Beyond the System of Record: Becoming an Industry Ledger

Vertical SaaS (VSaaS) companies have been arm-wrestling to become the system of record within a single customer—capturing a merchant’s data and decisions. And we have advocated to go further: own “All the Data” within a single customer.  

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But why stop there? The real power move isn’t just owning a merchant’s data; it’s integrating and normalizing data across key stakeholders–suppliers, distributors, and customers. Enter what we call the industry ledger: a system of record not just for one business, but for an entire ecosystem. It’s rare, but when done right, it’s one of the strongest positions a VSaaS company can hold—unlocking network effects, deeper moats, and serious revenue upside. More importantly, industry ledgers can solve complex, high-stakes problems where money moves fast, goods and services require coordination, and value chains are still frustratingly fragmented and paper-based. This is our call to action: VSaaS companies should stop thinking like a merchant’s bookkeeper and start thinking like an industry’s ledger.

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We see this as the next major evolution of the “Extend through the Value Chain” concept, and it comes in two primary flavors: horizontal and vertical.

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Horizontal Industry Ledgers (AKA data co-ops)

Data co-ops are nothing new—they’ve been around for decades. One of the most famous examples comes from catalog retailing. Back when retailers relied on mailing out glossy, expensive catalogs, they faced a tough problem: making the economics work required targeting and none of them had sophisticated analytics. Enter third-party data co-ops like Abacus. Retailers pooled their credit card transaction data, Abacus crunched the numbers, and in return, each retailer received highly refined prospect lists that dramatically improved conversion rates. And catalog retail wasn’t the only industry to tap into this model—data co-ops have played a major role in everything from credit scoring to media attribution, proving that sometimes, sharing data (wisely) is the fastest way to gain an edge.

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A horizontal platform aggregates the same types of data across multiple companies in a given vertical, and then normalizes, reconciles, and compares that information.

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These platforms create a “horizontal” ledger by consolidating metrics from many peer organizations—sometimes dozens, sometimes hundreds. A typical example would be a startup that helps retailers benchmark sales velocity or customer acquisition costs. Another might integrate with practice management systems across hundreds of clinics to create a real-time, industry-wide report on top-line revenue and churn. The key is that these ledgers deliver immediate feedback on how a particular business compares to its peers.

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Vertical SaaS has the chance to reinvent the data co-op—not as a service, but as software. Since the data already lives within their platforms, integrating and normalizing it becomes far simpler, eliminating the friction of traditional third-party aggregators. More importantly, because VSaaS companies achieve scale within their industries, they naturally hold a high share of the data liquidity, making them the ideal players to create these next-gen data networks. 

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It’s still early days—many industries are just beginning to digitize, and true benchmarking requires a deep well of data liquidity. Add in customer privacy concerns, and adoption is naturally cautious. But we’re already seeing early traction in areas like pricing, yield optimization, and benchmarking. 

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The biggest hurdle? Trust. Merchants need confidence that the data is both accurate and legitimate. Just as crucially, they need assurance that their VSaaS provider won’t misuse or exploit their data. This is where strong privacy controls become a differentiator—giving customers granular control over what they share, how they share it, and what they get in return, whether that’s insights, analytics, or even direct revenue. Done right, VSaaS companies won’t just collect data—they’ll transform it into an industry-wide asset that benefits everyone in the ecosystem.

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How data is packaged and merchandised matters. Aggregated and anonymized is the baseline, but the real power lies in creating proprietary metrics—custom attributes that ease privacy concerns and, in the best cases, become industry currency. Nielsen’s GRP moves $100M+ media budgets; Smith Travel (STR)’s ADR and RevPAR shape hotel manager bonuses. The right metric doesn’t just inform—it dictates.

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Where might horizontal ledgers take off over time?

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• Fragmented industries where no single player can collect the full picture
• Non-strategic data, where sharing delivers more value than keeping it private—think health and safety metrics that benefit everyone but don’t create a competitive edge‍
• Upstream or downstream concentration, where major players enforce data standardization—like insurers streamlining claims or governments requiring regulatory filings and tax reporting

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Vertical Industry Ledgers

While horizontal ledgers compare many “apples to apples,” a vertical ledger stitches together multiple players in a value chain. These models tend to emerge in industries where the value chain is highly fragmented and stakeholders must share data to build complex products, deliver services, or track key transactions. Some examples we see in the world:

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• Appfolio in property management that allows equity owners, operating partners, and  property managers to look at the same set of data
• Davisware in field service which provides a single source of truth for warranty information across OEM, distributor, and retailer
• Avetta that allows clients, contractors, and subcontractors to share updated information on credentialing, certification and insurance coverage
• CINC that provides data and workflows across banks, HOAs, and homeowners

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Where do we expect to see this happening?

• Highly fragmented value chains
• A significant source of market power/concentration through either a large buyer, a big supplier, or a government entity that mandates compliance 
• High coordination costs where slowdown in the process or work has high costs (for example in shipping food products)
• High difficulty in coordinating the service, delivery, or product. These instances typically require extraordinary context, collaboration, and technical details
• High transactional costs either through large volume (where reducing friction is valuable for all players) or a naturally high friction transaction so a VSV (vertical SaaS vendor) can intermediate
• Multi-party or value-add pricing where end pricing is determined by multiple inputs/ parties, or people charge on a value-add basis such as in construction or weddings
• High transactional costs–lots of swivel chair integration–users with two systems open, copy and pasting

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A vertical ledger knits all those moving parts into one thread. Instead of manually passing along spreadsheets or re-entering the same data in multiple systems, each stakeholder writes and reads from the same shared ledger. Done right, it’s more than a convenience. By coordinating tasks like payments, liability tracking, or design changes in real time, the ledger can drastically reduce friction and error rates. That, in turn, makes it indispensable for the entire industry.

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To make a vertical ledger happen, you need the right starting point. Importantly, the control point is not only the product but also the organization. By making your software work for the right people, organizations become a control point, such as in the case of empowering government entities. You want to serve the concentrated party. 

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Along the way, you’ll encounter distributors—often operating on razor-thin margins with little in the way of modern software. At best, they’re running a clunky ERP from the 1990s to track inventory, pay bills, and file taxes. But this isn’t a roadblock; it’s an opportunity. By making integration a core capability, you can help pull these distributors into the digital era–creating stronger network effects and even deeper data gravity. The more seamlessly they connect, the more valuable the entire ecosystem becomes.

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We’ve encountered businesses that began simply as “plumbing” to connect a few legacy systems, only to become the system of record for everyone in the chain. When a single platform starts cutting hours of busywork out of a complicated workflow, people typically embrace it quickly, even if they’ve clung to old software in the past. Eventually, the “old guard” solutions fade into the background, becoming a repository instead of the place people actually log in and get things done.

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A vertical ledger doesn’t just stitch together data across a value chain—it has to earn the trust of everyone contributing that data. Unlike a horizontal ledger, which aggregates similar data across many businesses, a vertical ledger asks for information from both sides of a transaction, meaning buyers and suppliers alike must believe their data won’t be used against them. A supplier, for instance, doesn’t want to be commoditized in an Amazon-style race to the bottom, while a buyer doesn’t want their demand forecasts leaked to competitors.
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Trust is the foundation, and it isn’t just about policy—it’s about behavior. VSaaS companies building industry ledgers must respect the way trade already happens rather than forcing disruption, provide transparency around data use, and ensure all parties see clear value in participation. That means software designed to reinforce—not upend—existing industry dynamics, governance models that protect sensitive information, and a reputation for acting with integrity. The most successful vertical ledgers won’t just organize an industry’s data; they’ll strengthen the relationships that keep the industry running.

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Why are these the best business models on the planet?

We believe these models—both horizontal and vertical—have gained momentum because VSaaS has proliferated and new technologies (another plug for AI) have reduced the cost of integrating disparate data.

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By bringing multi-stakeholder data together, you are not just creating customer data gravity, but the industry’s data gravity. If you believe in the network effects of data (for more, read Abraham Thomas’ excellent essay), you are truly building a fortress with an industry ledger.

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By bringing an entire industry under the big tent of your software, there are broader profit pools to tap into. Simply put: more stakeholders equals more profit. This is especially useful if you start serving low-margin middlemen. Industry ledgers can then move to serve the stakeholders who hold all the margin versus being forced to stick with their initial customer cohort. From there you bundle the data and shift pricing to charge those who can pay. 

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Where Do We Go from Here

We think that the industry ledger is the future. By getting multiple stakeholders on one industry platform, a VSV is fulfilling its highest calling by increasing the efficiency of the industry itself. In doing so, it can help effect standards to increase safety, reduce transactional and communication costs. It can allow pooling of risk for better pricing and even insurance. It can change the consumer experience by coordinating multiple stakeholders to transform a formerly disjointed experience into something seamless.

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It is the highest calling a VSV can aspire to and an industry ledger is one of the strongest ways to get there.