Posted on Monday, Sep 25th 2017
According to Gartner, the worldwide public cloud services market is projected to grow 18% in 2017 to $246.8 billion, up from $209.2 billion in 2016, driven by 37% growth in cloud system infrastructure services and 20% growth in cloud application services. At the center of this growing market is Billion Dollar Unicorn AppDirect.
San Francisco-based AppDirect was founded in 2009 by Daniel Saks and Nicolas Desmarais to distribute cloud-based software more effectively to businesses. With the proliferation of applications for small businesses and the growing complexity in managing them, there is a need for one trusted provider to buy the apps and support those apps. AppDirect is basically looking to become a familiar and trusted marketplace from where businesses can find a suitable business application and subscribe to it.
It is an open, agnostic, and extensible ecosystem for apps. It has thousands of business apps that have integrated to its API. Its platform also serves partners who want to resell apps and retailers who are looking to sell software.
In my recent interview in the Thought Leaders in Cloud Computing series, Daniel disclosed that the company has a reach of over 30 million businesses around the world and has over 4 million paid business users on its platform. Its platform includes apps from providers like Microsoft, Google, and GoDaddy. Its customers include Samsung, Deutsche Telecom, Staples and Comcast, who use AppDirect’s platform to host and distribute apps to their own customers.
From a couple of people in an apartment, AppDirect has today grown to a global workforce of about 700 in 13 global offices across North America, Europe, Asia, and Australia.
By industry, AppDirect’s solutions target Telcos/ISPs, VARs/MSPs, software vendors/ISVs, Consumer Electronics, Industrial IoT, Financial Services, SaaS, PaaS, and IaaS.
AppDirect has expanded and enhanced its service portfolio through six acquisitions including data visualization company Leftronic, open source billing company jBilling, app management service provider Standing Cloud, app managemet platform AppCarousal, tech support platform RadialPoint, and cross-cloud search vendor Xendo. The Standing Cloud acquisition was made for $9 million in 2013 while all others were for undisclosed amounts.
AppDirect is privately held and has not disclosed its most recent financials. Its revenue in 2014 doubled to $18 million from $9 million in 2013. The company makes money by licensing its platform to resellers and by taking a revenue share of subscriptions to apps purchased through its platform.
It has raised over $245 million so far from investors including J.P. Morgan, Foundry Group, iNovia Capital, Mithril Capital Management, StarVest Partners, and Stingray Digital. Its last round of funding was in October 2015 when it raised $140 million at a valuation estimated to be over $1 billion. In February 2015, it had raised $50 million at a valuation of $600 million.
In August this year, AppDirect appointed Michael DiFilippo as its CFO. Michael is a seasoned executive with nearly 30 years of finance and operations experience, including extensive knowledge around raising capital, integrating acquisitions, and overseeing financial strategy and operations for high-growth companies. Prior to AppDirect, he served as CFO of the SaaS Division at Citrix Systems. There are, however, no signs of any IPO plans in the near future.
Competition is heating up for AppDirect. Apart from cloud management platforms and brokerages like Jamcracker and Parallels, it might also have to face competition from Amazon, which has recently launched Subscribe with Amazon. This subscription marketing option can benefit from Amazon’s other promotional features such as search, recommendations, and Amazon Prime. Amazon’s Digital subscription users include Dropbox, SlingTV, Disney Story Central, eMeals, Fitstar by Fitbit, Creativebug, Headspace, LegalZoom, MileIQ, The Wall Street Journal, Chicago Tribune, and The New Yorker.
CEO Saks does not appear to be worried. He says that Amazon is concentrating on the consumer market for cloud services while AppDirect has built an ecosystem to serve businesses buying software. He also sees Amazon as a potential business partner who can use its reseller channels.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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