Before it launched Magento, in 2007, Varien was a small Los Angeles based development firm. It focused largely on ecommerce clients and its CEO, Roy Rubin, would occasionally contribute articles to Practical eCommerce, then a printed magazine.
Fast forward to 2010 and Varien is now, legally, Magento. Rubin presides over 200 global employees and a largely open-source ecommerce platform that’s been downloaded over 1.5 million times and deployed by over 75,000 online stores. It’s clearly the fastest growing shopping cart, so near as we can tell, and it offers features and benefits that many carts do not.
But Magento does have critics.
Some critics contend that the platform is complicated and smaller merchants can’t really use it without hiring a developer, an expensive and often contentious arrangement. Others remind us that the Community edition is not PA-DSS approved, and merchants who use that edition presumably cannot become PCI-compliant without the total use of a hosted payment setup, such as Google Checkout.
And then there’s the equity investment. Magento raised $22.5 million earlier this year from two separate investors. The investment required a brief SEC filing, but the filing doesn’t list the names of the investors. And Magento refuses to identify the investors, or what the proceeds will be used for.
Lastly, the long-rumored hosted version of Magento is, by all accounts, still in the works, but Magento won’t publicly comment on that, either.
We asked Roy Rubin to visit with us about all of this, and he agreed. We then requested that he respond to any question we had, and he agreed to that, too. The live chat interview with him follows, below.
Live Chat Interview with Roy Rubin
Kerry Murdock: Good afternoon, Roy.
Roy Rubin: “Hello, Kerry!”
Murdock: In barely three years, Magento has become something of a phenomenon. How did you do it?
Rubin: “To be honest, we are quite surprised as well. I believe we came on the market at the right time with the right mix of product and vision that really struck a chord in an open source and merchant community that was ready for something different. A great team here at Magento that is laser focused on the needs of the online merchant was obviously another key ingredient that delivered innovation, ease of use and user experience that is really second to none. Finally, the opportunity for 3rd parties such as technology companies, integrators, consultants to thrive and monetize on top of our platform created an economic model that led Magento to flourish.”
Murdock: How many actual stores run off Magento presently?
Rubin: “We estimate 75K+ stores, with thousands added weekly.”
Murdock: Can you break that down between your Community, Professional and Enterprise editions?
Rubin: “Most of the customers are using our Community product. The Enterprise edition has been on the market for roughly a year and seen tremendous success with some of the world’s largest retailers and brands embracing the solution. We are now adding hundreds of customers a month to our customer list. The Professional edition is relatively new and we are seeing early traction that has been very positive.”
Murdock: Varien, your previous development firm, is now called Magento, right?
Rubin: “That is correct, yes.”
Murdock: How many employees are at Magento?
Rubin: “We are approaching 200 employees globally.”
Murdock: And a new office there in Los Angeles, too?
Rubin: “Oh yeah! Long overdue, we were extremely tight for space in our previous location. What’s unique about our space is that we’ve saved room in our current location for ecommerce innovators and companies to come down and join us for a period of time. It’s important for us to be as close as possible to online merchants to learn of the challenges they are facing so we can continue to improve the product.”
Murdock: Changing the subject, is Magento’s customer a developer, or a merchant?
Rubin: “Great question! We spend a lot of time thinking about the constituents we are serving. At the end of day, we (both Magento and the developer) are focused on helping the merchants succeed. We see Magento as a tool and technology that enables success at both ends of the spectrum. Our mission is to enable success of the ecommerce ecosystem, which includes both the merchants and developers.”
Murdock: Among the biggest complaints we hear generally are from merchants that are dissatisfied with previous developer relationships. Our last three profiles, in fact, were from merchants who were angry with their developers. But, for most merchants, the use of Magento seemingly requires the use of a developer. Thoughts on that?
Rubin: “So let’s start from the end and work back to the beginning. Magento is an incredibly feature rich product and in many cases absolutely great to use as-is, out the box, with no development resources needed. In fact, tens of thousands of our customers never contracted a developer and are achieving great success.
“The thousands of more sophisticated implementations that are doing significant volumes have great developer relationships. We continue to work hard on building training and education resources to bring up-to-speed developers that lack the experience and know how. My advice is to check references and seek out qualified professionals when embarking on any project, and specifically a Magento implementation.”
Murdock: Moving on, not every ecommerce platform raises $22 million. But that is what Magento did last February, as disclosed in an SEC Reg D filing. Now is the time to tell the world all the details. Who are the investors and what will you do with the money?
Rubin: “I’d love to share the details when the time is right. We are excited to have partners that are committed to the Magento ecosystem and our mission of enabling the ecommerce ecosystem. What’s important is that we have the resources to continue to grow Magento around the world and produce more of the same innovation and technology that has positioned Magento for success.”
Murdock: You’ll call us when you’re ready to share, right?
Rubin: “Absolutely, I will do that!”
Murdock: How about sharing the details of your upcoming hosted, SaaS platform?
Rubin: “We haven’t announced any new products (outside of mobile) and continue to look at the market to identify growth opportunities to position Magento as a leader in the ecommerce world.”
Murdock: Got it. Moving on to PCI compliance. Your Community edition is, by your own account, the most used of the three editions you offer. And yet, the Community edition is not PA-DSS approved. What are those merchants, who use that edition, suppose to do to become PCI compliant?
Rubin: “The costs of certification and compliance are material for Magento and as much as we’d like to make our PA-DSS Certified Payment Bridge product available to our community, it’s a challenge. There are alternative options ranging from hosted payment pages to alternative payments and other options that should be of value to community merchants when seeking compliance. We continue to work on partnering with vendors that can help our merchants in this challenge.”
Murdock: A senior official at the PCI Security Council told us earlier this week that a merchant cannot become PCI compliant with a non-certified application. That person said, essentially, the day of reckoning was coming for non-compliant merchants, as they’ll receive large fines soon. What steps can your community users take to avoid that?
Rubin: “I can assure our community merchants that no matter the developments of PCI regulations, we intend to have in the market a product and a set of options that will allow them to transact safely and efficiently without the worry of non-compliance, as we do today.”
Murdock: I have just one more question, Roy. But, before that I want to thank you for your time today, for this interview. Also, we congratulate you and your Magento team for your accomplishments. It’s been amazing, really.
The last question is simply this: Do you have anything else on your mind today for our readers regarding Magento, the ecommerce business or anything else?
Rubin: “Thanks so much Kerry. It’s been a lot of fun and I have to hand it to our team here at Magento. Absolutely phenomenal group that continues to inspire me. It is incredible to be an ecommerce merchant and we are excited to see the global growth, including in areas such as mobile, which may indeed by the next wave.
“A scoop for you, Kerry. Earlier this week we launched the private beta of our mobile commerce product. We are big fans of Practical eCommerce and thanks for the taking the leadership in reporting in this space.”
Murdock: We’ll continue watching for your mobile platform. Thank you, again, and have a good day.
Rubin: “Thanks, Kerry.”