Full Disclosure: I'm a past and current investor in Veeva ($VEEV)
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I've been openly critical of the ability of horizontal SaaS companies ("H-SaaS") to add AI features to their products that will make a meaningful difference in their long-term futures, especially given the increasing competition from LLMs trained to automate those same functions (sales automation, HR, accounting, etc). From my POV, many of the H-SaaS applications developed over the last 20+ years are at extreme risk of being disrupted by LLMs trained to replicate those functions. For example, adding a sales contact to a database, and logging all of the interactions with that contact (a basic function of CRM) can be pretty easily replicated by LLMs, and the sales interaction can be synthesized via GenAI. That for example, puts Salesforce and legions of similar companies in the crosshairs of disruption.
Where I see an opportunity to avoid this disruption is in the world of vertical SaAS ("V-SaaS"), where the cloud application has embedded knowledge of specific workflows, processes, and behaviors inherent to vertical markets. So, as opposed to an application that manages back office accounting and finance (e.g, NetSuite) that needs to be adapted to each customer implementation, an application that has embedded rules and workflows of its market, such as Veeva Systems ($VEEV) does for the life sciences industry.
Though the company started out as a vertical application built on top of Salesforce, over the last several years the company has been building a proprietary platform that will eliminate the need to license Salesforce as a part of its solution. Not only will that drive up margins, but create insulation against the disruption we'll see in the H-SaaS market place.
As I sat down to assess the strategic options for Veeva , I couldn't help but think about the wave of change that the company is currently riding. The simultaneous transition from VeevaCRM, built on Salesforce, to the innovative VaultCRM, combined with the launch of Veeva Vault Basics, sets the stage for a thrilling chapter in its business story.
The Shift in Technology Stack: Goodbye Salesforce, Hello VaultCRM!
We're witnessing a momentous change in the world of technology. Veeva, a leader in cloud-based software for the life sciences industry, is making a significant transition from Salesforce CRM to VaultCRM. This move is not merely a shift in software but a complete overhaul of their underlying technology stack.
Overview of the Technology Shift
This shift involves moving from Salesforce’s CRM platform to Veeva’s own VaultCRM. Why is this important? It means that Veeva can now control its entire technology stack. This is huge! But what does that really mean ?
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Improved Performance: With Veeva managing its own tech stack, users can expect better performance and greater adaptability.
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Cost Efficiency: By eliminating the Salesforce component from its cost formula, Veeva has lower overhead, which could lead to substantial savings for customers.
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Better User Experience: By reducing friction in user engagement, Veeva aims to provide a smoother onboarding process.
Impact on User Experience and System Performance
The transition to VaultCRM isn’t just about changing software. It’s about transforming user interactions with the system. Here’s what we can expect:
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More Intuitive Design: A user-friendly interface that reflects the feedback from current users can make a significant difference.
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Faster Response Times: With Veeva in charge of its technology, users can expect quicker load times and reduced downtime.
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Scalability: As life sciences businesses grow VaultCRM will be able to offer a robust platform that adjusts according to their needs.
Benefits of the New Stack for Existing Customers
This transition brings forth a wealth of benefits, especially for existing Veeva customers:
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Cost Reduction: The most exciting news is that Veeva estimates a reduction in per-user costs by approximately 28%. This means more funds can be directed towards innovation and growth.
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Expansion of Services: Veeva plans to onboard an additional 1,000 emerging biotech customers within the next 12 months. This expansion means more resources tailored to meet their specific needs.
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Access to New Features: As Veeva continues to develop its software in-house, customers will benefit from new features that align closely with their industry realities.
This transition signifies a strategic move by Veeva. They’re not just changing their software; they’re changing how users will interact with the system. The goal is clear: to create a more user-centric platform that drives engagement and efficiency. At the same time, the reduction in dependence on the H-SaaS infrastructure of Salesforce enhances Veeva's ability to stave off the oncoming disruption of Enterprise LLMs and GenAI. This re-platforming will also open the door for smaller life sciences companies to join the Veeva ecosystem, as the licensing overhead of Salesforce will no longer be a price barrier. Veeva is currently rolling out a lower-end product ("Veeva Vault Basics") to accomplish this goal.
Unlocking New Customer Segments: Veeva Vault Basics
As the healthcare landscape evolves, the need for adaptable and accessible technology in the biotechnology sector has never been greater. One notable innovation is Veeva Vault Basics. This solution aims to empower smaller biotech companies. But who exactly is its target demographic? And how does it stand out in a crowded marketplace?
Understanding Veeva Vault Basics
Veeva Vault Basics is fundamentally designed to cater to emerging biotech firms, especially those valued under $1 billion. The goal? To democratize access to enterprise-level technology. There are many startups out there, trying to compete with significantly larger players. It’s like David facing Goliath. With Veeva Vault Basics, smaller firms can now leverage modern technology without the huge price tag.
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Introduction of Veeva Vault Basics and Its Target Demographic: Veeva Vault Basics makes advanced features accessible to companies at any stage of development.
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Establishing Market Presence Among Emerging Biotechs: The launch gives these startups a chance to integrate powerful systems that were previously out of reach.
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Leveraging the Lower Entry Point for Businesses Pursuing Niche Therapies: The solution also caters to those chasing innovative but high-risk therapies, providing tools to manage such projects effectively.
The Democratization of Enterprise Purchases
I find the concept of "democratization" quite interesting. For small biotechs, this shift allows them to implement the same technologies as larger organizations. They can manage clinical trials, regulatory submissions, and customer data without the massive costs associated with traditional enterprise solutions.
Veeva Vault Basics acts as a game changer in this regard. By removing obstacles, smaller firms now have the opportunity to thrive. This shift is essential not just for individual companies but for the biotech landscape as a whole.
Market Opportunities
Now let’s discuss market opportunities presented by Veeva Vault Basics. This entry-level product is specifically targeting biotech companies that are either pre- or post-funding. This means a broader array of businesses can explore high-risk but high-reward therapies.
The projections are ambitious. As stated, we can expect a 50% increase in customer diversity over the next couple of years. Why is this significant? More diverse customers mean a wider array of insights and innovations, not to mention enhancing the range of new therapies that could come to market.
High-Risk Therapies: Opportunities and Challenges
Veeva Vault Basics provides the tools to help companies working on high-risk therapies manage their projects more effectively. This can be crucial for early-stage businesses aiming at breakthrough solutions in healthcare.
In many cases, innovation comes with risk. So how do startups navigate this treacherous landscape? Should they take the plunge and dive into high-risk therapies? Veeva Vault Basics gives them the technology to make informed decisions and manage risks better.
This aligns with an ongoing trend of larger companies recognizing the potential in startups. As larger enterprises increasingly seek partnerships with smaller firms, the playing field gets leveled, fostering collaboration rather than competition. Large BioPharma companies already using Veeva products will find it easier to collaborate with emerging biotechs implementing Vault Basics, as they will be able to leverage common workflows and processes. This is precisely the type of vertical market specialization that gives V-SaaS companies an insurance policy against AI disruption.
Tapping into Emerging Markets: Growing Alongside Startups
As we dive into the evolving landscape of biotech startups, one thing is clear: the future is bright. But how does Veeva attract these innovative companies, especially those at the pre-and post-funding stages?
Identifying Strategies to Attract Biotech Startups
First and foremost, Veeva needs to outline strategies that resonate with biotech startups. Here are some key strategies:
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Build Trust: Startups thrive in an environment where trust is nurtured.
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Offer Scalable Solutions: Biotech startups require solutions that can grow with them.
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Reduce Barriers to Entry: Tackle entry barriers that are often daunting for young companies.
The Veeva Emerge Program: Purpose and Goals
To harness this opportunity, as an active investor, I've recommended that the Company create a "Veeva Emerge" program to specifically target biotech startups during their formative years. Here’s what I believe the Company could achieve:
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Establish Sub-Enterprise Revenue Line
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Create a revenue stream tailored to smaller biotech firms.
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Market Lock-In
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Win user loyalty before competitors get a foothold.
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Create Partnerships
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Foster collaborations that can evolve into equity or licensing arrangements.
Engagement Plans: Educational Initiatives and Partnerships
Simply building a program isn’t enough. Engagement is key. Here are some of my additional recommendations
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Educational Initiatives: Host workshops and webinars to provide knowledge and resources.
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Forging Partnerships: Collaborate with universities, commercialization offices, and influential entrepreneurs to bring in fresh perspectives.
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Software Evangelist Program: Enlist industry leaders who can champion Veeva solutions.
By surrounding startups with such support, Veeva could build not just a new customer base, but a community of innovation that captures life sciences innovation in its earliest form.
Expectations and Strategic Partnerships
Additionally, I believe the Compandy could implement five strategic partnerships within the first year of launching the Veeva Emerge program, tailored at these earliest stage life sciences ventures. Conservatively, I think Veeva could generate $20M in revenue through new accounts by the end of Year 2. Though the revenue is minor, I project that Veeva would gain early insight into the growth of emerging customer segments, which has far greater economic upside long-term.
In summary, the Veeva Emerge program could foster innovation and generate a "network effect" to reshape the future of biotech.
In addition to recruitment of early-stage biotechs, the Emerge program would also expand the Veeva network through:
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Collaboration with Educational Institutions: Create partnerships with universities and national labs that will open doors to cutting-edge research and innovation.
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Federal Infrastructure Engagement: Aim to engage with federal health infrastructure for potential collaborations in health-related projects.
Final Thoughts
So, what’s next for Veeva? The journey ahead is filled with possibilities. By already having made plans to reduce its dependence on H-SaaS, as well as having created a new offering for emerging biotechs, the Company is in a great position to withstand the onslaught of Enterprise AI LLMs moving into software.
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