Web3, Pricing & the WooCommerce Ecosystem

Jordan: Thank you very much. Great to be here. Thanks for having me on. Looking forward to the talk.

Jonathan: Good to have you, Jordan.

Kathy: Thanks for joining me today Jonathan. Sort of at the last minute, just jumped right in there ready to roll. Really appreciate it.

Jonathan: Always happy to be here. It’s a fun topic. Anytime we can talk about the future of WooCommerce, I’m here.

Kathy: Yeah, yeah, me too. This is pretty exciting. So, I really want to learn about Rally. I started investigating what you’re doing here, Jordan, and it looks like you’re doing some really innovative things. Can you give us just an overview for people who have never heard about your business what Rally is all about and what it brings to e-commerce?

Jordan: Sure. I’ll try to give the quick version. I’m sure we’ll get more into detail as we go. So Rally does things at two levels. The first level is the product level, and there what we do is offer e-commerce merchants a better converting checkout. So, we allow e-commerce merchants to either switch from the checkout provided to them by the platform that they’re on and use Rally’s instead. And we can get into the benefits of doing so, or we allow people to build headless stores where instead of building a checkout themselves, they can just use ours. So, that’s at the product level. And then the other level, what we’re trying to do, I guess a big picture is we’re trying to give merchants back the power that has recently been accumulated by platforms. We think merchants should be more in control of what happens in e-commerce instead of the e-commerce platforms.

Kathy: Okay. And you have some experience in what the Shopify world with your previous business CartHook. Can you tell us what you learned in that experience and how that informed the development of Rally?

Bringing the experience to the development of Rally

Jordan: Sure. Yes. CartHook was an incredible experience with a range of pros, cons, good, bad, ugly, amazing, all these different things. What CartHook did is something similar. It offered Shopify merchants an ability to use a different checkout, a third party checkout is how they term it. And the company and product were really successful and really popular. And we were never in the Shopify app store. So, we really grew a ton from word of mouth. We ended up processing almost $3 billion and had hundreds of merchants using the product, thousands over time. And unfortunately, because we were not compatible with Shopify’s business model, let’s say, they eventually shut us down.

And so, that’s part of where the ideology around Rally comes from where the way we looked at it, we were just doing something that merchants wanted, and in a world where a merchant gets to control what happens with their business, CartHook continues to flourish, but in a world where a platform can say, “Actually, that’s against our best interest. So we’re going to tell the merchants what they can and can’t do.” In that world, it does not work out. And so, with Rally, we’re not just trying to leave the Shopify ecosystem for more hospitable territory for ourselves. We’re trying to make the e-commerce ecosystem overall more hospitable for both merchants and app developers.

The focus on checkout for the future

Kathy: Interesting. And so, Rally is basically just a better checkout. What made you decide to really focus on the checkout aspect of all of the different things that e-commerce does?

Jordan: So, in reality, it’s my personal experience. I used to run an e-commerce business myself. It was on Volusion. This is like 10 years ago.

Jonathan: Oh, yeah.

Jordan: Yep. Volusion was great. We were originally on Yahoo stores and then we’re losing our mind because we couldn’t control anything. It’s all the same themes. It’s crazy from 10 years ago. The merchant should be in control, all these different things that are still present today. And so, when I ran my e-commerce business with my two brothers, I was responsible for conversion rate optimization. And so, I got good at conversion rate optimization and a lot of that work ends up at the most critical moment at the transaction, right at the checkout, the cart page, the checkout, the trust symbols, the payment, all these little micro communications that build up trust or a road trust. So, I’ve been obsessed with the checkout for a very long time.

CartHook started out as an abandoned cart app, which basically just optimizes for the lost checkouts and then CartHook eventually came across the bigger idea of, well, let’s not just prevent abandonment or try to recover abandoned carts. Let’s try to impact conversion rate and abandon rate right directly. Let’s build a better checkout. That’s really what started the journey there. And then as soon as we launched the checkout product for Shopify merchants. From there, the market took us on a ride of its own making. It basically just yelled at us what it wanted, And we complied.

The challenge of the Shopify App Store

Jonathan: One of the things I’m curious about, you said that you were never in the Shopify app store. Was it clear from the outset that there was a compatibility issue? Did you just not pursue it? Can you shed a little light on that?

Jordan: Yeah. It was like an accidental war. We did not mean to get into conflict. We identified the opportunity of a one page checkout that had more customization because when we had our abandoned cart app and went to do an integration with Shopify that’s when we noticed how rigid the Shopify checkout was. We couldn’t get our JavaScript on the page. You couldn’t add trust symbols. It was on myshopify.com. So from my times in e-commerce merchant, I looked at that and I said, “I bet there’s a mountain of demand that wants more control over the checkout.” So we looked at the terms of service and it said, “You can’t do that.” And we said, “Okay, you can’t do it.” But I was a bit persistent and discovered that they were coming out with a checkout API. What the checkout API allowed you to do is transact through Shopify’s payment processing function off of the site. And I put two and two together and I said, “We can build a checkout that allows the merchant to customize, but still goes through Shopify’s payments. Therefore, we’re not taking any money off of their platform. Therefore, we can do it. Oh, my God. Now we can put it together.” That is how we built the product originally to make sure the transactions went through Shopify so that we wouldn’t cost them any money.

Jonathan: I mean, it seems really straightforward.

Jordan: I thought it was too. And then we went to go put it into the app store and then we’re doing that where we’re taking bets internally on how many sign ups are we going to get in the first 30 days like a bunch of morons. And then of course, right before after we list it, we’re waiting for it to get approved. We get the email back saying, “We’re sorry, but you can’t launch this.” That’s when it all began. That’s when it was like, “Well, look, we just talked to your team over the last six months. We just bet our entire company on building this second product. We’re a team of four people. We’re not venture funded. We built a second product. We took all the risk.” And that’s where it all started. And so, eventually they came back and said, “You can keep going, but you can’t be in the app store, and you can’t use the checkout API. You have to use the orders API.” Meaning, you have to do the payments yourselves. And we were like, “That makes no sense, but okay.” So, we rebuilt the whole engine around payments. We started doing the payments ourselves and then didn’t go into the app store at all. I think they just assumed we would go away and die because we didn’t have distribution.

Proprietary platforms, yay or nay

Jonathan: So, I want us to keep going, but one of the things I’m curious about at this point in time, how do you feel about proprietary platforms?

Jordan: So, I don’t think there is an inherent evil or nefariousness. I think it’s just the way these things played themselves out. There is a very, very good article by Chris Dixon from a16z called Why Decentralization Matters. That thing hit me like a ton of bricks. And it helped me understand that the people over at Shopify were not a bad bunch of people. It’s not that they were out to get me and whatever else. It’s just the nature of a centralized platform to go through this S curve where when you’re just starting out, you need everyone’s help. You need agencies to join and app developers to join to fill in the blanks, to fill in the gaps in your platform, in your product. And in that moment at the bottom of the S curve as things start to go up it’s cooperation.

It’s we’re all in this together. Let’s all grow together. And as you go up the S curve, it’s a party. This is what happened with Facebook also. Everyone’s doing well, the users are happier. The agencies are happier. The merchants are happier. The app developer, everyone’s all in the same boat, but at some point the rate of growth starts to decrease and you start to hit the top of the S curve. And not coincidentally that often happens right around the time the central platform goes public. And then it goes from cooperation to competition. And now what you have is a mature platform in Shopify that anytime they launch a feature, they probably just killed 10 businesses. So, it’s not inherently evil. It’s just the nature of a platform to go through this, and we see it over and over.

Kathy: Yeah, same thing happened with Twitter and developers. There seems to be this relationship of upliftment, but then it becomes adversarial after time. But Rally is platform independent, right?

Jordan: It is platform independent. That’s right. We want to see an e-commerce ecosystem that puts the merchant in the middle. And we think the most likely place that happens is in what we’re all calling the headless ecosystem, which is this thing that’s just starting to form and doesn’t really have any borders. It doesn’t really have a shape yet. And so, when we think about which platforms to build for, WooCommerce is an immediate choice for us because we see the ethos, the ideology of WooCommerce being most compatible with the type of e-commerce ecosystem that we want to see. And so, that’s why it’s our first integration along with BigCommerce, right? You have one centralized hosted form, and then we have WooCommerce as our open source. And then the third platform integration we have is with Swell, which is a headless backend platform.

The current state of the WooCommerce and eCommerce ecosystem

Jonathan: One of the things just to touch on BigCommerce for a moment, I’ve really appreciated over the years their slow, but steady change in positioning towards this open where, I’m oversimplifying from my perspective watching what they’ve done over the years. This is my own take on it that they can’t beat Shopify at their own game. And they see the growth that’s happening over on the WordPress side of things. I feel similar. Proprietary platforms aren’t inherently evil by any means. In fact, there’s incredible value that you can get because of the efficiencies, because of just the focus of it. So, for me, the ideal is this there are for some people you need both. And what I like about BigCommerce’s approach of this open commerce position is like, “Hey, we’ll provide you with APIs.” My ideal state is an open source base that you own and then bring in the proprietary platforms where you need them to address things, but you’re not dependent on it. I mean, yeah, and it’s been fun to watch that evolve. It still feels though, and I’m curious for your take on this coming into WooCommerce. Good in theory, but I guess, how do you feel about the current state of the ecosystem and practice?

Jordan: WooCommerce specifically, or just e-commerce overall?

Jonathan: E-commerce overall first and then Woo specifically.

Jordan: I think it’s challenging. Shopify gets an enormous amount of the attention, but it’s not like Shopify’s anywhere near the majority of GMV in e-commerce in the US. It’s proven the model that if you can attract both sides, right? They have this beautiful network effect happening where app developers are attracted because of the economic opportunity. And then merchants are able to come on board because there are the apps that fill in all the gaps in the platforms like missing pieces and functionality and features. And then that brings in the agencies. And then that brings in more merchants and it’s this beautiful virtuous cycle. And it’s really the only platform that has achieved it in that way. And so, I see BigCommerce as doing the right things in trying to develop a similar ecosystem and a similar flywheel. And I look at WooCommerce as the other side of the trade off where it’s an enormous amount of freedom, but it isn’t providing the promise of the economic opportunity that building on Shopify does, and you have to get it all right in order to attract people.

Jonathan: Yeah. Back when I worked at WooCommerce, the thing that I would preach was this, with WooCommerce it’s ownership, it’s flexibility, it’s community. I think at the end of the day, ownership has been, and I think will always be the strongest point. But you have to unpack what does that actually mean? For everyone, early stage, for instance, it’s not necessarily a benefit. I would often go to this rent versus own. And for some time, rent is perfect to start something, but it’s interesting because to have that conversation authentically, you have to acknowledge the trade offs of that, which is like, “Hey, it’s yours.” And right now one of the challenges that I see at least at a macro level is there’s a lot of like, “Well, you can figure it out,” which is not necessarily what a fast growing merchant wants to hear. It’s like, “Well, great that I own it.” But I have some real problems I need to be addressed right now, and where do I go to? It’s like, “Oh, somewhere in the ecosystem, there is a solution for you.” There’s definitely someone who’s like, “Well, that’s great. I believe you, but how do I find them?” That’s one of the trade offs of this very open other side of it is that you can end up being left much more to your own devices.

Jordan: Yeah, I agree, and I’m curious on where that’s going to go, and I’m curious how monetization fits in around payments or hosting or software itself or services, agencies. I still think personal incentive is the thing that drives these things forward. I worry about that. I’m speaking for myself partly here where when I look at the WooCommerce ecosystem, I want to be able to see economic opportunity without guilt. I don’t want to look at that situation and say, “Okay, I think we can make an enormous amount of money on it, but I have to be careful. I have to tread lightly.” I think that is dangerous and unhealthy for the ecosystem.

Feeling bad about making money in the WordPress and WooCommerce ecosystem

Jonathan: I’d like to expand on that a little bit because I think you’re touching on something that is often not voiced, but I’d argue is fairly well felt in the WordPress ecosystem broadly it’s like, almost this, we feel bad if we’re making lots of money.

Jordan: Yes, or charging a lot.

Jonathan: Yeah, charging a lot. And Kathy, I’m curious. Have you noticed any of the same? Is what Jordan saying resonating with you?

Kathy: Yeah. I mean, I’ve been in WordPress for a long time and when I first started there were no plugins, but as plugins started coming along and as themes started coming along, it was almost like, “Well, people, WordPress is free. It’s open source. And why are you charging for it? Why are you tainting our opens source world with charging for this?” But I think it’s matured a lot. As more and more, I’ve talked to a number of plugin developers and they all have their philosophy of what do you give away for free and what do you charge for? There seems to be this consensus of, if you’re going to help someone make money, if you’re going to help somebody save time in making of the money, then it’s okay to charge for things.

But try to make the world a better place with what you’re doing, there’s this altruism. We hear a lot about five for the future and giving back to the WordPress space. So, there’s this balance and I don’t think anybody has found the perfect right answer. But I think we will find a balance. There has to be some kind of contribution back to open source, but we’ve got to also put food on the table and pay for college and horses and all the other things that our children need.

What would it look like to make money in the space without guilt

Jonathan: I have a thought on this, but Jordan, I’m curious for your perspective. What would it look like to make money in the space without guilt?

Jordan: So, I wouldn’t want to say that people should think the way I think. I think the best situation possible is that everyone gets to think the way they think. I personally think that maximizing revenue and profit is what makes the world a better place in this situation because that’s one of the best software and the best services. And that’s just a function of it. And people who are very, very interested in doing financial offer for themselves very often make an ecosystem better, make technology better, make services better. So, that’s the way I think. I just want to be able to do that without tiptoeing. And right now I feel like tiptoeing is a requirement.

Jonathan: I’ve also been in the space a long time, and I think that well describes. I don’t feel it personally. However, I notice it, and especially with companies coming in, I notice companies who “don’t tiptoe” and they get really hung out to dry. And so, then it’s like, “Okay, what did we do wrong?” And there were actually were things that they did wrong in terms of their understanding of the space, but it ends up making just like this fear piece. There are two things I’ve noticed. The first, I think about, especially I asked myself this question back when I worked at WooCommerce of why are people willing to give their time for free to WooCommerce? Because we had this whole community volunteer program and everything. Because WordPress it’s a bit clear, but WooCommerce is a business. Why are people willing to do that? Because they were. They were volunteering.

And one of the things that as I unpacked that and thought that through, I think there’s something about open source and this concept of shared ownership where if I help someone else get involved and help them with what they’re doing, it also helps me whether I’m conscious of it or not. The more people who succeed in because it’s like, why do go to meetups? Why do they spend their time helping others? There’s different reasons. But at the end of the day, for me to be able to realize that, wow, because of this shared open source ecosystem, if someone does something cool, if they improve something and sometimes it can be hard to quantify, but overall I’m also benefiting because I’m in the same ecosystem. So, I don’t need to rely on altruism to solicit volunteers because we all make that better. I’m curious if that resonates with you?

A need to rely on altruism to solicit volunteers because we all make that better

Jordan: It does because in any of these communities, none of us are 100% focus on profit. We do things for a number of reasons. Reputation, fun, friendship, belonging, and also financial success and business success. I mean, it ranges from hobby because that’s what you like to do all the way to. Well, I think going on this podcast is going to present more people to Rally and that’s good for me and for the business. And also, I’m having fun. So, it’s all mixed up in this human version of participating.

So, speaking of different ways of thinking, so for me personally as an entrepreneur, my choice is to focus on value. How much value can I create knowing that the more value I create, the more I get to capitalize on the creation of that value. One of the framings that I use as just a mental model is say, “Okay, if I want to make money in a situation, how do I create 10X value, and then just charge a 10th of that value. And I’m like, if I’m looking at business models I’m like, “Okay, if I want to sell a plugin for 1,000 bucks a month, which is like, “What? What are you talking about? What?” And it’s like, “Man, all I have to do is create $10,000 of value a month.” And that’s something that I feel like has been missing from our space where people will create this incredible thing, and it’s $39 a year. What are you doing? It’s a disconnect from value.

Yes. As someone who is coming over from the Shopify space where at CartHook, we started at $500 a month and added half a percent of revenue. And we only got there, we started off much lower, but we got there by looking at the enormous amount of value we were creating.

People would leave the Shopify checkout and start using our checkout. I mean, we had merchants doing 20 million a month and doing two million in post-purchase offers. Something that our software enabled that they couldn’t do on Shopify. Literally, $2 million a month in additional revenue. That is what helped me really come into terms with it does not matter how it sounds what we charge. As long as it’s related to the value that they’re getting, it doesn’t matter what the actual number is.

Focusing on the value

Jonathan: This is something I think is missing a little bit from our ecosystem right now. I’m starting to see more of it. But I think it’s an opportunity where it’s focusing on value. I was surprised early on in my time at Woo at just how much I felt some of that tiptoeing coming from my WordPress experience and talking to merchants about money, and what they’d pay for things, and plugins and all this and realize that no one cares because at least in all my experience because it’s like they’re running business. It’s a very simple value calculus. If you have a WooCommerce store that’s doing 50 grand plus a month in sales, in some ways you’re under serving them to offer a $100 plugin. You’re telling me that this core piece of functionality that I use for my business is only this? How can I rely on that?

Jordan: Yeah. We had a very similar experience because we offered a checkout which is central to the entire commerce business. And we had a competitor that charged a lot less than we did. And when we started looking at our business and how to make it healthier, we had too much demand, and our software wasn’t at a place that it could handle that demand. And so, what was happening was our churn was so high because we had three or 400 trials a month for a $500. At that point it was $300 a month product. So, ostensibly, a dream scenario. Over 100K in MRR in trials every single month, and what we did was we shut it all down and forced a demo. Instead of taking three or 400 trials a month, we would take 30 new merchants a month, and charge a lot more. And our business got so much healthier and churn went from 12% a month to 1% a month. And it was because we just narrowed in on that equation. Who wants an enormous amount of value and is willing to pay us for it?

So, that is not a sign of us being geniuses. That’s a sign of a competitive marketplace. Everyone’s picking their spot. Our competitor did a great job at onboarding a lot more merchants at a lower price point. We had an application process. So, when the merchant wasn’t right for us, we would literally link to the competitor and say, “This is going to be a better option for you.” So, that ability to pick and choose where you live in the market. It is happening in the WooCommerce space. You see hosting that’s expensive and very good. And then you also see my cheaper. So, it’s good that it’s mature in that way. I think it just needs to just keep going.
Thanks to our Pod Friends FooSales and Yoast SEO

The meaning of community-owned with Rally

Kathy: Oh, Rally, I was researching what you’re doing, reading on your site. With it being independent, it also seems like you have talked about it being community owned. What does that mean?

Jordan: Sure. Okay. So, a lot of the things that we’re talking about right now is around coordination. Where does the platform live? Where do the merchants live? Where do the service providers live? Where do the app developers? How does this all work together and become coordinated in the right direction together to make it all better? So, for me, the promise of Web3 and the promise of crypto tokens is around that coordination in the same direction over a long period of time without a central authority telling people what they can and can’t do. And that’s almost, the way I look at it is like a tragedy of the commons solution where we can get into a situation where we’re all incentivized to take care of this thing together because as it improves, everyone gets value out of it, even though no one owns it wholly.

What Web3 means in the Rally space

Kathy: Yeah. I want to back up just a little bit because you’re using some terms that are new to people, and I think, especially in the WooCommerce space. With Web3, I want to first, can you define what Web3 means. Because there’s a lot of people who talk about it in different terms, but what does it mean in the Rally space?

Jordan: So, for Rally, the way we look at it is that the checkout is where a lot of the value happens in e-commerce. And we are coming out of an experience at Shopify where at some point they understood that the checkout is where they derive their power. So, they have a front end where the storefronts happen. They have a backend with e-commerce functionality and a third party app ecosystem. But that entire platform, the entire system is aimed at pushing as much transaction volume as possible through the checkout. And that is where the business model is located. You can see over time in Shopify’s filings how payments revenue very quickly overtook subscription revenue, and it went from being a software company to a payments company. And not surprisingly, they didn’t like what we were doing because we were taking a billion dollars a year off of their platform.

So, now that we’re building what we see as just that central part, just the gate, just that one part. We’re not building a front end or the backend. We want merchants to be able to do whatever they want on the front end, and whatever that they want on the backend. And we’re just building that point of transaction. And we think it’s very short term to think that we should apply the same concept of let’s push as many transactions as possible, and then take as much as possible through the checkout, and that will be our revenue, and we’ll send it back to our shareholders the same way Shopify does. We think that might work, but only in the short term. We’ll get into the same situation as other platforms where at some point we’ll get into competition with everyone around us between the front end of the backend and so on.

So, we want to take a very different approach and the way we see it, the way we can accomplish the goals that we have in mind while also being successful ourselves is by incentivizing and aligning incentives through a token and a token represents ownership in a network. And so, what we want to do is we want merchants to earn ownership in the Rally network based on how much revenue they’re processing through the checkout. And so, what we do is we drive value into that token instead of driving value directly into our shareholders.

Kathy: Okay. So, this token, explain exactly what the token means. Is this a token that the merchant owns?

Jordan: Yeah. So, merchants earn tokens based on how much revenue they’re processing through the checkout. And those tokens derive them certain benefits in the network. Things like, one, access to the product. You have to hold a certain number of tokens in order to use our checkout. The other thing is discounts. And so, the more tokens you earn, the less you pay us as a central company. So, the more you keep stake, the more you earn and keep stake, the lower your pricing goes. So you’re benefiting almost like as co-op, almost like a Costco. You get membership and now you’re a contributing member and therefore you get better pricing. And then, another benefit is governance. So we take a portion of our revenue and we send it to a community wallet and that wallet is controlled by the merchants themselves.

So, as that wallet earns more of the fees and has more money, then governance over the network has real teeth. You can do real things with real money with it. And in the future, there will be big decisions on the product, the platform, the network, what to do with the money, what to integrate with next, all these different things that we want over time, the merchants to control more than us. So right now, in the beginning, the company, the corporation plays a very large role in getting it off the ground. But over time, the role of the company is reduced and the role of the merchants themselves goes up. But that it’s that crossover, it’s that cold start problem to use a phrase that people are more familiar with. That’s what we’re trying to spark as quickly as possible.

The Rally network as a blockchain

Kathy: Okay. So the Rally network is kind of like a blockchain?

Jordan: So, we’re building on Solana and our opportunity and challenge all mixed up in one is to make all this really easy and understandable, and merchants don’t need to do anything. They don’t need a hardware wallet. They don’t need to go up the crazy learning curve of controlling your own money or anything like that. So, we are a web two, Web3 blend of a hosted software product that people drag and drop and click without any complications. But we want to bring the benefits of Web3 and ownership and tokens to the merchants using the product.

Kathy: Okay. Interesting. Why did you choose Solana?

Jordan: A number of reasons ranging from transaction costs, speed, availability of investment, availability of support, developers, the rust language, yeah.

Kathy: Okay. Interesting. And for people who aren’t really into the crypto space, Solana is a blockchain technology that is somewhat like Ethereum?

Jordan: Yes. It’s a layer one blockchain, which means where transactions and blocks are settled. Our job is to really obfuscate that from the merchants and users, it just needs to work as opposed to a DeFi protocol where the most important thing is anonymity. It’s not that. We want to bring a lot of this value and benefit to a web two environment that’s very understandable. And we think commerce is perfect for it because what we have in our checkout is an engine of value. It will spit off value forever, and that value we think is best earned by the merchants themselves. So, when we glimpse out into the future 10, 20 years, we think something like this can just keep going for a very long time because it won’t… The ideal, the plan is that it doesn’t hit that same top of the S curve, that it doesn’t start to fight and compete with its participants, and its ecosystem.

Why it’s worth it to pay attention to the Web3 bucket

Jonathan: On this Web3 topic, I pay attention, and this is perhaps a character flaw or just a personality quirk, but if I see things really hyped, I tend to avoid them. I’m like, “All right, there’s a lot of this stuff going on now.” Now, this is intention with my very open web-centric. So, what I suspect to be true right now is that there are things that I deeply resonate with that are in this bigger Web3 bucket that I’m just not looking at be because of all the hype I’m seeing around these NFTs, and Twitter’s asking me if I want an NFT profile picture. I’m like, “Get out of here. What are you talking about?”

And so, I’m curious. So, I’m in this category where I am suspecting deep resonance with some of these ideas because I believe in decentralization. I also see the tradeoffs of it, so I’m interested in how do you mitigate those things in a way that doesn’t compromise? What makes it essential? So, for you, as someone who’s building a company in this space, I guess, how would you explain to me, and I suspect that there’s others in this camp where it’s like, haven’t crossed over. There is probably alignment, but I’m not looking because of all the hype. What is it about this that’s worth paying attention to? Why should I care?

Jordan: In one word, the reason to pay attention and not dismiss is inevitability. It’s all coming. It’s not whether or not it’s happening. It just depends on the pace and how it looks.

Jonathan: Why? Why is it coming?

Jordan: You see things around you every day on the web these days that start to point in the direction of there’s only one solution, and that solution is more decentralization, more ownership, more control. I mean, everyone is familiar at this point, even consumers who have nothing to do with the software world are aware of platform issues. They’re everywhere now. It’s from Facebook to Twitter, to banking. It’s everywhere. It is serious. We’re seeing very serious applications of these problems and issues right now. We see it in politics. We see it in the Canada truck situation. I mean, it is everywhere, and a lot of the solutions are coming out of this movement. The problem is that it is ugly and it is messy and it is human nature on display, and that is not always pretty.

So, you do have to take in some things that are not attractive and you do have to rightfully look at some of the things with a lot of skepticism and some of the things are straight up scam and straight up illegal, but that’s human nature. That’s everywhere. That’s regular software, regular banking, open source, close source, online, offline, it’s messy. For me, I got put into a situation where I didn’t know what to do. I was building the company of my dreams with 20, 25 people, a small group of people really committed to providing value to our customers. We were really successful. Our customers were really successful. The company was successful. We were enjoying what we did. We got together. It was phenomenal, and we got destroyed by a platform. And if you are me in those shoes and every day you’re walking around with a guilt over your head, at some point in time, you get sick of it. And you look for solutions instead of just complaining.

Maybe we’re at the tip of the spear. Maybe we experience a particularly harsh version of the experience with a large platform. And maybe that puts us in the right place to lead in this direction, and that’s how I feel, and I think that’s worth it, that’s worth fighting for. And so, I’m comfortable betting a lot on it, and the next 10 plus years of my life I’m comfortable betting because I feel an inevitability. And when I talk to people who are a lot of times it’s investors whose job it is to look out into the future and think about how does the world look in the future? And how should I bet based on that now? There’s a lot of resonance there because the things that we’re saying are true. And if you go off and talk to app developers in these closed systems, they’re scared. And if you go talk to merchants that they’re not allowed to do what they want, they’re frustrated. So, whether it’s NFTs or commerce or whatever applications of these things online, a lot of it feels inevitable, and that feels like a good bet to me.

Behind the scenes at checkout

Kathy: I have an experience. So, when I first figured out DeFi, I was actually walking through. It might’ve been Target or a grocery store, and I just looked around at everybody who was buying things, just people buying toilet paper, and I realized that eventually they would make transactions and it would feel normal to them, but they wouldn’t understand that everything on the underside of that had changed over to decentralized finance, and it was just like this, oh my gosh, awareness that came to me of inevitability. And you summed it up right there. It was just kind of like this aha moment of it’s not necessarily going to change people’s lives, but people’s lives are going to change. Towards that experience, when someone’s shopping on a storefront that is going to use Rally’s checkout, how does it feel? What’s happening behind the scenes where they’re just checking out and they’re getting their stuff, but what’s really happening? What’s going on? Where are all the moving pieces?

Jordan: Yeah. We see an arc of that experience for the shopper on where it is right now and what we need to build for in terms of meeting expectations today, and then looking out, along that arc into the future on where it goes. So, right now, what we see in commerce is a world where there is very little connection between the shopper on one side of the screen and the merchant on the other. It literally does not know who you are. And in order to understand who you are, you need to fill out fields. You need to put in your first name and your last name and your street address and your ZIP code and your state. And then you need to punch in your credit card numbers. And then you need to hit the buy button. And you are conveying to that website that does not know who you are. You’re conveying, this is my data. Here’s the stuff you need in order to send me the information, and that feels so archaic.

Getting data should be one little beep

That is not how it needs to be. I almost think of it like what’s that painting? I’m not a religious person. The painting with God and Jesus touch fingers. That’s how transacting online should be. You get my data. One little beep. Here is the information that I have decided to provide to you, and just the information that you need and no more and no less. And I get to control it as the shopper, and here you go. Now you can send me my stuff. So, we want to work toward that. Right now, we need to meet expectations. In terms of checkout and conversion, you cannot do anything. You can’t put ZIP code before state because that’s not how people’s brains work and that’s not good for a conversion.

So right now we have a checkout that works in that environment. What we’ve added is the layer of convenience and that comes in the form of a vault. So, when someone goes to a Rally checkout and they do that thing once. Here’s my first name, last name, here’s my address, and here’s my payment info. We just ask you to do that once. And then we save it to a vault that we can’t see the data on, so it’s secure. And then next time you come back to any Rally checkout throughout the network regardless of platform or payment processor, as soon as you type your email address in, we send you an authentication and we recall your info. So, at least we’re trying to tackle that one issue of don’t make people keep giving you the information. It makes no sense

Jonathan: When you speak about inevitability, I’ve had that experience multiple times of buying something from a new merchant. And especially if it’s an independent site I’m like, “Do I really have to enter all this information?”

Jordan: Yeah. You don’t actually. It’s just that there is no cross platform network, right? So Shopify did this inside of Shopify, and it works only inside of the Shopify platform, and it works only for Shopify payments, right? So, it’s one platform and one processor, and it’s all geared toward modifying behavior toward their business model, use Shopify payments. So, we are the opposite approach. We are across platforms and across processors. So, we work with the payment processor to tokenize, and then we go one layer beneath that into our own vault so that we can recall that information regardless of which site and regardless of which processor they use.

Future improvements in the WooCommerce ecosystem

Jonathan: I like that a lot. One thing I’m curious about. You came from the Shopify ecosystem. You see a lot of alignment with the Woo space. You see a lot of opportunity in the Woo space. Tell us a bit about what’s your experience been like coming into WooCommerce so far and where I’d like you to go with that is from the outside in of all the time that you spent in Shopify, which I think is valuable for a lot of reasons, but sometimes we’re too insular in this space where people don’t realize how it works on other platforms. What are some of the things? Tell us about your experience. What are some of the things that you’d like to see improved in the WooCommerce ecosystem?

Jordan: So, going into the WooCommerce ecosystem, my general impression is that it is much more dispersed. Shopify takes it all and bundles it all together. Here’s this community of app developers, agencies, and merchants, and what that does is it makes it really easy to go to market. You know who the players are, you know who to talk to, you know where to go. Whether it’s Facebook groups or whatever else. It’s easy to identify who are the merchants, who are the app developers, who agencies are. And WooCommerce feels more difficult to grab onto and like, okay, this is where to go.

So, at the same time, people in WooCommerce are much friendlier, much easier to talk to, much more straightforward, much more accessible. And so, that is the trade off there in my mind. At Shopify, because we were never allowed in the app store, our playbook was partnerships. How do we just add value to partners? One of our biggest partners was Recharge that did subscriptions. So, we partnered with them and it ended up 50% of CartHook’s customer base were also Recharge customers. So we did this overlap thing that benefited everyone. And so, that’s what I’m looking for in the WooCommerce space.

And so far, it’s relatively straightforward because people are responsive and accessible. So there isn’t this ego thing around, well, you’re not established, so I won’t talk to you or you’re too small, or you’re not a plus partner, or like the platform itself was impossible to deal with, and they had very, very strange issues internally because you were always talking to someone at Shopify, but you knew that that person wasn’t making the decision, but you couldn’t talk to the person making the decision. That wasn’t allowed, or very, very difficult to do. So, you’re talking to someone who really their interest is just making sure they get the next set of stock options. That’s their goal, but you’re trying to do something for your business, but you can’t get to this. It’s a very, very situation. Whereas in WooCommerce, you just start emailing people and they respond. And all of a sudden you’re on calls and there’s intros. So, it’s much more open.

Advice of what Woo builders should be thinking about

Jonathan: And what are some of the things given the experience that you have and looking at the future, I guess, what guidance would you offer the WooCommerce ecosystem and given what you know and what you’ve seen and the inevitability that you feel if for the people who are listening who are building on WooCommerce, who are building product businesses, et cetera, what are some of the things that you’d encourage them to think about?

Jordan: That’s tough, and I think one of the most important things I’ve learned going into WooCommerce is to walk in humble and don’t walk in and just start saying, “You’re doing this wrong, and this wrong, and this wrong, because there’s a long history here.” There is a culture that is the product of a very long time. And a lot of people putting an enormous amount of effort. So to come in as a newcomer and just start to point things out that are wrong, I’ve been very, very hesitant to do. My plan is to focus on the merchants. My plan is to just kill it for the merchants. And then everyone has to pay attention and everyone’s got to play ball. So, coming in tiptoeing a little bit almost out of respect of let me just understand my landscape here before I start telling people what should, and shouldn’t be, I think is the right approach.

Jonathan: It’s also what I’ve seen work most effectively with the business in the space. When you focus on the merchants and providing value for them solving problems for them, there’s a degree to which a lot of the rest doesn’t matter. I’ve seen plug-in authors like upset with other plug-in authors for their pricing or what they’re doing. And like, well, wait a minute. Are your merchants happy? Yes. Awesome. That’s great.

Jordan: Yeah. I think if there’s any, I don’t even know if it’s advice, but one of the things that I’ve seen that I think would be really good for the ecosystem is to do as much as possible to wash away the stigma of charging. When I see heartbreak from app developers, you can’t be successful with that. You can’t have people who work really hard and then they’re just exhausted by whether it’s people stealing their code, them not being able to charge, being unsure of what they can and can’t charge or do. That heartbreak of here is my honest commitment in good faith, and what I get back is not commensurate with that. That is really dangerous because that will turn people off from continuing their contributions.

Open source and the inevitable GPL

Jonathan: I don’t know how, but I got lucky with that early on. Somehow people taking my stuff and remixing it didn’t bother me. And I’ve noticed that it will bother people. This whole idea of GPL, but what does that really mean? Just, I don’t know. Early on, I had people take some of my things and repackage it and sell it, and it bothered me at first. It’s like, yeah, there’s still a degree to which especially without attribution or anything, but there’s something where it’s just worked out so much incredibly on the balance of this is worth so much more that it is open and that we have the ability to do that. And that’s one of the things, I haven’t quite figured out how to best do it, but it’s like you have to learn that one way or the other where it’s like, “Hey, it is okay in this open source space if someone like takes your stuff.”

Jordan: Yeah, that takes time, and I’m working on that myself because I’m going to this Web3 space where composability and interoperability is like, that’s the point. That is what’s seen as I think a good quote is composability or interoperability is the same, is to DeFi or same to Web3 as compound interest is to finance. That’s the thing that’s going to eventually make it better than its close counterparts. So, you do have to be comfortable with that. Maybe I’m more old school in that way, so I have more of a learning curve to go on. I almost see like, yeah, open source once you have your remote as a very reasonable way to do it. But look, it’s been this way for a long time.

I’m friends with Adii Pienaar because we were both in the e-commerce space for a long time. I mean, that’s WooCommerce’s history. WooCommerce’s history is a company called WooThemes doing an unbelievable job at moving things forward. But from my understanding, and this is not coming from Adii. We haven’t really talked about this, but my sense of what happened with WooThemes is they were made to feel really bad for charging, for making money.

Jonathan: I know. There are still people a decade plus later that are like, “Hey, they were the guys who took Jigoshop and turned it into WooCommerce. Most of the space is forgotten. There’s a few people like, “I remember.” I’m like, “What did they do wrong? It’s open source.”

Jordan: You can’t have both. You can’t say it’s open source to do whatever you want with it. And then blame people when they take it, and do whatever they want with it. We got to have both. And that’s one of those things that DeFi has done well, and there are just forks all over the place and copycats, and it is part of the Wild West landscape of the whole thing. And everyone acknowledges that’s part of the price we’re all going to pay, but it moves things forward so much faster.

Kathy: That’s where innovation happens. It happens in the Wild West. It happens when there’s no rules. It happens when there’s no boundaries, and it happens when one guy goes into one salon and take somebody else’s stuff.

Jordan: That’s the thing. It’s mixed in with personal interest and personal incentive and people with big eyes that go to the west and say, “I’m going to dig up all this gold because I’m the only one here,” is not a bad thing. So, it’s like mixing the open source ethos with extreme capitalism is how we go a lot faster.

Kathy: Or selling shovels to the minors, the other angle of it, right?

Jordan: Which is what a lot of us do.

Kathy: Exactly.

The past, the Wild West, the future, professionalization

Jonathan: One of the things I want to be curious about, and especially over the next couple of years, there’s a certain critical mass. WooCommerce is big enough now. There’s a big ecosystem there. WordPress, even bigger. There’s growth on both fronts. There’s lots to work with in the space, especially as WordPress moves closer to its 50%. There’s this theme that I’m paying attention to. What is it going to look like to professionalize? Because it’s like, we acknowledge the wild west part of it, which has a lot of advantages. There’s also, for me, I’m really curious and like, “Okay, how do we take the essence of that and grow up?” Because there are trade offs of that. It’s like, you don’t necessarily want to bring your family to the Wild West.

Jordan: It’s true.

Jonathan: That’s the thing that I’m starting to pay more attention to is, for instance, I’m glad that you picked up on, you found that partnerships were a way that you mitigated, and this is how people do it in WordPress. It’s often partnerships are how you get distribution. One of the things I’ve been paying attention to post that is just how do we professionalize that? Because it’s still something that if you’re good at it, great. But for a lot of folks, it’s a big barrier where they’re like, “Well, what do I do?” And it’s something that ends up being unintentionally gate kept where it’s a few people do lots of partnership deals. And so, that’s the opportunity that I’m paying attention to and saying, “How do we help our ecosystem professionalize?”

One of the ways I think we do it is by companies like Rally coming into the space, bringing lessons and bringing ways of thinking from other ecosystems in, but really taking root. It’s something that I think, it’s like you can’t make it happen. That’s part of the beauty of this open source and decentralized yet I think is a real opportunity to improve. It’s like, “Hey, let’s grow ourselves up a bit and bring more professionalization to what we do.

Jordan: Yes. And they are sometimes at odds. Because one of the most powerful things is a centralized app store. That lessens dependence on partnerships and access and money and it flattens things out, and that’s a good thing. But even an app store is a bit of dangerous because if it’s centrally controlled. Right now the Shopify app store is crazy. They basically built an app store to democratize and then they layered in ads.

Jonathan: Have you seen Microsoft just last week, I think it was last week or the week before, their policies for or guidance for an open web app store. Did you see that?

The excitement of WooCommerce’s opportunity over the next few years

Jordan: I’ve seen more in that direction and I’m very happy with that. You see Apple’s app store, it ends up actually being the point where there’s the most control exerted, even if it was like a democratizing impulse to go in that direction. I am very excited about WooCommerce’s opportunity over the next few years, but I think it’s time constrained. It’s not going to be open forever. We have a moment in time right now where Shopify’s ecosystem to me feels unhealthy because the merchants are really frustrated. There’s a great Twitter thread by Moiz Ali, the founder of Native Deodorant. So, he wrote about product issues and those product issues are very real and felt very painfully by a lot of merchants, especially the most successful merchants.

They’re the ones that are just baffled, but why can’t I do all these different things? Why do I need to orchestrate 20 different apps to accomplish what I need? And some of the apps you won’t let me use. And so, it’s this very frustrating experience for a merchant right now. And then on the other hand, this was my retweet of that. And then putting in my own thread around the app store and the app store I don’t think is healthy right now because no one knows where things are going to go, what Shopify’s going to invest in one of their competitors, are they going to acquire one of their competitors? Are they going to launch their own feature set? So, there’s a lot of issues on both the merchant side and the app store side.

To me that does not mean Shopify goes to zero. They’re not going to zero, but what it does mean is that the environment exists for both merchants and app developers to be open to alternatives, and that’s the moment in time that I want to dive into as hard as possible. So, it’s that problem. How do we make a compelling enough case for merchants to leave Shopify? I don’t think it’s a traditional platform that does it. BigCommerce will pull some merchants over. So, will Salesforce, so will other platforms including WooCommerce. But I think what makes the most compelling argument for a merchant to come off is the freedom around being able to do what they want with their business. That’s what I see headless as, this opportunity for merchants to pick and choose what’s right for them instead of be told what to do inside of a platform. Choose the front end that’s right for you, and the apps that go there. Choose the back end that’s right for you. Choose the payment options that are right for you.

That’s why you can see what we’re doing in that context. We want to be the default checkout for that ecosystem that lets people do whatever they want on both sides. But I see WooCommerce as potentially playing a very important role, not just on the backend in the e-commerce functionality, but also on the front because it has this blossoming landscape of apps and people can do what they want and they don’t have to worry about all these centralization issues. So, I just hope that the ecosystem can put it together.

Kathy: It sounds like it’s coming together that there is an inevitability of what people really want and what people really need and all of the different puzzle pieces are coming together to make this really the perfect time for some real innovations to happen. And Jordan, I am so glad that you came on WooVisions today to talk about all of this. I love of the blend of your experience at Shopify, as well as the vision that you’re seeing of what’s happening in DeFi and bringing it all together and sharing that with us today. It was a really great conversation. Where can people find you if they want to learn more about Rally, if they want to learn more about your thoughts on e-commerce as a whole?

Jordan: Yes, so first thank you very much for having me on. It was fun. It was a great conversation, a great way to start the week. In terms of finding what we’re doing, it’s RallyOn.com. If you go to the blog, there are a few blog posts that spell out our vision and our experience and what we’re trying to get after. And if you want to follow me, it’s @JordanGal on Twitter and feel free to say hello. And if you happen to be in the Chicago area, I’m moving there soon, so be in touch.

Jonathan: Jordan, that was fantastic. Thanks so much for sharing your insights and perspective and excited to see what y’all continue to do with Rally.

Jordan: Thank you very much. Appreciate it.