At Web Summit Vancouver, Clio CEO Jack Newton made the case that vertical SaaS platforms—and increasingly, vertical AI—are reshaping industries and creating outsized opportunities for Canadian startups.
Taking the main stage in his hometown, Newton began by revisiting a classic idea: “Some of you might recognize the title of this talk as a callback to a really famous blog post that Marc Andreessen wrote 11 years ago talking about why software is eating the world.”
But unlike Andreessen’s focus on horizontal software platforms, Newton said Clio’s early belief—and now proven thesis—is that “vertical SaaS applications designed for specific industries were going to be the ultimate winners in this space.”
A Made-in-Vancouver Case Study
Clio, founded in 2008, is now a 1,500-person company with a valuation of $3 billion. “We started working on this back in 2008,” Newton said, “and over the course of the last 17 years, we’ve grown to a 1,500-person company headquartered here in Vancouver.”
Clio’s success, he argued, stems from deeply understanding the needs of legal professionals—especially solo and small firms. “94% of law firms have less than 20 staff,” Newton noted. “80% of law firms have 10 staff or fewer, and a full half of all lawyers practice as solos.”
This was an “overlooked segment of the market,” he said, that larger software vendors ignored due to high customer acquisition costs and a preference for large firms. Meanwhile, Clio built a cloud-based platform that helped lawyers run their business and practice in one place—replacing pen, paper, Outlook, and Excel.
“We saw an opportunity to bring all of the types of work a lawyer needs to do under one roof,” he said.
The Power of Workflow Gravity
At the heart of Newton’s argument is what he called “workflow gravity.” Once a vertical SaaS platform becomes the system of record in an industry, it becomes indispensable.
“If I need to leave Clio to get that work done, that’s a flop, that’s a bug,” he said. “By building the system of record and the system of intelligence, you create this huge amount of workflow gravity around your systems.”
That gravity drives product expansion, he explained. “We started out building Clio Manage… and now we’ve expanded to a product portfolio of over six products that we are able to more fully solve our customer problems end-to-end.”
Vertical vs. Horizontal SaaS
Newton contrasted vertical platforms like Clio with horizontal ones like HubSpot. While horizontal SaaS tries to solve generic problems for a broad market, vertical SaaS focuses on depth.
“What I would like to propose is that it actually positions you for a much deeper and expansive opportunity to deliver truly deep value to that vertical,” he said. “You’re able to build a product that is fit perfectly for that vertical, that will eventually see you outpace and displace the horizontal players in that space.”
Other success stories in vertical SaaS include Toast, Procore, Veeva, Appfolio, and ServiceTitan—each of which Newton cited as proof that “many, many multi-billion dollar companies [are] flourishing in what were earlier dismissed as verticals that were too narrow to build meaningful businesses in.”
A New Frontier: Vertical AI
Newton closed by discussing what comes next: vertical AI. He argued that AI doesn’t just enhance vertical SaaS—it transforms it.
“What we’re seeing with Clio is the types of questions people want to ask our AI, Clio Duo, are dramatically expanded… They want to do everything in their workday from the practice of law to the business of law in one platform.”
He believes this shift dramatically increases market opportunity. “That is a small fraction of the total TAM of legal spend worldwide, which is a trillion dollars per year… you can start to participate not in that $20 billion TAM, but in that trillion dollar TAM.”
But even that trillion-dollar legal market only addresses part of the need. “A shocking statistic from the World Justice Project is that 77% of legal problems go unresolved by lawyers today,” Newton said. “As AI dramatically amplifies the impact of legal professionals, we’ll be able to expand the legal TAM to the 77% latent legal market that is not served or addressed today.”
A Call to Build
Newton closed with encouragement to fellow founders: “Whether it’s legal or medicine or construction or logistics, there are dozens and dozens of opportunities to execute on this kind of opportunity in many, many other industries around the world.”
“And I encourage you to think about how AI and software is eating the world and how you might participate in the value being created in that journey.”
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