Many of us now use AI in our personal lives. We are experiencing how useful it can be. The question of how to use it at work comes to mind pretty quickly. It is now looking like the answer to that question is what are being called Vertical Agents. What are they?
Lets start with AI Agents first. These are basically collections of software and model capabilities that can understand and respond to a situation without human intervention. You may already be interacting with them as the chat-bot providing customer service on a website or app. You might also interact via voice if you call in for customer service to many companies using them for “live” customer response.
These agents are typically created using an agent builder and rely on machine learning and natural language processing to complete tasks that may range from answering simple questions to pushing a process through one or several steps. Importantly, well built AI agents can continuously improve their own performance through self-learning. This is distinct from more traditional AI, which requires human input for specific tasks.
Vertical Agents are these same capabilities focused on a specific skill, industry or supply chain. The most prominent example thus far is Casetext, which created vertical AI solutions for lawyers, and sold to Thomson Reuters for $650 million in 2023. Their founder Jake Heller is featured in this Lightcone Podcast – Why Vertical Agents are the New $1 Billion Opportunity in Saas. which I highly recommend as a way to further understand this topic.
After working on Saas solutions for the past 25 years in fuel supply and convenience retailing, before they were even called that, this direction on adopting the power of AI to our industry seems clear. In 1999 when we started FuelQuest to bring the internet to our little corner of the economy, I saw this very similarly.
It was pretty obvious that using the internet was going to greatly expand the power of software. This expansion would go far beyond the mainframe or client server applications we had at the time. What was far from obvious was how to do that in a way that understood the many unique requirements, regulations, risks and quirks of our industry. Vertical Agents leverage the power of the latest Large Language Models (LLM’s) and Machine Learning (ML) capabilities that have been trained on these requirements. Coupling these with the traditional benefits of web-based SaaS platforms that we have used to automate for a couple of decades is a natural match. This brings together the tools needed to take a dramatic leap forward in productivity.
This leap will create winners and losers. Will they all be as big as the $650 million exit of Casetext? Some will and many will not. What is far larger is the value they will create in the companies that adopt them the fastest. These companies will find ways to drive competitive advantage. They will capture market share, increase margins, or decrease costs. Those impacts are going to be worth 10x the value that the technology providers capture in delivering the platforms that make it possible. Truly a win-win proposition.
