI/low‑code tools in a way that drove widespread churn, pricing collapse, or sector‑specific valuation damage.

  1. Sector performance and valuations. Analyses of public and private vertical SaaS companies show they traded at a substantial valuation premium to broader SaaS in 2024 (around 12.3× revenue vs ~7.6× for general SaaS), and investors continued to favor vertical software deals.(medium.com) Benchmarks also report that in 2024, vertical SaaS platforms outperformed horizontal SaaS by over 17% in revenue bands above $1M ARR, indicating relative strength rather than a broad hit.(tight.com)

  2. Company fundamentals. Leading vertical SaaS players like Veeva, Procore, and Toast reported strong revenue growth and healthy net retention through 2023–24 (e.g., Veeva net retention >120%, Procore ~30% YoY revenue growth, Toast ARR and revenue growing >20%+).(pmarketresearch.com) Industry commentary repeatedly highlights vertical SaaS as a growth area and “the future of software,” not a segment in systemic distress.(saasworthy.com)

  3. AI and the build‑vs‑buy story. Multiple 2024–25 analyses explicitly push back on the idea that enterprises are broadly abandoning vertical SaaS in favor of internally built AI tools. A detailed 2025 review argues that companies are not scrapping their software portfolios to run on DIY AI scripts; instead, vertical SaaS vendors are weaving AI into their existing products and are seen as well‑positioned in the AI era.(medium.com) A 2024 essay responding directly to Friedberg’s anecdote about churning from a $5k/seat tool concludes that, while such cases can occur, the author remains “long” vertical SaaS and views Friedberg’s extrapolation as overstated.(medium.com) Where AI coding tools are discussed as a threat to SaaS, they are framed as an emerging mid‑market risk rather than evidence that vertical SaaS had already been broadly disrupted in 2024.(businessinsider.com)

  4. Macro context. Vertical SaaS valuations did normalize from 2021 bubble highs, but this is described as part of a general SaaS/venture reset driven by higher rates and tighter capital, not a 2024 AI‑driven collapse specific to vertical SaaS.(fractalsoftware.com)

Taken together, the evidence shows vertical SaaS remained comparatively strong in 2024—with premium valuations, solid growth, and investor enthusiasm—and AI was more often a feature inside vertical SaaS than a large‑scale substitute for it. That contradicts Friedberg’s prediction that vertical SaaS companies would be broadly “smacked” in 2024 by customers rapidly replacing them with homegrown AI solutions.