#197: Scaled His Niche Vertical SaaS ERP with Growth Equity - Marc Sanderson · Practical Founders Podcast summary

Key takeaways

Deep domain expertise is crucial; building software from firsthand industry pain points leads to more effective solutions.
Customer education and operational engagement are key drivers of software adoption and retention.
Successful growth often involves partnering with a strategic investor who can provide more than capital—such as expertise, networks, and scaling support.
Meeting customers where they are in their workflows, rather than forcing best practices, facilitates smoother adoption of new systems.
Creating rapid wins and engaging customers throughout onboarding fosters high retention and loyalty.
Viewing partnerships as marriages—building relationships through due diligence, transparency, and alignment—is essential for successful scaling.
Value—desired, created, and captured—is the fundamental equation driving sustainable business growth.
While AI is a powerful tool, it should be integrated thoughtfully, with a focus on creating tangible value for customers to ensure long-term resilience.

Summary

The Role of AI and Its Place in Business Strategy

Marc Sanderson emphasizes that AI is merely a tool, not a strategy. He criticizes organizations that create dedicated 'Chief AI Officers' as falling into a trap of conflating tools with strategic leadership. His analogy compares AI to cooking rice—just because you can do it infinitely at no cost doesn't mean you become a Michelin star restaurant. The core message is that creating customer value should be the primary focus, not just cost-cutting or internal efficiency gains from AI. He points out that most AI efforts in the industry are aimed at expense reduction, which may improve financial metrics like Rule of 40 but do not necessarily foster deeper customer intimacy.

Marc Sanderson’s Journey from Industry to Software Entrepreneurship

Starting in the woodworking industry, Marc and his partner Walter Wilkie acquired a company in Minnesota in 1997, which served as the foundation for their software venture. Recognizing a pain point in their own operations—lacking suitable software—they built their own ERP system for architectural woodworking businesses. This internal tool gradually evolved into Innergy, a vertical SaaS ERP platform tailored for high-end residential and commercial millwork, handling everything from CRM to project management and field installation. The journey involved bootstrapping, customer-centric development, and comprehensive educational initiatives to ensure successful adoption. Marc's story highlights the importance of deep domain knowledge and meeting customer needs where they are.

Growth Strategy and Partnership with MainSail

Marc's company experienced rapid growth, reaching over $25 million in revenue by 2025 and with a growth rate exceeding 50%. To support scaling, Marc chose to partner with growth equity firm MainSail Partners, which acquired 51% of the company in 2025 for over $40 million. The decision was driven by a desire for strategic support and proven expertise in scaling vertical SaaS companies, rather than just capital infusion. Marc underscores the importance of thorough due diligence, establishing personal relationships, and choosing a partner that aligns with the company's long-term vision. The partnership has positively impacted the company's ability to scale sales, marketing, and operational processes.

Customer-Centric Implementation and Onboarding Innovation

A key success factor for Marc's software has been meeting customers where they are, especially in a complex, highly customized industry like architectural woodworking. Marc describes a rigorous onboarding process—lasting six hours and involving peer-led training—that fosters strong customer relationships and nearly 95% retention. He emphasizes the importance of understanding customer workflows, enabling rapid 'quick wins,' and providing ongoing benchmarking and education to drive adoption. This approach is geared toward creating 'raving fans' and making the company more resistant to AI-driven disintermediation by cultivating deep customer intimacy.

Lessons Learned and Practical Advice for Founders

Marc shares practical wisdom on managing growth, relationships, and strategic focus. He advocates for viewing partnerships as marriages, emphasizing thorough due diligence and deep relationships with investors and customers. He recounts that his company’s evolution was driven by a focus on value—desired, created, and captured—with special attention to aligning product development with customer needs through domain expertise and rapid prototyping. He also stresses the importance of culture, spotting crises early ('Crucifixion Sunday'), and having a long-term vision. His own near-retirement influences his view on leadership and succession planning, aiming to guide the next generation.

Show notes

Marc Sanderson is the founder and CEO of INNERGY, but he didn't start as a software founder. After earning his MBA and searching for a company to buy, he and partner Walter Wilkie acquired a small architectural woodworking business in Minnesota in 1997. Running that business revealed a deep operational problem: there was no software built for how custom woodworking shops actually operated. So Marc built his own.

That internal tool eventually became Innergy, a vertical SaaS ERP platform for architectural woodworking and high-end residential millwork businesses. Today, Innergy handles everything from CRM and estimating to project management, engineering, fabrication, and field installation. In 2025, the company reached roughly $25M in revenue, is growing more than 50% annually, and expects to approach $40M in 2026.

After bootstrapping growth for years using profits from the original woodworking business, Marc sold 51% of Innergy to growth equity firm MainSail Partners in 2025 for more than $40M, while remaining CEO. In this episode, he shares practical lessons about vertical SaaS, customer intimacy, onboarding complex ERP systems, finding the right growth equity partner, and why strategy still matters more than AI.

Key Takeaways

Deep Domain — Marc built software from firsthand pain inside his own woodworking business, not from an outside startup idea.
Education Matters — INNERGY advantage isn't only software. Customer education and operational thinking drive adoption and retention.
Growth Equity Fit — Marc rejected investment several times before choosing a partner that could help scale—not just provide cash.
Meet Customers — ERP success came from meeting customers where they are instead of forcing "best practices" immediately.
Customer Intimacy — INNERGY's onboarding, benchmarking, and peer learning approach helped create ~95% retention.

Quote from Marc Sanderson, Founder and CEO of INNERGY

"AI is just a tool. I see organizations creating a chief AI officer. I don't have a chief Outlook officer. I don't have a chief Internet officer. I don't have a chief Web officer. It's just a tool at the end of the day."

"Just because you can cook rice infinitely at no cost doesn't make you a Michelin star restaurant. It's all the other aspects of these integrated activities that make you who you are. And at the end of the day, as long as we are creating value for our customer, they will continue to write a check to us."

"A lot of the AI efforts that are going on across the industry is focused on cost reduction, expense reduction internal to the software firm. Great. That helps us get to a breakeven or beyond. It helps with the rule of 40. However, it does not create more intimacy with the customer."

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#197: Scaled His Niche Vertical SaaS ERP with Growth Equity - Marc Sanderson