Building Marketplaces from Vertical SaaS

This model works because software is the cheapest way to solve the cold start problem in a hard B2B market. A company first becomes the system of record for an existing workflow, like ordering produce, paying contractors, or accepting restaurant payments. Once buyers and sellers already run daily operations inside that software, adding discovery, transactions, and payments turns the product into a marketplace with built in trust and much lower customer acquisition cost.

• The wedge is usually a painful workflow that people already do off platform. In Notch’s case, restaurants and food distributors need current catalogs, order management, and payment coordination in a market with changing prices and thousands of SKUs. Software gets them online before marketplace liquidity exists.
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• Owning the workflow matters because B2B transactions are more than matching supply and demand. The software has to handle sourcing, procurement, contracts, fulfillment, payments, and disputes. That is why marketplace features often come later, after the product already sits inside the operational flow.
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• This pattern shows up beyond food distribution. Contractor payroll companies turned one off payments into recurring software for onboarding, compliance, and payouts, then used that position to add financial services and marketplace like discovery. Embedded payments in vertical software, from Toast to Shopify style models, follows the same logic.
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The next wave is software companies moving further into payments, credit, and supplier discovery once they already control the daily workflow. The winners will be the products that see the full transaction, keep both sides on one system, and use that position to expand from a useful tool into the place where business actually gets done.