The Startup That Allows Shopify Merchants To Cash In On Their Business

According to a recent Prosper Insights & Analytics Survey, almost 40% of people are still shopping in stores less than they did before the pandemic, while another recent report found that over half of consumers make regular purchases on their phones. Amazon isn’t the only company to benefit from this trend. Small e-commerce businesses, largely powered by Shopify, are also growing faster than ever.

OpenStore wants to capitalize on this trend. The startup is founded by well-known technology executives Keith Rabois (Founders Fund, Square), Jack Abraham (Atomic, Hims & Hers), and Michael Rubenstein (AppNexus, DoubleClick), and aims to be the first option for Shopify business owners to sell the online store they’ve built for a cash payout. OpenStore acquires the entire business for a cash payout and then takes over every aspect of its operations.

I recently had a chance to sit down with OpenStore co-founder and head of engineering, Jeremy Wood, to discuss why he joined the company, the changing e-commerce landscape, and where it’s headed next.

Gary Drenik: Tell me about your background and what led you to start working on OpenStore.

Jeremy Wood: I come from both a community and a family that really valued independent merchants and small-batch goods. I grew up in Portland which has an incredible maker-driven community. We used to keep our own beehives, build our own kayaks, and fill most of the house with our own art. Maker-driven communities tend to ardently support small businesses–shop local and shop small. Shop stories and story driven products.

As a result, I’ve always been interested in the world of small businesses – especially products with personality and history. Too often makers were put in a situation where they could either continue with the brand to grow it marginally year-over-year, or shut it down so they could move their talents to a new, exciting project.

While working at Google, I watched as companies like Shopify brought small businesses online and was re-energized by the space. When Keith Rabois told me about an idea to maintain founder-created brands while giving the founder liquidity so they can move on, I knew he was onto something big. The goal was to preserve those brands that might otherwise get shut down. We launched less than a year ago and it’s been incredible working with such a passionate, energized team here in Miami. We’ve already acquired a number of Shopify businesses and have very ambitious goals for next year.

Drenik: What factors do you think have made Shopify such a successful platform for independent retailers?

Wood: Ecommerce platforms, generally, have made putting a business online incredibly easy. I can now start selling goods in a customized shopfront within a day. One of Shopify’s best decisions was to invest in fostering an ecosystem of independent partners and apps. This not only benefited their business model, but also their customers. Shopify makes it easy to put a store online but Shopify’s partners make it easy to introduce entirely new ways of interacting with customers and tracking your store’s progress. Shopify was able to provide a differentiated, seamless experience for merchants by recognizing that they, as a company, couldn’t do it alone. Instead of trying to cook the entire meal themselves, Shopify invited everyone to a potluck. It has made the possible modes of operating a store online endless, easy, and adaptable.

Coincidentally, there’s been a consumer shift away from big-box stores and mega-retailers which has also worked greatly in favor of Shopify. There is now more traffic on independent retail sites than on Amazon and there’s a revived focus on shopping from smaller brands. Shopify has been able to provide the tools, at the right time, to help retailers amplify the power and visibility of small brands.

Drenik: What are some of the biggest challenges that independent retailers face today?

Wood: One of the biggest: managing volatile supply chains. Customer expectations around delivery times are incredibly high, where we now expect foreign goods delivered in a day or two. Innovation in shipping and logistics made this feasible previously, but the pandemic brought it to a screeching halt. Customers are often left unhappy and may cancel their orders, and so merchants need to figure out how to regain business and trust.

The second issue is a huge part of why we founded OpenStore: founders outgrow their successful independent businesses. Many of the entrepreneurs we talk to are passionate about the business they started, but may no longer be in a place where they want to spend all of their time running their store because it’s their primary source of income. They often don’t feel like they have a choice but to stick with it.

At OpenStore, we want to work with founders to give them flexibility and options. By acquiring their businesses when they’re ready, we give entrepreneurs time and money to devote to new ventures and adventures. Up until now, exit opportunities were reserved for only the largest and most successful Shopify businesses, where venture funding and an IPO may be in the cards.

Drenik: Why do entrepreneurs tend to want to sell? What benefits do companies gain from selling to OpenStore in particular?

Wood: Companies that sell to OpenStore get speed, reliability, and a good price. A defining feature of our process is the speed with which we make offers: within 24 hours of engaging with us brands can have an initial price in hand. Barring unexpected findings, we try to honor that price and often end up increasing it. Why are we able to offer a good price? We’re incredibly focused on doing our best to grow the businesses that founders pass to us—we’re good at what we do and are able to offer strong prices to merchants as a result: what’s good for us is good for them.   

Drenik: Can you share any specific stories of merchants you’ve worked with and what the process looks like for them?

Wood: OpenStore recently acquired FarmFoods. Its founder Janna Land started the brand to sell responsibly raised meat online. Her business skyrocketed during the pandemic – it grew by 500% from 2019 to 2020. But in 2021, she was ready to capitalize on this growth to unlock her next endeavor. We made her an offer within days, and she described the process as “cookie cutter, but in a good way.” She received a multi-million-dollar payout and is now free to move onto whatever she wants, while we’re operating FarmFoods.

As the head of engineering, I strive to help create these seamless experiences. I spend a lot of my time focusing on ways to streamline how merchants can get an offer for their business, and get questions answered along the way. Most merchants now complete all of the steps required to get an offer in under 15 minutes, which we’re incredibly proud of. This short process can end up being one of the most impactful decisions of their life and we want to help them understand their options as easily as possible. We want to ensure it’s a great experience they remember.

Drenik: Thanks for taking the time to discuss how e-commerce is evolving. It’s apparent that OpenStore can empower more entrepreneurs to take the leap in starting their own businesses. I look forward to watching how the business grows!