As a product builder and an investor, I spend a lot of time thinking about how companies win. In particular, what’s behind the decisions at the pivotal business and product crossroads that separate the winners from everyone else? Sure, some of it is luck but in my experience much of it is skill.
When we first invested in Whatnot’s seed round in 2020, the world was quarantined in their homes with little to do except watch Netflix and shop online. It was easy to imagine that their company, a “Twitch meets eBay” marketplace for collectibles, would take off. What was harder to envision was that it would become the fastest growing marketplace in the U.S., or that it would achieve what scores of larger companies have tried to do and spectacularly failed at - live shopping. Today, Whatnot is valued at $3.7 Billion and continues to grow at breakneck speed.
So what’s the skill of this founding team that differentiated them from other startups?
The cofounders of Whatnot (Grant LaFontaine and Logan Head) joined me for a chat about the early product decisions, frameworks, and thinking that turned Whatnot from a startup few had heard of into a category-defining juggernaut.
Our top 5 quotes:
“I think product market fit is when literally shit is on fire, and you can't fix everything.”
“If we tried to make a product for a billion people, there's no way it would be any good.”
“(Most) investors will only invest in a company that's going to be in a billion dollar market. But the right way to actually build a good consumer product is to keep it really narrow.”
“One of the things Mark always said at Facebook was that a good value is one that another sensible company could take the exact opposite stance on and be reasonable.”
“You don't build a business by copying and pasting a business model - you build it by solving user problems.”
Logan and Grant, thanks so much for joining me. For those who don't know, these are the cofounders of Whatnot. You probably already know Whatnot but if you don't, it's the fastest growing marketplace in the US. And it's been that way now for three years. So it's not just growing fast. It's also growing big. I've heard Logan describe it as “Twitch meets eBay”. Scribble Ventures first invested in Whatnot in the seed, back in 2020, which was an interesting time in the world, and also right about when Whatnot started taking off. And one of the things I love about Whatnot is for years when I was leading product at Twitter and Instagram, we talked about social commerce, and we talked about live commerce. It's huge all over Asia - in China alone livestream shopping is something like a $600 billion industry and growing. But everything we tried at Twitter and Instagram failed. And I think pretty much everything every other big company tried failed. It's just never taken off in the US - until Whatnot. So Logan and Grant, maybe we start by you guys giving a quick background on the company and your story. Why did you start Whatnot? How did you manage to get the initial bits of product market fit? And then, how did you begin scaling up?
I think the punchline that I'll give you is that part of our success in live commerce was that we didn't have any intention on building something in live commerce. So when we started Whatnot, we actually started a collectibles marketplace, because both Logan and I had been big collectors. And we just thought the experiences out there weren't that great. And then around 2020 when we were starting the business, that's when COVID took over the world. There were a lot more people getting back into their hobbies and collecting things. And we just thought there was something around the social aspect of collecting because a lot of the marketplaces that people were buying on are very transactional. You go there to search. But a lot of collectibles are about the community, more so than the objects. Oftentimes the objects are just an excuse to talk to someone who has a similar interest as you. And so we just felt like there was something around that. So we started Whatnot as a collectibles marketplace just focused on Funko Pops, which are these little vinyl dolls with big heads. We just started building a product really rapidly and staying close to the community. And we kind of stumbled onto live as a function of that.
How we stumbled on the live part was that we first grew a significant user base in the Funko community, which was great. We always watched what our users were doing and we were always talking to our users, so we noticed they were actually hacking Instagram as a way to host auction-type formats, but the experience was really bad. But people loved it, because there would be a 10 second latency between me and you. People would place bids through comments. And then you go back and forth through Instagram DM to sort of collect payment information, shipping information, etc. And so you talked about China and like what was happening there, Grant, and I had no idea what's happening there. But we built that because our users were already doing this off platform. And we thought that would be a great user experience. But the Chinese part was very surprising.
At what point in there were you like, holy cow, this is actually starting to be a thing? Like, we might have something?
Well, I think the journey of figuring out you're onto something good is a process. Everyone talks about product market fit but you don't really know you have product market fit until way after you have product market fit because there’s a zillion things that can go wrong. During the first stream we did, Logan and I were sitting next to each other. I was the one streaming and he was helping with the tech which was very MVP. So we were entering products in via command line. And I sold like $5,000 worth of Funko Pops in a couple hours. And we just got off that stream and were like, we don't know what this is but we just sold a lot of stuff! And it seems like people really like it. So we got the whole team together the next day and we're like - everything else you're doing, drop it. We're going into live. And we still didn't know anything about live shopping and China. Here’s a fun fact actually - we didn't know anything about live shopping in China until we started to fundraise for the seed round. And one of the first few investors I talked with was like, Oh, you must know a lot about live shopping in China. And I was like, uh huh. I did my research on that afterwards, and I was like, wow, this is huge. With what we were seeing, coupled with how big the market is in China, we figured maybe this thing can be monstrous. And then probably by the time we pitched you we were talking about live shopping in China, because it's a good pitch, right? But we had no idea.
It's interesting, because there's so many dead bodies, if you will. So many people have tried live shopping and failed. And so what's the dynamic between the two of you as you're growing? Is one of you more optimistic and one of you more pessimistic? Is one of you saying “we got this!” and the other one's like, “no, no, this is broken.”? And are you guys usually in the same place? What's the founder dynamic?
It depends. I mean, Grant is in everyone’s shit all the time. And I think that's a good thing. And so it's not just my shit, but it's also the whole team’s. And that's just the way he likes to operate. I would say I'm a little bit more optimistic, specifically in terms of building products, and kind of letting the team make mistakes, and not going in before they make that mistake. But I think the dynamic between him and I, it's really good. This is the first company we've worked at together. We've worked on projects in the past, and that was the start of our relationship and why we've always wanted to leave our jobs and start Whatnot together. But you know, I think like getting to know Grant, I've kind of figured out his style, he's probably figured out my style. In the beginning, it was a little bit more contentious. At that time, things were on fire a lot, much less so now. But we've been really incredibly lucky, specifically because we've built a good team.
I like that - the scale of how on fire things are. Not - are they on fire? It’s how on fire they are.
Well, there's a lot of definitions of product market fit. But I think product market fit is when literally shit is on fire, and you can't fix everything.
Yeah, good problems to have. And you were talking about starting small. One thing I've come to believe watching lots of startups, which I think is maybe not obvious: We all look at the giant companies around us like Google and Meta and Airbnb who serve global audiences with very broad products, sometimes they have multiple products serving billions of users, and it's often easy to think “Oh, I should go find a product that I can build for billions of people.” But it's usually not the right way to begin, right? It's way better to have a smaller number of people that love you and can't imagine what life would be like without you than having 100 times that many people who are kind of like, yeah, it's pretty good. The way you guys grew Whatnot, I think, embodies that. So maybe say a bit a bit more about how you approached starting small and scaling out from there.
When you're a startup, you're hugely resource constrained. So our early team was like four people. And, you know, either you're trying to do one of two things - you're trying to either upset a huge incumbent who has billions of dollars worth of resources or you're trying to create a wholly new market. But either way, you're doing it with a small amount of resources. And when no one's heard of you, no one trusts you, and you largely have no money like we did in the early days, it's very hard to convince a large number of people to come use your service. And so the best thing you can do is make something great for a small number of people, because you're so heavily resource constrained. If we tried to make a product for a billion people, there's no way it would be any good. Google or Facebook have tens of thousands of engineers perfecting the service and building it for that many people. But what they can't do is they can't say, “Hey, we're going to build a really great product for Funko Pop collectors”, because it's inherently impossible in the structures of those organizations, largely. They have to move all these big metrics, pay attention to Wall Street and do all these things. And so you I can't think of any counter examples, certainly not in consumer tech which is what I know best. You have to start very narrowly. There are a couple of moments in time where you might be able to get away with starting big, like some platform mobile chips, but it's so incredibly rare. Now there ends up being great tension in the early days, because investors will only invest in a company that's going to be in a billion dollar market. But the right way to actually build a good consumer product is to keep it really narrow. And so it's really tough. And there's actually a lot of people who will pull you in a different direction. You do have to have a path to get bigger if you're going to be venture funded, though. So you have to be thoughtful around that. You have to be thinking about it in the early days. But you can't get to step two before you start at step one, which is building something great for someone. And the only way to do that with a small amount of resources to start really small.
Yeah, I totally agree. There's a compartmentalization almost in your head where you've got to know where you're going. But also be able to say no, we're just right here right now. And we're going to make this awesome. Talking about scale, in the early days it’s a lot of doing things that don't scale. And every startup has incredible stories of the things that they did. We have crazy stories from Twitter of the things that we did that definitely did not scale. What did you guys do that didn't scale in the early days, but that were real catalysts?
I would say maybe it was kind of the original model that we had, which was that we did physical authentication. In the early days, it was just Grant and I in a house together. And what I mean by physical authentication is - so let’s say I want to buy a Funko Pop online, and the seller would actually ship it to us, and then we would physically authenticate it, then ship it to the buyer. Between the two of us, that was a very constrained thing to do, because we would have hundreds of boxes. And we'd have to go through that to ensure the authenticity of each item. Going through that process, it was not a scalable model, specifically on the operations side. I think we learned that because it was so intensive on our side, we needed to figure out a better system, specifically on the seller side. Like, how do we vet sellers versus having everything go through us?
We bootstrapped both sides in the marketplace. So initially, how we got off the ground was we basically built a pricing algorithm that crawled all the pricing data for Funko Pops. We would price it based on liquidity and sell through over a handful of days, and then go acquire it from eBay. We authenticated it ourselves, shipped it out, the first three months in the marketplace, there was no seller product. Then when Logan built the seller product, we didn’t know if we had enough sell- through to support sellers. So we then cross listed everything to eBay under our Whatnot account, no matter which seller you were. And then we had to deal with all sorts of crazy stuff. Like, a seller didn't ship and we couldn't destroy eBay ratings. So we're just handing out refunds in that case and free stuff to everyone to maintain liquidity. We were losing thousands of dollars at that time, which we didn’t have, so it felt like a lot of money. So ya, the initial origins of the company were entirely unscalable.
How did you become Funko Pop experts to the point that you could do the authentication yourself?
I think if you're gonna build anything great, you have to be immersed fully in it. You have to understand the users, and all parts of the business. It's just like learning anything else, you go incredibly deep on your research, every authentication for us was fundamentally a research based task, where it's like, Okay, what does all the real stuff look like? What does all the fake stuff look like? What are the signals? How do we know? And then how do we codify those systems and scale it? It's very similar to the process of how to understand what our user needs. You aren't just gonna talk to lots of people, you learn to read everything out there. And I think that's how you build great products even for us still today. Our team is over 400 people, and whenever there's a problem somewhere, we go talk to the users to understand what they're doing. We look at the data, and deeply understand the problem, the space, and what everyone's doing.
Now that your team is no longer four people, you're now 400 people, how do you stay innovative? How do you manage the “starting small” problem these days when you have more zeros associated with everything that you do?
It just depends on the problem. The way we operated in the early days was that we said, Whatever you create, we're doing B plus work at lightning speed. We would never do anything perfect, it would just be good and we get it out there, and learn really fast. Now, the business is bigger - there's tens of thousands of sellers and millions of users on Whatnot. There's a lot of people using the system, you can't really tolerate things that don't work or adding funkiness in it. There's our core product experience. And then there's new things that we're building and tacking on new categories. There's low tolerance for low quality work in the core. But there's high tolerance for okay, really fast, iterative, let's learn-type of work. And there's no hard gradient between those. As a great technology company, you have to have an A-plus core consumer experience, but you also have to keep innovating. And there's a lot of tension between the two, but you kind of separate it out. So a good example would be - we have our live product, and then we have our asynchronous product. Our live products are much more built out, that's kind of the core experience, whereas our asynchronous product is more eBay-like but there are some things we're doing in the async product that we think will differentiate us a lot. There’s much more tolerance for building fast and for things that aren't perfect. And for taking some swings. It's not a huge component of the business yet - it’s meaningful, but it wouldn't take us down. So we just move really fast and innovate. And as you get into the core experience, the bar just gets higher, of course, and you keep pushing. You can't be risk averse. The beauty of software is that it’s a system that has high tolerance for risk. You can feature flag everything, you can a/b test stuff, roll it back, etc. So I think in summary, we're still really high risk taking, you elevate the bar through time, and then if you're building new things, you treat it like a true zero to one thing, you don't treat it like I'm trying to perfect the system.
At this stage, when we were building Zero to One things versus two or three years ago, we’re a little bit more cautious on how we build this because our system is so big. Anything that we do build, even if it is a zero to one thing like Grant’s example around the async marketplace, has a dependency across a lot of other products like the live core experience. So we have to be a bit more rigorous and grown-up, specifically on our engineering culture. That's definitely been a cultural shift because even two years ago we were used to shipping and not really caring when it breaks. We didn't care but we would fix it immediately. But now it's like, if we break something, someone's business is at stake. So many people’s lives depend on Whatnot right now,as a way of income, and we just can't disrupt that.
You mentioned “B plus products at lightning speed”, which starts to sound like a value. I think company values are fascinating and so important when done right. One of the things Mark always said at Facebook that stuck with me was that a good value is one that another sensible company could take the exact opposite stance on and be reasonable, which makes something like “high integrity” a terrible value, because nobody's going to take the opposite side of that. It's table stakes. But you know, risking getting canceled myself, I think Facebook's move fast and break things is one of the greatest all time values, because it is controversial. You can imagine 100 companies that would say, No way, move methodically and do it right. But move fast and break things gave engineers at Facebook permission to take risks. It built a culture of rapid iteration. And I think that was one of the things at the heart of Facebook’s success. So how do you guys think about culture as you go through hyper growth? What are the values that define Whatnot?
I think culture is one of the most important things. Specifically, we want to hire people who are culturally aligned with how we want to build product and how we want to operate. And so a couple of years ago, we built a set of cultural values. But also, culture is meant to change as you scale. So we've actually changed some of those values a little bit. One of the values we have that I would say is similar to “move fast and break things” is “move uncomfortably fast”. I think “move fast and break things” is really interesting because people take values to heart. So they will move fast, and they will break things, but they also use moving fast as an excuse for breaking things. And depending on what it is, it can be unacceptable because we're at this stage where you really have to think about quality to some degree. You're not going to bring the entire site down and then use “move uncomfortably fast” as an excuse. Principally, we always want to operate with this sort of startup mentality, being close to our users. But I think there are a few principles outside of move uncomfortably fast. So I think it's really important to always listen to our users. That's probably the most important thing at the company and we're pretty unique on how we do that. We make everyone talk to users, not just product managers, but also engineers, designers, people on go-to-market, our ops team…we give everyone a dogfooding budget. They have to use our app, and understand it. Every month, employees have a certain amount of money to spend on Whatnot. We don't want to hire people who want to come in just because it's Whatnot, we want people to actually be excited about what we're building and understand our product. Another thing that I think is a really important value is “Figure it out”. We're at the stage where we don't have a lot of things figured out and we can't hand hold you to figure things out. So it's kind of like rolling up your sleeves and actually going outside of your comfort zone. It might not be your expertise, and that's okay. But you should do your best job to figure it out and come up with the right solution to the problem.
I think culture is incredibly important because it's the shared language on which you agree to operate. And it's relatively unnatural for 400 people to operate in unison. So if you don't have it, you can't really speak one language and things can easily come to a standstill. We officially have 11 principles at Whatnot. We define them in kind of a great detail. What does this mean? What are the trade offs? And why?
Let's switch gears. Let's say I'm a PM at Whatnot. What's my life like? Like, I have an idea. How do I get it shipped? Do I come to you and pitch you? Or is it totally the opposite side of the spectrum where you've already laid out a roadmap, and my job is to execute it and keep the trains running on time, or something in between? How do you think about it?
We're kind of a mix of top-down and bottom-up. Obviously from the company side, we have a strategy. And we want to be able to execute on a couple of big bets. But we go through trimester OKR planning. And between what the team comes up with and the bigger initiatives that the company sets, It's a blend of both. It’s probably like 60% what the team thinks is appropriate to hit a company-wide OKR and what they think is going to be best for our users, to something that we were really bullish on. We were talking about the asynchronous marketplace earlier - that's something Grant and I have been bullish on forever. And it's something that I've actually been closely working on with the team, because I think it's such an important thing. In terms of what it’s like to be a PM here, it's pretty rigorous. There's a lot to do. It’s important how you ruthlessly prioritize your time and work on the best things that are going to be the most impactful for our users and business. Given we're kind of a startup where we have multiple fires, you have to pick and choose which ones to put out and which ones to let burn. It's a really hard skill set to do. So we're pretty rigorous on the types of PMs we hire, and we've definitely gotten better. We actually only have 4 or 5 PMs on the team. We need another 3 or 4 at least. It's been challenging hiring that role, not in terms of top of funnel, but really getting the right talent through. Grant and I have a really high bar. 1 out of 400 people who interview - not to scare anyone who's listening to this - will probably make it through the process.
Nice. Let’s talk about data for a second. Marketplaces throw off a ton of data. You're managing supply and demand, and you have large and growing numbers. And you've got backgrounds at places like Meta that live off of a super data-driven approach. But I know you guys have strong feelings about this. How do you think about using data at Whatnot?
From day zero, we've always been very data oriented. They are tools to be used during the right situation. And so you have to be quite thoughtful around that. The controversial thing for us has been up until about three months ago, we didn’t a/b test a thing. We're big enough to be a public business. But the reason was that we were building an incredible number of foundational pieces to the business. And it was just very clear that they were going to be additive to the user experience. When it's really clear that it solves a problem, it's designed well, and the team dog foods and builds it well, then we just get it into users’ hands as fast as possible. It’s “moving uncomfortably fast”. On occasion, we might get it wrong and we get some feature flags and might roll it back. As you get bigger and bigger, you do need to innovate, but you also need to optimize the core experience more. Most sales at Whatnot come through our feed. So one of the core things that we're doing now is figuring out what to rank and what content to show people to drive sales for our sellers. It’s really important, and also very hard to intuit whether to put this thing above this thing or above this other thing. And there's millions of permutations. Well, in that world you do need to start a/b testing to actually deliver for the users. So in areas like discovery, we are moving more towards a data-driven a/b testing team, but we won't ever lose our roots and not trust our guts on the right product decisions that we think are good for users. We're just gonna ship the thing. You can't not be data driven. We've always known the metrics, the business, and the drivers very deeply. We chose very purposely for the first three and a half years of the business to a/b test virtually nothing, because we had high conviction based on talking to users and looking at the data that were making the right decisions. Now as we get to this stage, where no matter how good you are, you can't really know because you're running so many different math equations and permutations, you do have to use the tool and use a/b testing to get to the right outcome. There are some companies that choose to be design driven, or some companies are going to a/b test every damn thing. Each one of those approaches has its place. Figuring out when to use data and at the right time is really important, which is what we've tried to do.
I feel we are incredibly lucky, because strategically when things were kind of blowing up, we decided to invest in the data team, and we did it earlier than most others do. A lot of people are impressed with how mature our data stack is, specifically for the stage of business and how long we've been operating.That was a good strategic decision that we made. And I'm very happy we did because we're able to do a lot of the things that Grant is talking about.
You guys said a couple of things that really resonated with me. One is just a reminder that these things are tools - they serve you, you don't serve them. So use them where they're helpful and don't where they're unnecessary. And also that there are real trade-offs with it, in terms of timing. It takes time to design a whole bunch of a/b tests. And if you're building foundational pieces that you just know need to exist, sometimes it's better to just go build them as fast as you can. You can always optimize later. So on the topic of scale - as you start to get scale, all sorts of good things happen with it, but bad things happen too. One of those is that suddenly you become an interesting target for the bad guys. The people who are out to defraud and steal money. Solving those problems is always hard because it goes against all your normal instincts as a PM. Like, instead of reducing friction, you now need to add friction in places. So you want to trust your customers, but actually you need to add points where you really make them prove that trust. So how have you balanced this as you've grown?
Both Logan and I had a bunch of experience in marketplaces, and one of the things that marketplaces live and die on is trust. And so it does trade off against a good user experience in a lot of places, and it trades off against growth in a lot of places. But since the beginning of Whatnot, trust has been a pillar of the strategy. We've always had a Trust and Safety Team and they've always been a core team. So in our business, even today, we have five pillars we invest in. My guess is we’ll probably invest in those five pillars for the next three years, and one of those is trust and safety. It will basically never go away. In comparison to almost any other marketplace on the internet, we actually don't have an open supply side. Every seller on Whatnot is hand vetted by our team today. And we've done that all the way up to a pretty big scale. Because if people don't feel comfortable, they're not going to come back and purchase. Now, all that said, when you're scaling incredibly fast and have millions of people and tens of thousands of sellers, it's effectively a moderate sized Internet City. So you need a police force, and people do bad things. We develop policies to try and steer the laws of the land. We've built a lot of systems, and we're not perfect, we definitely still make mistakes. A lot of the ways people manipulate this system are pretty unique to live commerce. The biggest trust and safety problem we had I never would have expected to be the biggest problems but we have a whole engineering team and a lot of the go to market team spends a lot of time on it. It's a hard problem that's ever ongoing, and we're going to invest in it forever. We put out some pretty great product stuff over the past three to four months, but there’s still a lot of work to do.
There’s the parts of this that are obviously bad people trying to defraud users, and it's an evolutionary game, you're never perfect. It's very difficult, they get clever, but it's also pretty clear what you do when you catch them. How do you think about the areas that are not obviously illegal, but controversial, like issues of speech, or things that are offensive? How strong of a hand do you want to take in terms of Whatnot’s policies, or how hands off do you want to be?
Our Northstar is to make sure that our community trusts us. There are two sides - there's the buyer side, and there's the seller side, and those things are often at odds with each other. So we try to be really clear what our North Star is and set up a series of principles on each side. Now, we’re a shopping platform, not a free speech platform. For instance, we're not like Twitter. So as a function of that we're actually we, we will police speech much more if it's going to erode the businesses of our sellers, or make people uncomfortable shopping. One of the more common things where we end up banning people is, for instance, if they talk bad about other sellers - you can say honest things about businesses, but if you're bullying people, you're going to be gone. So that's an easy example. A more controversial example is that we have all these sellers and some of them have very large operations. Our biggest sellers are doing millions of orders a year. We had a moment a few months ago where a bunch of items had gone missing across a bunch of buyers. And they kind of cooperated on social media. We saw this guy was scamming us, and there was a whole mob who wanted us to ban this person's business. So in a case like that, we think fairness is important. We don't instantly ban a business, but we're gonna investigate and understand the issues. Was there malicious intent there? Or was it just a mistake, because maybe the guy was scaling his business? And what do we do to help? Do we teach them a lesson, but also help them scale their business? So in that case, we ran a deep investigation, we saw nothing malicious, we saw someone who probably got in over their heels on scaling the fulfillment of their business. And so we said, alright, you screwed up. You’re gonna be gone for a period of time, because you can't do that to customers. And when you come back, we're gonna want to see these 20 things with your fulfillment. And if it happens, again, you will destroy trust too much. I don't think there are right or wrong answers on a lot of these things. It's just about putting our principled stance out there and adhering to it.
As I say, it is hard because we are this community driven platform. And so people do like to talk. And I think that's a good thing. Anything that happens in our platform, it is something that we have to really look into and use our best judgment. I think we'll grow and learn every day. But as a community driven platform, it's an interesting dynamic, I think, compared to other platforms.
The only thing I know for sure after working on problems like this for years is that anybody who says it's easy has not thought deeply about it. Safety is one of the hardest things and really important. So it's great that you guys are thinking about it and focusing on it. Let's talk about people a little bit, and scaling. My own story here that I reflect on a lot is that when I joined Twitter in 2009, my first boss was this guy Abdur Chowdhury, who was the Chief Scientist. I joined as the first data scientist, kind of a data engineer. And he'd always say, Well, now that you're here, you're going to lead everything with data, I've fired myself from that job. And I was always like, wait a minute, you fired yourself from that? Isn't building a career about getting more responsibility, not finding people to give that responsibility away to? But as I've grown, I've learned he was totally right. The only way you scale, whether it's from like four to 400, like what you guys have done, or 400 to 4000, is to find people who are better than you, and you fire yourself from the things that you were doing before. So I'm curious if that's been your experience, or if you guys disagree with that? And, what's the progression been like for you as founders going from four people and doing everything to a big team of 400?
I agree. And I disagree. I think it just depends on what it is. I've scaled myself out of one job, and I'm trying to scale myself out of another job. Finding better people, I think, is much more important. An example would be Ludo, who's our VP of Engineering. Grant and I probably spent almost a year on that search, because we wanted to find a great person. I was running engineering and shit was on fire. And it was very chaotic. And me being someone with not as much experience as Ludo has with managing much bigger teams, which I've never done in my past, was kind of a wake up call. We needed to find someone who's not only great at managing people, but also recruiting and the other things we need within the engineering team as we scale. We're kind of at this point on the product side now. So I'm also running product, where I haven't done the job before at this level, even though I'll always be involved in the product to some degree. I think you still need to be involved to some degree. Which is the point where I would disagree - you still have to understand and know what's going on. We’ve been searching for this person on the product side for nine months now and I think we'll probably fill it pretty soon. We've interviewed a lot of people but as founders, you’ve got to set yourself up for success and think about the company first. But you do have to be involved, and have an understanding, and go deep with certain things, because things can get out of control. Even if you might hire someone really good on paper, you have to know what's going on. And most people who are good on paper aren't that good.
If you're gonna go to 400 people, then to 1000, then to 2000+, you can't do the job the same way. You can't try and control all the pieces of it, you would die. Because there's so many things to do. Three years ago, I was still doing every customer support ticket, basically. Do I do every customer support ticket now? Hell no. Now the flipside that's also true is that a company can only be great if you're delivering for your users and creating a great business all-around. And if you completely cede control and understanding, there is no way that you can push the business towards solving user problems and making sure you're on the right track. And so, you have to do both things. That's why the job is really hard. It's like you have to see the thing, but still understand the components of it well enough, and what's happening, to make quality decisions because it's really easy for you to get detached from that. And it can go to hell. And not only can it go to hell, it will. So it's just a matter of where it's going to pop up next. The sooner you catch it, the better the business is going to be as a function of that. One of things I tell the team all the time is that most things are not, “I'm going to do this or this or this”. If you're going to be doing things well, it means doing this AND this AND this. It’s about using “and” functions, not “or’s”.
Let’s now talk about the current day and reflect on where you are and where you go next. One of the amazing things about Whatnot is how many things have gone right. But you've had a whole bunch of fires to put out along the way. There's all sorts of stuff that goes wrong on a daily basis. What have you learned from the stuff that hasn't worked? And how does that influence what you build going forward?
We've definitely made hiring mistakes. I think any co-founding team and CEO will tell you that you're gonna make hiring mistakes. And the thing that people will also tell you is that you always have to keep the bar incredibly high, but it's very amorphous on what that actually means. And, in terms of how to do that properly. Logan mentioned he thinks we've had a pretty good hit rate on our executive hires, and it's because they go through a gauntlet. We don't hire people unless we have incredible confidence in them. That's been a good thing for us. Another thing I’d add is - we talked earlier about how we didn’t a/b test too much. I think we probably waited a little bit too long to build that muscle because when you switch, when you go from using product intuition to a/b testing a bunch of things. A lot of your systems have to change, particularly when you’re scaling because you're pushing teams in a different direction. I think we were a little bit more in the mode of building lots of new things as opposed to perfecting the existing system, which is really important as you get bigger. We’re still calibrating our way towards that. There's probably some stuff that we built and shipped over the past three or four months where had we been a little bit more deliberate on the core experience and getting it right, it would have set the business further ahead.
We talked about the way that live and social commerce has exploded in Asia over the past decade. Now you guys are making it work in the US, and nobody else seems to be. What would you say you know that others don't?
We were incredibly lucky, first of all. I would say the reason we've been able to make it work is about the advantage of being a startup. As compared to the bigger companies such like Meta which have actively gone after live commerce, what we've done well is ruthlessly prioritizing the right things to build and being very, very close to our users, developing a relationship with them. It’s not just about the people buying, but also the people who are selling, and really developing a good go-to-market strategy around how we launch new categories. As Grant mentioned, we launched with Funko Pops - that was a strategy. A lot of investors were actually giving us pushback when we were fundraising, like this isn't a big business, or you need to get into other categories. Many said that unless we could get into other categories, they we're not going to invest. And that makes sense from an investment standpoint. But when you're building something, it doesn't make sense. You have to start small and start building out. When I think about how we've gone about category expansion, it’s really worked for us, because we look at these overlapping categories. For example, if someone likes FunkoPops, they might like Pokemon. So launching into Pokemon after Funko was actually a little bit easier for us because we had that user base. We do also have to take big bets and not give up on things, though. With sports, which is our biggest category today, you can think about the user - most of them probably don't collect Funko Pops or Pokemon. This type of user is a little bit different. But it really took us a lot of dedication to get that working. And it took probably about six to eight months to actually get off the ground, I think a lot of companies would have just given up, because they don't see it working immediately. It takes a lot of effort to get something going and you can't give up. You have to stay laser focused and not do too much. If you look at some of the competitors beneath us, at the startup level, you can see them go very horizontal versus vertical. I don’t think you can build a good user experience like that, because you can't deeply understand each category and interact with users to grow those categories and make sure there's a great experience in each.
I just think, fundamentally, we weren't building a live commerce business. If you approach any business from the angle of “I'm going to build a business”, you're not actually going to solve user problems. And so and so we just said, “we're gonna build something great for collectors”. And we went and built something great for collectors. At the end of the day, you build your business as something great for people. It's not like anyone's asking you, “Hey, I really want live commerce - just copy/paste that thing from Asia.” That's the big fundamental mistake. There's a bunch of things that Logan alluded to that we did really well - we know how to execute well, we've been working on marketplaces for the vast majority of both of our careers, we know how to do category expansion, to set up support, and how to build product. You don't build a business copying and pasting a business model - you build it by solving user problems.
One of the coolest things about scaled consumer products like Whatnot, or Instagram, Twitter or any of them, is that people end up using your product for stuff you just would have never imagined. In Twitter's case, people were using it to organize free speech rallies during the Arab Spring. We also had a dude live tweeting the Bin Laden raid without realizing what he was doing. Presidential candidates used it to run their campaigns. You must have had a bunch of similar things on Whatnot. What are some of your favorites?
One of my favorites on Whatnot is a fish and coral shop. I think they’re in Ohio or something, and the guy has sold like 5,000 Corals through Whatnot. Or maybe even more now at this point. We’re building a collectibles marketplace and this guy is selling live corals! It turns out that you can actually send corals and fish through the mail if you package it properly. I didn't anticipate a use case like that. We were talking to a product candidate the other day and he said he woke up at 5am and someone was on there selling pickles, so he bought a bunch of pickles. To me, it's the range of businesses that are getting built on Whatnot that’s incredibly surprising.
I’d also add that in terms of some things that define our product roadmap, we don’t have features that strictly define how the product is intended to be used. So what we see is that a lot of users will kind of hack things in a way we didn't really realize that they could hack it. An example is that some people have created tips for themselves - they would create a listing, and they would hack it because we had NFTs. And with NFT's, you don't have to pay for shipping. And so tips were listed under the NFT category. They would get all that money to go to them, except the commission that we made. When we saw people were doing this, we knew we needed to build tipping in as soon as possible. So it's multiple things within our app that surprised me that people are able to find workarounds. When you see people doing that, it tells us that maybe it’s something we should build within the product.
It’s very similar to back in the early days of Twitter when people started manually typing “RT”. At some point, we figured we should probably just build that. As you look forward a few years in the future, what are you guys most excited about? When you wake up in the morning, what's the thing you're thinking about that gets you really jazzed to come into work?
For me, it's a couple things. The first is - how do we look three years from now? I think what will be a challenge, and what a lot of companies don't get right is continuing to scale culture and operate at the same level of efficiency and speed as they do today. The second thing I’m excited about is around the product. There's so many categories that we can be in, and right now we're in over 100 categories. So how do we really scale that to thousands of categories? Not just within the US, but on an international basis too? We launched in the UK about six months ago, and in France a couple months ago. That's been growing at a healthy rate. And as Grant pointed out, there’s these odd categories like coral. Just like having these fun things that people wouldn't expect to be streams that you can kind of go into I think is really exciting to think about.
I also think category expansion is really exciting, and international expansion too. Logan said earlier that I'm the more pessimistic one. I tend to wake up and think about what's going to go wrong. There's a lot of fires to fight but I'm just really excited about all the categories, all the businesses we can help build. One of the things I've wanted to build in the product forever that I hope we do at some point next year is trivia. I’d love to see more game shows on Whatnot. We actually did a pilot game show that our marketing team put together a couple weeks ago. 10s of 1000s of people tuned into it, and it was incredibly fun. It’s a pet project I'd like to see come to life because I think a lot of what makes life shopping fun is not the shopping, it's a game. It's entertainment. Building more of those mechanics into the product is just so fun.
Let's do a quick lightning round to end. I'll just throw some questions at you and you guys can give like one word answers. First is - texting or talking?
Texting. I hate meetings.
Would you rather be have your superpower be invisibility or super strength
What’s the most surprising thing about running a startup relative to your previous jobs?
The biggest problems are people problems.
I was gonna say the same thing.
Best TV show you've watched in the last six months.
The Last of Us
The Last of Us
What would you say to someone who’s never tried Whatnot?
When people say they don't try when I try to explain it the best I can, but I feel like it's really hard to explain. It's best just to show so I show them the app. And I'm like, Look what you can do. And then they try it.
Oppenheimer, or Barbie?
One of you is an Oppenheimer person and one of you is a Barbie person. We found the division at last.
This has been awesome. Thank you guys so much for taking the time. It's really inspiring what you're doing and I would encourage anybody who hasn't tried it to go give Whatnot a shot because it is just an incredible experience.
Operator-in-Residence, Scribble Ventures (Scribble.vc). President, Product & Business, Planet. Previously Head of Product at Twitter, Instagram, and Novi. BA, Mathematics and Physics at Harvard, & MS, Physics at Stanford. Ultramarathon runner, husband to @elizabeth, and Dad to three awesome kids.