Omer (00:09.280)
Welcome to another episode of the SaaS Podcast.
I'm your host, Omer Khan, and this is the show where I interview proven founders and industry experts who share their stories, strategies and insights to help you build, launch, and grow your SaaS business.
In this episode, I talked to Jordan Gal, the co founder of Rally, a headless checkout that gives e commerce merchants more control over their checkout experience.
In 2014, after running his own e commerce business for years, Jordan launched a simple abandoned cart app, which eventually became a customizable checkout for Shopify merchants.
By 2020, Jordan and his co founder had found product market fit, built a product that people loved, and were generating about $6 million in annual recurring revenue.
And they were profitable.
And then everything fell apart.
They experienced what every founder fears when building a business on someone else's platform.
Shopify suddenly decided that it wasn't going to allow them to offer their product to any more Shopify merchants.
In this interview, you'll learn how they overcame numerous challenges to to grow to over $6 million in ARR, how they handled the realization that their dream was crushed, and what they're doing differently now with their new SaaS company.
Hope you enjoy it.
Jordan, welcome to the show.
Jordan Gal (01:37.200)
Omar, thanks so much for having me on.
I'm excited to be here.
Omer (01:40.000)
Do you have a favorite quote, something that inspires or motivates you that you can share with us?
Jordan Gal (01:43.880)
I'm a Winston Churchill guy.
I'm a Never surrender.
That's my quote.
So a lot of the Churchill things about resolve and perseverance, that's where I go.
Omer (01:53.650)
I keep meaning to see Hour of Darkness.
I still haven't seen it.
Jordan Gal (01:56.130)
Yeah, it's good.
And I had a phase, like two, three years.
That's all I read, just biographies.
And yeah, I find it inspiring.
Anyone who acts bravely when it's unpopular, I like that story.
Omer (02:09.330)
Love it.
All right, so tell us about Rally.
What does the product do?
Who is it for, and what's the main problem you're helping to solve?
Jordan Gal (02:15.490)
Sure.
So Rally is a checkout product for e commerce merchants.
And what it does is it gives merchants control over the most important pages of their business.
Right now there is an assumption that an online merchant that wants to build their e commerce business, that they have to accept the checkout that's provided to them by the platform that they're building on.
And we challenge that assumption and we say, look, we specialize in this.
We're going to do a better job at it than anyone else.
And you as the merchant should be in control of your business.
And you should have the option to choose these different parts of your business, whether front end or backend or checkout.
And so we're building for something called the headless ecosystem, and I'm sure we can get into that.
Omer (03:01.930)
Yeah.
So maybe this is a good time to talk about that.
So how is that different to more of a traditional integration, like having a checkout on Square, for example?
Jordan Gal (03:13.690)
Yes.
So a lot of the popular e commerce platforms that you see, Shopify, BigCommerce, Salesforce, WooCommerce, Magento and so on, they were built as monoliths that provided both the front end.
Right.
The storefront experience that shoppers actually interact with to the checkout, the transaction layer that accepted payment and then put an order into the back end.
And the backend handles products, orders, customers, and so on.
And these platforms did a fantastic job at bundling that tech stack.
Right.
You think about Shopify success, it's because there's never been a piece of software better at bundling all that tech and letting a merchant get online selling products quickly.
So the E commerce market specifically around Covid the amount of focus and investment and resources that went into E commerce, what's starting to happen is that as merchants get more sophisticated and have more resources, they want to have more control specifically over the shopping experience on the front end.
And these platforms that were built monolithically are not that flexible.
The storefront is like a visual representation of the product database.
So all the product pages look the same, all the category pages look the same, and so on.
And that desire for more control over the shopping experience is leading into what's called the headless approach.
Headless literally means take the head off, take the front end and detach it from the back end so that the merchant has a lot more control over the front end shopping experience that's detached from the back end.
So that's generally what headless means.
We think it goes beyond the front end.
And where it ends up is where a merchant can pick and choose what's right for their business.
A specific front end, let's say builder IO for the front end and and then a specific backend, whether it's BigCommerce's backend or swell or commerce tools or commerce layer.
And we want to be the unifying checkout for that ecosystem so that you can very easily wire up a stack of technology to get online easily without a ton of development, but still have all of the flexibility of choosing which parts, which front end, which back and which checkout are Right.
For you.
Omer (05:24.290)
Got it.
And this sounds like this is good for merchants, it's good for app developers, but what's in it for the E commerce platforms to open up?
Because presumably they need to provide the APIs for all of this to happen.
Jordan Gal (05:39.730)
That's right.
It is a difficult relationship between the established platforms and this demand that's coming from merchants.
Now there are some platforms that are more accommodating to it and some that aren't.
We think that it is merchant driven and if that's what the merchants want, then that's where the market is going to go.
There is some difficulty if, let's just say, for example, you're an E commerce platform and all of a sudden your merchants, many of which are your largest and best merchants, come to you and say, we want to use a different front end, we don't want to use your front end anymore, we don't want to be restricted by your theming language and we want a totally different front end.
You want to be supportive, but that's not a fun thing to watch your merchants go off and start to build their storefronts elsewhere.
So there's tension.
Omer (06:27.390)
Which products do you currently integrate with on Rally?
Jordan Gal (06:31.710)
So right now Rally works with traditional and headless.
So we, we almost have to admit as a software company, what we like to do is we like to build for the future.
We like to build where we think the market is going, not exactly where it is right now.
And we think the market's going toward headless and we see the front end going first.
But there's also a lot of backend API driven platforms like the ones I mentioned earlier that are starting to get funding and starting to get traction.
So that's the ecosystem that we're building for.
But practically as a software company right now, we have to admit the majority, overwhelming majority of the gmv.
That's the amount of process revenue in the market is happening on traditional platforms.
So we are starting off there.
So we have an integration with BigCommerce and with WooCommerce, and we.
Our first bet in the headless ecosystem is with a platform called Swell.
Omer (07:26.410)
Got it.
And the business was launched earlier this year in January 2021.
Jordan Gal (07:32.010)
Yeah.
Omer (07:32.650)
And you recently raised $6 million.
So congratulations on that.
Jordan Gal (07:35.930)
Thank you very much.
Omer (07:36.810)
But I think the really interesting part of this story is that the reason you are building this business and this product today is part of the journey of where you ended up with taking a different approach with your previous business, which was Carthook, which is more of A traditional integration.
And we're going to talk about the story, but in a nutshell, it basically was you built a pretty successful business, found product market fit, it got to profitability, things are looking good, and then suddenly the platform that you were building on decided they had other plans.
Jordan Gal (08:18.130)
Yes, that's right.
So a lot of what we're doing at Rally is influenced by the experience at Cardhook, which is my previous company that I started in 2015.
And that started off as an abandoned card app.
And then we found a better idea and built a checkout product.
But we built it specifically for Shopify, just one platform.
Omer (08:41.050)
So let's go back to when you came up with the idea for Carthook.
Like, where did the idea come from?
Jordan Gal (08:47.610)
So I used to be a merchant.
I used to run an e commerce business with my two brothers.
We sold niche products online.
We were going after CSN stores and Hay Needle.
Those would eventually become Wayfair, and Hay Needle was actually called Net Shops back then.
And both of those companies had hundreds of niche sites.
And so my brothers and I took a look at what they were doing.
We liked the model and we started following and tracking where they were spending their advertising dollars.
And we would build a similar site that sold niche products like Adirondack chairs and fire pits and solar lighting products, niche products that were difficult to find offline.
And back then it worked because Google was still cheap.
And you would get a better conversion rate when sending traffic to a store dedicated to that narrow category.
Almost like you get a better conversion rate when you go to a fishing store compared to the fishing aisle of a sporting goods store.
That's basically the analogy.
And we built that business and grew it and then sold it.
And then I wanted to get into software, but fell in love with E commerce through my experience there.
And so I took a look at one of the products that we used at our e commerce business that had a very strange ratio of providing us a lot of value every month.
But the product was horrible.
And so Cardhook started off as a clone of that product.
We just wanted to make a better version of an abandoned card app.
Omer (10:18.560)
So you sold this e commerce business, I guess, like several years before you founded Carthook, is that right?
Jordan Gal (10:24.380)
Yes, that's right.
Omer (10:25.500)
Okay, so tell me about.
Okay, so you have the experience.
You've seen the.
This problem from your own experience that you think that Cardhook can solve.
How did you get to the point where you're like, I'm going to go and build a software business?
Jordan Gal (10:39.220)
Here.
Yeah.
So I got into the microconf scene with Rob Walling and started going to those conferences and meeting people.
And I'm a non technical founder and so my biggest challenge was finding someone.
I didn't have a lot of money, I didn't want to raise money and I wanted to find a partner to build it so that I could go off and sell.
So that's what I did.
I got a little bit lucky.
I ended up finding a family friend randomly.
My wife and I were in San Francisco for a few months.
We literally bumped into him at a laundromat and then started going to lunch.
And then I effectively had to convince him that spending two, three months building this product with me was worth his time.
So that was like the first big challenge how to get the thing built.
And so I gave him a piece of the company.
He built the first version and then I was off and running and had something to sell that had recurring revenue.
That's basically how I looked at it.
Omer (11:35.780)
What did that first product look like that you went out to try and sell?
Jordan Gal (11:39.220)
It was a piece of JavaScript that sat on the checkout pages of e commerce platforms.
And when a shopper got to the checkout, as soon as they put their email address into the email field, our JavaScript would capture the email and then wait 60 minutes.
And if they hadn't completed the checkout page, meaning if they hadn't reached the thank you step within 60 minutes, we would then consider it abandoned and then would trigger an email campaign that brought out the products that they had in their checkout into the email and said, hey, you left this in your email.
Click here to come back and buy it.
So that's it.
Pretty straightforward.
Omer (12:19.160)
And I'm just trying to get this sort of the timing right here.
So Cart Hook launched 2015, but you'd started working on this, what, a couple
Jordan Gal (12:27.480)
of years before the abandoned card app?
Well, no, it was right around the same time I think we started it like 2014 and then had it built.
And then I went about just getting the first few, few customers and I did that through cold email, which worked better back then than it did now.
Omer (12:45.020)
And everything worked better back then.
Jordan Gal (12:47.580)
Seriously?
Omer (12:48.180)
Okay, great.
So you start emailing other merchants and getting them to try putting this JavaScript on their checkout page.
Were you charging for the product at the time?
Jordan Gal (12:58.060)
I was and I had a great pricing pitch.
I had a no brainer offer which really helped.
The way I positioned it was this tool makes trackable roi.
That was one of the things that was really important to me as a characteristic of the software business that I wanted to get into.
I wanted to be able to point to how much money I was making my customer because I thought that would give me more pricing power and would be more easily justified on an ongoing basis.
And so this product had that benefit.
When you click on an email link and then you go and buy the product from the store, you can track that.
And then in our product we can show you how much we made you.
And so we base the pricing on that.
And my pitch was, you'll pay 10% of the recovered revenue up to $99 a month.
So once you hit $1,000 in recovered revenue, you were capped.
You weren't going to pay more than $99 a month, and if you recovered less than a thousand, you would only pay 10%.
So people heard that and basically said, so I don't understand why I wouldn't sign up.
And I would say, exactly, love it.
Omer (14:06.670)
I think having a great offer is so underestimated that you can talk about features and all the great things that you do, but ultimately it's about giving people risk reversal and making it exactly like such a simple offer that why would I say no to it?
Jordan Gal (14:30.390)
So it was this combination of building up desire by showing the product over a demo.
And I did all of this direct sales on a call, showing the product, building relationship and so on, and so building up the desire.
And then naturally in the person's mind, it's okay, now I want it.
How much is it going to cost me now?
What is this trade off I'm about to make?
And then I would effectively show them a way that the trade off like just wouldn't cost them anything.
It would effectively be risk free because you were capped at how much you were paying and if anything below that, it was 10%.
It just felt so fair that it removed that obstacle entirely.
Omer (15:06.780)
So tell me again about what the product did.
So if somebody hasn't completed checkout in 60 minutes, what was going on in the back end of your product, what would you do?
Jordan Gal (15:16.300)
Yeah, we would capture, we would capture the cart contents.
So let's just say I have, I don't know, I have a native deodorant stick in my cart and I go to the checkout page and I start to check out, out.
But for some reason I stopped checking out before I complete the purchase.
Nowadays everyone's used to getting these emails that say, hey, you left us in your card.
Come back for free shipping.
Back then, it was not yet A best practice.
And that was probably the number one thing for us to overcome.
People weren't sure if they should be like quote, doing that to their customers.
This is, it has an analogy to what we ended up doing later on with the checkout product.
Because it was one of these things that I thought was so obvious that it was inevitable that it would become a best practice.
So I felt very comfortable building in that direction.
So an abandoned cart function is effectively if you don't do it, you don't make that money.
And if you do put in abandoned cart emails to people who abandon the cart, then you do recover some of that.
So I liked that scenario and felt comfortable, even though there was friction initially that it would become a best practice.
And that is what happened.
Omer (16:22.770)
Got it.
And you started off raising friends and family around about, I think it was like 275k to get this off the ground.
But then a couple of years later you discovered a bigger idea.
And can you talk us through what that was and how that changed what you were working on?
Jordan Gal (16:39.970)
Sure.
So at Cardhook, originally with the abandoned card app, I started off with that original co founder and a few months later he got like his dream job offer and the company was doing like a thousand bucks a month.
So I, I insisted that he take the job offer and then I, I ended up on my own for a few months and I just did this one to one very manual sales process.
Got the first 30 or 40 customers or so and then I got an opportunity to raise some friends and family money.
I had gotten a little bit of acquisition interest and it was felt too early.
I told a few people about it and they suggested instead, why don't you just raise a few bucks from us, you know, some of like my friends from college, that sort of thing.
At that point in time I said I do want to do that, but I do need a technical co founder.
And that's when I found my co founder, Ben, and he brought some people to the table also.
And then we were off and running.
We raised that initial 275k, we started growing the business, we started doing a lot of partnerships and integrations and that's how we got from 5k a month up to like 10 and then 15k month.
And that was our playbook.
Our playbook was do an integration with the platform and then try to do some co marketing with that platform and then keep doing that over and over again.
What happened was at some point we got enough demand for the Shopify integration and we had been putting it off because Shopify took away some of our magic.
When you go on to Shopify's checkout, they wouldn't let you put JavaScript on it.
And so we had to capture the email address through the API, which took away some of our magic, which was we'll capture the email address as soon as it's typed in the field.
And we couldn't do that.
So we were hesitant to build the integration.
Eventually there was enough demand for it, so we did.
In that integration process, I was effectively staring at the Shopify checkout page every day.
At some point in the day, I would come across and do testing and so on.
And from my experience as an e commerce operator, I was the one responsible for conversion rate optimization in the business.
And one of the things I did is I became good at conversion optimization and the concepts around it, around building trust and showing different trust symbols and how not to surprise at the wrong time and how to meet expectations.
And one of the things that I got really good at was optimizing our checkout page.
Now, when we went to do this integration with Shopify for the abandoned Cart app is when I bumped up against the reality that Shopify allowed no changes to their checkout page at all.
At that point in time, it was still on myshopify.com, it wasn't even on the store's domain.
And that's when the light bulb hit me.
And I said, I bet there's an enormous amount of demand for a customizable checkout for Shopify merchants.
This is the most popular, fastest growing platform and yet you can't do anything on their checkout.
And I bet there's demand here.
And that's how we found the bigger idea.
Omer (19:35.060)
And so Cart Hook basically became a customizable checkout for Shopify.
Jordan Gal (19:40.340)
That's right.
Now, it was really important, right?
This was a big risk, right?
We had four people at the company at the time, and we didn't raise very much money.
And to build a second product was a huge risk.
It was a bet, the farm bet.
Now, because of the way we grew the Card Hook abandoned Card app was this partnership channel type of an approach.
What really ended up happening is that we built an inbound engine.
And so all these integrations and partnerships just kept sending us new customers.
And that's what gave us the confidence to say, you know what, we can work on a second product, effectively halt any progress on the original app for 6 months because we knew the revenue was still going to keep coming in and actually still growing.
And that's what gave us the confidence to say, yes, let's build the second product.
Let's make this big bet.
And that's when we built the customizable
Omer (20:36.950)
checkout for Shopify at the time, in terms of integrating with Shopify and.
And getting access to their API to do something like this, like, how easy or hard was that at the time?
Jordan Gal (20:51.150)
This was one of those things where, you know, as an entrepreneur, sometimes you just have to make it work.
The way we did that was we found first we looked at the API and said, well, it doesn't look like there's any way to do it.
But I didn't want to quit on the idea, so I kept pursuing it until I found a developer advocate who worked at the company.
And they let me know that we couldn't build it now, but they're working on an API that would allow it to work.
And so then we had those two things combined.
We had what we thought was a good idea, and then we had a little bit of inside info that maybe we could move faster than other people could.
And so that is what told us, yes, let's go for it, let's start building it.
And then we made it work.
We had.
There were a lot of workarounds because it wasn't meant to work, but we just had to figure out different ways to do it.
And hats off to the product and technical teams that were able to do it.
Even though my rudimentary approach was how do we take Shopify's three pages and put them all on one page?
That's basically what I explained to the developers.
And they were like, you are out of your mind.
We can't do that.
And then two days later, they came back and said, okay, I think we figured out how to do it.
Omer (22:03.600)
So you've got the idea, the opportunity eventually appears through the new API functionality that they made available, and your team figures out how to build the solution.
And this was something that when you shipped, it was pretty popular very quickly, right?
Jordan Gal (22:24.010)
It was.
I never recommend to anyone in the software world to build it with the hopes of as soon as you launch it, they will all come knocking at your door.
Omer (22:34.820)
Because usually that's what happened, right?
Jordan Gal (22:36.740)
Usually they don't.
That's right.
But I was convinced.
I knew from my E commerce experience and.
And what I had done, because the team was pretty worried.
They were.
And it was my job to keep them confident in pursuing this idea that was really risky.
And the way I did that was by doing the research work specifically where I ended up zeroing in on was the Click Funnels Facebook group.
So Click Funnels did a ridiculously good job at building a community in Facebook.
This is five years ago.
And what happened was Click Funnels popularized something called post purchase upsells.
So Click Funnels was built as like a no code funnel builder.
And Russell Brunson, the founder there, did a great job at educating people on the software.
And while the software itself was initially built for digital products, things like consulting and webinars and ebooks and that sort of thing and courses, what ended up happening is a lot of people there ended up selling physical products, and clickfunnels was not really built to sell physical products.
So there was no backend.
There was no orders and inventory and shipping and all that functionality.
So when people got onto clickfunnels and started finding any success at all selling physical products, they immediately hit a wall of difficulty and they were exporting CSV files and they were losing their minds trying to figure it all out.
So a lot of those merchants looked over at Shopify and said, we want Shopify's backend, which is superior for e commerce functionality, but we don't want to lose this funnel approach to selling that Click Funnels allowed.
And so that's where I saw the right place for our product to sit as an initial kind of stab at the market.
So initially, Carthook's checkout wasn't even in the store at all.
It had nothing to do with the Shopify store.
It was simply a bridge between a clickfunnels landing page and then a checkout system that enabled post purchase upsells that then put the order information into Shopify's backend.
That was the mvp.
And that hit a nerve, like immediately.
And the second we launched it, it was wild omer, like I miss these days.
I did demos for a lot of people and the reactions on those demos were the most satisfying thing of my career.
You would get people on a demo and they would be just losing their minds.
They'd be like, I cannot believe what you guys built.
And they would stop and like text their friend and then give their friend the zoom link.
And the friend would come on and the friend would freak out with them.
It was like, oh my God, we are onto the right thing.
We are definitely onto the right thing.
Omer (25:26.000)
Wow.
Jordan Gal (25:26.480)
Now, after launch, that's another story.
Omer (25:30.080)
So if I understood this correctly, the focus of the MVP was about helping primarily click funnel customers to start selling e commerce.
Type these kind of physical products on Shopify while still retaining some of the benefits they got from this click funnels, funnel type experience.
Jordan Gal (25:54.110)
That's right.
And here's some irony.
I want people to keep in mind what we're describing now when we end up talking about Rally, which is five years later and effectively trying to take the same approach.
What the approach boils down to is that the merchant should be the one in charge of their business, not the platform.
The platforms are trying to build these businesses for as many merchants as possible.
And what ends up happening is that they cater to the middle and that limits the freedom and flexibility for merchants.
So these merchants, they wanted Shopify's backend, which is great for E commerce, and they wanted flexibility on the front end and they wanted control over their checkout.
So it's funny just hearing myself describe it, because in many ways we're trying to do the same thing with Rally five years later.
Omer (26:44.360)
Okay, so you teased us with what happened after launch.
So what did happen when you launched?
Jordan Gal (26:49.240)
Okay, so we launch, I think it's like September we launch and immediately like 50 signups in the first like few days.
And at this point in time it was $99.
I think it was $99, yes, because that's what clickfunnels was.
And I was like, all right, that's straightforward.
Let's just go with that pricing.
And so that's obviously a good sign.
Now we very quickly understood that we couldn't handle that many people.
We were still in the early stages of really understanding what it required to run a checkout product or a checkout product was not like our abandoned cart product.
The abandoned cart product, if things go wrong and you don't send out emails for two hours, you just apologize and you move on.
A checkout product, if it goes down for 60 seconds, then you already cost people money.
So we had to figure out how to handle this new thing that we were managing.
And at that point in time, we didn't know what we were doing.
So those first 50 signups, the way I describe it is we would load them up into a conveyor belt of torture and we would chop them up and they would come out the other end like begging for like just, oh, I'm sorry, I want it to work, but it doesn't work and I'm done with the pain, which was no fun to experience.
And so what we had to do was admit to ourselves we're not ready to take on this many customers.
What we need to do is we need to build up relationships with these customers.
This is not a self serve product.
So let's slow things down in two ways.
The first is let's require a demo.
Let's allow ourselves to build relationships and really have a better understanding of their needs and then we'll decide if they're a good fit for us at the stage.
The second thing we did was we tripled the price.
We made it 300 bucks a month instead of a hundred.
And that was the first really important lesson for us.
The demand didn't change at all.
So we clearly got the pricing wrong.
That one move right there was huge for the business.
Because later on, really what we learned is that this wasn't going to be 10,000 customers type thing, that we were better off with 500 customers that paid more.
So that was really helpful.
Omer (28:58.230)
If you've gone through and you get these 50 signups and basically it turns out it was a terrible experience for most of them.
I don't know what the number was.
Most people wouldn't then say, okay, let's triple the price.
So just help us understand how you came to that.
Jordan Gal (29:10.390)
I'm a big fan of experimenting with pricing and I think most people generally are very apprehensive to change their pricing.
And I am not.
And I'm very happy to raise prices, change prices.
And that actually was hugely important to the business.
A few years later that we can get into that.
We just wanted to slow things down and we thought that forcing a demo would deter a lot of people.
And we thought that tripling the price would deter a lot of people.
And we said to ourselves, we'll go self serve and we'll go with a lower price point later on when we can handle self serve and there isn't as much friction to the onboarding process.
Omer (29:46.010)
Okay, great.
So eventually in the five year journey through to 2020, you grew this business to about 6 million ARR.
Jordan Gal (29:57.330)
Yes.
Omer (29:58.130)
Tell us a little bit about it.
Like what were the main growth drivers or marketing channels that helped you get there?
Jordan Gal (30:04.770)
Sure.
So that first year that like hand to hand combat demos with everyone, a lot of apologies, we still processed a hundred million dollars.
So we again knew we were on the right track and we just needed to keep at it until we got better at it and the product got better and then we could take on more customers.
So 100 million in total processing, we're probably somewhere around 60k in MRR, somewhere in that area.
And then what we decide is we have no choice but to rebuild the thing.
And so this is one of those moments in the company where you just look at your CTO and you Say, all right buddy, if you get it right, we're gonna, we're gonna crush it.
And if you get it wrong, the company might just not work.
And Rock, who is the CTO then?
Who's my co founder at Rally just made it work.
He just went into the cave for two months and came back out with version two.
Soon as version two launched, everything was better.
And that's when the rocket ship started.
And we went from 60k in MRR to 250k in MRR in the second year.
So that second year we did somewhere around 600 million in GMV in total processing.
And then we were off to the races.
And we had a reputation established in the Shopify ecosystem and we were never allowed into the app store there, but we kept doing integrations with companies like Recharge and Klaviyo and so on and that again, rebuilt an inbound engine.
And we never did sales.
We barely spent any money on marketing and just grew like crazy.
Omer (31:35.450)
What was different about that new product that you built?
Did it allow you to go back to the self serve?
Jordan Gal (31:41.130)
It did not.
We ended up.
Okay, so here, let me get it right.
We did go toward self serve and the most important thing is that the product was just much more reliable and much faster.
So a checkout page speed matters a lot.
And so what started to happen is that we started to do really well on conversion rate for merchants and then we added in the post purchase offers and made those better.
And then people were just making so much money from the product that they would run through walls to use it.
And if you think about Shopify, their checkout's good.
And the shop pay buying experience is I think, arguably the best buying experience in E commerce on the web.
So we were playing like D1 ball.
We had to compete against that.
But we gave people so much ROI that they were willing to use our checkout instead of theirs.
If we look at some scale at Cardhook overall in, in total we processed two and a half billion dollars out of that two and a half billion dollars, 300 million was post purchase revenue.
So that one feature that you couldn't get anywhere else, you couldn't get at the Shopify checkout, but you could get at ours.
Drove 12% of new revenue.
It's not just a small bump.
It was so significant.
And once people started using it in their business, then you get addicted to it.
Because now all of a sudden you have this new canvas that you're optimizing that you never had access to and it would become Part of your strategy and part of your return on ad spend calculations and then you just, you would never leave.
So that's what really started to work.
So one of the most interesting experience in the whole thing is that somewhere around 250k in MRR, I actually got to the conclusion that we were in trouble.
Which felt strange because the whole outside world, all my peers were like, oh my God, you have a rocket ship, you're so smart.
And in reality my response back was, yeah, we're about to hit a wall at 100 miles an hour.
So yeah, I'm happy to get into that part of it and what we did about it.
Omer (33:40.540)
So this started around 2014, 2015 as this abandoned cart app and you were trying to get people to install this JavaScript on their checkout pages.
A couple of years later, you see there's a bigger opportunity here and you're getting more requests for this customizable checkout which you, you decided to focus on on Shopify.
Didn't quite get it right the first time, but with the things you talked about doing in terms of slowing down and rather than self serve, moving to demos, tripling the price and then also eventually rebuilding the product got you to a point where you, you grew this to about 250k.
Mrr.
What, at what point was I, was that a 20?
Jordan Gal (34:21.519)
I think this is toward the end of 2017.
So at that point in time we have a strong success team.
So we are doing self serve free trial signups, but we're doing a lot of work on success and support.
And we had a real problem with Churn.
We had a problem with activation and we had a problem with Churn, but they were both being masked by tremendous demand.
So we had a product that cost 300amonth at that point and we had somewhere in the area of 400 free trial signups every month.
So this is 120k in potential mrr signing up every month.
It's.
That's the dream, right?
But it was unhealthy underneath.
And so our Churn was stuck somewhere between 10 and 15% per month.
And if you're in, if you're SaaS, that is crazy.
That's so high.
And the reason it was happening, because we were attracting the wrong merchants.
You know what?
We had the right idea.
We wanted to satisfy everyone.
But what we had to admit was we're not right for everyone.
So we made what I think was the best decision we could have at the time and we cut off free trials and we went back to forcing A demo.
And it had some interesting impact.
Instead of requiring a demo, what we called it is an application.
Basically, apply to work with us, which was such a snotty, annoying kind of positioning, but it really worked.
It really worked because people wanted in so bad, they wanted to qualify themselves to us and we wanted to take that premium position in the market.
So we invested in our brand and in our website and we pointed at the competition and basically said, if you're big and you have a lot of needs, you come to us, we can handle it.
If you're small, you're just getting started.
Go to our competitor.
And that's really what we would say if a merchant would apply, we would reply back if they weren't a good fit for us and we would give them a link to our competitor.
So we really took like this very strong position in the market, even if underneath we weren't quite as strong as we were pretending to be.
Omer (36:27.880)
And.
And did that solve the or improve the churn situation?
Jordan Gal (36:32.040)
So here's what happened.
I. I think it's July 2017.
We make the change.
We say, from now on, you need to apply.
So we go from 400 free trial signups to the next month.
We have 20 demos.
So half the company's looking at me like, all right, you just killed the golden goose.
But in my head, I know that ratio of.
I forget what the formula is, but it's a really important formula for SaaS, effectively.
How much are you growing?
What's your average revenue per user and what's your churn rate that gives you a maximum mrr?
And we were getting close to it.
And so I knew we had to make a big change.
So what we did was we forced the application and then a demo, and we raised prices from 300 to $500 a month and we added an additional half a percent transaction fee.
So we like really up the price and forced the application.
So it was like, it was a risky move.
Now, the.
I think the thing that surprises most people in software is that we also increase the price on existing customers.
We didn't.
We kept them for six months.
So we let them get through the holiday season and we said in January, we are raising your prices.
Also, we'll leave your monthly price to 300, but we're also going to add this half a percent and we made them a promise.
Here is, are all the things that we're going to do into the product between now and January and we're going to add enough value to justify the price increase.
And in January if you don't think we've added enough value that you don't want to go through the price increase, you know you're going to judge us based on that and you're going to leave.
Omer (38:04.070)
That's interesting.
I know a lot of founders would avoid doing that like the plague.
Let's grandfather those people in.
And I think if you can connect it to value, which is what it's all about at the end of the day.
Jordan Gal (38:15.830)
That's right.
Omer (38:16.630)
I think people can rationalize and understand that.
So I guess the question is, did you deliver enough value?
Jordan Gal (38:21.150)
Oh, my God.
It worked so well.
We went from 10, 12, 14% in monthly churn down to 1 to 2% monthly churn after.
Wow.
And revenue went through the roof, and we went from 250 to 500k in MRR in one year.
Wow.
Everything got healthier.
Everything made more money.
I remember one specific conversation.
I felt that the support team was in a demoralized place.
And I pulled them aside and I said, okay, what percentage of your energy and efforts are going toward merchants that are never going to become good paying customers?
And they said, at least 50%.
And that's when I knew, okay, this can't go on.
We have to make these changes.
And that was a good catalyst to relook at everything and make these big changes in combination with understanding that we were going to hit the MRR wall with our churn.
And one of the things I'm most proud of is that the company ended up being healthier from a revenue point of view, but also from a happiness point of view.
Everyone just felt so much better.
And there were.
We.
We had this one incident over chat.
We effectively said to a merchant that they're not right for us and they should go to our competitor.
And they called us choosy little bastards.
So, of course, what do we do?
We got it on T shirts and hats.
And everyone in the company, like, walked around with this pride of, yes, we are choosy bastards.
And it's our software company.
And that doesn't mean we have to work with everyone.
We want to work with people that we really enjoy working with.
And it gave the whole company this swagger of, maybe we're not for everyone, but the people we do work with, we absolutely crush it for.
And that's part of why we're successful.
And yes, it's beautiful.
Omer (40:07.770)
Love it.
And I don't think it was.
You guys weren't being arrogant.
Jordan Gal (40:10.370)
It Was that a necessity.
Omer (40:12.410)
Yeah.
And just doing a better job at knowing who your Customers are that you can deliver the most value to.
Jordan Gal (40:18.570)
Yeah, that's right.
Omer (40:19.490)
Okay, so listen, so we've gone through this.
Jordan Gal (40:21.330)
Yeah.
Omer (40:21.770)
Roller coaster of, okay, slow start, sign up problems, new product, having to rebuild.
But now it sounds like everything's clicked, got product market fit, you've nailed the target market.
Churn isn't a problem anymore.
It's incredibly healthy.
MRR is in a really good place.
You're 6 million ARR.
And then 2020 comes along and everything.
This hits the fan.
Jordan Gal (40:46.980)
Yes, it does.
So before it hits the fan, we hit the pandemic.
And like everyone else, every business owner is freaked out.
Oh my God, what is going to happen?
Fortunately, 2020 and the pandemic actually had the strange impact on E commerce, where it boomed because everyone was ordering online.
So we did well through 2020.
Our issue was not economic, our issue was political.
And what I mean by that is that we were building on top of a platform.
This is what many of us do.
Many of us entrepreneurs look at a platform, whether it's Facebook or Google or Twitter or something else, and we like building on top of platforms because it aggregates demand.
Here are all these customers that share this thing in common.
And I'm going to solve a problem for you specific Salesforce CRM users.
And that's how I'm going to find my angle on the market.
Now, we did the same thing.
Our problem was that we did something that poked directly at the platform's business model.
Right?
Our checkout created all this value around the payment processing function.
And we took the payment token from the checkout page and we reused it for the post purchase offers to make the one click.
We did all these amazing things.
But what it meant is that we were processing the revenue instead of Shopify.
And at some point when we got big enough and we were processing a hundred million dollars a month and up, Shopify wanted that to end.
We were starting to become too big, have too big of an impact on their business model.
And it's their platform and it's their right to dictate what happens on their platform.
And unfortunately, what that meant for us was that we had to stop doing business the way that we were doing business and had to stop growing our product.
Omer (42:39.740)
So what happened?
Did they shut down access to their API or parts of it?
Jordan Gal (42:45.780)
So what I'll give them credit for is that we work together, Right?
Some companies, we've all heard the horror stories of one day you wake up and your API access is cut off.
Now, I don't want to cover for them it was no fun of an experience.
And I am papering over the fact that I stressed out over this for four years.
The entire time was very stressful.
But at the end of the day we made a deal with them and the deal was that we would stop taking on new customers to our checkout page and instead build a post purchase upsell app that works inside of their checkout so they could keep the payment process.
And so if you go to carthook.com right now, what you'll see is an app that's in the Shopify app store and is active and the company's doing well.
But for me as an entrepreneur, I had lost my appetite for building for Shopify and so I put a new CEO in place, a Cardhook and I left to start Rally along with Rock, who's now my co founder, who was the the CTO at Cardhook and now he's with me at Rally.
Omer (43:49.180)
Carthook as a product has changed and now it's so when a platform is in this position they can either look at an app developer like you guys and say we'll acquire them or to the rules have changed and this is what you need to do now if you want to keep integrating with us or three, we're going to invest internally and build our own solution and put you out of business.
So that's right.
At least it was not the third option.
But I think that from what I understand this was an incredibly difficult time for you and the team and I know you've tried to be pretty good about this is we came up with a deal and we did this and so on.
Emotionally what was going on underneath all this time?
Jordan Gal (44:35.060)
Oh, it was the most difficult experience of my career.
I the the whole experience that we just talked about from a non technical e commerce founder to getting a software product built and figuring out how it works and then taking the risk on a second product and finding product market fit but it not being healthy and adjusting like these were all huge challenges but they were leading to a really successful outcome.
So we know what multiples are these days.
We know that a growing software business that's processing a billion dollars a year in GMV and doing 6 million in ARR.
We know what that's worth these days and it is life changing.
And to experience the fact that got taken away for me in many ways out of my not my doing, let's say took a lot of work on my end to accept it and in many ways I have accepted it in other ways you know, what I'm doing with Rally, it's very specifically not accepting it and trying to do something better and bigger with it.
So it's incredibly difficult.
But we're not the first company it's happened to.
We're not the last company it'll happen to.
It's unique in that it happened to me.
Right.
So it's unique to me.
But.
But this happens in the web overall.
And we're trying to change that approach with Rally.
And I think there's a lot of ideology and meaning in our efforts at Rally to make it better.
And that part of it feels amazing that you can try.
It's the first time in my career that I've had this really tight alignment between I want to do what's right and what's good.
And that also makes the most financial sense.
That's also the way I can be the most ambitious and go for the biggest opportunity, is actually trying to do what I think is right for the market, which is this freer approach and pulling power away from platforms and putting it back in the hands of merchants and app developers.
So that part of it feels good.
And what else can any of us do in our careers but learn and keep going?
Omer (46:50.100)
And this isn't a Shopify thing.
This is a situation that could happen on any platform to any founder who's building on top of that platform.
And I think it's something that a lot of founders worry about all the time.
Maybe when you start out in the early days, you don't really have that much to lose.
So building a platform, it's fun.
You kind of experiment, you do things and you start to grow.
But once you, you get traction, you find product market fit, you hire people who are depending on you and the business.
Yes, the stakes become higher and then you start thinking what happens if they turn the switch off tomorrow?
Jordan Gal (47:38.440)
That's right.
So you make a really important point in that when you start off, the trade off seems obvious.
Of course I'll build on a platform.
I. I don't have the resources to go and build my own platform.
So let me go basically attract customers that are already pulled together on this platform.
But the more successful the app developer becomes, the more worried they become about the rules changing and the investing in their competitor or acquiring a competitor or doing a partnership with a much larger competitor that has crappier software but now has better positioning in the sales process.
And the.
This is a truth that's happening everywhere on the web.
The exciting thing is that what's happening in Web3 and crypto and blockchain is starting to offer an alternative.
And it's so.
I'm a big fan of Chris Dixon.
He was just on Tim Ferriss podcast.
He also wrote an article called why Decentralization Matters that I highly recommend to people.
It was a huge influence for me.
The thing that we all forget is, is that companies like Google and Facebook and let's think about Google for a sec, they built their businesses on these protocols like HTTP and smtp and they knew that whatever they built on those protocols couldn't get taken away from them.
There was no platform that was going to change the rules later on.
But then they accumulated so much power and so much financial interest in maintaining their power that now we're all building on top of them and we're assuming that they have the control, whereas they.
That was not the situation under which they built their businesses.
And Web three is like wrestling that back to the way it used to be, where there are these protocols that we can all use and build on top of with the knowledge and confidence that no one can change rules on us later on.
And that is just.
That's so exciting.
You can, you can tell obviously why it would be exciting to me, but I think it should be exciting to all entrepreneurs on the web.
Omer (49:39.690)
Yeah.
And I think in that article that you mentioned that there was this kind of, this idea of this predictable life cycle for platforms.
Jordan Gal (49:46.650)
That's right, the S curve.
Omer (49:48.250)
Yeah.
It happens to all of them that in the early days they all want to attract, I guess, you know, you could say buyers or sellers into that marketplace.
Jordan Gal (49:56.730)
Right.
Omer (49:57.130)
But it changes significantly once they get to the top of that S curve and they have to start thinking of different ways, ways to grow the business.
Jordan Gal (50:04.090)
That's right.
It switches from cooperation with the ecosystem to competition with the ecosystem.
And it is an inevitable life cycle.
And, and the thing that's exciting about Web3 and what we're trying to do at Rally is we're trying to ask ourselves, how do you build a platform that does not have a top of the S curve?
How do you keep interests aligned the entire time?
And that's like this interesting, like business and intellectual kind of argument to make and idea to pursue.
And that's.
That's cool.
Omer (50:38.340)
And, and that takes us back full circle to what we started the conversation about was pursuing this headless ecosystem.
And, and why you.
It's something that you've decided to go all in with.
And I think that hopefully by sharing your story of Cart Hook and the experience there you are Probably a lot more qualified to talk about the importance of a headless ecosystem.
Jordan Gal (51:03.930)
That's right.
It's funny.
And look, this is how it works.
You look back at an experience and it was painful, but what does it do?
It puts you in the position that you are after that experience that's unique.
And oddly enough, like, we happen to be the right people to build exactly what we're building because of our experience.
And maybe it didn't go well, but I'm 100% convinced that a few years from today I'll be grateful that it happened the way it did, because I wouldn't have ended up what I'm doing, what I'm doing now without it.
And so we have a very unique perspective because of it.
And I'm happy that in an interview like this you get all that context.
And then when explaining what we're doing at Rally and talking about it, it makes more sense in that context.
And looking at the E commerce world, right, it's happening all over the place.
It's happening in finance, it's happening in social networking, all these different places.
Our neck of the woods, our part of the web is commerce.
And I'm convinced that there should be an alternative in commerce infrastructure online to building on top of a platform that can change the rules on you.
So that's what we're doing.
We want to build a much more decentralized ecosystem that can't do what was done to us.
Omer (52:24.320)
Yeah.
Love it.
I really appreciate you coming on and sharing your story with Carthook and the ups and downs.
I think it's really exciting what you and the team are doing with Rally and I'd love to follow up at some point and see where you take this business.
But for now I think we should wrap up and I've got some lightning round questions for you.
So just try to answer them as quickly as you can.
Jordan Gal (52:45.540)
Okay, let's do it.
Omer (52:46.500)
What's the best piece of business advice you've ever received?
Jordan Gal (52:50.020)
I think it's Bill Gates that talked about the goal of a business or an entrepreneur is to capture a small part of the value that they create.
And the more value you can create, the more right you have to a portion of it.
So that's what I like to look at.
How do we create an enormous amount of value and if you can do that, the money will will work itself out.
Omer (53:12.810)
What book would you recommend to our audience and why?
Jordan Gal (53:15.930)
Oh man, I think I go back to the Churchill biography just on perseverance.
Omer (53:20.250)
What's one attribute or characteristic in your mind of a successful founder?
Jordan Gal (53:24.970)
For me, creativity.
Omer (53:26.570)
What's your favorite personal productivity tool or habit?
Jordan Gal (53:30.220)
Unplugging and not thinking about and just letting ideas spin in the back of your head.
Omer (53:34.780)
What's a new or crazy business idea you'd love to pursue if you had the extra time?
Jordan Gal (53:38.780)
I feel like I'm pursuing the craziest version of this idea.
That's how I feel.
Omer (53:42.900)
What's an interesting or fun fact about you that most people don't know?
Jordan Gal (53:46.380)
I was born in Israel on a kibbutz, which is effectively a commune, which is the complete opposite of entrepreneurship.
Omer (53:54.540)
And finally, what's one of your most important passions outside of your work?
Jordan Gal (53:58.070)
My honest answer to that is that I have lost too many of them.
So my hobbies have been sacrificed at the altar of both work and family.
And so right now, my biggest passion is my family.
Omer (54:09.510)
All right, great.
Jordan, thank you so much for joining me again.
And if people want to find out more about rally, they can go to rally on.com and they can also check out cart hook@carthook.com and if people want to get in touch with you, what's the best way for them to do that?
Jordan Gal (54:26.880)
Twitter at Jordan Gall or just my first name@rallyon.com.
Omer (54:31.080)
awesome.
Thank you so much.
It's been.
This is a conversation I've been looking forward to for a while.
And thank you for coming on and sharing your story, your experience, and hopefully providing a little bit of inspiration for somebody who may be going through a similar struggle right now.
Jordan Gal (54:46.280)
Thank you so much for having me on for guiding the conversation, and it's
Omer (54:49.840)
great to talk to you.
Thanks, Jordan.
Jordan Gal (54:51.120)
All the best.
Omer (54:51.680)
Cheers.
Jordan Gal (54:52.270)
Thanks.
