Powering the Future of B2B Subscription Commerce: A Conversation with AppDirect

The internet age has made it easy for online shoppers to buy anything they need without leaving home. Looking for new shoes? Head to Zappos. Hankering for new reading material? Amazon is a few mouse clicks away.

Venture into the realm of apps and the cloud, however, and things start to get complicated.

Enter AppDirect, a B2B subscription commerce platform for selling, buying, and managing recurring technology services – and one of the latest companies in the WestCap portfolio. What Shopify is to one-time physical goods transactions, AppDirect hopes to become for recurring digital services, making the lives of digital entrepreneurs just a little easier.

WestCap Vice President, Allie Haldeman, who helped lead the investment, sat down with AppDirect CEO Nick Desmarais to talk about the company’s journey so far, his perspective on a quickly evolving market, his hopes for the future — and the value of a good ice bath.

Allie: Nick, can you explain what AppDirect does?

Nick: Back in 2009, when analog goods and services moved online, the digital experience had a point of consolidation. We saw this pattern play out in every category, and we thought to ourselves, “How does this not happen for software?” Our bet was that there just weren’t enough applications online to justify a marketplace, but that as the cost of computing continued to go down, you'd get this proliferation in the technologies available to small- and medium-sized businesses. And we really hit the wave at the right time.

Then what we found is that these companies were really struggling to manage those technologies in a unified environment—and it's not just them. Businesses tend to buy technology through advisors, and these resellers were also struggling to find, buy, and manage on behalf of these businesses.

We built a marketplace service that enables you to monetize technology services, to lower your customer acquisition costs. We also have a workspace to help your client manage these technologies in a unified environment. We've combined subscription billing with commerce capabilities, and we are omnichannel. So if you are a merchant and we power your commerce experience, we can power everything from your checkout flow to your marketplace to your reseller relationships to your distribution.

And AppDirect has thousands of advisors that we've successfully signed up, who are really involved in helping our clients navigate through this process. So they can sell from our catalog and then bundle that with our platform.

Allie: It was about a year ago when our mutual friends, Inovia Capital, were kind enough to introduce us. Going back in time, what was your first impression of WestCap?

Nick: One first impression I had was the breadth of capabilities that WestCap brings. I had a sense of, “been there done that” from the team, and for us that was really important. The right investor or board member helps you anticipate issues versus react to them. Can you really do that if you haven't experienced it yourself? The WestCap team has lived through some of the things that we're going to go through ourselves in the next five years. That was very appealing.

And one other thing I want to point out: One of our values is intensity, and I think that's clearly shared here. I was incredibly impressed by the team’s rigor, their research and how that translates into what became almost an intuitive understanding of our business.

Allie: When we think about B2B marketplaces in general, these are really complicated businesses to scale, but when done right, they result in highly durable, highly defensible businesses that really matter. For our part, we have incredible conviction that the time, capital and energy invested over the last ten-plus years from you and the team means AppDirect is here to be a generational business and has enormous opportunity ahead. What gets you excited thinking about the five- to ten-year horizon?

Nick: Ultimately, we want to be the leading B2B commerce platform for selling, buying, and managing technology services. When we look at gross merchandising value, we want to be above $100 billion within five or ten years. That's a very ambitious goal, so if we break that down, we definitely look at reach as an important factor. Firstly, how many marketplaces are we powering?

Then we look to translate that reach into conversion. A lot of that is driven by the categories we can populate our marketplaces with. We've had a lot of success in telecom, SaaS and infrastructure service, but there are other categories that we're really excited about adding over the coming years. For example, recently we have expanded our energy category with the acquisition of Broker Online Exchange, North America's leading retail energy network.

And then I think about retention, which is incredibly important. We don’t just offer a marketplace, we also offer a workspace. So, the end user of our platform client can login and have single sign-on to digital services that they've procured and be able to access them in a secure environment. We believe there are a lot of opportunities for innovation in that space.

Allie: I couldn’t agree more. From our vantage, the role of AppDirect as both the marketplace infrastructure, as well as the marketplace itself means that it's uniquely aligned to the growth of the ecosystem – the “find, buy, manage” life cycle allows you to really entrench with your client base and be with them as they grow too.

In our diligence, one point that came through clearly is that AppDirect is building for the future of the ecosystem and is focused on long-term partner enablement. Can you share a little more about your approach of building for the channel and the AppDirect value proposition for its partners as distinct?

Nick: It’s really about how you build a value proposition that is far above anyone else trying to come into the space, where it creates a lot of friction for a new entrant. One way to do that is an aggregation effect—by bringing together technologies that were siloed historically. For AppDirect to develop a subscription commerce platform, we had to bring together subscription billing, data management, and storefront technology. If you’re an entrant in our space and you haven't invested the blood, sweat, and tears to build that type of platform, I think it'll be very hard to move.

The second is really a flywheel effect, where every provider that joins our network to sell through our marketplaces makes it more attractive for these partners of ours, these advisers, to want to join and bring us their trusted relationships. Then, the more of these small and medium businesses that they refer to us, the more attractive it becomes for providers to join a network, because they don't want to invest in those types of integrations unless there's a lot of reach.

Allie: Let’s talk about AI. What is AppDirect’s approach to AI? It is a big transformation throughout the industry, but how has AppDirect adapted to these changes?

Nick: We believe AI should simplify technology, making it more immersive and removing complexity. By abstracting functionality and providing conversational interfaces across all applications, AI humanizes the IT stack, moving beyond traditional cloud application layers to incorporate cloud management, large language models, and conversational AI interfaces. This vision led us to launch devs.ai, an agentic AI platform and marketplace that offers AI tools, integrations, and monetization opportunities which have not happened yet in the channel.

With devs.ai, literally anyone in an organization can choose a large language model, create a tailored AI application, and train it on their own enterprise data, all through a seamless interface with no technical skills. Businesses are using devs.ai to automate and streamline tasks, accelerate innovation, and drive new value, all while having the security and flexibility within our platform.

We have seen an amazing adoption trend, even internally at AppDirect. 100% of our departments use AI and we actually have just as many AI agents as we do employees, it’s a 1:1 ratio, which is a recent phenomenon as the platform was launched earlier this year. I could not be more excited about all the upcoming ai-first projects we have on the roadmap, some to be announced at our annual tech conference, Thrive.

Allie: Excited to see what’s next for AppDirect as there have been so many great advancements. What words of wisdom do you have for someone going at it as a new entrepreneur?

Nick: One is: you happen to yourself. What I mean by that is, there's a lot of stress as an entrepreneur. But ultimately you're not stressed because of a given situation; you're stressed because of how you're choosing to react. Learning to use your power of observation to create a wedge between your emotional reaction and your logical response is really important. And in that space you can find grace as a leader.

In our line of work, it's not often that you have somebody telling you why you're doing a great job. For me, recasting my relationship with negative feedback has also been very important—realizing that feedback is because somebody cares enough to tell you. As an entrepreneur, what you should fear is silence, because silence means nobody cares.

Allie: That’s great advice. Nick, thanks so much for your time. One last question that we always like to ask: what is a fun fact about you that not many people know?

Nick: It used to be considered kind of out there, and now I guess it's become more mainstream. For many years, I’ve liked taking an ice bath. I start every day if I'm at home with a 31-to-35 Fahrenheit ice bath, and I will plunge in the ice and stay there and meditate. I've been doing that for half a decade, and I love it.

About the Contributor
Nick Desmarais founded AppDirect in 2009 and serves as AppDirect's Chairman and CEO. Nick is focused on the evolution of AppDirect's business strategy, growth and innovation roadmap. Before co-founding AppDirect, Nick worked at Bain & Company as a management consultant focused on media and business services. Nick holds a bachelor's degree with a double major in economics and political science from Amherst College. In his spare time, he enjoys outdoor activities and traveling to new countries.