Excited to share my conversation with @ntippmann! Nick is a vertical AI and GTM expert so it was great to talk shop with him about AI, how B2B SaaS evolved, and how distribution has changed. Here are some takeaways and insights from the conversation: Vertical AI changes the value proposition from efficiency to execution. Nick’s core framing is that SaaS helped people save time, while vertical AI can actually do the work. That shift changes the buyer, the budget, the pricing model, and the ceiling for how large these companies can become. The real TAM unlock is services and labor, not software. Traditional vertical SaaS was constrained by software budgets. Vertical AI can compete with outsourced services, internal labor, and professional work that previously sat outside the software spend category. That is why Nick sees the opportunity as dramatically larger than the prior wave of vertical SaaS. The best vertical AI companies will not be thin wrappers. Nick’s bet is on companies that combine workflow software, domain-specific context, proprietary data, and agentic execution. The model is not “AI replaces SaaS,” but “SaaS evolves into a system of work.” Incumbents are vulnerable when their strength becomes rigidity. Legacy systems of record often have distribution, data, and customer relationships, but they can also be slowed by old architecture, existing pricing models, and organizational inertia. Nick is most interested in markets where the incumbent is entrenched but not especially nimble. Distribution and trust may matter more in AI, not less. Because software is easier to build, it is harder to stand out. Nick argues that content, community, events, brand, empathy, and domain expertise remain critical. In vertical AI, credibility with the buyer can be a moat before the product moat fully compounds. Outcome-based pricing is becoming the new frontier. AI products are pushing companies away from seat-based SaaS pricing and toward pricing tied to completed work: per resolved ticket, per document, per workflow, per enriched record, or against avoided professional services spend. The best pricing models will align with the value customers actually experience. Forward-deployed services are not a weakness; they may be evidence of where value accrues. Nick sees OpenAI and Anthropic building services-heavy motions as a sign that intelligence alone does not solve enterprise problems. Context, implementation, workflow integration, and judgment still matter — which supports the vertical AI thesis. Seed investors need to look past the demo. In a world where a founder can vibe-code a polished product quickly, Nick focuses on deeper questions: Does the company get better with usage? Is there proprietary data exhaust? Are there reinforcement loops? Can the wedge expand into adjacent workflows? Is there a real vision beyond the initial tool? The wedge still matters, but the expansion timeline is compressing. Nick acknowledges that AI lets companies build more faster, but he still wants a sharp entry point. The difference is that founders may need to move from wedge to broader workflow coverage much earlier than in the SaaS era. GC AI is a case study in founder-market fit plus distribution. Nick backed the company because Cecilia Ziniti brought deep credibility in legal, had early community instincts, and chose a focused wedge in in-house legal. The insight was not just that legal work fits LLMs; it was that in-house legal has distinct workflows, budgets, and pain points from law firms. VCs and founders are often talking past each other. Nick thinks VCs underappreciate how brutally hard execution is, while founders often misunderstand fund math and why “good growth” may still not be enough for the next round. The AI era has raised expectations, especially as investors compare every company to the fastest-growing AI breakouts. Nick’s contrarian view: foundation labs moving up the stack does not kill vertical AI. His argument is that the labs’ move into applications and services actually proves the opposite: raw model intelligence is not enough. Durable value may accrue to companies that own the workflow, the customer relationship, the domain context, and the system of work. Really enjoyed this episode of @InvestNStartups. Thanks to Nick for coming on!