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10 Years Building Vertical Software: My Perspective on the Selloff. Nicolas Bustamante, who has built vertical software on both sides of the LLM disruption (Doctrine for legal, Fintool for equity research), wrote a moat-by-moat analysis of vertical SaaS that is worth reading. In his view, five moats collapse (learned interfaces, custom workflows, public data access, talent scarcity, and bundling), while five hold (proprietary data, regulatory lock-in, network effects, transaction embedding, and system-of-record status).

A few things I think are missing. The biggest threat to vertical software incumbents probably isn't scrappy AI startups building 80% of the features at 20% of the cost (like his new Fintool company). It's that products like Claude Cowork can do 80% of what vertical software does out of the box, with general agents and data access, at marginal implementation cost. Once integrated, enterprises might trust Anthropic, OpenAI, and Google more than they trust a vibe-coded startup.

There's also a scenario Bustamante doesn't address: LLMs themselves will likely commoditize. If that happens, model providers will have to fight for companies and startups to use their tokens. That's precisely why Anthropic, OpenAI, and Google are strongly pushing into the product space themselves, because products might be more defensible than models. This raises an uncomfortable question for Bustamante's own company, Fintool, which he doesn't address. If what they built is, as he describes, essentially markdown skill files integrating with MCPs and foundation model APIs, what's their justification against the model providers doing the same thing?