What Census Data Tells Us About Growth, Fragmentation, and the Next Great SaaS Markets (Maybe)

In a recent article, “Where Are The Opportunities in Vertical SaaS? Picking Your Market in 2025”, we updated data from the 2017 Economic Census with 2022 Census data to show relative sizes and industry fragmentation across industries as defined by six-digit NAICS codes. The theory: larger, more fragmented sectors are attractive for Vertical SaaS providers.

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In response, Sam Gerstenzang, co-founder of two tech-enabled vertical companies, Moxie and Meadow Memorials, asked if we would compare the 2017 and 2022 datasets to examine which industries had grown the most and which had become more or less concentrated. Sam’s wish is our command. Thanks to my trusty sidekick, Matthew Solomon, who has the necessary data wrangling skills.

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The chart below plots the compound annual growth rate of revenue between the 2017 and 2022 censuses for the 820 six-digit NAICS industries on the X-axis.  The Y-axis shows the change in industry fragmentation during the same period. Fragmentation is measured by the percentage of an industry’s revenue that is outside the top 50 firms, consistent with our prior post. Each circle's size indicates the relative size of the industry’s total 2022 revenue. The dotted lines represent the median change in concentration (near 0%) and the median growth in sales of 5.19%.

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To identify meaningful patterns, we isolated the 5% of industries farthest from the median on both dimensions. These outliers reveal the industries that are growing or shrinking fastest and those consolidating or fragmenting the fastest.

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In the upper right quadrant — fast growing and fragmenting — you’ll find:

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• Solar electric power generation, 
• Mobile food services (e.g., food trucks), 
• Other non-hazardous waste treatment and disposal (mainly composting), 
• Other computer-related services (mostly disaster recovery services)
• Plate work manufacturing (plate, not sheet metal).  

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The two largest markets in this quadrant are software publishers (software is still eating the world—especially now) and new multifamily housing construction, both with active Vertical SaaS activity. 

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The upper-left and lower-left quadrants contain the rapidly shrinking industries: copy shops (no surprise), but also computer terminal/peripheral manufacturing and motorcycle/bicycle/parts manufacturing. We can’t explain these latter two!

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The bottom-right quadrant contains the fast-growing but consolidating industries. Because this quadrant is so dense, we zoomed in on it separately.

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Some of the larger industries in this quadrant are:

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• Crude petroleum and natural gas extraction 
• Data centers and hosting services (No surprise there!)
• Fuel dealers (heating oil, LP gas, firewood, etc.) 
• Lumber, plywood, and other wood products (e.g., cabinets) wholesalers (Perhaps this was a COVID-era thing?) 

The three fastest-growing industries were:

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• Local delivery and messenger services (e.g. Instacart, DoorDash and the like)
• All other travel accommodations (think AirBnB)
• Other management and consulting services, including telecom and utility consulting. 

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A few anomalies remain in the data, partly because the NAICS definitions changed between 2017 and 2022, though we corrected for that where possible. If you are interested in the raw data, methodology, and scripts we used, please contact Matthew Solomon.