How Appdirect CEO Linda Walsh grew Appdirect to $227M revenue and 1M customers in 2024.

hello everyone my guest today is Dan sacks he's president and co-ceo of app direct the only end end cloud commerce platform for succeeding in the digital economy which he co-founded in 2009 with his partner he and his co-founder dream to someday build a business worthy of the Inc 500 lists and starting his entrepreneurial journey dan and his co-founder officially launched the company in 2011 raised over 245 million in venture financing and reach to a company valuation of more than 1 billion the app direct ecosystem now powers millions of cloud subscriptions worldwide and connects channels developers and customers to simplify the digital supply chain alright Dan are you ready to take it to the top yeah all right very good so let's just jump in kind of at day one tell us first off before I get to that story kind of what app Direct does and how you make money that money is a pure play SAS yeah so direct helps businesses find by news conferences and we generate revenue both from share of the transaction for your the right share as well as a platform fee for those that use our services to make money in the cloud and tip I mean today when you break down revenues though is more of it coming from essentially there were furel fees or more coming from just the flat SAS fee to use the platform a combo boat but definitely the platform fee was the you know line share of the initial product and then we see a really really high growth of the transaction fees as well so it's similar to you know a billing platform in that we run a kind of subscription as a wait labeled marketplace and developer ecosystem that helps businesses of all types of large businesses and small businesses we were a lot of major telcos Comcast and others around the world helps them get to market faster and then we also share an upside we didn't need software and so tell us the story about Comcast specifically how do they use you yeah definitely so if you can one of the opportunities that's emerged over the last several years with the growth and cloud is that businesses want to be able to access cloud services from people they trust and going back to the early founding about direct you always had this fundamental perspective that most businesses don't necessarily want to just go online and subscribers didn't want to buy everything they need from a trusted provider so Comcast is an example of a brand with Comcast business that offers you know telecom services you know internet it is a great trusted provider so often things like collaboration services email backup and others so that's how we hope that we enable them to get access to a portfolio of services that they think solves their customers and then you've got kind of four different I think sectors with your market reseller devices and then your billing platforms each of those there are mega mega mega players in terms of competition so talk to me about kind of like the network modules built into app direct since you are a platform about how that allows you to defend each of those four beachheads yeah I think what's unique about out direct is that based on the way that we are positioned in the market we're really the only player that can able someone to resell our portfolio of cloud services and we focus on helping people monetize in the cloud as well as manage relationships and our products fall across that different bucket so while within each area there may be you know pure-play competitor in terms of us we're operating as the only suite so you can think of it as what humps bodies for marketing and sales or for what NetSuite is you know for back-office we are for commerce so really helping a business and manage anything that they need in terms of making money in the cloud and managing their customer relationships in the car yep and then give me a sense on average I mean what are people I mean I sure was a huge span I don't know good on every cohort but on average what are these customers pay you per month um definitely so uh your license fees range you know dramatically yeah we have entry level into perspectives that would start around UK per month depending on the complexity and going all the way up to you know the hundreds of thousands for more complex deployments yeah today well I mean I'm sure you have an inside sales team this kind of thing is there a specific cohort you're focused on today are you generally moving upstream or downstream yes we started you know the highest of upstream and then we created Beach heads and different verticals so we've ruled out from toko Taborn MSP and now actually was a fascinating vertical for us is manufactured so even traditionally you wouldn't have thought of a manufacturing firm is one that just had a core a software company but many firms are looking to digitally transform themselves through IOT and therefore if you used to you know produce hardware it's not the values not necessarily the hardware itself it's around the connectivity in the software and the ecosystem you can provide so we're seeing grow that are getting back to your vertical and just to be clear the number you said earlier where you kind of let people in in the many many thousands range you're talking a CV a CV they're a monthly ARPU monthly ARPU okay let's get more to the founding story so 2011 where was your head I mean did you just quit a corporate job and your backs against the wall and you got to make something work where were you yes I was actually graduating at school and it was you know just really the height of the recession so businesses around the world were struggling my family had a furniture store in Niagara Falls Canada and bean street and you grew up in the store my great-grandparents started it it was really the pride for us in the community and you know when the recession hit we had to shut it down and that really kind of you know mark me in saying you know the the opportunity for entrepreneurship you know in the early year 2009-2010 timeframe was really bleak on the other hand came to visit my co-founder who at the time was a painting company in San Francisco and we kind of saw the opportunity that cloud services can bring to really help empower business owners around the world the biggest gap that we saw in the market is that for my family experience I remember that buying software was a major decision and that we knew the people who sold us the software I still remember the person's name who sold my family that made our peace solution was brickster and he knew the prints are vertical really well so we really start to build this global network that connects the developers of applications with the and businesses and thus you know we become this you know he do system for distributing services around the world and would have you scaled to today in terms of total customers using the platform yeah so we reach now over 35 million customers around the world so super excited to have knew such a wide business footprint you know from starting an apartment what do you say 35 million are we talking like seats per logos or give me tell me exactly what that means that's a reach so that would be the customer customers of our customers that we have reach to but we do have millions of business users got it got it so I'll just I'll just put a minimum and say you have definitely more than a million and those those obviously then touch you know on average 35 each right if there's 35 million with a minimum of a million I'm sure it's not something like that you have Network effects that's a easy way to say it right that's yeah walk me through for that first year so who was your first customer and how'd you land them yes / first customer was actually Bella Canada in Canada and you know it wasn't the furniture company huh I know there we go yeah but the there were two people we were two people in apartment at the time and you know the idea of enabling this massive company was was definitely a daunting task but we really believed that if we could empower a company that has you know big reach over you know a country or an area then that would have the biggest impact so instead of you know going toward a door and selling directly to small businesses we start to partner with you know people who had millions of business customers so Dell had you know over half a million business customers at the time in Canada and we really wanted to enable them to have early access to stop solutions so we went me aggregated relevant services for the Canadian market and that was our first footprint and then because of your bill we got silicon because that we got what was that first says oh well well I'm well I mean what was a size I'm curious can you share since it was so long I don't yeah so so the funny thing is that we we went in with this idea that okay we're gonna propose this we're gonna get budget and it's gonna be millions of dollars and you know early days we kind of thought because the project value was so big we get a lot of that but one of the things that we realized is that while we approved an earmark the project out on a lot of money they didn't have enough you know a lot of budget for us ourselves so we had to think creatively about how we helped them to support you know the business case and get to market so to do this is usually an embarrassing number but I'm curious what you remember what first year revenue was 2011 yeah he was in the okay good so any bootstrap or did you raise before you even had a product on so we bootstrapped as long as we could and then it started to ramp up and we start our growth but we very early to the idea for that first punch...