As investors we are fortunate to meet with hundreds of companies. One of the first things, whether right or wrong, we do is to immediately try and put the company in a “bucket” in terms of what they are doing. This helps in identifying the market, competitors and better understand the value proposition. I love watching Paul Graham hosting his “Office Hours” live at TC Disrupt as you can watch him struggle to do this in real-time with the pitching companies.
When we first met Nicolas and Daniel of AppDirect in 2010 we immediately understood what they were doing and why it was important, but we struggled to put the company in a bucket. Were they a SaaS company? PaaS? A marketplace? A provisioning service? We debated it internally and I was recently reminded of this by a tweet from Box’s CEO, Aaron Levie:
Let’s just agree that this is how we describe cloud to our moms: SaaS is Crate and Barrel, PaaS is IKEA, and IaaS is Home Depot.
— Aaron Levie (@levie) July 15, 2012
Actually, it didn’t matter if we couldn’t ‘bucket’ the company. It was very apparent that Nicolas and Daniel had very strong convictions about cloud-based software and a vision as to how they would evolve and where the market was going. They saw a future demand for a platform to sit between cloud-based services and customers. This platform would provide app discovery, administration abilities, unified billing and employee provisioning for the customer. They also saw the demand across numerous industries to aggregate and sell cloud-based services, or any digital content for that matter.
Nicolas and Dan spent a tremendous amount of time researching, talking to potential customers and envisioning how cloud-based services would be delivered and consumed. They live and breathe it. When I first met them they came across as passionate evangelists and I admit that I was quickly a convert. Others obviously were as well. They had already recruited an amazing founding team, built a great technology platform and had an anchor customer lined up. We were excited to be able to partner with them and invested in their seed round.
Fast forward a year and a half and their vision has continued to come to fruition. So much, in fact, that the vision Nicolas and Daniel had of the market is now referred to by Gartner as Cloud Service Brokerage. A currently small market that Gartner predicts will be the largest category of growth in cloud computing by 2015 and eventually mature to a market in the hundreds of billions.