#162: Practical Investor - What's Working Now in AI-Driven SaaS Growth - Dave Yuan
Practical Founders Podcast
How incumbents should respond to systems of action
Dave advises incumbents to map hero users and Cousin Richie tasks and protect data and workflows.
Dave Yuan is the founder of Tidemark, an active growth equity investor focusing on vertical SaaS companies with outsized advantages that can become "control points" in their markets and grow very big. Dave and Tidemark have invested in successful vertical software companies like Toast, ServiceTitan, Jane, and CCC.
Tidemark hosts its annual VSaaS Collective Live Event, featuring experienced speakers for hundreds of vertical SaaS founders, on November 5, 2025.
In this episode, we discuss the practical opportunities and risks of AI as it is currently developing in 2025 for vertical SaaS companies. Dave explains several powerful examples of how AI is being used in his portfolio companies and the new strategic questions that are being discussed.
Dave also shares:
- Why software companies are getting real results with AI and are not waiting for the AI revolution--it's here now.
- How AI-powered "systems of action" have undue influence with important users and can potentially displace entrenched systems of record software.
- How fast-growing practical software company grow efficiently with well-timed product, channel, and regional expansion.
Quote from Dave Yuan, founder of Tidemark Capital
"There are a handful of examples where software companies with AI-powered solutions are getting two to five times what they got on a software seat with new outcome-based pricing. They are providing real hard to ROI that's measurable, oftentimes associated with revenue.
"And arguably, they're only getting started because the outcomes that they're measuring are relatively low value and they can increase the value of the outcomes and price accordingly.
"To capture that value, it depends on competition. Because you can add a lot of value to your customers, but you can only charge for that value unless there's not a lot of competition vying for the same thing."
Links
Podcast Sponsor – DesignliThis podcast is sponsored by Designli, a digital product studio that helps entrepreneurs and startups turn their software ideas into reality. From strategy and design to full-scale development, Designli guides you through every step of building custom web and mobile apps. Learn more at designli.co/practical.
The Practical Founders Podcast
Tune into the Practical Founders Podcast for weekly in-depth interviews with founders who have built valuable software companies without big funding. Subscribe to the Practical Founders Podcast using your favorite podcast app or view on our YouTube channel.
Get the weekly Practical Founders newsletter and podcast updates at practicalfounders.com.
Practical Founders CEO Peer Groups
Be part of a committed and confidential group of practical founders creating valuable software companies without big VC funding. A Practical Founders Peer Group is a committed and confidential group of founders/CEOs who want to help you succeed on your terms. Each Practical Founders Peer Group is personally curated and moderated by Greg Head.
The AI-powered Podcast Player
