Why Vertical AI Wins

For the past decade, software companies have largely followed a familiar playbook.

• Build horizontal tools.
• Acquire users.
• Expand across industries.
• Scale through distribution.

The AI era changes that equation.

The next generation of enduring companies will not be built by serving everyone. They will be built by deeply understanding someone.

• A wealth advisor.
• An insurance underwriter.
• A compliance analyst.
• A healthcare operator.
• A lawyer.
• A recruiter.
• A logistics coordinator.

The opportunity is no longer simply to build software. It is to build systems that perform meaningful work.

For most of the software era, technology helped people do their jobs more efficiently. In the AI era, technology increasingly participates in the work itself.

This changes where value is created.

The winners will not necessarily have the best models. Models are becoming more accessible every year. The winners will have the deepest understanding of workflows.

They will know where decisions are made. Where information breaks down. Where expertise matters. Where trust matters. And where automation can create leverage without sacrificing quality.

This is why I believe vertical AI will outperform many horizontal approaches. The most valuable systems will not be general-purpose assistants. They will be domain-specific systems embedded directly into workflows.

• A wealth management AI that understands portfolio construction, tax implications, private markets, and investor behavior.
• An insurance AI that understands underwriting, risk assessment, claims, and regulation.
• A healthcare AI that understands clinical operations, patient journeys, and compliance requirements.

The moat is not the model. The moat is the workflow.

The data. The trust. The relationships. And the accumulated knowledge of a specific domain.

AI is changing the economics of company creation

Historically, building meaningful software companies required large teams. Today, smaller teams can accomplish dramatically more. AI allows founders to move faster, experiment more frequently, and operate with leverage that was previously unavailable.

This creates opportunities for a new generation of AI-native firms.

• Companies designed around AI from day one.
• Companies where software, services, and expertise blend together.
• Companies that start by solving real problems for customers and gradually evolve into scalable systems.

Many of the most interesting companies of the next decade may not look like traditional software companies at all. They may begin closer to services. Closer to workflows. Closer to customers.

Over time, they compound knowledge, data, automation, and trust into durable platforms.

This is one of the ideas behind 434 VC

We are interested in founders building AI-native companies in markets where workflow expertise creates defensible advantages.

• Founders who understand a problem deeply.
• Founders who are close to customers.
• Founders who are building systems that create real leverage.

The future will not belong to the companies with access to the most models. It will belong to the companies that best understand how work gets done — and increasingly, how to help get it done better.