A Product Market Fit Show | Startup Podcast for Founders
00:04:37 · Pablo Srugo, Daniel Saks
[00:04:37] S2: So tell me a little bit about Bell. Like what exactly did you do for Bell back then through AppDirect? [00:04:44] S0: So this is the interesting situation with AppDirect is we spent about two years in a room with no windows, 10 engineers, and we had this vision of building an app marketplace. And we had early sponsorship from the president of Bell Canada, which was huge. We're Canadian, although we were in Silicon Valley at the time. And we would go fly to the Bell headquarters, spend time with them. And the mistake we made is we actually only worked with Bell and it was about a year enterprise sales cycle. So it took, call it a year to sell, six months to a year to implement, and then another year to figure out if it was working or not. So all of our stakes was just on this one deal, working or not. [00:05:22] S2: What is like an app marketplace in this con? I mean, you got like the Shopify app marketplace, right? Obviously iOS, Android, but like for Bell, like what's the idea?
00:05:28 · Daniel Saks
[00:05:28] S0: Our technical co-founder, Andy Sen, had built the Salesforce AppExchange, which was really the first B2B app marketplace of the time. And he joined us early on at AppDirect with the vision of building the app exchange for every other company. And our belief was every B2B business needs an app exchange. And that has truly come to fruition. And AppDirect is grateful to power, you know, a big majority of these marketplaces in some capacity. So whether it's marketplaces like SAP and IBM, or whether it's marketplaces like AWS, that's really the power. And what we found in telecom is they had these big business bases. So essentially, Bell had 500,000 business customers in Canada. AT&T had 4 million in the US. These businesses wanted to look to their telecom for other value-added services. So it could be security. It could have been, call it collaboration tools. So what we did is we enabled the telecoms to resell all these SaaS services to their client base. And today that generates upwards of $10 billion in gross merchandise value, meaning the transaction volume of our customers. But in the early days, we said that GMB is our number one metric, but it took us probably five to seven years to figure out how to really get the flywheel going on GMB. So you brought up this Bell case with us. We launched the Bell App Store, and we actually didn't succeed with it. So we learned a lot, and we had very strong conviction in our vision. But while we got this big enterprise behemoth, it actually didn't work. I remember leading up to the launch, 72 hours ahead, we were trying to recruit all these apps. We had all these different apps, and we worked aggressively to get these in for the Bell launch. And I remember the head of Bell saying, this is going to be on billboards, this is going to be in airports, there's going to be so much that it's going to break the site. You've got to have the infrastructure to make this work. And after crunching to get this thing launched, we launched on time. It was like crickets. No one came to the App Store.
00:07:21 · Pablo Srugo, Daniel Saks
[00:07:21] S2: Wow. Just the worst feeling. [00:07:23] S0: Yeah, the worst. And in fact, Harley from Shopify came to me a few weeks later saying, WTF, the Bell Business App Store has less traffic than my intern's blog. So it was pretty challenging at the time. But what we did is we learned from that experience, and we were able to figure out the right ways to commercialize on behalf of our customers. And that way, when Deutsche Telekom and AT&T launched, they saw very strong success. And it did take a while. [00:07:51] S2: What was the learning? Because I would have assumed that they would have done some amount of marketing, and as much as it might not have been, let's say, perfectly effective or efficient, it should have been good enough if the value was really there. But it sounds like it wasn't. It sounds like there was really some kind of optimization that you could figure out. [00:08:05] S0: I think what we've learned with B2B technology, and this still extends today, is that businesses want to buy from people they trust. So brands of trust where they have the right to play. And what we found is like telecoms have a lot of good reason to sell telecommunication services, video conferencing, security, but maybe they're not the best to sell zero accounting or something else. [00:08:25] S2: So it was a matter of figuring out what should be, what actual products should be in that marketplace.
00:08:25 · Pablo Srugo, Daniel Saks
[00:08:25] S2: So it was a matter of figuring out what should be, what actual products should be in that marketplace. [00:08:29] S0: Exactly. It's the merchandising strategy. And then the other component is the reason why someone trusts, call it AT&T or Dutch telecom in a business capacity, is that they've worked with them for many years. So the other insight that we had was instead of just believing that you can get people from a billboard to go on a website, the better strategy was to actually enable the sales channels and the relationships that already exist. So once we started training the physical human sellers at these companies, they were able to articulate the value prop. And that's really what drove a lot of the success and the momentum. [00:09:04] S2: And how, the other question I had, we're going to talk a lot about Outbound, like how do you get Bell as your first customer? How does that happen? Yeah. [00:09:11] S0: So we had a chicken and the egg problem. Our vision was like AppDirect. We want to build an app store and sell cloud services to the world. But in order to get the best apps, we needed to showcase that we have customers. So we had this idea of going to the telecoms, because if you have all the global telecoms, then they represent almost every B2B business in the world that's connected. And the way we got into Bell is we did have an investor relationship. We had an opportunity to pitch. I remember on pitch day, we were pitching against IBM and all these bigger companies, Laszlo Systems and enterprise companies.
00:09:11 · Daniel Saks, Pablo Srugo
[00:09:11] S0: So we had a chicken and the egg problem. Our vision was like AppDirect. We want to build an app store and sell cloud services to the world. But in order to get the best apps, we needed to showcase that we have customers. So we had this idea of going to the telecoms, because if you have all the global telecoms, then they represent almost every B2B business in the world that's connected. And the way we got into Bell is we did have an investor relationship. We had an opportunity to pitch. I remember on pitch day, we were pitching against IBM and all these bigger companies, Laszlo Systems and enterprise companies. [00:09:44] S2: And you're pitching a marketplace like they wanted a marketplace and you were one of the vendors or you're pitching a new idea to them? [00:09:49] S0: No, it was actually an innovation day. And we pitched them on the idea of a business marketplace. We came with suits, with printed consulting decks. [00:09:57] S2: It was a different time, mind you. I mean, this is what, 2008, you said? [00:10:00] S0: 2009, 10, 11. We were 23 at the time, 24 at the time, and just went in there and had this conviction. [00:10:07] S2: Tech didn't have the respect that it has today. Do you know what I mean? Like, especially for a big company like the tacos. You got to go and suit up.
00:10:07 · Pablo Srugo, Daniel Saks
[00:10:07] S2: Tech didn't have the respect that it has today. Do you know what I mean? Like, especially for a big company like the tacos. You got to go and suit up. [00:10:14] S0: Yeah, we had to suit up. It was like serious board meetings, long negotiations. And yeah, I remember at Deutsche Telekom, we had a meeting with them and it was like, call it 15 people in a formal board meeting with a suit. And this was pre-COVID, you know, by a long shot, but I was doing the call virtually and I was upstairs. I happened to be in my like parents' house. And just as I was in the meeting, I like had my suit on, but like only boxers on, no like formal pants below. And my mom like opened the door and said, Daniel, lunch is ready. And I stood up. [00:10:48] S2: Oh God. [00:10:49] S0: And like years later, the sponsor at Deutsche Telekom told me like, yeah, they kind of recognized that that happened, but they thought it was cool. They're like, yeah, here's, you know, young guys hustling with Silicon Valley energy and attitude. And, you know, a lot of these big companies at the time wanted to bring the energy of Silicon Valley to these big enterprises. And that was a lot of the wedge that we had in the early days. [00:11:11] S2: I took you off track, but back to that Bell thing, you're pitching against all these people. Why do you think they chose you?