B2B enterprise SaaS is about to undergo a major shift. While SaaS revolutionized how software is built and distributed, allowing businesses to streamline operations with cloud-based tools, it had one major problem: it’s still built on a one-size-fits-all approach, with general-purpose solutions that require constant customization and integration. This led to complexity and inefficiency, as businesses needed multiple tools and human resources to make everything work.
This is where vertical AI agents come in. These agents are hyper-specialized and built to automate specific business functions, reducing the need for multiple systems and manual intervention.
In this blog, we’ll explain what vertical AI agents are, how they differ from SaaS, and the massive opportunity they present to founders.
What are vertical AI agents?
Think of Vertical AI agents as AI systems designed to perform very specific, niche tasks within a business or industry. Unlike general-purpose AI tools, they don’t just perform general tasks like drafting emails, answering questions, or generating text. Vertical AI agents can replace entire human teams and business processes, making operations more efficient and cost-effective.
Take, for example, AI-powered QA testing, customer support, or payroll systems. These vertical AI agents are highly specialized to handle the intricacies of these tasks in a way that broad AI models like OpenAI’s GPT can’t. While general-purpose AI can handle a variety of functions, vertical AI agents are designed to dig deep into one area, automating entire workflows and removing the need for human involvement.
This makes vertical AI agents more effective and scalable, allowing businesses to reduce both their software and labor costs. They go beyond just being tools. They become the whole system.
Vertical vs. Horizontal AI agents
Vertical AI Agents
Vertical AI agents specialize in one specific task within a business or industry, automating entire processes. For example, an AI agent for payroll handles everything from calculating wages to filing taxes, all without human intervention.
Horizontal AI Agents
Horizontal AI agents are general-purpose and can be used across various industries and tasks. A general AI like OpenAI’s GPT is an example. It can assist with many tasks, but it isn’t specialized enough to replace a payroll department or fully automate customer service.
In short, vertical AI agents are specialists who focus on one thing and do it exceptionally well, while horizontal AI agents are generalists who serve many functions across industries.
Best time to start a Vertical AI agent startup
In the early 2000s, SaaS companies like Salesforce revolutionized industries by moving software online, making it scalable and accessible. Now, vertical AI agents are taking it a step further. Where SaaS enables better management, Vertical AI automates entire workflows. It’s the difference between having a tool to help and a system that does the job for you. That’s why vertical AI agents will be much bigger than SaaS.
Here are five reasons why it’s the best time to start a Vertical AI agent startup.
More mature Large Language Models (LLMs)
With the recent AI advancements, we now have better, faster, and more compact models compared to the past 15-18 months. These advancements provide the necessary foundational technology for creating highly functional vertical AI solutions.
A shift in startup strategies
The old way of scaling a startup, where you’ll hire thousands of employees, is changing. Now, startups are leveraging AI tools and agents to stay lean and earn more profit with fewer employees. Startups are actively looking to add AI agents to their tech stack.
Cost savings
Businesses today spend far more on payroll than on software. Vertical AI agents will allow companies to streamline their operations by automating manual, repetitive tasks (like customer support, data entry, or QA testing), reducing costs.
Higher customer value and retention
By default, vertical AI agents are designed to address the unique needs of specific industries, offering businesses a more tailored and effective solution than general-purpose SaaS. Customers will value these specialized AI agents more because they’re built to solve their unique pain points.
Early-mover advantage
From healthcare to finance to retail, the application of vertical AI agents is virtually limitless. As vertical AI agents are still relatively new, there’s a massive opportunity for early movers to establish themselves as leaders in their chosen niche.
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Conclusion
Vertical AI agents are set to revolutionize industries, offering companies greater efficiency and cost savings by automating workflows and replacing software and human labor. With advancements in AI technology, the right market conditions, and a shift in startup strategies, now is the perfect time to jump into this space.
For founders looking to take advantage of this trend, Appwrite’s startup program offers the perfect platform to build and scale these AI-powered solutions. It provides you with the tools, resources, and support needed to bring your Vertical AI agent idea to life. Apply to the program
