this week i'm thinking about – #13 – Servicetitan

Hey friends,

Welcome to the dozens of new subscribers since last edition! Feedback and suggestions are very welcome, especially from the new folks.

I’m writing an occasional blurb about something I learned that’s broadly tech-related. If you have thoughts, I'd love to hear from you, and I'll paraphrase the best responses in the next newsletter. My goal is to start conversations with people thinking about similar topics through different lenses. If you know anyone who would be interested in the discussion, please do forward this along, send them to the archive, or have them subscribe here.

John

What I learned about: Servicetitan 🛠
Nestled in Glendale, a non-techy LA suburb, Servicetitan is just far enough to fly under the Silicon Valley radar: Techcrunch’s first coverage of the company was their $800M valuation round last year (followed months later by a round at a $1.65B valuation), while most SF-based companies get funding announcements starting at their seed round. It's also not an overnight hyper-growth success – founded in 2012, they claim to have "at least doubled" in revenue for the past five years, eventually hitting ~$100M in revenue last year. Servicetitan offers a full software platform for HVAC and electrical workers: payments, payroll, marketing, sales, customer service, scheduling, contracts, reporting, and more.

Most of the key horizontal SMB SaaS applications have played out (CRM, POS, accounting, marketing, payroll, etc), but for an unsophisticated software buyer, it can be hard to navigate these purchasing decisions. This is why Servicetitan and other full-suite vertical-specific applications are intriguing: the messaging is extremely straightforward as they have a single buyer. The one-stop shop messaging removes all complexity from the purchasing experience, and once on-boarded, customers are much less likely to churn given the software effectively runs their entire business. An increasing ability to hyper-target on Facebook and Google means there is an opportunity for vertical-specific SMB software companies to finally reach the relevant SMBs efficiently, despite traditionally having been hard to target. Once you aggregate enough SMB customer density, you can create a consumer marketplace with proprietary supply (like Thumbtack or Opentable, but with deeper supplier integrations).

There are several Servicetitan analogs in other verticals: Toast (restaurants, founded 2011), Mindbody (gyms, founded 2000), Booster Fuels (fleets, founded 2014). What are other services industries that don’t yet have clear full-suite software winners?

See these links if you want to read more about:


What I’m reading 📚


What subscribers said about the last edition (Chinese insurtech):
Eric pointed out that while Chinese incumbents can get away with collusion via JVs, it is much less common in the US. This is because if US tech incumbents form a JV to get a distribution advantage, it will expose their digital monopoly power, making them an easy antitrust target.

Athena devised a creative insurance arb scheme for someone who is into extreme sports but safe on paper – i.e. a bad risk for insurers to take. This person can take out a really expensive insurance policy and sell it for a profit. Do not try this at home!

Jeff noted the relatively common pattern of Chinese firms launching with giant war chests – Lufax, e.g., raised a $500M round very early on given their relationship with Ping An Insurance. Other startups regularly raise $100M seed rounds when affiliated with Chinese incumbents.