With Special Guest Jordan Gal co-founder & CEO of Rallyon
More About Rallyon
We’re excited to announce that we’ve raised $6m in seed financing to build a world-class eCommerce checkout and a community-owned eCommerce ecosystem.
You can read more about it here:
A very big thank you to our investor group.
The round was led by Rainfall Ventures with participation from Felix Capital, Long Journey Ventures, Afore VC, Commerce VC, and some extremely helpful angel investors.
If you’re a merchant on BigCommerce or WooCommerce, sign up for early access here:
Interview
Intro: Welcome to the WP-tonic WordPress and SaaS podcast, Jonathan Denwood and his co-host Steven Sauder interview the leading experts in WordPress e-learning and online marketing to help WordPress professionals launch their own SAS. Take it away, guys.
Jonathan Denwood: Welcome Back folks to The WP-Tonic this week in WordPress, and SaaS. This is episode 653. Got a great entrepreneur founder of a couple of great companies. We’ve got Jordan Gal with us and he’s got a new company, Rallyon. He’s gonna be telling us about this new company about his experiences with his other company, it’s gonna be a great show. I’m gonna let, Jordan introduce himself. So would you like to give a quick 20, 30-second introduction to the tribe?
Jordan Gal: Sure thing. Good to be here, Jonathan and Steven thanks very much for having me on the pod. My name like you mentioned is Jordan Gal, I run a company called Rallyon. I used to run a company called Cart Hook. They’re similar they share DNA. So I’m looking forward to getting into it. I’ve been an entrepreneur for a long time. I grew up in an immigrant entrepreneur household. This was always kind of destined for me and I live in Portland with my wife and kids, and I’m looking forward to getting into all the stuff on the professional side and how the personal impacts it, whatever we have in store.
Jonathan Denwood: That’s great. And I’ve got my great co-host, Steven. Steven, would you like to introduce yourself to the new listeners and viewers of the tribe?
Steven Sauder: Yeah, my name’s Steven Sauder, from hustleFish.com.
Jonathan Denwood: That’s great. And before we go into this great interview that I’ve been really looking forward to, I’ve got a message from one of my major sponsors. We’ll be back in a few moments.
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Jonathan Denwood: We’re coming back. Also like to point out, if you’re interested in buying a sponsorship spot on the show, you can buy just one show, three months, six months, we’ve got various packages. All you have to do is go to the WP tonic slash sponsorship, and you will be able to see all the packages we offer. It’s a great way of getting yourself in front of the WordPress community. So Jordan, let’s start off. Maybe you can just give a slightly more detailed background about your history, about why you started Cart hook and what has led to the new company. Only a small question Jordan.
Yeah, no big deal. I think I can do it in, in, a relatively short amount of time and, I’ll get to how the two companies share a DNA. So my adventures in e-commerce started roughly 10 years ago when I started my own e-commerce company and we were selling niche products online. We were really going after the CSN stores and net shops model, those two companies would eventually become Wayfair and Hayneedle, but the way they started off was having hundreds of very niche sites. So we basically followed along with where they were putting their advertising dollars, and then we would clone those sites. So we had a network of very niche sites and that’s, how I got my start in eCommerce. Ran that company for, about a year and then sold it off. It wasn’t like a big, crazy exit. It was really because we were selling products that were available elsewhere, online, and in an Amazon world that didn’t feel like it was gonna work out for us. You really have to get a massive scale like Wayfair, and Hayneedle.
So we sold it off, but that’s what got me to eCommerce and wanted to stay in eCommerce but move over to the software world. And that’s when I launched Cart hook, cart hook started off as an abandoned cart app. It was really an attempt to build a better version of a terrible piece of software that we used that gave us great ROI every month. Every month we pay like $79 a month and this thing would make us $5,000 every single month. So I figured, you know what, I think I wanna be that guy on the other end of this deal and just built a better version of that.
So we ran that for about a year and a half in the WooComerce space Volusion and then when we went to do an integration with Shopify that had me staring at the Shopify checkout for a few weeks. And from my time as an eCommerce entrepreneur and how much we optimized our checkout, I spotted what I thought was a bigger opportunity. I thought you know what? I bet people in the Shopify space want more customization of their checkout. And so that we took a big risk and built a second product as a team of four. And that’s what the Cart hook checkout, turned into, and that product took off. So we did a hundred million in processing the first year in business and then 600 million in year two, and then over a billion in year three. And our product allowed Shopify merchants to use our checkout instead of Shopify’s. And we enabled a bunch of features in there.
So that was great, but it set us on a collision course with Shopify because we were poking them right where the business model is, which is at the transaction layer and at the GMV, and so on. So about a year ago, Shopify came to us and said, all right, we need, we need you to stop doing that. And we need you to move over, to be a supported app that does your post-purchase upsell your most popular feature, but inside of the Shopify checkout. So two things happened at the same time, the first thing that happened was we said, yes, we should do that because that’s the right thing to do for the company. And the second, anything that happened in my head, a switch turned, and that was I’m done working with Shopify. And so I put a new CEO in place and she’s been running the company for the past, year. And I went off and started Rally, with Rock who’s my co-founder, and a few other people. And now we’re building a checkout product, but for the rest of the web. You could see how the freedom, that mindset that WooComerce brings, is very attractive to us and why we are making our way into, this ecosystem.
Steven Sauder: With Rally and building a checkout interface for the rest of the web. Does that overlay into a Shopify stuff at all? Or the rest of the web except Shopify?
Jordan Gal: That’s right. Everyone except Shopify that’s right. And the reason for that is because they do an incredibly good job at monetizing payments. And so over time, they’ve realized that they’re effectively a checkout company with an ecosystem around it. And that’s what their market cap is tied to and their stock price and everything else. And so they’ve made a concerted effort to make sure that all revenue goes through their checkout. So they’ve had similar experiences with Cart hook and with OCU, which was one of our competitors with a recharge that handles subscriptions. And so the writing’s on the wall for anyone running a checkout on Shopify. It’s not gonna work out.
And so there’s still a lot of value to add to merchants with an independent checkout that really focuses exclusively on checkout, as opposed to an e-commerce platform that has a lot of things to worry about. So that’s where we fit in. we see what’s happening right now in e-commerce as a pretty traditional unbundling. So Shopify did an incredibly good job at bundling the stack and making it easier for people to come online and have no code and so on. But now it’s starting to become unbundled because merchants want more control. They want more control over the front-end shopping experience. They want more control over the backend and what’s right for them. And so in an unbundled eCommerce world, we wanna play the transaction layer in a very platform-agnostic way. You could do whatever you want on the front end. You could do whatever you want on the backend. And here’s this great checkout for you to use instead of rebuilding yourself.
Jonathan Denwood: That’s really interesting the way you said it kind of comes, the flux comes back and forth. you’ve been quite no I went to, MicroCon in Portland and you were one of the speakers there and you were quiet, I felt very balanced and fair about reflecting on your relationship with Shopify, the good, the bad, and the ugly. Would you like to touch that in, this interview, some of the things you’ve reflected about your ongoing relationship with Shopify?
Jordan Gal: Sure. I think it’s a really important topic because entrepreneurs, our peer group if you wanna call it, very often build on platforms. And there’s, big pro and a big con, right? The pro is that the audience is all bundled together and the distribution is relatively straightforward. You kind of know, right. You can go to build with and download sites that are using Shopify or Magento or Salesforce or woo-commerce. So you can reach them. There are app stores, there are communities. And that’s what draws us to build on top of platforms. We identify gaps in the functionality of the platform, and we build apps to add value to the merchants or customers of that platform. That’s the pro
The con is that you are building on rented land and that doesn’t always work out for you. And it’s tough to tell at the beginning, whether or not it’s gonna work out for you. It worked out for us for quite a while. We built a great business, 25 person company, 6 million ARR profitable, just took a few friends and family money. It was basically my fantasy business. It’s my dream. I used to go into the office every day. I used to fly to Slovenia to see our European office with another 10 people there. Every few months, I mean, I was very happy. I worked really hard and it was really ugly the first few years. And then we got to a place where it’s, a fantastic company. But didn’t work out for us.
Now at the same time, that doesn’t mean Shopify is a bunch of like evil people. That’s not really it it’s their platform and it’s their right. And the powers in their hands to exercise to defend their business. So this happens normally, there’s a great article by Chris Dixon called why decentralization matters. This is really like the article that brought me into crypto and decentralization. And I always looked at crypto and thought it was interesting, but I never understood how it fit into what we were doing until I read this article. And what it talks about is the S-curve of a platform life cycle. Where on the way up, the pie gets bigger so fast and effectively, it’s a party for everyone, both the platform and its compliments. In Shopify’s case it’s app developers and agencies and service providers, everybody wins on the way up, but at the top of the S-curve, as the growth starts to slow. And very often when a company goes public, there’s a lot of value to be had. And there’s one party in the equation that has almost all of the power and it is their fiduciary responsibility to grab as much of that value as possible.
So this isn’t like a good evil thing. This is just a, this is how it’s done. This is just what ends up happening. And you see it in Facebook, you see it in these social platforms, you see it on Twitter, kicking people off of their API. And these are many of them are great companies. But as an entrepreneur, without the power, you can get yourself squeezed. So, yeah, so I’d like to talk about that topic because maybe we were at the tip of that spear and we had a uniquely difficult experience. But it’s not that unique. I know a lot of people in different ecosystems and when you go behind the scenes and talk to founders a lot of ’em are quite worried and scared of the platform. And I would love to see less of that.
Jonathan Denwood: And there is a kind of follow throw or observation. I think Shopify in all fairness cause, I’m a WordPress junkie. I make my living through WordPress I’ve been doing this podcast for almost nine years now God helps me. So I’m really engrossed in open source and the principles of WordPress, but on reflection Shopify, they could have been a lot nastier to you really couldn’t they. I don’t know too much about them as a company. You agree with a little bit, but, compared to some other stories and how some other companies act, but the principles are just the same, basically they can do whatever they want can’t they?
Jordan Gal: that’s. Right. Yeah. And as a platform matures, more of it tends to happen. And so that traditional platform life cycle that all of us look at and really kind of accept as a fact of life. The exciting thing about web3 is that it starts to challenge that as a, it challenges the assumption that this is the way it has to be. And that part of it is exciting. And you can tell why it would be exciting to me given my, experience. And so we look to these new versions of the principles that are actually quite similar to WordPress’s founding principles, and we wanna apply them to commerce. And that part of it’s exciting.
Jonathan Denwood: Because some of the concerns that you’ve outlined have increasingly been entering the discussion, the public discussion in the WordPress community, because of all the capital that’s been invested in, the founder’s private company, automatic from salesforce.com. An enormous injection of capital, hundreds of millions of dollars has come from salesforce.com into automatic. So obviously they’re gonna require a return on a very large investment, and this has caused a lot of concerns, discussions worries. So it’s all linked, over to you, Steve.
Steven Sauder: Yeah. I would love to dive into this idea of decentralization on an e-commerce level because I think a lot of times when you’re thinking about a website, you’re also thinking, an e-commerce website, you’re thinking about the website component of it and the product shopping cart, checkout component of it. Like Shopify, right. Maybe I’m going there to sell a product, but I’m also building an entire website there or, like Squarespace. I go there to build a website. They also have e-commerce stuff that gets plugged in, or if I’m using WordPress, I’m gonna grab woo commerce. There’s just like this very standard kind of linear path. But all of a sudden, like you’re kind of talking about no like your website is one thing and e-commerce is something else that’s like not tied to it from a company kind of standpoint. Can you dive into that and kind of explain how does that works or what does that looks like? From a theory, and also like from like, from a very specific sort of angle as well.
Jordan Gal: The, way I look at this is, if you think about an online store it’s 2021, but almost all of the online stores we experience are very direct analogies to the offline buying experience. You have a homepage, that’s a storefront, you have category pages that are aisles. You have product pages that are standing in front of the product, looking at it, then you literally still put it into a cart, and then you go to a checkout line. So that analogy made a lot of sense 20 years ago when we were just trying to figure out, okay, how do people online, how do they buy offline? And let’s see if we can mimic that experience and kind of match those expectations. So that’s been the way online stores have been built for a really long time. But the tech now is good enough that it doesn’t really have to be that way.
We should be able to do whatever we want on the tech, especially on the front-end buying experience. We still need to match expectations and meet expectations because people, you, especially around their checkout, anything you do that doesn’t match expectations is bad. If you go city, zip state, instead of city-state zip, all of a sudden conversion goes off. So you really have to match those expectations. I think what excites us is if you separate the checkout from the underlying platform or from an underlying platform, you do give the merchant a lot more freedom on what to do on the front end. And that helps them find the customers where they are.
Right now it’s very much, I’m scrolling Instagram and now I need to leave Instagram and I need to go to a product page. I need to add something to the cart. I need to put something in the checkout. I need to get to the thank you page. I need to check my email. And then I go back to Instagram. That is a disjointed experience. I think that changes a lot over the next few years, I think about virtual experiences, I think about walking around a virtual store, I’ve been watching ready player one a lot, try to picture this stuff where this goes. And if I’m inside of decentral land in a virtual experience, and I’m going into the Nike store there, I can’t leave that experience the same way and go off to a different website. So that front-end buying experience needs to come all the way up to where the shopper is. In this case, it’s in a virtual store
Now at the same time, you still have to get you, you gotta get boring at some point. You need to transact. And then you need to take the order information. You need to send it back to the order management system so that someone can put it into a box and put it on a carrier and on a plane and then on a truck and get it delivered. So there’s this mashup happening around frontend experience, backend experiences. And that is made easier when the checkout can float. What happens in some platforms let’s take Shopify, for example, it’s relatively rigid in that you need to go to the storefront and the storefront is a visual representation of the product database. And then you need to transact in one place at the checkout, wherever you are, you gotta get back to the checkout, and then they can handle the backend fulfillment in order management and so on. So I think commerce changes a lot over the next few years and an independent checkout that doesn’t tell you what you can and can’t do around the front-end experience is valuable.
Steven Sauder: That makes so much sense because like the reason why Shopify is easy to use or WordPress and WooComerce is easy to use or, Squarespace is easy too because they make all these expectations. The expectation is products are organized like this, products are displayed like that, and here are the options that you could have, but they automatically stick you in this very predefined box with a predefined user journey. And you don’t have that flexibility to say, what happens if somebody comes in from a different angle, which everybody– which today, like the angle that somebody is coming into an e-commerce store is from all over. Someone’s not Googling your site or going directly to it. Like they used to as much, there are a thousand ways somebody can wind up there and that’s right. Yeah. That, that, that makes sense. Like if, and right, you decouple that you have that flexibility back
Jordan Gal: That’s right. Cause right now, no matter where you’re coming from as a traffic source, everyone’s gotta go to the same product page. And just from a conversion point of view alone, sending all of your very traffic to the same product page already you know that’s not gonna work as well, matching the buying experience to where the traffic source is coming from.
Jonathan Denwood: Wow. That’s great. We need to go for our break. We’ll be back in a few moments folks
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Jonathan Denwood: We’re coming back, we’ve had a great discussion. Jordan obviously passionate about his product, about all this, these are the type of guests that I love when they come on the show. before we go into the other part, the second half of the interview, I just wanna point out, if you are interested in, getting some recommendations about plugins, WordPress services, anything that I’ve used. I’ve got a page that recommends things that I think are best in the WordPress ecosystem. Just go to WP-Tonic slash recommendations, and there’d be a whole list there for you of everything that I recommend personally. But I don’t give any guarantees folks. Don’t come back to me if it doesn’t work out for you.
Let’s go back into this great interview. So I’ve got, a two-part question here, which is good for me, Jordan. Normally they’re 15 parts. So make a joke of it now. So how do you see, Rallyon’s relationship with WooComerce and secondly, the wording on your website, you say a community-owned ecosystem. What does that really mean? And secondly, why don’t you just make the thing open source?
Jordan Gal: Yes. Okay. All good question. So that was three, by the way, that,
Jonathan Denwood: That was 3 actually.
Jordan Gal: All right, now I’m gonna have trouble remembering all three parts, but the first part let’s talk about.
Jonathan Denwood: I do that all the time. It’s terrible.
Jordan Gal: It’s okay. I also speak with too many commas. So let’s look at WordPress. when we think of where Rally fits and which merchants will be attracted to it and which communities we wanna work in, it was very obvious that we were gonna go toward WooComerce. I think we shared a lot of ideology and DNA with it. I like that woo commerce puts the merchant in control and it’s also the type of merchant that wants to be in control and our product that really takes a set of pages in an eCommerce business’ life that normally they don’t really control. It’s usually owned by the backend platform and you really start to lose a lot of control when you get to the checkout. And we like to flip that on its head and say, this is completely yours, and you can do all this new stuff with it. So for a variety of reasons, it made sense to us to go toward WooComerce. Number two was community-owned. What was number three? I think maybe number three was better to go first.
Jonathan Denwood: On your website, you got a community-owned ecosystem. What does that actually mean?
Jordan Gal: Sure. So let’s get into this. So hopefully I can do a good enough job explaining this in, in like a minute or so. So if we think about e-commerce, let’s just think about an e-commerce platform. You have the front end, you have the back end, and then you have the transaction layer in between the two. The checkout is now in, and let’s take Shopify’s case, where the power comes from is the checkout. That’s where you can really tell people what they can and can’t do. That’s where you can do things like you can have featured only if you use their preferred payment processing method, things like that. So a lot of the business model ends up focused on the checkout and a lot of the power and sometimes coercion happens at the point of checkout. So now, if we look at where we want things to go into a more headless, ecosystem where the merchant really can choose their front end, choose their backend and choose their checkout.
If we wanna succeed in a new environment like that, really our ideal is that we connect with a bunch of front ends and a bunch of back ends. And we become this unifying, checkout layer, which is great and can be really good for the business. The issue there is, if we don’t watch out, we’ll end up in the same exact position as Shopify where we’ll do the coercion and we’ll have the power because all the payments will go through us. So if we succeed, we’ll end up on the same S-curve as any other platform and the whole goal of the company is to avoid that. And so when we think about how we avoid that and how we do it in such a way that’s still financially feasible and in incentivizing to ourselves where we end up is looking toward web3 and looking toward using a token in a very specific way.
And so if you think about what Shopify does they have a front end, they have a backend, and then they have a gate that goes through the middle. And that gate is the checkout and all the transactions go through that gate. And that’s the opportunity to tax that gate. So you take a portion of that as your take rate, and you bring that home to your shareholders, and as a traditional business is happy. So we just have the gate, we’re just building the gate and we wanna work in a cooperative way with the front and the backend. So we kind of have to think long term in this, we can’t just extract otherwise we’ll end up in fights with everybody and won’t work out for, for us.
So instead of using our gate to take home, all the value, what we wanna do is take that value in the form of the payment processing revenue and drive that value into a token. And that token is earned by the merchants using the checkout as they process revenue. So as you process revenue you earn tokens. And so what ends up happening is as the project, as the company grows, the more revenue is processed through the checkout, instead of us keeping all of that value and revenue, it gets driven back into the token that’s owned by the people who are actually driving the transactions. So in that way, it becomes an eCommerce ecosystem, a network that’s owned by the merchants that are actually processing through it. Did that make sense?
Jonathan Denwood: You’ve lost me a little bit, but I’m not the sharpest tool, but I don’t, I’m the bluntest either, but I think you are a bit sharper than me. So I’ve got two follow up and then put it over to Steve. So, how are you gonna make money? Because obviously you’re not a charity and secondly, why don’t you just make the whole thing open source?
Jordan Gal: Yes. So that right. That third question I think is really, really important. It may be that in the future, we do end up as open-source, and really, we might end up being hosted in a decentralized way. So no one can even take it down, not ourselves, but I see that as off in the future. And the reason for that is because there’s nothing like a small group of very interested people to get a project off the ground. And so I have a lot of ideology behind this, but I’m insistent on the fact that it needs to be close-source and controlled by a small group of people in the beginning. To me, it gives it by far a better chance of success. As opposed to an open-source project off the bat,
Jonathan Denwood: But you’ve publicly stated, I feel that you’ve got a 6 million investment. Those investors want a return and you need to make a return. How does that work with your aspirations of it being open source?
Jordan Gal: So this is where things start to get interesting in terms of different business models and web3. So the investors right now they’re inequity. They own stock in the company. In the future. What we want to do is bring on investors, including the existing investors and move their ownership into the token instead of our company equity. And what that allows you to do is to operate almost as a public Good. So let me explain what I mean by that. One of the things that crypto can address in an interesting way is the tragedy of the comments. You have a park down the block that no one cares about. It goes to hell compared to the yard in front of your house that you care about, that you maintain. The interesting thing that crypto can do in terms of business models is can set up a situation where we, as an independent private profit-motivated company can own a significant portion of the tokens.
And so, as long as the token value goes up, we remain financially incentivized. So the merchants can own in the future, in the model, in the future few years out, the merchants own more of the tokens than we do, but we can still operate it from a very incentivized point of view because we all own the tokens. And as long as it’s being used and the value goes up, then the company can make money also. So that’s like the bigger version of it. And along the way, there’s revenue in payment processing, there are payment processing partnerships, and we charge merchants directly. And as they earn tokens, they pay us less. So you start off paying us 50 basis points, and then as you earn more, you go down to 40 and then down to 30 and then down to 20 and so on. And that’s part of what drives the value in the token. That money, instead of going to us, it’s going back into the token itself.
Steven Sauder: And, and this idea of the token is that someone could sell that token and get like if I own a token, can I sell a token? Or is that token just a credit for a lower price on the checkout?
Jordan Gal: You can also sell it, it’s yours.
Steven Sauder: So, if a transaction 50 cents of every transaction let’s say, goes to this skimmed off the top goes to this token system, you guys are entitled to a certain portion of that because you own the tokens to it as an e-commerce person I also am entitled to a part of that because I have some tokens from doing the sales and as the community grows and gets bigger, we all develop more and more, money out of these tokens from just sending more and more people through our checkout process.
Jordan Gal: That’s Right. So it’s our job to make them as valuable as possible to own and stake as opposed to selling. So hence the discounts instead of paying full price and governance in terms of what happens with the project, what happens with the roadmap? So we have to drive the benefit of holding onto it as high as possible. So that supply comes off of the market as opposed to getting dumped onto the market.
Steven Sauder: Do you feel like, there is a roadmap in trying to educate the e-commerce people about how the system works? Or is that, or is that some like, is it fairly familiar to people with Bitcoin and all these other cryptos out there and how they kind of operate?
Jordan Gal: No, I think it’s effective I just think of it as 0%. Yes, the people who are into crypto will be attracted to it, but our assumptions and how we operate and what’s in our admin and what’s in our UI and so on is that you don’t need to think about any of this stuff. All you know is that you’re getting benefits. And so you don’t have to yeah. That’s one of the bigger challenges. And I think that’s a bigger challenge for the market as a whole because right, all this infrastructure got built and all this DeFi got built and the learning curve to get into it is preposterously high and dangerous. And so this next wave of companies like ourselves and, as a company out there called brain trust, which is like a decentralized Upwork competitor, we have to build the application layer on top of this infrastructure in such a way that obfuscates all the tech and the weirdness and the danger and all that. We just need to bring the benefit up, which is, it’s a fun challenge actually.
Jonathan Denwood: Right. I think we are gonna wrap up the podcast of the show, hopefully, Jordan can stay on with us for the bonus content, which is about another 15 minutes. We’re gonna do a bit of a drive around, Bitcoin about blockchain, about, I think I’m following his vision. I just want to confirm it in the bonus content. So Jordan, what’s the best way for people to find out more about you and, Rallyon?
Jordan Gal: Yes. Go to Rallyon.com. If you’re interested in what we’re talking about, go to the blog. I wrote three blog posts that kind of layout a lot of the stuff about our experience what’s happening in the market and where we’re going. Especially the people out there rolling their eyes, just from, hearing the word crypto. I encourage you to go check it out. And then follow me on Twitter at Jordan gal. If you just wanna say hi,
Jonathan Denwood: yes. Do that. I think Jordan’s doing some really interesting stuff Rallyon. It’s gonna be great to see where it goes, Steven. How can people find out more about you, your thoughts, and your company?
Steven Sauder: Yeah. Just head over to hustlefish.com.
Jonathan Denwood: That’s great. And if you want to get more involved with the tribe, get some real insights into what I’m doing with the podcast future guests to get part of the community discussion. Join the WP-Tonic Facebook group, which is the WP mastermind group about which tries to help anybody trying to make a living in the world of WordPress. So please join us there. We are always trying to encourage a bigger discussion. We’ll be back next week with another fantastic guest. It’s gonna be our last show of 2021. And we’ve got a great guest as well a bit like Jordan. It’s gonna be a great discussion and please join us for the bonus content, which you’ll find on the WP to YouTube channel. We see you next week, folks. Bye.
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