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Simplifying the Magento Extension Experience with Ravi Mittal · Talk Commerce

• Brent Peterson (00:01.474) Welcome to this episode of Talk Commerce. Today I have Ravi Mattel. is the CEO and founder of Rave Digital and owner of a Headworks. Ravi, go ahead, do an introduction for yourself. Tell us your day-to-day role and one of your passions. Ravi Mittal (00:14.886) Yeah, absolutely. As you said, I'm CU. I founded Ray of Digital, which is a full service e-commerce agency in 2008. After I left the corporate world, I used to work for IBM. So I'm coming from a technical background. And I always wanted to have my own company, so we started a dev shop, purely a software factory. We pivoted to complete e-commerce agency around 10 years ago. And since then, we have been focusing mainly on Magento as a practice. So we've been running that company, Beacquired, Aheadworks in 2019, which is one of the most reputable extension building companies. And then since then, I've been operating and running Aheadworks as well. have 57 extensions, we won four awards, and we leverage those extensions for our deliveries in our e-commerce services business. Brent Peterson (01:10.958) That's awesome. So before we get started, and we're going to talk about some of your ideas about the Magento community and some ideas about how extensions are sold and how they're licensed. You have volunteered to be part of the Free Joke Project, so I'm just going to tell you a joke, and then you just give me a rating one through five. So here we go. Not to brag, but I just got hired as a fitness model. They used me as the before picture. Ravi Mittal (01:22.086) you Ravi Mittal (01:31.332) Yeah, sure. Ravi Mittal (01:42.33) The rating for that is 1. 1 being the highest. No, I was messing with you. The rating for 1 being the highest because you that's the number one joke you know today this week. I know the rating the 5 is the highest. You get a 5 all the time. Brent Peterson (01:45.74) Okay. Brent Peterson (01:49.294) You Brent Peterson (01:56.238) All right. Brent Peterson (02:01.068) All right. All right. Thank you. All right. So in our green room, we were talking a little bit about the Magento community and how Adobe has changed things. Tell us a little bit about the, where you'd like to see, and we're going to talk specifically about the marketplace and extensions, but give us some background of what led you, first tell us a little bit about why there's a problem with the Magento extension system. Ravi Mittal (02:26.36) Yes, so brief background about this thing. We all know we love Magento. It's heavily flexible. It's commercial open source, so there is a premium model there. And these extensions were sold as a one-time extension. But what happened is that on an average, a brand or a merchant will use an extension for around seven years. With every version or every security patch update, we need to update our extensions to make sure that they are compliant with the new versions of it. So there is a lot of overhead involved. So when you are a 57 extension company, then there are a bunch of engineers, a couple of weeks trying to do that. And there were some years where there were like 10 version upgrades that were released. So supporting those for seven years comes at a cost. So we as a community, we all of us introduce subscription that hey, you can get the initial license, you can use it for life if you don't new version of it, right? But if you need the support, and if you need the new version of it, two years down the line, one year down the line, whatever, know, as and when they come. then you need to have a subscription. So we introduced subscription and that is when it started making a little bit of financial sense to run an operator for-profit organization which builds extensions. Ravi Mittal (03:56.166) I lost the audio, Bren. Brent Peterson (03:58.892) Sorry about that. Okay. So we talked a little bit about how Audi or how Shopify does their extensions, how big commerce now is doing their extensions. Tell us how Magento at the moment or how Adobe commerce is selling their extensions. Ravi Mittal (04:12.504) Yes. So right now, let's take one example. So there's a difference between managed e-commerce and unmanaged e-commerce. So rest of them are like shop by big commerce, are managed e-commerce platforms. They are not open source. When you buy extension, you get the source code. You have access to it. You can use it as in how you wish it. Versus an app. in Shopify space is a SaaS application even if it's a small app reward points or anything to enable B2B any of those blog or content building whatever you know they are small apps and they are running and operating in a SaaS format so that means there can be thousand merchants on the same SaaS application using that app And the app building partner cannot customize it for one tenant, right? So there is that key difference. That is, in terms of licensing, because you are not open source and because you don't have source code, because you don't have keys to a kingdom, they can very easily come up with easier licensing model, $20 a month or $200 a year kind of licensing model. Versus in Magento space, we right now have an initial licensing cost, let's say $200 or $300 per open source. But then there is another licensing cost for Adobe Commerce. And some of the vendors have third tier of licensing cost for Adobe Commerce Cloud. So if extension is, let's say, $300, which our blog is like $280 for open source. It will be double the price for commerce with us, right? And some of them, charge 2.5 times that price. That's the initial license cost. After that 30 days, you have to go for a subscription, which is a monthly or yearly that you can choose. And generally, that maintenance and having access to a new version of the product comes at 50 % of the initial license cost, right? So if your open source is $100 license, then Ravi Mittal (06:26.47) The commerce would be $200 and Commerce Cloud, some of the vendors will charge $250. 50 % of that roughly, give or take, will be per year maintenance and get access to the new version of product costs, around $50 for open source and $100 for commerce. That's how it works. It's complicated. It's very complicated to me. It should be simple. $X per year, $Y per month. That's it. That's how it should be. Brent Peterson (06:54.966) Yeah, I think the interesting thing that you had brought up earlier was around how they're being sold and tell us about how right now how everybody has to pay for extensions in their store. Talk about how they have to go to every vendor and try to pay for that. Ravi Mittal (07:09.743) Yeah. Ravi Mittal (07:13.124) Yeah. So most of these extension building companies, by the way, you know, like a headworks, which is our company, we have to buy on a headworks.com, they add to cart, they check out just the ways if you're buying a physical product from Amazon to mean that the whole extension buying thing should be a is a B2B. So extensions are owned by a company, not by a person. So if Brent bought it for his company, it's not owned by Brent because Brent can move on. It is owned by the brand, by the customer. So we need to make sure buying experience is like that. And once the team is there, onboard it, It should be installed at extension. That's as simple as that. There should not be any add to cart and check out. The buying experience, to me, we need to rethink about it and we need to just install extensions. There can be a free trial period. So you can try it for seven days or 30 days or whatever the vendor wants to, or there's no trial. then the easiest thing would be 20 bucks a month. That would be the easiest. And then you just install it. If you don't need it, can uninstall it, you can remove it from your store. And right now when we do an extension audit, to my surprise. we find at least 10 to 15 percent of the extensions that are there in there enabled and active are not used by the brand. So we need to if we can do this install and install easy it's just easier for buying experience it keeps the magenta instance clean as well. Brent Peterson (08:53.73) Yeah, I think one thing that you mentioned and more, I think the problem with people adding too many apps or extensions is probably the same across all platforms. But one thing that you had talked about was how extensions are being purchased and having to go to every single vendor. So in your case, if you did have, if you did have a client with 70 different extensions and let's just say they are 70 different vendors, they'll they're responsible for going to pay. Ravi Mittal (09:17.136) Yeah. Ravi Mittal (09:20.475) Yeah. Brent Peterson (09:23.554) that renewal every year to 70 different people, Ravi Mittal (09:27.302) Yes, yes. So on an average, are talking about small bills, we are talking about small merchant doing a few million dollars in online commerce per year. So a few million dollars in GMV. They on an average have 70 extensions from on an average six to seven different providers, right? Maybe 50 of them are, let's say, paid ones. So there needs to be 50 subscriptions, right? Now, Let's say if they have 10 of those from a headworks. They are not all on the same billing cycle or schedule. One may be bought by Brent, another may be bought by Nicole, another may be bought by Ravi. So a different schedule in different timelines, different rate cards, different... complete timelines. So it is important for us to unify that and to make it simple because how is it possible if you think about it how is it even possible for a brand when we are already having a subscription fatigue around us we are asking for their one online store to keep up with 50 subscriptions it's impossible it's not done you And I'm the culprit of, I'm one of the biggest culprit because we do subscriptions as well. So we need to make it easy on that. We first need to make licensing model very easy. The second thing is we need to make this whole billing part of it very easy. Brent Peterson (10:58.882) Yeah, and currently it is centralized on the Adobe marketplace. So everybody can go there and they can purchase something and they're vetted by Adobe. But after it leaves there, there's no centralization anymore, right? So I think one thing you're advocating for is Adobe to step in to centralize that entire buying process and renewal process. Is that correct? Ravi Mittal (11:21.99) Yes, no, so quick fact about that. So on Aheadworks and that applies to almost all vendors as well. On Aheadworks.com, so 90 % of our sales come from our own website. Only 10 % to 15 % let's say. goes through a magenta marketplace, right, where all extension vendors are publishing their extensions. Not all of them right now find financial sense in keeping up their extensions published on market. So some vendor may have 50 of them will only publish their top 25. Why? Because of the work involved in the approval process and all that. MFTP, what is Magento Functional Testing Framework, that those scripts needs to be updated, they need to be approved, and it's a work, right? So definitely need to make that easier. most importantly, it doesn't make financial sense out of it. If they're getting a few thousand dollar a month from the marketplace, why would they? Why would they go through that pain? So yes, Adobe Marketplace is a central place where all the extension providers are publishing most of their extensions or half of their extensions. But 90 % of the sale is coming from their own websites. Only 10 % to 15%, as I said, is coming from Marketplace. There's a reason for it. There's a reason for it. Brent Peterson (12:48.822) So help me understand your ask then what what are what are you advocating for. Tell us exactly what you would like to see in terms of how the community changes and selling extensions and managing extensions and re and licensing extensions. Ravi Mittal (13:04.998) Yeah, it's very simple to me. First of all, if you don't want a subscription, at Aheadworks, there are some changes that we can make as Aheadworks, because we are just only one player in the market. But what about those six? We cannot unify for one into one. So only Adobe can do certain changes. So first thing is that we need to really think about it. it's not a $300 you cannot get a lifetime license. It doesn't make financial sense at all. But what we can do is we can do a long term like five year license, which is what we are launching next week. And five year license at a 30 % discount price. So it's not a subscription. So after five years, things change, right? So for companies that do not want to deal with subscriptions, especially bigger brands, they can have that option, right? The second thing we are doing starting next week is we are unifying our licensing cost. So it will be $300 per, in my example, $300 per year for all of them. for all editions of Magento, for whether you're on Adobe Commerce, Adobe Commerce Cloud, or Magento open source. So for all of this, so we are literally slicing our licensing costs by 50 % for Adobe Commerce vendors. So we are simplifying the licensing model. Ravi Mittal (14:37.464) And we can definitely introduce one bill, but it won't help the community. So the second chain that we are suggesting is that Adobe Magento Marketplace introduces that one bill. So all of those seven or six vendors, in my example, on an average, their invoices would be one invoice. And it's not that difficult change. It's a billing cycle change that can be introduced by, well, there will be lot of positive impacts of it if that change is done by Marketplace. Brent Peterson (15:12.12) Yeah, I I think that it would increase their bottom line for Adobe. It would give them some more revenue. do you think, I mean, I guess, do you think that they care enough right now to get that done? And what is that lift for them? Ravi Mittal (15:30.918) They do. They do. I think they do. My question would also be that did somebody ask them to do this? So this is also like the responsibility lies on the shoulders of the whole community. And they are supporting all the Meet Magenta events. They are open to conversations. Definitely, the bigger the company you are, the change is a slow change. But I'm pretty hopeful that if we then they would be open to that. It makes only sense. mean, to me, it's like a no brainer, like Amazon Prime, right? So why would you not do it? And that's not a huge of a change. We should start focusing as a community. Let me first crunch some numbers. So let's say if I was Adobe executive, right? How does it so this is my appeal if Adobe is listening to Adobe, like how does it make financial sense? So give you a rough number. And this is my rough estimate, right? Because based on my revenue, and I know that there are seven different extension vendors, Roughly this is a 10 million dollar market, 10 million dollar per year market. So right now let's say even at for ease of calculation I will say let's say 10 % of this revenue is coming and going to marketplace. Adobe charges right now 15 % on that. So on a 1 million they generate a revenue of $150,000 on that. That's nothing. That's really nothing. Now let's think about it like this. Let's say if we do one bill and that means we made it super easy for brands to do business with Magento community or Magento platform, right? So that reduces the shrinking. Back in the day, were double the number of extensions or double the number of instances on Magento as compared to Shopify. Now things have reversed. We have 4,000 extensions published in Marketplace and 8,000 Shopify apps. Now, first thing is we acknowledge that yes, Ravi Mittal (17:29.164) the market share is we are losing the market share to Shopify big time right. The second thing is we need to understand if we don't acknowledge how can we fix it right. So the magento market is shrinking I'm seeing it first hand. So if we introduce this change the shrinking will stop and probably will grow. The brands would start buying extensions from the marketplace rather than directly going to headworks.com or mst.com or mageworks or mageplaza. So let's say if we reverse that trend, if they introduce this thing reverse it, 90 % of the sales should go from marketplace, right? That's how it should be. So now if they take 10 % of that, not 15%, let's say 15%, I'm just trying to do the math, right? So 10 % of that is $900,000, right? on top of it to stir the community. And that is insignificant money. The thing is that if Magento shrinks in general, Adobe Commerce will shrink too. We are hand in hand. We are joined by the hip. So it's not good for commerce as a practice in general. And extension will never go away even if they introduce App Builder. It would not go away. That's going to be there. We need to acknowledge that and understand that. So if that's going to be there and if we grow that, then it will be good for both commerce and open source. It is not open source related initiative. Commerce will never be extension free. It does not have me in the next five years. That's all I'm saying. So they should also do up to a certain revenue level from extension vendor. charge 0 % to the vendor. brand has a reason to buy it from marketplace because it's one bill, ease of doing business. And then extension building vendor have another incentive to publish and keep up with all of their extensions. Most of them are doing less than half a mil. Ravi Mittal (19:41.67) So if you make it 0 % fee for up to half a million, they will publish all of their extension on MarketPool. They will keep up there. They will not shy away from trying to sell in different ways or shapes or form on their own website because now there is no reason to. They're not sharing 15%. So that would just flourish the community. Everybody would have a buy-in if we implement those changes. It's magenta. It be implemented. Brent Peterson (20:09.678) Talk a little bit about the licensing cost between enterprise and open source and commerce. That was one of my pet peeves back in the day was it's exactly the same code base and all you're doing is charging a premium because the client is paying a license. Ravi Mittal (20:22.735) Yeah. Ravi Mittal (20:29.55) Agreed. And the extension building companies have tried to justify it because there's Magento open source that is free and then there's Commerce out. So freemium kind of model, right? So there is different licensing costs for different editions of Magento. And many of the companies, by the way, do that, right? But to me, I think the licensing should be based on usage rather than, know, addition, right? And it would be good for extension building companies to start thinking that way as well. Right? If I am having a drag and drop content builder, we have buildify, drag and drop content builder. If you are writing and using my app and writing 10 pages of content, right, with it, I would charge you less. But if you're doing 1,000 pages with me, then I'll charge you. It's usage-based, right? It has nothing to do with the addition of the product. In very few cases, it may, right? And so we need to just change our mindset as a community for that. But in Adobe commerce versus open source, there is many reasons for you to. ask for a license. There's B2B, there's features functionality, there's support part of it, there is a hosting part of it, there is other technical service like Fastly is included, that part of it. So all of that bundled together is okay, it comes at a pay. VR extension is not that. Almost all extension one code. I'm charging Adobe Commerce more just because I think that they can pay more. Brent Peterson (22:02.668) Yeah, that's right. All right, so we have about five minutes left. us, let's just, tell us, let's talk really quickly about Meat Magenta Florida, why people need to go there. Ravi Mittal (22:12.23) Meet Magenta Florida, started this conference because I was missing Magenta Magic from back in the day, 2019 was the last one, happened in Ankor. So, and I hear it from everyone that, we missed this, we missed this. So right from the beginning, we wanted to bring that vibe, that feeling, that the size of a full conference back. We wanted to give Magenta Magic a new home. So that's why we started Meet Magenta Florida with that intent. The keynote is Chirag, Chirag Nichar. Brent Peterson (22:50.894) What's about your keynote this year? Ravi Mittal (22:57.062) He's a very accomplished keynote speaker. He works at Google. And he will talk about how landscape for e-commerce space and digital commerce trends are moving. So it will be a good keynote. This time our keynote will be a little longer. It will be 45 minutes. We will also have in the conference a roadmap session that would be a separate invite only for the leaders and in the Magento community, they would come from both sides, from Adobe side, from the Magento open source side, and the association members will be there. And we will talk about things like this. So this will be one of the items on the agenda. But then we are preparing a very structured agenda for that meeting. and we would have that conversation at Meet Magenta Florida as well. It is a full two-day conference and we have got good brands coming. We got Helen of Troy, Henry Shine, all of those. Chewy is coming, Earthbound Trading, Haynes brand, so we've got good brands coming. Nestle is coming in doing a case study that is I'm looking forward to that one with Hybris. So yeah, it will be a good conference. know, we have a separate case study track because what's the there's nothing better to learn from people's experience and if brand can tell their own stories, then other brands can learn from it. Brent Peterson (24:32.056) Yeah, I think the unique thing that you've been able to do is get a lot of merchants at the event. It's been very encouraging to see the amount of merchants that attend. Ravi Mittal (24:37.359) Yes. Ravi Mittal (24:41.646) Yeah, absolutely. Absolutely. Brent Peterson (24:45.358) Robbie, before we leave, I gave everybody a chance to do a shameless plug. What would you like to plug today? Ravi Mittal (24:54.47) So one of the biggest thing is definitely we want to make changes in the community and God willing, we are at a place where we are able to influence the change in the community. We want to do that. But we have business for profit. And one of our biggest wires is that we leverage 57 extensions and around 11 SaaS applications in our delivery. So the biggest problem is that whenever you need a customization or a change and when you're delivering services as an agency, then you go back and forth with that extension building company because that's an external component to it. With us, we leverage our extensions and our SaaS application for delivery. So time to market is faster. We are efficient, very, very efficient in terms of time to market and also the cost of delivery is associated with it as well. So that's biggest why as we have an equally strong full service e-commerce agency and we are a product company as well. So both those arms work together to benefit the brands. Brent Peterson (25:57.578) and where's the best place for people to get in touch with you? Ravi Mittal (26:00.934) I'm on LinkedIn, that's the best place, you that's the only social media that I do, you know, right now. So I'm on LinkedIn, but you know, feel free to reach out to me or through our website, anywhere, you know, I don't mind giving, I'm a very easy person to give myself a number as well. So yeah, once you reach out to me, we'll probably just be talking on the phone casually all the time, yeah. Brent Peterson (26:20.214) That's fantastic. I'll make sure I get those on the show notes and I look forward to meet magenta Florida. It is coming up. This this episode will come out next Monday. So tell us the dates of meet magenta Florida. Ravi Mittal (26:31.482) Mm-hmm. Ravi Mittal (26:35.822) Meet Mej into Florida is February 5th and 6th. It happens in Hard Rock, Florida, which is the guitar building. It's an awesome venue, awesome location. And we have day one, lots of insular events going on. Day two, we have a closing party and after party after that. And then during the day, will be lot of learning to workshops, one by Mark Schuss, it be a technical workshop and the B2B workshop, which is a business workshop. Day one would be by Nicole Donnelly. So I'm looking forward to that. are growing this. Last year we were two tracks, this year we three tracks. We will have more sponsor on the floor to talk to and network with as So we are introducing new components in the conference and we are going year over year in all dimensions by 15%. So this year we'll do the same. Brent Peterson (27:24.994) That's awesome. Ravi Mattel, the CEO of Rave Digital, founder, CEO of Rave Digital, and owner of Headworks. Thank you so much for being here today. Ravi Mittal (27:34.512) Thank you