Here at Rally, we've been in the lab for a year. We've focused on building the best ecommerce checkout on the web for merchants. As the product gets closer to launch, it's time we tell our story.

Over the next few weeks, we'll identify what we believe is currently wrong with how ecommerce works today, how it impacts merchants and app developers, and how we plan to fix it.

But context matters, and for that we need to take a step back.

Scar tissue

Before founding Rally with my cofounder Rok, I started and ran a company called CartHook. My cofounder Ben and I launched it in 2015 as an abandoned cart app with $275k of funding from friends and family. In 2017 we found a bigger idea to work on, and launched a product that gave merchants full control over their checkout process. It was popular immediately, with over $100m in revenue processed in the first year.

Even with no app-store distribution, the product would go on to process over $2.5b on behalf of merchants. I think it's fair to say we hit a nerve.

Unfortunately, we ran into trouble with the platform that we built on, and were ultimately stopped from adding new customers to the checkout product.

Any founder or builder who’s ever watched a product they believe in be stifled knows the experience is brutal. The team worked incredibly hard for years, built a product people loved, found product/market fit, and grew the business to over $6m in ARR, profitably. Only those close to me saw the toll it took on me personally. The endless worry. Getting so close to achieving my dreams for my family. I didn't set out to do battle, but I have scars.

It's important to pause here and state something clearly: I don't blame the platform.

Any founder or builder who’s ever watched a product they believe in be stifled knows the experience is brutal.

The product we offered processed payments, which put it in direct competition with the platform's core business model.

Now, while I may not blame the platform itself, I do blame platform dynamics -- the way platforms are constructed, how they’re incentivized. I believe these dynamics are actively holding back innovation in ecommerce.‍

The platform problem in ecommerce

The best articulation of the platform problem I’ve seen is Chris Dixon’s essay, Why Decentralization Matters. In the essay, Dixon walks through what he explains is the “predictable lifecycle” of a platform.

At first, platforms “do everything they can to recruit” both users and “third-party complements" -- developers, app creators, and content creators who build within the ecosystem and, in turn, help to make the platform more valuable.

But once the platform takes off, and they start moving up the adoption S-curve, their relationship with customers and partners shifts. The platform’s power over both groups of participants grows.‍

And when that happens, Dixon writes, the way the platform derives value out of the ecosystem changes as well:

“When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum. The easiest way to continue growing lies in extracting data from users and competing with complements over audiences and profits.”

Image source: Why Decentralization Matters 

So how does this harm merchants? It restricts their options. The platform’s business model takes precedence over the needs of the individual merchant. You can have access to this API, but not this one. You can have this feature, but only if you use our preferred payment processor, or pay more money to upgrade into our elite tier. You can’t use that particular app, because we don’t have a commercial deal with them. And so on.

Meanwhile, app developers, instead of being rewarded for making the platform better, are taxed. App developers quite literally become a source of revenue. Building an app on a platform? You may be a convenient partner, and you may add significant value to the platform, but you are also a customer.

With merchants prevented from pursuing their preferred strategy, and app developers altering behavior in fear of retaliation, innovation is secondary.

Dixon sums it up perfectly:

“For 3rd parties, this transition from cooperation to competition feels like a bait-and-switch. Over time, the best entrepreneurs, developers, and investors have become wary of building on top of centralized platforms. We now have decades of evidence that doing so will end in disappointment.”

With merchants prevented from pursuing their preferred strategy, and app developers altering behavior in fear of retaliation, innovation is secondary.

A new way

In ecommerce, a platform derives its power through control over the checkout process. The checkout serves as the gate through which all transactions must flow, allowing a centralized company to dictate what happens throughout its platform.

That’s the way it is today, but there's a new way forward.

Thanks to the nascent headless ecosystem, ecommerce technology is experiencing an unbundling. The change is putting power back in the hands of merchants and app developers.

Headless frontends are giving merchants more control than ever before over the shopping experience. And API-driven headless backends are giving merchants unprecedented control over their business processes.

Using web3 principles and innovation in crypto, Rally’s vision is to fundamentally change how value flows within ecommerce.

Instead of value flowing inward, towards a centralized company, we are building a checkout that allows value to flow outward, toward the community of merchants and builders.

‍‍Our checkout works with all frontends and backends, and solves the platform problem in ecommerce by ensuring the following:

- Merchants must be able to build and conduct their business however they see fit

- App developers and partners must be able to contribute without fear, and should participate in the upside of the ecosystem

Instead of value flowing inward, towards a centralized company, we are building a checkout that allows value to flow outward, toward the community of merchants and builders.

Join us 

Over the next few weeks you'll hear more about our vision for a new, better way to build for ecommerce, and how all of this impacts merchants and app developers in particular.

In the meantime, we’re looking for merchants, app developers, and partners who want to build a new way forward in ecommerce with us.

Make sure to check out part 2 and part 3 of this series.