I’m going to say something that might sound crazy to some people: the era of the all-in-one software suite is over. Dead. Finished.
For years, we were told that the future was a single platform that could do everything for everyone. A monolithic beast that promised to solve all our problems. I’ve seen it time and time again in my career, both as a founder and now as an investor. The idea is seductive, but the reality is a bloated, inflexible mess that serves no one well.
I learned this lesson the hard way. When we were building RemoteTeam, which was later acquired by Gusto, we were constantly tempted to add more and more features, to become the one-stop-shop for remote team management. But we quickly realized that by trying to be everything to everyone, we were becoming nothing to anyone. We were spreading ourselves too thin, and our product was suffering.
We made a pivot. We decided to focus on doing one thing exceptionally well: helping companies manage their remote teams. We built a lean, flexible, and powerful tool that integrated seamlessly with other best-in-class products. And it worked. We were acquired by Gusto, a company that shares our philosophy of building focused, interconnected systems.
This is the future of software. It’s not monolithic; it’s composable. It’s about building flexible, interconnected systems that solve specific industry problems. And the companies that are embracing this trend are the ones that are winning. Vertical SaaS is the future, and I’m putting my money where my mouth is. I’ve invested in over 200 startups, including some of the biggest names in AI like Anthropic, OpenAI, Scale AI, and Hugging Face, and I’ve seen this pattern play out over and over again.
The Tyranny of the Monolith
So what’s so bad about monolithic software? It’s the same reason you don’t use a Swiss Army knife to cook a gourmet meal. It might have a lot of tools, but none of them are particularly good. You end up with a clunky, inefficient, and frustrating experience.
Monolithic systems are the opposite of agile. They are slow to update, difficult to customize, and impossible to scale. They are a one-size-fits-all solution in a world that demands personalization. And they are a nightmare for developers, who have to deal with a tangled mess of code every time they want to make a change.
I remember talking to a founder a few years ago who was building a CRM for the construction industry. He was trying to compete with Salesforce, the ultimate monolith. He was building a better product, with more features, and a slicker interface. But he was losing. Why? Because he was playing their game. He was trying to build a better monolith, instead of changing the game entirely.
I told him to stop. I told him to focus on a single, painful problem for a specific niche within the construction industry. I told him to build a composable solution that could integrate with other tools. He took my advice, and today his company is thriving. He’s not trying to be the next Salesforce; he’s building the future of construction software.
The Composable Revolution
So what is composable architecture? It’s a way of building software as a collection of independent, interchangeable components. Think of it like a set of LEGO bricks. You can combine them in any way you want to create something new and unique. You’re not limited by the design of a single, pre-built toy.
This is the future of software development. It’s about building small, focused, and independent services that can be combined to create a larger, more complex application. It’s about giving developers the freedom to choose the best tool for the job, instead of being locked into a single, proprietary ecosystem.
And the best part? It’s not just a theory. It’s happening right now. The rise of microservices, APIs, and cloud-native technologies has made it easier than ever to build composable systems. And the companies that are embracing this trend are the ones that are building the most innovative and successful products.
Look at the companies I’ve invested in. Scale AI is a great example. They are not trying to build a single, monolithic AI platform. They are building a set of composable tools that allow developers to build their own AI applications. They are providing the building blocks, and letting their customers create the future.
Vertical SaaS: The Killer App for Composable
This brings me to my next point: vertical SaaS is the killer app for composable architecture. When you focus on a specific industry, you can build a much more tailored and effective solution. You’re not trying to be everything to everyone. You’re trying to be the best in the world at solving a specific set of problems for a specific group of people.
And when you combine this with a composable architecture, you have a recipe for success. You can build a core product that solves the most pressing problems for your customers, and then you can use APIs to integrate with other best-in-class tools. You’re not trying to reinvent the wheel. You’re leveraging the power of the ecosystem to create a better experience for your customers.
This is why I’m so bullish on vertical SaaS. It’s the future of software. And the companies that are building vertical SaaS solutions with a composable architecture are the ones that are going to win in the long run.
The Cloud AI Gold Rush
The rise of cloud AI services and APIs is like pouring gasoline on the fire of the composable revolution. Companies like OpenAI, Anthropic, and Google are providing access to incredibly powerful AI models through simple APIs. This is a complete game-changer. You no longer need a team of PhDs to build AI-powered products. You can just plug into an API and get started.
And the best part is the pricing model. Most of these services are usage-based. You only pay for what you use. This is a huge advantage for startups. You don’t have to make a huge upfront investment in infrastructure. You can start small and scale as you grow. This is democratizing access to AI and leveling the playing field for startups.
I’ve seen this firsthand with the companies I’ve invested in. They are building amazing products on top of these cloud AI platforms. They are moving faster, iterating quicker, and building more innovative products than ever before. This is the future of software development. And it’s happening right now.
My Advice to Founders: Go Niche, Go Deep
So what does this all mean for you, the next generation of founders? My advice is simple: go niche, go deep. Don’t try to build the next Salesforce. Find a specific industry, a specific problem, and a specific customer. And then build the best damn solution in the world for them.
Embrace the composable revolution. Build a lean, flexible, and powerful product that can integrate with other tools. Don’t try to do everything yourself. Leverage the power of the ecosystem. And most importantly, don’t be afraid to have a strong opinion. Don’t hedge. Don’t try to please everyone. Build a product that you believe in, and that your customers will love.
In my book, “Becoming Top 1%”, I talk about the importance of focus. The most successful people in the world are not the ones who are good at everything. They are the ones who are world-class at one thing. The same is true for companies. The most successful companies are not the ones that do everything. They are the ones that do one thing better than anyone else.
Predictions for 2026: The Composable Future is Now
So what does the future hold? Here are a few of my predictions for the state of cloud AI and SaaS in 2026:
- The death of the monolith is inevitable. By 2026, the idea of a single, all-in-one software suite will be a relic of the past. The future is composable, and the companies that don’t adapt will be left behind.
- Vertical SaaS will dominate. The most successful SaaS companies will be the ones that focus on a specific industry. They will build deep, defensible moats by solving the unique problems of their customers.
- Usage-based pricing will be the norm. The subscription model is not dead, but it’s on its way out. The future is usage-based pricing. It’s more fair, more flexible, and more aligned with the interests of both customers and companies.
- AI will be everywhere. AI will not be a standalone product. It will be embedded in every application. The most successful companies will be the ones that use AI to solve real-world problems for their customers.
The Future is Not a Monolith
The future of software is not a monolithic cathedral, built by a single architect and controlled by a single entity. It’s a bustling bazaar, full of independent merchants, each with their own unique wares. It’s a chaotic, vibrant, and beautiful ecosystem of interconnected services. And it’s the future I’m betting on.
So, if you’re a founder, I have one last piece of advice for you: stop trying to build a cathedral. Go to the bazaar. Find your niche. And start building.
Frequently Asked Questions
How can I apply this thinking to my own situation?
Start by identifying the core principle behind the opinion, not the specific example. Then ask yourself: does this principle apply to my context? If yes, test it in a small, low-risk way before going all in.
What's the most common pushback you get on this?
People often push back by citing exceptions or edge cases. And they're usually right that exceptions exist. But building a strategy around exceptions rather than patterns is a losing game for most founders.
How has this view evolved over time?
My thinking on most topics has changed significantly over the years. Early in my career, I held many conventional views that experience proved wrong. I try to update my beliefs when the evidence changes.