Meet the founder who’s taking on Shopify

Today’s guest is a guy who has software that allows people to create online stores. The minute I heard about this idea, I said, “Whoa, he’s going to get crushed.” There are competitors already in the space who are really, really big.
I’m talking about Amazon and Shopify. And into this space he waltzes in and he says, “I’m going to build something better.” I want to find out how far he’s come.

Gal Ratner is the founder of ShopSnap, which allows customers to create an online store in a snap. The fact that he’s here shows you that he’s come pretty far. But I want to understand how.

Gal Ratner

Gal Ratner

ShopSnap

Gal Ratner is the founder of ShopSnap, which allows customers to create an online store in a snap.

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Full Interview Transcript

Andrew: Hey there, Freedom Fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses. I do it for an audience of real entrepreneurs. I know that now there are more and more podcasts popping up, more and more interview programs popping up for people who are just basically wannabes. They want to live vicariously through the entrepreneurial experience, they will never do anything except enjoy that, the stories and I get it. I think my audience is completely different.

We are real entrepreneurs looking to understand how other real entrepreneurs have built their companies, and we want the details. We want to understand it because we want to actually use it. And so I’ll be real with you.

Today’s guest is a guy who has software that allows people to create online stores. The minute I heard about this idea, I said, “Whoa, he’s going to get crushed. I know lots of other . . .” Not lots of, frankly, there are couple of competitors who are really big, who are already in the space. The big ones are Amazon. Oh, he’s going to wince when I say this. The number two is Shopify for creating an online store. And into this space he waltzes in and he says, “I’m going to build something better and I’m going to actually create a really profitable successful company.” And I want to find out how far he’s come.

Actually, frankly, the fact that he’s here shows you that he’s come pretty far. But I want to understand why. How did he come this far? What is you doing that’s working for them and what’s he going to do next? All right. His name is Gal Ratner. He is the founder of ShopSnap. Their website if you want to follow along is shopsnap.io. It allows customers to create an online store in a snap. I don’t really think that does justice to the business model. We’re going to talk about how he sells it. I think that’s the key part of his success, the way that he sells, who he sells to and how he gets it in the hands of shop owners.
This whole interview was sponsored by . . . boy, I am fast talking here Gal, but I’ll continue along.

Gal: Keep going.

Andrew: This whole interview is sponsored by two great companies. That first will help you get your next design done right because you’re going to get a crowd of people to design it for you. It’s called DesignCrowd. I love them. And the second one is going to help you do email marketing right. Email marketing is becoming more and more annoying. These guys make it better by making it more effective for you, the guy who sends out email and more effective for your customers because they get the right email based on what they’re really interested in. It’s called Active Campaign. But I’m going to talk more about those later. First, Gal, welcome.

Gal: Thank you. Thanks for having me.

Andrew: You know, I look at my time as I do the intros to make sure I don’t go on forever, sometimes I do. Today was like two minutes, I ripped right into it and then I spend another 10, 15 seconds talking about my sponsors.

Gal: You are on a roll.

Andrew: I am on a roll. Hey, while we’re on this like friendly place, let me ask you your revenues for 2017. What were they?

Gal: I can’t disclose that. We’re a private company, but it was in a high two digits.

Andrew: High two digits. That doesn’t say enough. Can we say if it’s millions of dollars?

Gal: Yeah, in the millions.

Andrew: Okay. Millions of dollars. You guys have any outside funding? I couldn’t tell when I was looking you up on CrunchBase.

Gal: It’s a funny story. When we first started, we actually closed our first partner even before we had the product ready and went with that contract out and tried to get funding. And just like you presented it in your intro, you know, it’s just another guy, just another ecommerce platform and we couldn’t get any funding. And everybody said, “Hey, once you guys start selling, we’ll fund you.” And I said, “Once we start selling we won’t need you anymore.” So I just put all my money in there and bootstrapped it and we just went out, bootstrapped and no funding.

Andrew: Are you guys profitable now?

Gal: Yes, very.

Andrew: You are.

Gal: Very profitable.

Andrew: Very profitable. Your background was in something called before this, you were doing something called Inverted Software. What’s Inverted Software?

Gal: I still do. Inverted Software is my software consulting business. So . . .

Andrew: You started 2001 right after the dot com bust.

Gal: Yes. Yes. I’m a software engineer and we started a software consulting business because we saw a lot of gaps in the market when it came to outsourcing. So we saw the companies that are outsourced to India or Eastern Europe and getting back non-usable code. So we started the company that had a customer satisfaction guaranteed, and we’re working on hybrid models. So we work with some developers that are offshore, but our main development and management is onshore.

Andrew: Onshore meaning which country?

Gal: Los Angeles, California.

Andrew: Los Angeles.

Gal: Yes.

Andrew: You had developers in Los Angeles?

Gal: Yes.

Andrew: Okay. And then offshore meant which country?

Gal: And not only developers, but we have the architects and the solution directors. And then we have developers in Bucharest, Romania and a few in Russia. And what we do is we provided pretty much a team in a box. So you’d get a team that’s partially, local partially remote and that’ll offset the cost. So we’re not the cheapest one, but we’re also not the most expensive ones.

Andrew: My understanding is that the guarantee part came in when people told you, “Hey, why do I need you? I’ve got these guys in India who are super cheap, I can get it done lower price.” And you said . . .

Gal: “Good luck with that.” I mean, I’ve seen it before. They’re always cheap when you start and it ends up being more expensive at the end, and the software doesn’t have a good life span because it wasn’t written well, it wasn’t architected well, it’s unmaintainable, it’s slow. We see it all the time.

Andrew: Okay. And so you said, “I’m going to create this company that will guarantee, that we can sell,” you kept building it up, and then you came across something called Volusion. What is Volusion?

Gal: Volusion.

Andrew: It is . . .

Gal: Volusion in back in 2008 was bigger than Shopify, believe it or not. It’s the same concept and it was started by a kid named Kevin from his parent’s bedroom. He put up a server and wrote the first iteration and it grew thanks to the fact that he got really good partners that knew how to sell the software, and no one else was doing it until Shopify came in and raised an obscene amount of money.

Andrew: So he built a software that allowed anyone to create a hosted . . .

Gal: An online store.

Andrew: Shopping . . . hosted.

Gal: It didn’t start as a hosted one, but it turned into hosted one eventually.

Andrew: Okay. So first he was creating software that he was selling, you could install it on your server and have your own store. Am I right about that?

Gal: Yes.

Andrew: And then he said, “We’re going to host it,” which is the best approach for most business owners.

Gal: Yeah, he didn’t say it. Another guy named Brad Lenny said it, but eventually that’s what happened.

Andrew: Okay. All right. Why did another guy say this? What do you mean by that?

Gal: Well, the founder is . . . you know, like founders tend to be . . . he was a coder, and he just happened to have really good partners that were really shrewd and they steered the company.

Andrew: I see. Got it. Okay. And so then the next thing that happened was you said they got partners to resell it. How did that work? What kind of partners?

Gal: They didn’t get partners, that would be ShopSnap.

Andrew: Oh, okay. I thought . . .

Gal: So Volusion . . .

Andrew: So you meant internally they got really smart people who sold it, and so they did really well selling this.

Gal: Yeah, yeah.

Andrew: I see.

Gal: Just like Shopify, the same concept, only these days the software is horribly outdated and slow, and they have a lot of downtime. . .

Andrew: Volusion software is. Okay.

Gal: Volusion, yeah. And they’re nowhere near where they used to be. They actually started a new initiative called Mozu, but I don’t believe that went anywhere. I might be mistaken, but you’ll have to research it.

Andrew: Okay. All right. And you said that you wrote the entire Volusion ecosystem. What does that mean?

Gal: The second iteration of it. When we were hired, we put in place the entire system that does the SaaS underneath, so creates the new online stores, moves it between servers. Back then there was no cloud. So it was actually UVMs, provisions it, does the building, everything. So it was a pretty complicated system to write just because the technology wasn’t quite there yet. And at the time, I also had from Inverted Software, I had a product called shoppingcart.net, which I think you can install if you have a Windows hosting account, you can install for free right now.

Andrew: I went to shoppingcart.net earlier today. There was nothing on there, just said “Hello World.”

Gal: Shoppingcartnet.com.

Andrew: Okay. Let me see if I got it. Shopping . . .

Gal: Cartnet.com.

Andrew: Shoppingcartnet. Yeah, I just copied it from your LinkedIn profile and I thought.

Gal: Yeah. The guy that owns shoppingcart.net refused to sell it to me, so . . .

Andrew: So what is the full domain?

Gal: Shoppingcartnet.com.

Andrew: Oh, shoppingcartnet.com. Got it.

Gal: Yeah. But there’s no one that goes there because the way people get that software is through their hosting provider. So if you have the hosting provider that lets you choose between many shopping carts to install, Magento commerce and a few more, and one of them is going to be shoppingcart.net.

Andrew: Oh, look at this. So even on the bottom of the site, it says Shoppingcart.net is the name of the company. And you’ve never owned shoppingcart.net the domain, it was just called Shoppingcart.net but it was always on shoppingcartnet.com.

Gal: I own the trademark, I own Shoppingcartnet the trademark, I own the logo, but I don’t own the domain name.

Andrew: And he’s messing with you. I feel . . .

Gal: I don’t want it. It’s . . .

Andrew: You don’t want it anymore. Right. It looks like you basically moved on pass this. But you’re saying back then, this is what? 2010 you created . . . 2011, earlier?

Gal: Well, the first iteration I think came out in 2009. And version 2.5.1 came out, wow, a long time ago, I think it was 2011 or 2012, and we put it aside. We’re not developing it anymore because it morphed into ShopSnap.

Andrew: Okay. So what you’re saying is you had experience creating shopping cart software for yourself, you then had a client who hired you to build a full on shopping website for their users. And so you had a lot of experience there. And so you looked at it and still you saw that, which is Volusion, you saw Shopify and you said, “There are issues with both of these platforms and all the others.” What are the issues that you saw?

Gal: So the main issue that’s both in Volusion and Shopify is that most of the merchants don’t sell anything. They’ll open a cheap store, they’re going to pay $200 a month, they’ll keep it for a year or two, and they’re going to shut it down because they’re not going to have any sales. And the reason why they don’t have any sales is because there’s so much competition out there over keywords, everybody’s pushing the same products, and . . .
Andrew: I’ve noticed that too. So I’ve been approached by many, many e-commerce people right now to do interviews with them. When I really break it down, the majority of their revenue is coming from Amazon and their own personal Shopify site is struggling. It’s enough sometimes to keep it going, obviously, Shopify doesn’t cost that much, but it’s not where their real business is. It’s on Amazon, and they’re trying to figure out, “How do I make my own website into the main source of revenue, the main source of customers?” because then they own the relationship with their customers and they’re not seeing it work.

And I don’t know see people shut down those stores, but I talk to people only after things start to go really well. You’re saying you saw the same problem and you saw that stores were getting shut down and you said, “There’s got to be a better way.”

Gal: Yeah, yeah. So Amazon’s conversion rate is 17.2% for non-Prime and 78% for Prime.

Andrew: I heard you say that to our producer. What does that mean? Because that 78% . . .

Gal: It means that 17.2% are the people that end up on Amazon.com buy something.

Andrew: Oh, I see. For that experience, for that moment or in the day?

Gal: Visitors versus customers.

Andrew: So I check Amazon on a regular basis. I was this morning trying to show my kid a toy that I think he might want. I loaded up Amazon and we looked at a couple of different variations of it to decide. We didn’t buy right there. Does that count as . . .

Gal: You’ll be back. Yeah, you’ll be back and there’s 17.2% chance you’re going to be buying from Amazon.

Andrew: Okay. Or since I’m Prime it would be 78%. So it’s not in the moment that you’re going to close a sale.

Gal: No, it’s unique.

Andrew: So how do you get this statistic? Where does that come from?

Gal: I read online. I don’t remember. Let me . . .

Andrew: Okay. All right. I thought maybe you had some inside information on this stuff.

Gal: You can Google it. It’s well-known, so I didn’t invent it. Just Google Amazon Conversion Rate and you’ll see it right away.

Andrew: When I do . . . okay, Amazon Conversion Rate. I’ll do that. All right. So you saw that, and meanwhile, Shopify stores did what?

Gal: Between 2% and 4%.

Andrew: Two and four percent meaning 2% or 4% of people who come to the site end up buying.

Gal: Yes.

Andrew: Okay. And you said, “I think we could do something better than this.”

Gal: Yes, yes.

Andrew: Yeah, okay. This comes from Recurly and I don’t even know where Recurly gets that data. I see Recurly saying 74% conversion rate. They’re saying that for non-Prime members is 13%. So I get that this is out there. I wonder how anyone would even know this stuff. The only way . . . I know how they would know it or I know one possible way to know it. Chrome plugins are notorious for collecting data like this and then selling it to researchers or making it available. Am I right?

Gal: It could be. Could be.

Andrew: Okay. I don’t know if that’s how this data that you have came out . . .

Gal: No, no. It used to be the Alexa tool bar, but now I believe it could be . . .

Andrew: It’s the freaking Chrome extensions, because one of the problems with Chrome extensions is a user is they suck in every bit of data that I do. Like I love keyboard shortcuts. I use it on my Mac all the time, but they don’t work in Chrome because Chrome overrides the whole keyboard shortcut system of the Mac. Also, I have a Chromebook. There’s no keyboard shortcut there.

I said, “I’m going to install a Chrome plugin that will allow me to do it.” And I looked at the permissions that this thing wants, and it’s basically to read every website I’m on and everything I type in to the website. I said, “I can’t install this.” So now what I’ve got is, I’ve got a plugin that lets me turn on and off each individual Chrome extension based on whether I’m using it or not. So if I’m using it, I turn on the Chrome extension, if I’m not I turn it off. And I’ll tell you why. I know a lot of entrepreneurs . . .

Gal: But there’s so many companies that know everything about you like Facebook and Google. They pretty much own your soul, so I suggest . . .

Andrew: I’m okay with them because at least they’re big enough that I know that it’s not going to be weird shenanigans. Here’s why I do this. I do scotch night here at the office from time to time, less now, because I’ve got two young kids. And people would tell me all these stuff that happens behind the scenes at their companies.

The fact that they read people’s email messages if they log in with that, the fact that they’re looking to see what people are doing on their websites. When Travis Kalanick would have a Travis from Uber. I always mispronounce his name. When he was caught showing people where his most famous writers were going, like at what parties, who they were, everyone freaked out. And maybe they should.

Other founders do this on a regular freaking basis. This is a side rent. Nobody talks about it and I always tell them, look, whatever we say at scotch night I’m going to keep really private, I’m not going to tell what you’re doing, but let’s talk real here and understand. And man, if you see that, you start getting horrified. I don’t mind in the aggregate data being used, I don’t even mind faceless people of Facebook using it because I think that they’re pretty watched now. But man, an individual guy just looking over my stuff. No.

All right. Anyway, back to your story, Gal.

Gal: Banks do it too.

Andrew: You’re seeing all this happening and you say, “I think I could do better.”

Gal: Yes. It’s always easier if you do it the second time around. And what gave birth to ShopSnap was the fact that Volusion had two offices, one in Simi Valley, California and one in Austin, Texas. And we came in one morning to the Simi Valley office and they shut the doors on us. They simply moved everything to Austin. And there were signs . . .

Andrew: And your employees, your developers, your team were working out in their offices and they were just shut out of the office.

Gal: Yeah, yeah. And they shut it on their own employees as well. So we just . . . we were shocked at the beginning, but then we saw a big opportunity here to use all the talent. So we simply gathered all the team that was in the Simi Valley office and we started ShopSnap.

Andrew: Why do you think they shut down? I didn’t know anything about this. I’m looking it up.

Gal: I don’t want to get into it. I don’t want to get into it.

Andrew: Yeah. Tell me what happened there?

Gal: I really don’t want to get into it because there are contracts in place.

Andrew: Okay.

Gal: But as a general note I would say that we also have an office in Austin simply because of California taxes.

Andrew: I see. Okay. Interesting. All right. Wait. So if you have an office in California and in Austin, how does that affect your taxes? Don’t you have to still pay . . . well, how do you break down your tax bill?

Gal: You’ll have to ask my CFO, Ronny.

Andrew: Okay. Oh, I’m so curious. Maybe I need an office in Austin.

Gal: He set it up as some sort of a limited partnership that owns DLC as one of the partners. It’s something weird, so . . .

Andrew: Oh, that’s clever. Oh, I would love to interview him about that.

Gal: Yeah, he’s an awesome guy. Yeah.

Andrew: Yeah, California taxes are pain in the freaking ass. All right. So you’re seeing all this. Don’t you have an issue though where you’re working for someone and then you go out and you create a similar product that could potentially compete with that person?

Gal: I don’t see it as a competition because quite frankly I had Shoppingcart.net before they had Volusion. So I just see ShopSnap is a continuation of Shoppingcart.net.

Andrew: But it’s not. It’s different. Shoppingcart.net was shopping cart.

Gal: So ShopSnap, the only difference is that it’s more sophisticated and that it’s hosted on the cloud.

Andrew: Did you have any agreement? Did you have any issues with them when you launched it? Did they accuse you of copying their model or anything?

Gal: No, no, because it’s been enough time to . . . I think it’s been like over five years.

Andrew: Okay.

Gal: And I believe California does not have non-competes. So even if you send a non-compete . . .

Andrew: Not for employees but for companies, don’t they?

Gal: We didn’t have a non-compete.

Andrew: You didn’t?

Gal: No.

Andrew: Okay. All right. Now the model that they have is completely different from yours. You’re not just changing the way that people buy and adding SEO and a lot of other marketing things to the store itself, but the way you get the store in people’s hands is part of the model and part of what separates you and what allows you to do well.

Let me take a moment and talk about my sponsor and then we’re going to come back here and talk about how you innovated on the business model and how that allowed you to get customers. All right. My sponsor is a company called Active Campaign. I saw somewhere on your site that you have like a MailChimp ID in the user store, right?

Gal: Yeah. It connects to MailChimp.

Andrew: All right. I get it. I’m going to urge you to consider adding Active Campaign, and I’ll tell you why, and encourage people to use Active Campaign. MailChimp and people like . . . you know what? I just signed a big contract with Active Campaign. I know they don’t love me to talk about their competitors, but I can’t just . . . I have to be myself.

Here’s a problem with a lot of these mail system. All they do is they’re designed to make it easy for people to send out newsletters, the same thing to everyone. And even if you don’t have a newsletter email system, you’re still sending the same thing to everyone, and that is not the right way to message people. And I know it because I used to make that mistake.

What you want to do is, if someone’s brand new to you, send them a welcome message, then you want to send them something that introduces them to what your company’s about. Then you want to maybe send them a message telling them who you are, who’s running the freaking show, right? And then maybe a little bit of success stories of someone else who’s using your product. And you do this onboarding experience to welcome them, and then you might want to do the newsletter. Maybe, I’m not even sure that that makes sense.

Gal: Yeah, it’s called lead nurturing.

Andrew: Right. Nice onboarding, then nurturing, but you don’t want this person who just joined today and the person who’s been on your mailing list a year ago to get the same message. You don’t want someone who looked at baseball bats, baseball bats, baseball bats to get an offer for a girl’s bike necessarily, right? Or I guess girls would be into baseball too, but you get what I’m talking about. You want to be aware of where they are and their relationship with you and what they’re doing on your site. And if you do that, then you could send them the perfect message at the perfect time.

So imagine someone’s been looking at baseball bat, baseball bat, baseball bat, and you then send them a message because they didn’t buy and you know they didn’t buy, you send them a message a few days later saying, we’re now offering 10% off baseball bat. Now they’re interested enough because they’ve been glancing baseball bats often enough that they want to open up the message, and number two, you’re offering them a discount, just get off the fence, maybe even say, “For the next 24 hours we do that.”

Or if you notice that they’re watching videos on your site about baseball bats, I’m saying this because one of your stores is selling baseball bats and now it’s in my head. If they’re watching videos all the way through and they’re not even looking at the fact that you sell a baseball bat, you might say, “Many people know us as the content site for kids who want to learn how to hit a ball better with their baseball bat, but what they don’t know is that we also offer a wide range of baseball bats that will help you improve your swing. Here are five from our site, click any one of them.”

This level of intelligence has been around, I’m going to say, for over a decade. The problem is it’s always been too expensive and too tough, which means that people will either not buy it because it’s too expensive, or they’ll pay that money and not actually get to use it. Active Campaign said, “No, no, no. We are going to be the easy option for this. We’re going to make it so easy to people actually use our software themselves.” And so that’s what they do.

All the stuff that I’m telling you, anyone can use even the most technically unsophisticated person can benefit from Active Campaign. All they have to do is go to this special URL that I’m about to give out. And when they do, they’re going to get to try it for free. Go play with it, see if it works for you, see if it makes sense for you. Then if you sign up your second month is going to be for free. You don’t even have to pay for it. And here’s the benefit of everything here. Two free one on ones.

They’re not saying here, “Take this software, go deal with it yourself. If it doesn’t work, it’s your fault because you don’t know it.” They’re going to say, “Hey, look. Get familiar with it then we’re going to do a strategy session with you. We’re going to get a person on the phone who is experienced, who is going to understand your business, show you how you can increase your sales. Boom, set you up. Then we’re not going to bend you even at that point, we’re going to come back again for another one on one session to make sure you used everything and if you didn’t, we’re going to help you out.” Two free one on one sessions when you this URL I’m about to give.

And finally, if you’re with Mail Champ or anyone else that you’re not super happy with, you should look at the fact that they have free migration. I think they’ll migrate you from just about anyone for free if you use the special URL. I said I was going to talk slower, but I’m still not. The special URL is activecampaign.com/mixergy. They’ve been around for years and they just keep getting better and better. All right. You know what? Gal, if I had my way, all we’d be doing as human beings is talking fast and walking.

Gal: That will get boring after a while.

Andrew: Are you a fast talker?

Gal: Sometimes when I don’t think that much I talk fast. But when I have to think, not only do I talk slower, but my Israeli accent comes out.
Andrew: I heard that you grew up in Israel and that one of the things that made you leave was you saw that in Israel they didn’t make cars. Why would the fact that Israel doesn’t make cars cause you to leave the country?

Gal: I have several degrees, one of them was in cars engineering, and before I went to study software, I thought I was going to design cars, so I went to school for cars engineering. I came out of school and realized I made a horrible mistake. There are no cars in Israel to design. But that really didn’t make me leave Israel. I actually left Israel to go do some motorcycle racing. So I’m a road racer and Israel did not have any race tracks nor was racing legal. So I took the time after college to come over here and just have fun.

Andrew: To LA?

Gal: To LA, yeah.

Andrew: And so you had fun and they trapped you.

Gal: Yeah, and I stuck around.

Andrew: LA is good like that. I went there just for three months just to have fun before summer, and then I was going to go backpack to Europe, and then boom, I just ended up coming back. It’s too warm, it’s too nice. Wait. So you told us . . . here’s the part where you can make this interview really great, or we can be blah. Here it is. You told our producer, “I did some things in Israel that I can’t mention in an interview. Not exactly illegal, but I don’t know.” I saw you do something with your face. You want me to quote it? Here’s what you said, “I never did anything illegal, but I did get into some stuff that I can’t mention in the interview.” Mention it. Be the bad ass motorcycle rider that you are.

Gal: Let’s keep it at blah. I’m a business man now.

Andrew: Really?

Gal: I have a reputation to maintain.

Andrew: Like what? Racing? That’s all it is?

Gal: Racing. That’s all it is, yes.

Andrew: That’s it. Just racing stuff?

Gal: Yes.

Andrew: It’s not any kind of . . . did you do hard drugs or anything like that?

Gal: No, I never touched drugs.

Andrew: Never touched a drug. Okay.

Gal: I don’t need drugs. I go in and train Jiujutsu every day and that’s my drug.

Andrew: So when you say racing and it’s illegal, what do you mean? You’re just like riding through the streets superfast?

Gal: Yeah, yeah.

Andrew: Oh. You could do that pretty much in LA too, that doesn’t seem that badass.

Gal: I tried, and I ended up paying thousands of dollars of fines. So I got . . .

Andrew: If we have scotch will you tell me about this other stuff that you’re not comfortable mentioning in an interview?

Gal: If we have scotch only if it’s a Macallan 30.

Andrew: I could do that. Boom. All right. Okay. Let’s continue with this story. So you see these opportunities, you say, “I can make it better.” When you’re visioning the product being finished, what makes it better in your mind at the time? What do you say, “If I get this and this and this, we could help people sell more”?

Gal: So a few things. One is, first of all it needs to be up and running, and it needs to be quick. The conversion rate goes, you have better conversion rate if your store is quicker. People don’t want to wait for pages that are loading. And in Volusion it was all old ASP pages. It’s technology that hasn’t been supported by Microsoft for I think 15 years now. And the loading time is super slow.

In addition, it sits on proprietary hardware, so the thing just goes down all the time. And those things don’t happen on Shopify, but they do in Volusion and you can go and Google Volusion unbiased reviews. There’s a page dedicated to that. And you can just scroll down thousands of, I think not thousands, but maybe hundreds of reviews saying, “My store went down. My billing, it refused to stop my billing . . . ” And a whole bunch of . . .

Andrew: Okay. You said, “I can make it better because I’m going to build it from the ground up using more modern software.” And then you also said, you know stuff about SEO that you can bake into your product that’s not in others. In fact, before we started you showed me a couple of things and you said Shopify is never going to have that. So how did you know what to bake in? What kind of SEO stuff to bake into this?

Gal: Years and years of doing it. So you’d be surprised what type of developers and so called experts work for large companies. You can have a company that makes a billion dollars, and it was written by a $14 an hour guy in India. So you never know what’s behind it and what the bones of the products are. And me being a software developer it’s very important to me that everything is top quality, the code is scaleable, maintainable, quick.

Andrew: But was SEO part of the stuff, the work that you did at Inverted Software?

Gal: Yeah, we do SEO for our clients.

Andrew: And so were there a few things that you saw that you were doing for your clients that worked but weren’t baked into shopping apps?

Gal: Yeah, yeah. And that’s baked into ShopSnap. And I also baked in is mobile. So all the other ecommerce platforms they were created before mobile was popular, so in order to make it mobile you have to install a mobile theme, but then the bones are still desktop. So you’ll see on every store that it looks really, really nice on mobile, but then you make the screen wider and you realize it doesn’t look good on desktop or vice versa. And it’s because it’s all responsive skins.

We bake responsiveness into the product itself, and we baked features that are available in mobile into the product itself, because we had the good fortune of starting development pretty late. So the technology was there, the platforms were there, the CSS was there. So we came in at a good time. And all the other platforms that now I consider legacy are still struggling with it.

Andrew: You mentioned the code that you have. I’m looking at some of your sites and I see your URLs end in default .aspx.

Gal: Some of them, yes.

Andrew: Why do you keep that in there?

Gal: Because it doesn’t matter for SEO if the default is on aspx, but if you try and create . . . I just created a shopping cart before we started recording. And if you go and create a custom page in the control panel, you would see that it’s not going to be .aspx.

Andrew: I could’ve sworn I saw it on one of your stores too.

Gal: On a ShopSnap store?

Andrew: Yeah. Or on ShopSnap itself.

Gal: ShopSnap itself that’s highly unlikely.

Andrew: Okay.

Gal: Shopsnap.io is written in NVC. ShopSnap, the stores are written partly in web forms and the admin is an NVC. But even if it’s web forms, the quickest . . . well, I don’t want to get too technical, but the quickest way to do things in microsoft.net is with generic handlers. That’s the quickest you get to the bare bones of the machine and that’s what most of the pages are using.

Andrew: Okay. The other model . . . the other thing that you had was, you said, “I’m not going to create a site where anyone can come and create a store.” I know that that’s part of your road map, but you said, “I have a plan for how to make sales.” What was that plan?

Gal: So there’s a good book called the Art of War, and one of the lessons in the Art of War is never face a superior enemy face to face. So if little old me can put only $10 million of my own money into the platform, goes and starts selling on Google keywords, Shopify are going to erase me from the map because they just have more money, they’re going to just bid more on the keywords and that’s going to be about it.

So what we decided is to work with companies that actually have customers that sell online. So we work with logistic companies, we work with credit card companies, merchant acquirers, and we give them their own version. Their own version has features that are proprietary to them, so it connects to their ecosystems. So for example, a logistics company would have a dedicated API that connects directly to their warehouses. A merchant acquirer is going to have a version that only connects to their payment gateway, so their customers can’t really switch on their payment gateway. And so on and so forth.

Andrew: I see. So you’re saying, “Hey look, there’s people as merchant processors, the business owners who want to accept credit cards to go to. They’re going into them to sign up any way to get credit card processing. Why don’t those people also sell a store? And that way they could make money on every purchase that’s made because they get a percentage of the credit card transaction, but also they get an ongoing monthly recurring revenue from running the store for those clients.” And that’s what you were thinking. You were innovating not just the product, but you’re innovating the marketing of the product.

Gal: Exactly, and it’s a win-win-win because there’s major benefits to owning your platform. So the first one is you own the customer, right? The customer have their business on your platform. You make more money, you bundle the bills, so they get one bill and still paying Shopify and authorize.net, they’re only going to pay authorize.net. You get much better stickiness.

Andrew: Okay. So it’s not just the ongoing revenue, it’s also . . .

Gal: It’s the churn.

Andrew: It’s harder to switch.

Gal: It’s harder to switch. And the most obvious feature is the fact that now everyone knows who authorize.net is versus only merchants, because now authorize.net’s logo is at the bottom of every store and there is a link to authorize.net from every store. So Google picks up that link, so they’re much higher on the ranking. And they pretty much let their customers market them.

Andrew: I was trying to . . . you wouldn’t tell me all the names of your stores. You gave me one in private to look at.

Gal: I’m allowed because our partners are actually competing with each other, so we keep it super-secret. We only have one partner that . . .

Andrew: I’ve got a feeling that if I did enough hunting, I could find something like . . .

Gal: Never. There’s nothing . . .

Andrew: None of it that’s going to let me do it.

Gal: There’s nothing that links back to ShopSnap not even the phone number for support. So we do everything under the hood, but we stay under the hood.

Andrew: You know what? Let me try built with. “BuiltWith . . .” because that’s how it’s going to work.

Gal: No, no.

Andrew: Let me try. “Shop . . .” No, I don’t even see ShopSnap on there.

Gal: No.

Andrew: No? Weird.

Gal: We don’t even own shopsnap.com.

Andrew: Shopsnap.io.

Gal: Yeah.

Andrew: You know what? Because what you could do is go to BuiltWith and do Shopify. Here’s what people do with this, right? They go to BuiltWith, they type in Shopify, they search customers who have Shopify stores whose stores are built with Shopify. They collect all their email addresses, they put it into a software like Milkshake. They send out a message saying to them, “Hey, I can increase your sales from your store.” And then if someone doesn’t respond, it automatically follows up and says, “Hey, you didn’t respond to my message, but I promise I could increase sales from your store.” And then when someone responds you say, “Well, here’s how you can do it. Switch over to ShopSnap.”

Gal: It’s not the way we operate.

Andrew: No. That’s just not the model. Okay. So you had this other vision, “I’m going to go to people who are going to white label my software, and they’re going to sell it to their people.” And you said, “Before I even build it, I want to see if I can get a customer.”

Gal: Yeah. So we closed the first partner six months before we finished.

Andrew: This is Tiger Logistics.

Gal: Yeah.

Andrew: Who’s Tiger Logistics? Who are they?

Gal: They are an $800 million company that’s I think 46% owned by the French Post Office.

Andrew: And they have customers because they ship out products on behalf . . .

Gal: Yeah, yeah. So their customers tend to be more enterprise and mostly in sports equipment. But we also partners that have small mom and pop stores, and we have different packages for those guys. So we go all the away from Shopify comparable prices to the enterprise.

Andrew: How did you get them as a customer?

Gal: Tigers, you mean?

Andrew: Yeah.

Gal: A guy called Doug Jones, which built . . . he’s an excellent business development guy, and he built a company called Newgistics in Austin which was recently sold.

Andrew: A company called what?

Gal: Newgistics.

Andrew: Okay.

Gal: He connected me and someone at Tigers, and I gave him a little demo just like I do to everyone and gave him the benefits and they were sold on it. And I said, there’s only one hook, we didn’t finish yet.

Andrew: I see.

Gal: So they waited until we finished it and then we launched.

Andrew: Did they pay you for it? Did they pay, or did they just committed that they were going to resell it?

Gal: Yeah, there’s no . . . so we absorb the cost for every new partnership. All we require is a certain minimum. If the company is too small for us, we usually put a minimum of 100 stores in the first 12 months. But most of our partners, they just go through the minimum like a week or so.

Andrew: Okay. I heard Dan Bliss someone who I interviewed back in 2010 is also part of the business. I interviewed him because he had something called Perfect Business which didn’t do business plans, right?

Gal: He had the perfect pitch conference in Vegas and he had a lot of big names out there. I think the CEO of TrueCar and a few more. Yeah. So he’s an interesting guy. He used to actually own the Hollywood sign. He bought the Hollywood sign and then he started tearing it down and selling it online piece by piece.

Andrew: As necklaces and jewelry.

Gal: As necklaces, yeah.

Andrew: Because it was the original Hollywood sign was taken down and replaced with a newer prettier Hollywood sign, right?

Gal: And he paid I think 450,000 for the old one, something like that.

Andrew: And he broke it up and started selling it in pieces and then he sold the last part of it.

Gal: Yeah, some artist.

Andrew: I’m looking at a CBS news story about it from 2005, I guess he sold it.

Gal: Yeah, something like that. And now he’s dabbling in hotels. So he bought a hotel in Illinois or somewhere.

Andrew: Hotels.

Gal: Yeah. His hometown. He does manly real estate deals.

Andrew: Interesting. And he’s not in LA anymore?

Gal: Well, he met his wife in London, moved to London for a while, came back to Burbank. So he moves around.

Andrew: So he’s your partner?

Gal: Yeah.

Andrew: What percent equity does he have?

Gal: I can’t disclose that.

Andrew: Why does Dan have equity in your business? What do you need Dan for?

Gal: All right. So it’s an interesting story. So as I was figuring out what to do and how to put in a new platform, I actually gathered some people for a round table and those were old friends of mine. And we had a meeting in Chatsworth. I have a friend called Jerry, he’s an Israeli guy and he owns a company called Ciphertext. He used to be part of Logicube, had a falling out with them, he sells encrypted hard drives. So we all gathered in his office and we started brainstorming about a new platform. And earlier that day, Dan hunted me down through LinkedIn, and I looked at him and I looked up his videos interviewing . . . what’s that, the owner of Virgin?

Andrew: Richard Branson.

Gal: Richard Branson. I looked up a video of him interviewing Richard Branson, and I was really impressed. I was like, “Oh, this guy is really good.” And we started talking and he goes, “You know what? I like you so much. I’m going to draft your business plan for $50 an hour.” And I’m thinking to myself, “$50 an hour? Seriously? That guy is a multi-millionaire. Why would he do anything for $50 an hour?” So I said, “You know what? We’re having a business meeting tonight with Chatsworth. Why don’t you show up?” And I think he lived in the Marina back then. And he drove Chatsworth, which is if you live in LA it’s not an easy task. Between the Marina and Chatsworth is about two hours that’s if you take PCH.

Andrew: In Santa Monica could take forever. Yes. So he was willing to put that kind of effort in, he drove up and what happened?

Gal: I was just so impressed with his ideas. He just blew my mind and I just after the meeting was over, I took him to a room and I said, look, I want you to be a part of this and here’s the percentage I want to give you. Just come over and just keep blowing my mind and help out with a business.

Andrew: Because he helped you think of new ideas.

Gal: Yeah.

Andrew: I see. And so what did he come up with that you hadn’t thought of?

Gal: He came up . . . first of all, he came up with the name.

Andrew: Okay.

Gal: He came up with a bunch of stuff that was social, the way the user interface should look like, and that’s a new interface. That’s actually not the store that I set you up with. He came up with some SEO features that I didn’t think about. So he came up with a lot of stuff. And mainly he came up with . . . up until then, I was just flying by the seat of my pants not thinking about actually putting financials in place and projections and everything that makes a business, business.

And he taught me how to think in such a way. So it’s nice to have an idea and it’s nice to say, “Hey, we’re going to make millions,” but he taught me to actually put it on an Excel spreadsheet and to verbalize it and to follow up on things. So he made me more mature.
Andrew: Interesting. I’ve lost touch with him over the years. I see his Richard Branson interview now. I guess it was at his conference. I see the two of them sitting down. A Perfect Pitch, 2009. All right. I’ll tell you what, let me talk about my second sponsor and then get into what you did after you got the first customer, how you added SEO and other features. All right. The company is called DesignCrowd. Here’s the deal with DesignCrowd. Do you have a designer in house?

Gal: I have multiple designers.

Andrew: So one of the things that happens when we have designers is they end up giving us the same thing that we’re used to, and they don’t blow our minds with outside vision, with outside possibilities. I have a designer too. I freaking love him. The thing is, though, that when you want to start something new or refresh or reconsider what you’re doing, what you want is not your designer, not a different designer. What you want is a crowd of designers to re-consider your site.

Like I’ll tell you this. This could come across as insulting. You tell me if it’s bad. I feel like the text on your site is a little outdated, and I don’t know enough about text to tell you why these bullet points are a little hard to read and not grabbing me and don’t do justice to what you’re doing. What do you think of that? Is that insulting?

Gal: I think you just made Lowell Housman very, very sad.

Andrew: I think . . . I’m sorry to do that, but I do believe that you guys could do better with the text on the home page of shopsnap.io. Anyone who wants to can go and take a look. The top of it, really clear, I see what you guys are doing. Open a store in a snap. What I think the bottom part with the bullet points, it’s just way too tiny and especially on a big monitor, spread out. All right. But that’s not what I’m here to say. Here’s what I’m here to say.
What he could do is, he could say, “You know what? I’m the in-house designer. I would like to get brand new ideas, an influx of possibilities, and see how other people would re-imagine this. You go to DesignCrowd, you create, I forget what they call it. I actually don’t even like what they call it because they make it sound way too fancy. You basically answer two, three questions, and boom, you end up with a crowd of designers who all swarm on your project, and then they start creating different variations.

Now, you get angry at some of them and you go, “This is not what I asked for,” and you give them feedback and you give them one star. You go to a couple of them and you say, four stars. “You actually are on the right track. Here’s what I would adjust.” And then they go back and adjust it. You give some five stars to let people know that you can be generous with the stars and tell them what’s working about it. And they all go back. They readjust, they create, and then boom, you end up with a collection of designs most of what’s to your liking and the rest you just axe, frankly, because there’s one button to get rid of them. And then you pick one and you only pay for that one.

Now, the designer who created it could continue to design the site, give you more ideas, be someone that you call on and work with and hire on a regular basis, or you just take that thing and you go to your designer, you say, “Look, here’s a different take on this. We’re going to start to implement this. How do we get closer to this? How do we start bringing this to the rest of the site?” That’s what DesignCrowd is about. His name is Lowell?

Gal: His name is Lowell, yes. He actually has his own CSS framework that’s comparable to Bootstrap called Pure CSS Framework.

Andrew: Okay.

Gal: But the idea behind that website, that specific website is think about us like you think about Ford. You don’t go to the Ford website to buy a car. You go to the Ford website to just get some information about Ford, and then you go to the dealer to buy a car. It’s the same with us. And so you’ll go to ShopSnap just to realize who ShopSnap is and what we do, but you’ll go through one of our partners to actually get an online store.

Andrew: And then the online partners design it?

Gal: Yeah. They would sell the designed packages, but the design packages are specified on our website. So that’s how they know how to price them.

Andrew: Still, even on your site anywhere, there’s something about good design that makes people value what’s there so much more. It used to be that if you would walk into a meeting in jeans and a t-shirt, you are undervaluing yourself and people would then undervalue your experience because of it. If you walked in with a nice suit and tie, they respected you. That’s not true anymore. Today, it’s actually the opposite.

I used to wear jackets and shirts and collars and everything here, sports jackets and all that. I even had a handkerchief. I spend money on freaking handkerchiefs and learned how to put him in. People didn’t really respect that. They felt a little bit too disconnected. Today what we respect, what makes us feel like something is worth more than it actually is, is the design of the site. And frankly, I think you guys do a great job, but I think that the text on your site could do a little bit better. It could be less like the built-in text in Microsoft, that’s actually not . . . do definitely better than that. But that’s my suggestion. Now you didn’t come here for me to say that. I do feel actually . . .

Gal: I appreciate it. I appreciate your feedback and I will let him know.

Andrew: All right. Anyone out there who is listening to me. This is kind of awkward now. But anyone out there who is listening to me should go to DesignCrowd. Get your first design from them, or frankly your next design. If you already love what you’re doing, open your eyes to what’s possible. Go to designcrowd.com, super inexpensive, especially if you use this link that I’m about to give you. It is designcrowd.com/mixergy.

They’re going to show you how they took my ugly, ugly, ugly, ugly, ugly, ugly cover art for my podcast and they made it into something that looks really nice. You can actually see 97 different designs came up for that. And then I picked this guy in the Philippines who had really beautiful design for me. All right. Go to designcrowd.com/mixergy, you get a discount and you’ll get to see what they did for me. And let’s continue with the interview.
Gal: You know, speaking of design me and my girlfriend went to see an open house a couple of months back, and it was a house in Lobo Canyon, and it was $5 million, right? And I go through a tour of the house and I see some Perl books on the shelf and Perl is a very, very old programming language. So I asked the realtor, “What does the guy do for a living?” And she says, “He’s an internet entrepreneur.” So I go, “Okay. Can I talk to him?” and bless you.

Andrew: Thank you.

Gal: So apparently, he was in the house doing some work, so we started chatting. And his name’s Gary [inaudible 00:49:15], and he gave me his business card and then I went through his website. And once I saw his website I was, “How can this guy own a $5 million house? His website looks like it was designed in the ’70s.” And so sometimes it’s not about the design. Sometimes it’s about the actual deals that you close because his customers are Pep Boys and Walmart, and they’re very large, but you can . . .

Andrew: You know what? Fair enough. I do now, I’ve gone the other way from not at all caring about design to suddenly becoming like the Apple design snobs who will think about every button on Apple and appreciate every little thing, and then forget about the fact that those designs actually are just there to help with the functionality and the functionality is what’s more important. And you’re right, that is becoming an issue for me.

Gal: Yeah. The design needs to get out of the way.

Andrew: It does. At the same time though people do value stuff that’s designed better.

Gal: Yes.

Andrew: Which freaking bothers me a ton because look at the way I’m dressed. Can you even see this? Look at this.

Gal: Okay. Look at Amazon. Do you like Amazon’s design?

Andrew: No, I don’t. But I do love their iPhone design.

Gal: So Amazon’s design looks like . . . I don’t want to say how it looks.

Andrew: You’re right.

Gal: But look at their conversion rate, right?

Andrew: It’s so freaking cluttered.

Gal: The design gets out of the way.
Andrew: Good example. Great example. Because you know what? My wife and I will sit down sometimes and just want to watch an Amazon movie that we started the night before. I don’t even know where to go look for that. I can go to the home page of Amazon, but then that might show me whatever video they’re recommending for me, not the last one I watch. I can go to . . . what do they have? Amazon Prime video. Amazon Prime . . .

Gal: That’s functionality. That’s not design, that’s functionality.

Andrew: Sorry?

Gal: So that’s functionality, that’s not design. It goes into UX and so it’s a gray area.

Andrew: Fair enough. I do think that . . . okay. That’s a good point and I’m glad that you made it, and I’m feeling awkward about myself and me saying that, but we could continue on with this interview. So you had your first customer, you wanted to show that you can increase sales. Tell me what you did for SEO that was working, tell me what you did about the psychology. And I know you don’t want to get into details of too many things, but you could give one or two examples. Let’s start with the psychology. What did you do with psychology to help close sales?

Gal: So for psychology, people usually close sales when they’re being asked to close the sale. So if you’re going to ask your customer to click the Buy button, they’re going to click the Buy button. All they have to do is make sure they know who you are, they know when they’re going to get the product and they’re happy with the product itself. So there’s . . . I don’t want to talk about it too much. We talked about it in the pre-interview, but I don’t want to find someone else copying us later on.

Andrew: Maybe one or two things, just to give us a sense of how it works. By the way, I’m on your shopping cart on one of your stores. That’s where I saw aspx. It’s the URL of the store, you asked not to give it out and then it’s slash shoppingcart.aspx. I knew it lead into a store at times.

Gal: Okay. So that page is not being indexed ever by Google.

Andrew: Okay. So you’re saying, “Look, it doesn’t matter, I’m not going to obsess about the URL structure.” Most people don’t care about it, and frankly, it doesn’t show in many new browsers and when it does matter, we care about it.

Gal: Yeah. The shopping cart itself is never indexed by Google.

Andrew: Okay. So can we give one or two of the different other things that you do to increase sales? Do you do count? You don’t do countdowns?

Gal: No. After the patent clears maybe we’ll talk about it. But it’s kind of like it’s a high-pressure sale combined with over-the-counter add-ons. Well, everything I’m going to say is going to give it away.

Andrew: Okay.

Gal: So let’s just conclude the fact that we saw an increase in conversion rate and also increase in SEO for every store that . . .

Andrew: What about this thing that you told my producer? You gave her an idea of one of the techniques you use. Can I give that one?

Gal: I don’t know which one it is.

Andrew: Well, let me see. Let me scroll over here and find it. Here’s what you did do for me, you said, “Look, Andrew, here is one of my stores, go search for their products on Google.” So I opened up an incognito browser, I searched for the product on Google. It was an Under Armour hat, and it came up right under Under Armour’s URLs.

So it was all the top links were for Under Armour’s website itself to see the hat and then the next link under that was for your customer’s store and led him back. And you said, “This is one of the things that I do to help my store owners actually sell. We do really good SEO on it.” And that was impressive. The other thing that you said was . . .

Gal: Yeah. And it’s all baked in, so there’s nothing they need to do and there’s no extra add-ons, and there’s no Shopify apps that you need to purchase. It all comes in baked into the software.

Andrew: The thing that you told our producer, I’m going to say, it’s like Amazon says, “Want buy tomorrow, click the Buy Now button and you get it.” So around the buy it now button you tell people if you get it now, you have a little bit of a chance to get it tomorrow.

Gal: You got me. Yes. If you give them timelines, you’re going to get a better result.

Andrew: Yeah. That worked for me this morning. I can get these Bristle toys, these Bristle Blocks, but I have to order and have a countdown for when I
have to order if I want it before the weekend. And I do want it before the weekend, so the kids will play and I get some time to read.

Gal: Yeah. And not only that, that should be the climax but there’s a build up at the top of the page that explains why you need to buy it now.

Andrew: What do you mean by why you need to buy now?

Gal: It’s why should you want the product by tomorrow?

Andrew: Oh really?

Gal: Yeah. So there’s a lot of . . .

Andrew: Why would I want product by tomorrow?

Gal: Yeah. So there’s lot of secrets to . . . it’s mostly human psychology. There’s a lot of secrets to the art of how to increase conversion rates.

Andrew: All right. I’ve been through this with you before the interview, during the interview. I can tell when you have a barrier. And frankly, my job is to push to the limit, and your job is to say, look, there’s some things that have to be beyond the limit and I’m not going to go into it. I’m glad that you feel comfortable pushing back because I’d rather you push back than come back five minutes after the interview and say, “Andrew, please edit this out” because I don’t edit.

Gal: Yeah. It goes beyond just writing good software. It’s good psychology. That’s what makes sales.

Andrew: Okay. How did you get the rest of your resellers? How did you get these people to sign up with you?

Gal: I just hunted them down. I just hunted down to the CEOs on LinkedIn and sent them emails and just bugged them until they gave me 30 minutes of their time and once they gave me 30 minutes of their time, that was it.

Andrew: So if I had Andrew Merchant Services where I enable anyone who’s listening to my voice to accept credit cards, you would hunt me down and you say, “Andrew, let me create andrewshops.com or whatever you want to call it. And all of these people who you’re selling merchant services to can create their own stores and that would be . . .”

Gal: Yeah, yeah. If I think you’re big enough, yeah. Because if you’re giving me . . .

Andrew: Okay. And it’s all you doing it?

Gal: Yes. It’s me and a few other sales people. So I like to do those partnerships myself because I need to gauge if there’s something there or not. So I do it myself mostly.

Andrew: Okay. What’s your process? It’s just looking at . . . where do you find all these guys who could potentially be partners?

Gal: Those guys are some of them are public companies, so I know about them, but I’ve been in the industry for a long time so I know who the companies I want to work with are.

Andrew: One of the things that helps you sell better, market better, you told our producer was the CD that you got and you just stumbled on it and you started listening to it. You know the CD I’m talking about?

Gal: Perry Marshall. Yeah, Perry Marshall . . .

Andrew: Yeah. Which one from Perry Marshall? Is it Guerilla Marketing for Hi-Tech Sales People?

Gal: Yes, that’s the one.

Andrew: What do you get out of that that’s teaching you how to sell better?

Gal: Direction and the ability to express my expertise to people that don’t know me.

Andrew: How do you express your expertise to people who don’t know you?

Gal: I have a lot of articles out there, a lot of blogs and I can demonstrate that I can understand and solve their problem, which is pretty simple when you think about it, but it takes years and years of actually solving people’s problems to understand the next problem and to know how to solve it.

Andrew: Looks like he’s got this. Let me see. Get your audio book it’s on perrymarshall.com/b2b-marketing.

Gal: It’s a little updated these days. I think I ordered it back in 2003 or ’04 or ’05, and I don’t think it stands the test of time today, but there’s still some good principles that people can apply.

Andrew: Okay. Frankly, I just realized. I don’t even know that I can put a CD into anything. I don’t know how I would listen to a CD if I wanted to.

Gal: I have a CD player in my Ford F150 truck.

Andrew: You got . . . you’re in a truck?

Gal: That I had for a long time and I refuse to give it up.

Andrew: Why do you need a truck? What are you hauling?

Gal: Motorcycles.

Andrew: Motorcycles. I see. You still ride?

Gal: Yeah.

Andrew: Wow. And you compete?

Gal: Used to. If any racers are out there they’re going to remember the old WSNC which is the Willow Springs Motorcycle Club which shut down years ago. They did a few [inaudible 00:59:19] races, but I really need to get back into it.

Andrew: Wow.

Gal: It’s just lack of time.

Andrew: That’s pretty badass. All right. So the business is going well. Your next thing is you’ve got an idea for how you can reach the masses directly. So not only enable other people to resell your software and enable their customers to create stores on your platform, your next idea is?

Gal: It is an AI engine that keeps track of a consumer patterns, compares them to their social profiles, mood, life events, local news, and then spits out a result that is the product that’s most likely to be purchased along with a text that’s most likely to encourage that person to buy, put it all packaged all in an API, Shopify apps, Magento . . .

Andrew: So you’re saying this will also be on Shopify stores?

Gal: Yes. This will be a completely different company.

Andrew: Okay.

Gal: And then go sell it from Walmart and Jet and Target, sell it all the way through the enterprise Magento stores and all the way to the Shopify store. So that’s really a product for everyone.

Andrew: You know what? So I’ve been talking to entrepreneurs here in San Francisco about this as the thing that they know is the future, they’re trying to at some point in the future get to, but they’re not there. The idea that, “Why should everyone see the same web page as everyone else? Why shouldn’t that web page, its content, what its selling, how it’s selling it change based on the person who’s there?” Just like I mentioned earlier with email, it’s possible today.

Gal: Yeah. That’s not a new idea.

Andrew: But you think you’ve found a way to do this?

Gal: Yeah, we just didn’t have the technology until neural networks came around.

Andrew: Okay, what’s in neural network? And how’s that going to let us do that?

Gal: Neural networks are nodes that learn from previous decisions. So you would put variables into one side of the network, and you’ll put nodes in the center that just do decision making based on compensation variables that you put in from learning. And then out comes a result from the other end. So if you would put all the products that the store sells on one side and the profile of the person that’s looking at the store out of the other end should come into product that’s most likely to be purchased along with the text, that’s most likely to make an impact.

Andrew: I see. So you are not creating if-then scenarios the way that we used to . . . like if someone is this way, then do that. You’re just allowing the neural network to think like a brain and understand, “This is the person, this is the product. I understand how to match them.”

Gal: Yes.

Andrew: Okay. All right. The thing that I thought you were going to say was you guys are thinking of offering a free version, aren’t you?

Gal: That was one of the options we might do in the future. I was talking to, do you know Hemi Zucker?

Andrew: Who?

Gal: Hemi Zucker who’s the CEO of 2J Global? So I had a really good conversation with him and he suggested . . .

Andrew: Well, j2, is it? It’s 2J or j2?

Gal: 2J or J2, I don’t remember. Used to be…

Andrew: j2 Global, yes.

Gal: Yeah. So he suggested it and we might go for it sometimes in the future, but there’s legal issues with our partners. We don’t want to compete with them. So we might go for a free version where you get to install for free and then you just pay . . .

Andrew: For sales.

Gal: Yeah, for sales or when you start making sales.

Andrew: You know what? j2 also is a very interesting company. They started out, didn’t they, as like . . .

Gal: eFax or . . .

Andrew: eFax, yeah. They still have eFax. Then they just started buying a bunch of different companies, like the most recent one was . . .

Gal: Two hundred companies.

Andrew: Ziff Davis which bought something else. I forget what bought it. And then as people tried to trace how they did this, they realized, “Wait, Ziff Davis is owned by this old fax company.”

Gal: Yeah. He’s a very interesting guy. I had a two and half hour conversation with him at Roosevelt Hotel. One Friday we had lunch and he gave me a lot of ideas and also some good connections. So if you want to interview him I can certainly make an introduction.

Andrew: I would love it. I’m going to have to spend a lot of time researching him because this is a guy who I feel it’s hard to understand him. I see too many people laugh off his business because they connect it back to the fax machine.

Gal: Don’t laugh him off. I don’t want to give out too much of his story, but if you don’t end up connecting with him come back to me and I’ll tell you his story and how he made it, which is a very interesting story.

Andrew: Really? Okay. Is there somewhere I can read about it online?

Gal: Probably not.

Andrew: Really? Okay. You know what? So let me see his market cap. This is . . . there it is. Look at this. The market cap is what’s important to look at. Forget about the fact that he used to be in faxes. The market cap is at this moment $3.8 billion.

Gal: Yeah.

Andrew: All right. Thanks so much for being on here. Anyone who wants to go check out your site should go to shopsnap.io, shopsnap.io. But why here, frankly, they can go and sign up for a store, can they?

Gal: No, they can’t. I just I guess enjoyed telling the story or they can go invertedsoftware.com and maybe if someone needs custom software can help them there.

Andrew: All right, invertedsoftware.com if they want to hire developers, a team to do it, to build for them.

Gal: Yeah. And also, I love to connect with people on LinkedIn, so look me up on LinkedIn. Send me a LinkedIn message, and I usually actually talk to my LinkedIn connection, so probably I’ll send you back . . .

Andrew: You do?

Gal: Yeah.

Andrew: I ignore all my LinkedIn connections, too much noise.

Gal: Well, at the beginning people don’t understand what I want from them. They think I want to pitch them something, but I really don’t. I just want to learn more about them.

Andrew: Yeah, you seem like a good guy. You know what I like? Usually I give people before the interview starts this talk, a special talk about how to keep them from folding if I ask tough questions because I’ve seen that people start to just collapse. I forgot with you because I forget why. I just forgot with you.

Gal: Israeli army, buddy.

Andrew: Maybe that’s what it is because I asked you some hash questions, I’m looking at you, you’re not folding into yourself, you’re not collapsing. You’re like, “Yeah, Andrew, here’s me telling you why this design actually matters.” And especially when I said, I found the aspx in the URL, you quickly shot back, Google doesn’t actually index those pages. That doesn’t matter.

Gal: Yeah, yeah. Same with a checkout. Try to checkout. I don’t remember if the checkout has an aspx on it.

Andrew: Yeah. I like that. I really am grateful that you were able to withstand that and come back in and actually illuminate me and tell me why you’re thinking the way you are and how you’re building this business. I would never have discovered your company except for this interview. I’m really proud to know about it. I’m looking forwarding to seeing how you built it. Congratulations to Dan Bliss. I don’t know what he said to you that day in California, but sounds like he’s riding a successful company here and I’m sure helping out.

For anyone who wants to go signup for my sponsors, I’ve got the company that will help you send out smart, customized email. It’s called Active Campaign. Go check them out at activecampaign.com/mixergy. And if you want to see how my design was impacted by working with DesignCrowd and get a big discount for yourself, go check out designcrowd.com/mixergy. People are telling me they’re saving these URLs just in case they need them in the future so that they get the discounts, and I don’t know how long they’ll work, but they work right now. Designcrowd.com/mixergy if you want to sign up for it. Gal, thanks so much for doing this interview.

Gal: Thanks for having me.

Andrew: Bye, everyone.


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