A Product Market Fit Show | Startup Podcast for Founders
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?
00:11:11 · Pablo Srugo, Daniel Saks
[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? [00:11:15] S0: I think it was that we had a very concrete vision of how Bell could make money from cloud. And just like today, every business and every board is thinking about how can we make money from AI? What are the best ways to monetize AI? We had a really strong story for how all these different businesses could benefit from cloud. [00:11:33] S2: Got it. You're co-CEO, is that right? [00:11:34] S0: Yeah, I was co-CEO for many years. And then just as, you know, AI and Agentic AI was hitting, I transitioned my co-CEO role to my co-founder. He's running the CO. It's been tremendous under his leadership. I'm still on the board and, you know, couldn't say better things about where AppDirect is headed, but had the opportunity to start again in the infancy of the AI phase. And I think there's a ton of parallels to building in the cloud era and then starting again in the early stages of the Agentic era. And a lot changes, but a lot of the same principles or learning stay the same.
00:11:34 · Daniel Saks, Pablo Srugo
[00:11:34] S0: Yeah, I was co-CEO for many years. And then just as, you know, AI and Agentic AI was hitting, I transitioned my co-CEO role to my co-founder. He's running the CO. It's been tremendous under his leadership. I'm still on the board and, you know, couldn't say better things about where AppDirect is headed, but had the opportunity to start again in the infancy of the AI phase. And I think there's a ton of parallels to building in the cloud era and then starting again in the early stages of the Agentic era. And a lot changes, but a lot of the same principles or learning stay the same. [00:12:11] S2: Yeah, I was going to ask, I mean, you know, just maybe as a segue type question, like what is the AppDirect today? Because obviously that vision of a market, I mean, I'll just give you maybe a stupid example, but, you know, I'll just buy whatever cloud tells me at this point. You know, I'll just interact with it. Be like, let's do this thing. What do you really need? Oh, you really need that? Okay, fine. Buy it. You know, does it have an API? Great. Like, you know, that's the kind of old world of, you know, I log in somewhere and I go into their marketplace and I see these things, like seems foreign to me, but is that still happening? Or is there a new, like, is there a new vision for like AppDirect? How do you think that plays out?
00:12:45 · Daniel Saks
[00:12:45] S0: Yeah, so AppDirect has become the everything store for B2B. And if a business wants to buy recurring technology, generally a lot of that business is going to go through AppDirect in the backend. And we have now 10,000 agents, resellers, VARs, maybe many more. We have many enterprise app stores. So think of us as like the plumbing in many ways to get access to these ecosystems. And we've grown by category. So now we sell telecom, we sell energy, we sell business services, we sell IT, we sell all types of different business technologies to many different channels. And we've become really the standard. So for a lot of startups, you may just go online and buy your own stuff, but most businesses with procurement arms are always going to buy through, people. And that's where AppDirect has really shined. And we've been very acquisitive and we own brands, including PartnerStack, which is a leading referral marketplace that a lot of people are familiar with. FirstBase, which is one of the ways startups acquire technology and their computers and laptops and other procurement. So there are a lot of avenues in which we've grown, all stemming from this vision of the B2B app-inning store. And I think in the world of AI, there's a lot that can change. Like how do we index on Cloud, which I think AppDirect is very good at because it has such a deep catalog and knowledge and network. So it's either our agents or our platform customers are probably the ones that show up in Cloud versus AppDirect themselves.
00:14:13 · Pablo Srugo, Daniel Saks
[00:14:13] S2: You're kind of behind the scenes. Like I might be using it or somebody, some business could be using it. They wouldn't necessarily know. [00:14:18] S0: Exactly. Yeah. Okay. We have like millions and millions of business users that may not know that we're powering it, but we are. [00:14:24] S2: Tell me about this transition period. Like how do you perceive what's happening in AI and how do you decide to leave something that's grown to be so big to start something from zero again? [00:14:36] S0: So I think in many ways, like in 2023, AI was at the infancy and it was unclear of how it would manifest at the application layer within businesses. And I thought if there's ever a time to start something again, that would be it. I think in terms of just managing that transition, just full confidence to the leadership team that was in place and Nicholas, my co-founder and CEO. And I think, you know, part of my maturity was knowing that, hey, I think the business is ready to have one CEO. I think Nick's the right guy to do it and that leaves opportunities for me to start new things. So I think that that was a transition that took many years and we were really methodical about, but very excited about what's occurred there and it allowed me to get back to the startup and entrepreneurial juices that I was really excited about. [00:15:19] S2: So you started this like six months or so after ChatGPT. What was the original idea?