Appdirect

9-712-410
REV: SEPTEMBER 16, 2011

ANDREI HAGIU LAURA ARJONA EMILY ZHANG

Ga ame Tim Dec me cision for App pDirect t
I skate to where the puck is going to be, not to where it has been. w i t yne — Way Gretzky inning of 201 and AppD 11, Direct was co oming up on the second anniversary of its n It was the begi found ding. Co-foun nder Daniel Sa walked th aks hrough the bu ustling San Frrancisco finan ncial district o his on way to meet his te t eam and conte emplated the direction of his company Some recen events, inclu y. nt uding a new round of ven w nture capital (VC) funding media expo g, osure, and a s sudden outpo of interest from our t strategic partners, had spurred excitement and anticipati within his firm. His ne steps wou be a ion s ext uld crucia for mainta al aining thismomentum. At the top of Saks’s mind was that h and co-fou m A f d he under Nicolas Desmarais would have to lay out AppDirect’s l s e A launch strate egy for enteri ing the web-based applic cation space at a major clou computing conference presentation just a few mo a ud onths away. Ap ppDirect was created to bring togethe small busi s b er inesses looki ing for web-b based applica ations (“appps”) and the in ndependent software vend s dors (ISVs) th developed them. AppD hat d Direct’s web p portal would allow custo d omers to easi access and manage all purchased a ily d l apps. Throug the market gh tplace and portal, small businesses could gain improved in p l ntegration, e ease of use, and securit for ty applic cation manag gement. Th co-founders had forge a relation he ed nship with BBell Canada, a channel p partner, soon after AppD Direct’s forma ation in Augu 2009 as a way to addr ust ress the classi two-sided platform “ch ic hicken and egg” problem (see Exhibit 1 for a time e m t eline). Acquir ring custome required A ers AppDirect to offer o many apps, but to entice develo y opers to creat those apps the company had to prom that custo te y mise omers would be available fordistribution. The cha d e annel strategy was to gain access to a la y n arge potentia user al base— —essentially Bell’s small business Inter B b rnet and phon customers ne s—which would then natu urally attrac developers to sell apps th ct hrough the AppDirect plat A tform. Sa reflected on whether AppDirect sh aks hould contin nue its strateg of partne gy ering with ch hannel distrib butors to enssure a user base, or chan course alt b nge together by m marketing an selling its apps nd direct to end co tly onsumers. Th business app store w a fast-gro he was owing, comp petitive space and e, choos sing the righ strategy co ht ould mean th difference between be he e ecoming the Amazon of small busin ness software and drowning in the wa aves of onlin platform c ne competition. Saks had to makemarket strate delibe erate plans fo either strat or tegy. If AppD Direct chose t direct-to-m the egy, how sho ould it best structure the direct platfor s rm? If it chose the chann route, whi channels should AppD nel ich Direct
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Professo Andrei Hagiu an Laura Arjona andEmily Zhang (MBAs 2011) prepa or nd a ( ared this case. HBS cases are develo S oped solely as the b basis for class di iscussion. Cases are not intended to serve as endor a t rsements, sources of primary data, or illustrations of effective or ine , effective management. Copyrig © 2011 Presiden and Fellows of Harvard College. To order copies or request permission to reproduce ma ght nt H T naterials, call 1-800-5 545-7685, write Ha arvard Business School Publishing, Bo oston, MA 02163, or go to www.hbsp o p.harvard.edu/edu ucators. This publica ation may not be d digitized, photoco opied, or otherwise reproduced, poste or transmitted, without the permis ed, w ssion of Harvard Bu usiness School.

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Game Time Decision for AppDirect

approach? Daniel had to figure out which...