The Ultimate Guide to Verticalization

Series: Let’s talk about Trends in Startups

Simon Wolff
Aug 21, 2014 · 4 min read

Episode 1

Background

Definition (in Product Terms)

Image for post
Image for post

Creating specialized niche products (Verticals) instead of “Does-Everything-Products” (Horizontals).

  1. Verticals serve small niche markets and a specific target group instead of serving everyone.
  2. Verticals are often broken-down versions of former Horizontals.
  3. Verticals are ideally better at what they do than a Horizontal that offers the vertical offering as one feature.

Examples

  1. Foursquare splits its checking-in-feature off, creating Swarm.
  2. Dribbble was built for designers to show their work, not for everyone to show their work.
  3. Algorithmia aims to be the app store for algorithms, not the app store for every app.
  4. Togethera wants to be the social network for families, not the social network for everyone.
Image for post
Image for post
6. The best example I came across which shows that Verticalization has been happening for a long while already, is Craigslist. Inspired by a great blogpost by Andrew Parker, I created this chart (contact me if you want the original) to show how Craigslist has been verticalized:

Why is this Trend happening?

  1. Mobile: As everything is shifting to mobile, and thereby to apps, multitasking gets easier. It’s often faster to switch between different apps than to navigate within one app.
  2. Specialized products attract specific communities and communities are always more engaged when they are small and specific. Example: Stackexchange vs. Ask.com. Communities can only thrive if they attract engaged users because this is what creates network and lock-in effects and these effects are, by the way, what VCs look for.
  3. Reducing complexity and minimalizing design of products has become a mandatory criterium for success. Obviously, this is more easily achievable with Verticals.
  4. People are overcoming signup barriers more easily than in the past. Signups are becoming faster, easier and more seamless and therefore, it is less of a problem to get users for a new product.
Image for post
Image for post
All the different Verticals offered by the Q&A Platform StackExchange.

So what does this mean for you?

  1. Don’t try to build The One and Only Search Engine for Everything and Everyone. Instead, build The One and Only Search Engine for Dog Food in Thailand.
  2. Just take some feature that a big horizontal product provides and build that one feature new and better. Example: Facebook Groups. Basically every group that exists in Facebook could be an own social network (Your group for your soccer friends, your group for your neighbors, your group for your drinking buddies).
Image for post
Image for post
You can tackle small problems one by one!
  • Everything must be seamless! Build tools on top of existing solutions to make them better. Example: Brisk.io on Salesforce (“Salesforce on Speed”).
  • Everything must be integrated with each other! Luckily, there are Verticals taking care of that (If This Then That, Zapier, …)

I hope this was helpful and I wish you all the best,

Simon

Read more about Startup Trends by clicking here.


Cover image credits: http://superfamous.com/

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch

Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore

Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store