The global ecommerce market today is large and getting larger, representing $5.2 trillion in 2021 and expected to reach $8.1 trillion by 2026.
Not surprisingly, the market for software platforms that enable that commerce is also large, but highly fragmented. One company that has quietly grown and innovated the sector is commercetools.
commercetools Founder and CEO Dirk Hoerig.
Founded in 2006 by Denis Werner, and Dirk Hoerig, the Munich, Germany-based commercetools is an enterprise commerce platform with a cloud-native and API-first architecture. It utilises microservices to allow its customers to build customized payment, check-out, social commerce, marketplace and other services.
What started as an implementation agency for Hybris (now SAPHybris) installations became a software company in 2013 with the introduction of its commercetools platform. Its founder and CEO Dirk Hoerig famously coined the phrase “headless architecture” to describe the application’s approach of separating the frontend presentation layer from the backend ecommerce solution that manages all commerce functionality. This founder’s journey story is based on my interview with Hoerig.
“In 2010, I was reading a story by Wired’s Chris Anderson (”The Web is Dead, Long Live the Internet”). Up until then all commerce software applications were built for the desktop web to try and replicate Amazon. We saw things changing quickly. So we asked ourselves, should we not make ecommerce technology focusing on enterprise customers that is first truly born in the cloud? Mobile is taking over, more flexibility is required that brands and retailers and manufacturers need to iterate faster on the customer experience,” says Hoerig of the founding idea behind commercetools.
Hoerig and his co-founders spent three years from that moment to commercetool’s introduction in 2013 developing the platform. Hoerig came up with the term “headless architecture” to describe the company’s innovative technology to both early customers and investors.
“The challenge when we launched in 2013, it was the first of its kind.Now everyone wants to be like us. But at that time, we needed to explain it. Before that everybody was trying to just open the box. Now you can play with our API and finally build what you want. If what you build requires changing, you can do that in real time. So you don’t need to start from scratch again. But at that time, it was early, and we came up with a term to help people understand it. It might have been a challenge, but I think in hindsight, it was genius without knowing it,” says Hoerig.
Tech analyst firms began adopted the term and then many others co-opted it, including the Accentures and Cap Gemini’s of the world. “As a result, our customers were asking us to help them understand what’s changing in the commerce space. And everybody started to use that term. In hindsight, it was great because we, we redefined the whole category,” says Hoerig.
Today Hoerig and team’s headless architecture has caught on with an ever-broader array of customers. And its API ecommerce ecosystem allowed commercetools to partner with other commerce players. Now the company employs over 640 people in both its Munich headquarters and in offices across the U.S., Europe, and the Asia Pacific working with large, blue-chip retailers like The Sharper Image, Danone, Volkswagen, the LEGO Group, L.L. Bean and others.
“We’ve just crossed the $100 million mark in contracted annual run rate on the recurring revenue side. So that was a good milestone that came earlier than we planned,” says Hoerig.
Its increasing momentum has allowed the company to attract $308 million in venture financing to date. Its latest C Round for $140 million in September of 2021 led by Accel alongside existing investors Insight Partners, REWE Group and others valued the company at $1.9 billion.
Hoerig grew up in what he described as a “normal” family in a small town outside of Hamburg, Germany and was always interested in sports, especially volleyball where he played for the national team. He moved to Munich to attend and graduate with a degree in computer science from The Technical University of Munich in 2004 and continued his volleyball playing where he played professionally. At “just” 6 feet tall, which is small for a volleyball player, he says he had to train and work harder than other players. That tenacity helped persevere in building commercetools.
He got his first taste of the ups and downs of entrepreneur’s life working for several venture backed start-ups while still in college, when one of the founder’s he was working with absconded with the funds never to return and closing the business. While it was upsetting, Hoerig didn’t consider it a major disruption in his life. Through volleyball he met Denis Werner, who would become his partner in the founding of Hybris implementation agency Xoanon in 2003 and with whom he would later co-found commercetools in 2006.
While it took the founders 7 years to introduce the commercetools platform, they were their vision for market was right. “I think that the main lessons that we learned is don’t give up. We knew from being 10 years in the industry and we worked with all of the platforms out there. We knew most of the founders from these companies that would later receive billion-dollar valuations. We knew that the market was going to change,” says Hoerig.
As for the future? “Companies are looking for best of breed and cloud native and more flexibility. And we believe that there’s a huge window now open as the incumbents are slowly fading out and those technologies are fading out. And we also are working on something we call our portfolio strategy. It’s having a little bit of the model of Twilio where we start to offer more of the building blocks that are to the left and to the right side of commerce that our customers need to create authentic shopping experiences,” concludes Hoerig.
About Author
