Building venture firm, @DaybreakVCP. Previous to this was at the well known, @IndexVentures. Rex is an avid writer about how technology & people intersect at http://digitalnative.tech.
Guest Author: Rex Woordbury
Business-in-a-Box 2.0: One of the main trends I’m seeing in the Pre-Seed & Seed markets this year: a new generation of “Business-in-a-Box” startups.
This is powered by both technological & cultural shifts: On the *technology* front, generative AI automates workflows, removing the complexities of launching & managing a business.
We saw the same thing with software, which digitized cumbersome pen-and-paper tasks. But AI is an order-of-magnitude more efficient at abstracting away the headaches and grunt work of entrepreneurship.
On the *cultural* front, we’re seeing a shift to more flexible, self-driven work. Self-employment is at its highest level since 2008. Small business applications are in record territory, topping 5M last year.
Gen Z is leading the charge here. Research from ZenBusiness found that 84% of Gen Zs selected entrepreneurship as the most exciting of 12 possible career paths, with 75% saying they want to become entrepreneurs.
Business-in-a-Box vs. Vertical SaaS / AI I view business-in-a-box as a cousin of vertical SaaS / AI. Vertical SaaS / AI companies follow a familiar playbook:
1) Identify the most salient pain-point for your customer and solve it.
2) Use that wedge to win over customers.
3) Layer in more products over time—cross-sell and up-sell, improving customer lifetime value and becoming more defensible.
Toast’s first product was a cloud-based point-of-sale system for restaurants. It seemed niche. But over time, Toast layered in over a dozen products: inventory management, lending, payroll, marketing, digital ordering, delivery. According to Barron’s, 62% of Toast customers use 4 or more of its 15+ products. Toast now boasts a $9.5B market cap.
I’d argue that business-in-a-box startups differ from vertical SaaS / AI by adding one or both of two functionalities: (1) Training, and (2) Discovery. Overall, I group Business-in-a-Box into three core offerings: Training, Discovery, Admin.
For each piece, let’s take an example of a startup that does it well:
TRAINING: Many savvy startups are adding an education component. Abby Care, for instance, helps families become trained as certified caregivers through a 1- to 4-week virtual course. Caregivers can then be compensated by Medicaid for taking care of children with disabilities or special needs. This creates an upfront cost, sure, but the product is sticky with high LTVs, allowing for quick payback.
DISCOVERY: Discovery encompasses finding customers—building your book. Grow Therapy, for instance, lets you launch your own mental health practice. Some therapists might have their own book they can port over, but many don’t. Grow helps you find patients.
ADMIN: Admin is the closest piece to vertical SaaS + AI. These are the tech tools that remove the day-to-day complexities. Moxie, for instance, offers a suite of features for running your med spa—from ordering Botox to setting up your website to managing bookings.
What comes next: In America, there are 33M small businesses—99.9% of all businesses. Most services businesses are a good fit for business-in-a-box. We’ve seen GlossGenius for haircare, Fora Travel for travel agents, Craftwork for painters. The list will grow.
The biggest shockwave, of course, is AI. Rather than making work easier like software, AI does work *for you*.
• Phase 1: Handling invoices over the phone & with paperwork
• Phase 2: Elegant software to file & organize my invoices
• Phase 3: AI agents handling invoices, like your own personal admin —
We’re at a cultural moment in which more people want to start a business. At the same time, technology makes that option easier than ever. I expect this combination will lead to an explosion in business creation.
Check out the original tweet here.
