Why Vertical AI Agents Could Be 10X Bigger Than SaaS: Insights from Y Combinator

Since its introduction in the early 2000s, SaaS (Software as a Service) has redefined how businesses access and use software. It replaced cumbersome, on-premise installations with scalable, cloud-based solutions, unlocking a $300 billion market and giving rise to over 300 unicorns. SaaS transformed software delivery and accessibility, becoming an integral part of modern enterprises.

Now, with artificial intelligence advancing at a breakneck pace, vertical AI agents—specialized tools designed to automate entire workflows—are poised to disrupt SaaS in the same way SaaS disrupted legacy software. These AI tools don’t just make workflows more efficient; they have the potential to replace entire teams and functions within enterprises.