Capital is flowing freely in the market. Every week, I hear about another friend's company getting funded. Some are building voice bots, others are creating dev tools, and still others are tackling QA testing or social causes. Many of these are essentially "ChatGPT wrappers." While there's nothing inherently wrong with that, if your goal is to revolutionize a horizontal industry, you need a strong moat.

For a horizontal SaaS, the biggest moat (after solving a core customer pain point) is its technology and product experience. For a vertical SaaS, however, the moat is built on distribution and deep integrations. In the coming years, giants like OpenAI and Google will likely dominate the general AI landscape. Without a deep technology moat, you’ll either be acquired or dead-pooled when a big tech company releases its own version of your product.

This isn't to say horizontal SaaS isn't worth building; it's where many of the most innovative companies are born. The risk, however, lies in building on someone else's core technology. For instance, if you're building a voice bot infrastructure using Livekit on the backend, what's to stop Livekit from eventually competing with you directly? It’s simply difficult to build a defensible horizontal SaaS business without a true tech advantage.

This is where vertical SaaS shines.

Countless age-old industries like real estate, healthcare, construction, and law are still massively underserved by technology. This creates low-competition, high-reward opportunities for startups to dominate a niche. Building an MVP is often more straightforward, and solving a specific, known problem makes it easier to demonstrate value. Consequently, getting users to pay becomes simpler, especially if you can show a clear return on investment (ROI) of 4x or more.

Today's customers crave industry-specific solutions. They don't just want a CRM; they want a real estate CRM or a legal practice CRM. When you tailor your product's entire workflow and feel to a specific industry, you become invaluable. If you're using AI, this means moving beyond generic models and providing ones fine-tuned on industry-specific data. This creates a powerful feedback loop that makes your product and your moat stronger with every new customer.

Unlike broad platforms that require endless customization, vertical SaaS delivers instant value with out-of-the-box compliance, industry-specific workflows, and pre-built analytics. Teams get results faster, which leads to quicker adoption and deeper loyalty.

Here’s a breakdown of how I am working on building a Real Estate product.

Pick a Niche and Become an Expert. Start with an industry you have some exposure to. Let's say you pick the automobile sector. Don't just interview people, shadow them. Live their workday. Aim to become a domain expert in a month. Take notes, ask questions (no matter how dumb), and constantly ask, "Why is this process the way it is, and is there a better way?"

Build a Lean MVP to Solve One Problem. Once you have a clear problem statement, build a simple solution. Use no-code tools like n8n, Google Sheets, simple forms, or even a WhatsApp group to get started. The goal is to solve the problem, not to build a perfect product.

Iterate and Expand. Iterate on your MVP until you find product-market fit (PMF). Once you've truly solved that first problem, find the next one.

Solving one problem is cool, but you know what's cooler? Becoming the de facto solution for the entire vertical. Your goal is to create an ecosystem with network effects, replacing their disparate tools with your integrated platform. If some tools are irreplaceable, partner with them. This is how you build your distribution moat and win the market.