Introduction to OneText

The typical online checkout experience has become cumbersome and filled with obstacles. While numerous companies are developing solutions to improve online checkout, few are rethinking the process from its core. One such company, OneText, is revolutionizing the way shoppers complete purchases by introducing a "text-to-buy network" that enables transactions via text message.

Funding and Background

OneText, founded by former PayPal employees, has successfully closed a $4.5 million seed round. This funding round was backed by prominent investors, including Khosla Ventures, Coatue, Citi Ventures, Y Combinator, Good Friends (a fund established by the founders of Warby Parker, Allbirds, and Harry’s), and Matt Bellamy, the lead vocalist of Muse.

Concept and Innovation

Co-founder and CEO Jonathan Fudem conceived the idea for OneText during his time working on the checkout team at PayPal. He observed that many startups, despite having user-friendly interfaces, struggled to convince merchants to adopt their payment flows. Fudem noted that this is a challenging sell, as many merchants lack the autonomy to choose their checkout provider due to their e-commerce platform’s constraints.

Unique Approach

OneText distinguishes itself by utilizing SMS, which does not require merchants to replace their existing website checkout. Unlike large platforms such as Instagram and WhatsApp, which offer e-commerce features, Fudem believes that brands need direct and personal relationships with their customers. OneText positions itself as a competitor to traditional SMS marketing companies known for sending mass, impersonal messages and spammy links.

Features and Performance

OneText employs a combination of tools, including AI-powered two-way conversations and human intervention, to enhance conversion rates by 20% to 30%. Features such as cart recovery, post-purchase upsells, and personalized recommendations contribute significantly to its performance. The company runs its own wallet, which integrates with a brand’s existing payment processor to complete transactions. After a customer’s first purchase, OneText securely stores their payment information, allowing them to reorder with a single reply.

"Card-on-File" Setup and Automation

This "card-on-file" setup is akin to charging items to a hotel room, providing a seamless experience. To facilitate this, OneText uses "consentful" automation. If a brand wants to charge a customer for a reorder, OneText sends a text notification stating that the payment will be processed in 24 hours unless the customer cancels. This process is opt-out by default.

Future Expansions

Over time, OneText plans to expand its network to enable shoppers to use their vaulted profiles across multiple brands, complete with prefilled checkout data and more intelligent recommendations. This ambitious plan is aimed at building a cross-brand, SMS-native payment network.

Ambition and Growth

According to Fudem, creating a consumer-facing wallet that is significantly better is a daunting task. However, OneText is focused on developing a business-to-consumer texting platform that mirrors the "charge it to your room" experience, with the phone number serving as the key. OneText underwent Y Combinator’s program in 2023 and has since quietly built out its platform. Today, the company boasts a clientele of midsized e-commerce brands, generating $10 million to $100 million in annual revenue, as well as smaller startups and large enterprises.

Revenue and Scaling

Fudem, who co-founded the company with CTO Daniel Brain, reported that OneText has been scaling at a rate of 3x year over year and is generating millions in revenue. This significant growth underscores the potential of OneText’s innovative approach to online checkout and text commerce.