Yisro heard—priest of Midian, Moshe’s father-in-law—about all that G-d had done for Moshe and for His people Yisrael, that G-d brought Yisrael out of Egypt.

along with her two sons. The name of one was Gershom, because he [Moshe] had said, “I was a stranger in an alien land.”

And the name of one was Eliezer, because the G-d of my father was my help, and rescued me from the sword of Pharaoh.

When Moses said to Yithro, Give me your daughter Tzipporah as a wife, Yithro answered, If you do what I ask of you, I will give her to you as a wife. Moses: What do you ask? Yithro: Your first son must serve idolatry. Thenceforward, they may serve (G–d) in heaven. Moses accepted. Yithro: Swear. And he swore, as it is written (Exodus 2:21) "Vayoel Moses, etc.", this being an expression for swearing...

Now I know that Hashem is greater than all the gods, because the very thing they plotted came upon them.”

It says in Michilta that Yisro made a stipulation with Moshe "your first son will be for idol worship, and from here on for the sake of heaven." And it is difficult how Moshe could agree to this. A possible explanation is that Yisro erred by saying "from here on." This was a condition before getting married as explained in Michilta there, and "from here on" would mean from that moment, before they were even married. He should have said "and from then on" in which case Moshe would not have accepted the terms.

In a commentary on Mechilta called Zeh Yenachamenu it says that Moshe Rabbeinu relied on the righteousness of Tziporah who was able to prevent [the deal from being fulfilled]. Therefore, when the first son was born, Tziporah rose up in anger saying that her husband did not have the right to make such decisions for the child, and therefore she named him because she had jurisdiction over him. And when it says "the name of one was Gershom because he said 'I was a stranger in an alien land'", seemingly the word "he said" is unnecessary. It should have just said "because I was a stranger....", similar to how it is said afterwards "And the name of one was Eliezer, because the G-d of my father was my help..." However, this is the meaning - when this first son was born Yisro demanded that his deal be honored and Tziporah responded that she was the one in charge of the child. And Moshe said "what am I to do? I was a stranger in a foreign land and I did not know your customs, that the wife is in charge."

...The Midrash expounds that when Yisro allowed Moshe to marry his daughter, he demanded that they agree that the first son would be designated for the service of idols, and therefore he was not circumcised until they encountered the angel on the way and it wanted to kill him, and then Tziporah circumcised [the child] and released [Moshe] from the deal he had made with her father. Therefore it is written here "because he said", meaining that now it is revealed to all that he was forced by the deal because he was a foreigner and was compelled to do as Yisro said. Nevertheless, because of this pact, Jonathan descended from him, and he became a priest for the idol of Micah

The Danites set up the sculptured image for themselves; and Jonathan son of Gershom son of Manasseh, and his descendants, served as priests to the Danite tribe until the land went into exile.

Jonathan said to them: This is the tradition that I received from the house of my father’s father: A person should always hire himself out to idol worship and not require the help of people by receiving charity, and I took this position in order to avoid having to take charity.

If anyone else would have said "Now I know that Hashem is greater," they would have said [mockingly] "this one says 'now I know'?" But Yisro really knew, because he reviewed every single house of idol worship in the world, and could not find any substance in them, and then came and converted. Because of this it is fitting for him to have said "now I know."

Our Rabbis said: Yitro was a priest for idol worship and he saw that it lacked substance, and he scorned it, and he thought about repenting before Moses arrived. He called the residents of his city and said: ‘Until now, I have served you. Now I am old; choose another priest.’ He arose and removed the service vessels of idol worship and gave them all to them. They arose and ostracized him so that no one should have ties with him, no one should perform labor for him, and no one should herd his flocks. He asked the shepherds to herd his flocks for him, but they did not agree; therefore, he sent his daughters out.