Whatnot founder: This is the future of e-commerce

you built a company that is worth twenty billion dollars but just put out in perspective that is more than if you add up the entire market cap of wendy's under armour hurts rental car harley davidson american airlines also isn't that bananas when you hear that yeah i i think it's absolutely nuts i feel like i could rule the world i know i could be what i want to put at all in it like a day's off on a road travel never look back i find interesting about you is that you went from a guy who's a kid who was working in a deli almost failed out of high school to now you've you built a company that is worth twenty billion dollars and all and all honesty at trying not to focus on the number because i just like if you focus on it sort of seen zip scene and then you're like well i've you know done a lot already a pat myself on the back but i think we're pretty early and what we're doing and so i'm just trying to think about it and just sort of look at like the problem ahead but one step one foot in front or the other and yeah we started think six and a half years ago there's still a lot of work to do yeah i remember because you may not remember this but we run a phone call and i was like hey is a great idea i'd love to invest and you're were like i don't know got like kind of it's already full and i was like oh but i'm such a great guy and then you were like we'll see and i didn't follow up and that not following up cost me cost dearly alright i actually do remember say i wrote it down in my diary that day graham what happened from your perspective yeah yeah you tell the story yeah so what happened i mean when whenever you're like one of the like we've we've had rounds where we've been a hot company and we've had rounds where we've not been a hot company so sort of like seeing this the full spectrum of things and once the rounds closed all we really want to do is go back to work so i remember talking to sean and you know i'm like i should probably follow up with him and then i just got busy with work and didn't and i think i like in my head i sort of felt bags i think i should have done something but i don't know well listen i've been a fan i was a fan before i'm still a fan now now i'm just a bitter fan which is a is a unique place to be it and we should explain what the company is right you you're a founder of whatnot but so basing is you've built a large company in a space that i think most people would have found very small and unusual unusual this almost like a stack of unusual behaviors we'll just give like kind of quick summary which is if you open up whatnot today the app you see people selling all kinds of things it started off with collectible and you know like these little funko funko dolls and then opening up packs of cards and stuff like that but now you could buy anything i sam i don't know if you know this you could buy a crazy shit on what i bought a crab this morning it was like a fisherman fishing and he's like i got these crabs and then he's like you could buy the crab right now i bought a crab he's like great know he's it's gonna be sent to the mail to congratulations shot and there's a crab coming my way now and that's i don't know what just happened but i i a crab coming in the mail the seafood is incredibly good to be honest like i actually eat i hate it like very regularly it's my favorite better because i'm telling my wife i bought internet crab and i don't know if she wants that to be in the house but i i got internet grabs gum my way you saw where it came from you don't know what you're getting if you go to supermarket that's true that bad thing came up the person who was doing it their profile shows like how many they've sold and it says three thousand three hundred her her usernames shout out to i love crabs so i love crabs she's sold three thousand three hundred yeah this crab pack i bought whatever thirty four dollars she's made over a hundred grand selling crabs on the internet like this is unbelievable yeah last week i had a full crap oil brought to you by whatnot i can't tell listen is dumbfounded or his internet connection dropped he's been the same face thirty seconds i want crab but i i don't understand how on earth you could start something like this because a marketplace like this seems like probably the hardest business the start i think marketplaces are probably the most durable and also the most challenging and when sean originally told me this idea it might have been four years ago you might have been two years in i'm like yeah that sounds cool but these are impossible how did you get your first let's say one thousand sellers to even use the thing because i'd imagine that's harder sellers if not buyers yeah i mean the early days it was all sort of hard i think for us the reason we did it is because me and logan who started it we'd only ever spent our careers and consumer internet and working on two sided platforms and marketplaces so when the idea of starting a b b business sounded way more painful in starting like a consumer marketplace to us just because of what we knew when we when we first got started we didn't even have the the live component and so we had to get like immensely creative and so initially we had a value prop if we'd authenticate whatever was sold can you do it like a movie scene so you and logan you're sitting somewhere you have an idea who says the idea where are you what what happened and then how long from there to the first go live so there's there's sort of like two founding stories depending on if you talk to logan and you talk to me they're both both technically true so i'll go back to the first one because logan will be annoyed if i don't tell it which is logan and i are in japan over like the holidays and we were both sort of fed up with our jobs and we both we both built company before so we we we prefer to sort of like focus on building things and we're drinking in a bar in tokyo we're like let's start a business and we bought like fifty domains and we knew we're gonna we're like us five marketplace business and my bought is like random domains did you have an idea or just straight to the domain you know it's you're trying in a bar and so it's like one of our initial ideas which you we we did actually sort of you for a couple weeks was we'll build like a better full service craigslist which is took terrific business idea by the way but that's what we we initially started with that's like in the in like the starter pack of entrepreneurs it's a craigslist is so ugly could do better yeah the the economics just don't make any sense right and so you're selling all these use goods that are basically worth nothing but you need to be able to you know spend a bunch of money in order to make the user experience of craigslist better like be able to do so so sort of like i'll give you an example i've talked to hundreds of entrepreneurs on this podcast and i've got a bunch of takeaways but one of the big ones one of them that shocks a lot of the people out there who are product nerds which frankly i am myself is that oftentimes in order to turn something that's going kinda good into something that's absolutely amazing is to fix the marketing not the product and in particular fix how many people know about the product that's like the big thing it's called attention say it with me attention and so this team at starter story they put together a free guide they call it the one million dollar attention guide it's this pretty amazing thirty nine page document that's filled with fifteen tactics to get eyeballs on what you are building and so there's a even a thirty minute recording from pat who's the founder of starter story he has interviewed hundreds and hundreds of entrepreneurs so he's able to put this together through a bunch of research and experience and so if you're interested in getting more attention which frankly you should be everyone should be then you should click the link below in the description or scan the qr code right here you know we're in tokyo we buy these domains some of the domains are like random domains we're gonna use like seo hack like used peloton and then i you know you you you name it like we had like fifty domains but we sort of growth hacking our way into the the business even that at that stage so anyways then it comes to sort of like fall of twenty nineteen and we we're sort like alright we're gonna make the plunge logan logan left his job started to work on on what became whatnot and the the early division of labor was sort of like logan gonna build it and then i'm gonna do everything else and so they're like alright on the full service craigslist and one of the bits of full service crisis was gonna be like we're gonna be able to do deliveries and so i'm like alright let's go figure out i i did like the envelope on you know on the app and be like yeah yeah maybe they're still there there and then i start calling all the delivery companies so go on linkedin and i linkedin all of these people who run delivery business like the guy who runs delivery at bob's discount furniture the guy who runs delivery at like all these other companies and like they take calls with me i'm like how much does a delivery cost at scale and so like how much is each leg and how efficient is it and they were nice enough i they sort told me and with after doing two of those calls like this just doesn't work like the cost per delivery relative to the value added on the used item is just there's no margin there for the business then like oh shit need to find something else to do and at that point in time it was logan we brought on an engineer already and then we had half a designer so the team was to sort like a three and people can can you give a little perspective your financial situation because we have a lot of entrepreneurs so listen but we have a lot people wanna start so like you're talking about hiring people already did you have funding or did you just have like hundred thousand dollars saved up what was your financial situation to do that yeah probably i don't know hundred two hundred thousand dollars in the bank okay i'm not including my four zero one k did you wire that over to the company and you're like alright now we have two hundred thousand dollars that's what we can hire with check by check yeah i just go like i the the the implicit agreement was i'd be willing to spend up to that amount of money doing the business before is monte name and so like what we did early on so our first engineer is actually based in brazil it was a guy that logan used to work with and had known really well who was who's like super talented but you know he's in brazil and so it's it's it's much more cost effective there he's kinda difficult to work with so he's you know he's like really talented but really challenging to work with you can get him on the cheap and then you give him some good equity and then the designer we just gave him equity we're like do the branding do all of our designs what do you the equity in the business which obviously has has turned out well for for both of those folks and so yeah we're we're sort of doing that twenty four hours until like doing diligence on delivery costs like oh shit we have to change this business and by the way they're building it so we we have even to this day we we try and having an immense bias to action because you just learn things by doing things so even if you're wrong as long as you're wanting to admit you're wrong and then change direction it's totally fine so logan and gustavo we're building the back end like the order system and the some of the front end and go everyone hey everyone i think this idea is gonna work gonna try and find something else like it's okay we can we gotta build a payment system anyway so as long as we're doing a marketplace we'll keep building so she's like alright yeah let's still do that and then i was just going around internet looking for marketplaces that i thought were really broken and i kept coming back to ebay which is you know back in the day i used to sell on yahoo auctions and ebay it was like prep payment processing online it was pokemon cars and so recognize this i don't know what you can see is that the chance is that the holographic chance it's a yeah holographic chan this is you guys did your diligence i bought the software up twenty years ago our paths crossed i bought this for ten dollars yeah i i remember that ten dollar money order definitely when of those was like making money as the first time when you're a kid and like the past something special about that yeah so i kept on you know going through marketplaces and what come back to ebay and then like everything that was trending on ebay was collectible bowls and i could see all my friends were getting back in the collectible bowls and then me and logan start making trips to all of the comic books shops in la and they're like packed they're full of funko pops and so i go everyone and got this amazing idea we're gonna go and change and build the collectible marketplace and let's focus on funko pops and here's all of the reasons well what what were the reasons because the way that you're describing this is very un and maybe it was at that un because like if a normal person's they'd be like well ebay seems like they're doing collectible is pretty good like marketplaces i would imagine all about liquidity meaning the perfect amount of buyers and sellers and there's stuff there and so like what was the metric or the signal where you said this is actually attainable or with it just i wanna build a business this might work let's just see what happens there's probably a little bit of both the initial sort of data or research we used to inform it was at that point in time you could pull the sales by every single category on ebay there's a tool and was called tara peak and we we went across every single collectible category and plotted the sales and collectible through time and how it was growing and in every one of these categories was like going gang buster so there's clearly a a broader trend happening in the market and when you looked at it then there were more funko being sold and ebay than comic books which is one of the reasons we ended up choosing comics or sorry funko goes over you know say comics or a bunch of the other categories it was between funko and pokemon where the first two categories there's demand people wanna buy used funko yep there's there's huge demand and then the the the sort of taste element of it was we just felt like the product hadn't changed in twenty years materially and it felt like it should and when we thought there was something around social we didn't really know what it was but we just sort of felt there was a with a with sort of this broader trending collectible which which was really driven by people rh who had money getting back into things that were nostalgic from childhood and the fact that there just hadn't been a lot of innovation in the space that probably should have had more innovation and we could we could sort of sq and imagine there's a much better social experience around this where you discover new things where you chat with people that who are into the same things as you and then yeah we just took a a a leap of faith when we started the company one of the things where we said is we're not a sort of vision driven company were a user driven company so we were never behold to like our idea needing to be like the idea we were always going to try the thing make sure we were building a great user experience and if users didn't love it we were always willing to just change why do you think that's important because i think you know the media movies tv magazine they they love the visionary founder the one who saw it before anybody else and as sexy as the founder you also wanna be the visionary founder and the most iconic founders you know steve jobs was you know i would say that was like the attribute that was associated with him was a sort of like taste you know the people don't know what they want but i will see what they want i i know what i'll do i'll put a thousand songs in their pocket that sort of thing why do you think it's important to kind of highlight the other way the when we said we were sort of a customer driven inverse vision driven company it didn't mean that we we didn't think there was wasn't any value in having an idea for how you wanna build the future you have to know which direction you're heading it it was more of this idea though that no matter what it starts and begins with the customer if you have this amazing idea for something and customers do not want that you're dead to rights and so if you're thinking about you know stack ranking these things in terms of like what it what matters and what is of greater importance of course is the customer no matter how great your your vision is and i think it's a you know one one of my lessons that's been even more solidified from one running what whatnot is stories are sort of bs you know a lot of stories in terms of like business are are really a mechanism to convince people to follow you versus something of like real substance like the things that matter actually have much much much more depth to them and so i think the you know the visionary founder just sounds good what what be an example of a kind of popular myth but the the actual substance is something different will be an example i'll give you some in the context of whatnot were things that just like in the early days sort of feel better but actually if you you dissect these things they should have worked in a different way so one of the things like really early on with whatnot was investors were very nervous to invest in a funko pop company so there is a point in time when we launched our first live auctions product and you know we're growing like a hundred percent month over month and we talked to a lot of the you know the well known investors and they're like funko i don't know about that that's a small market you know and investors want to invest in these big giant markets and look at how big apple is and google is but the reality is when you dissect history all of those companies started in in incredibly small area and almost every great company starts an incredibly niche or small area and then takes that and in catapult ford because if you're a four person company like we were in their early days you can't compete in a mass market it's it's almost impossible to drive a ton of consumer value in a mass market so for instead what you have do is you have to compete in a small market though a really great user experience for a a smaller subset of people and then expand it isn't that how ebay i also started like like wasn't the first thing which has the sensor but then wasn't it like weren't also very niche at the beginning they're they're incredible niche i think that the real story from what i've gathered from folks so there's two there's two founding stories there too one at one is is allegedly made up for p r which was the pe dispenser one the real one was like the first item sold on ebay was a broken laser pointer or a sold a broken laser point of collector and and the p r just didn't want ebay to be known for like broken junk and and so you know told the pe dispenser story but yeah if you sort of like there's a lot of these things that like at first surface value a thing sounds good but actually there's a lot of specificity to doing it right so well keep don't after big markets don't hire big fancy executives don't necessarily hire people because they've worked at big fancy companies there's all these things that sort of at surface level sound good which which are actually largely incorrect the paypal stories kinda like this right so you have elon has his vision for x and he's like it's gonna do everything a bank does on the internet it's gonna be you know lending it's gonna be mortgages it's gonna be checking account savings his accounts so that's what the vision was for that and then here was paypal this little tool for ebay sellers you know it's like this kind of the niche within the niche and he kind of resisted it actually for a little while and then they finally kinda gave like well that's what the users that's where the demand is that's what the users want this war and like of course now paypal can do a lot more than it did when it started but went after that very small market initially and finally rejected the founder vision idea going in there's always exceptions to the rule so i i never say you know definitively that's the way to do it but i can tell you in that every consumer success case that i'm aware of the the pathway look like that i'm looking at the march twenty twenty web archive i think how how into the company are you in march twenty twenty based like four months in okay i'm looking at the website on web archive looks pretty good it says browse fandom so i guess that means like different niches of funko so you can look at sports star wars star wars rick and morty and if you click on it i'm not sure if it will show you but it looks like you have sellers on there you're only four or five months in but it looks like a lot of sellers sellers are on there actually and it even has staff picks like you guys are c some cool ones how many sellers were actually on there and how did you convince them and also feel free to admit if there's any black hat tactics there there's a statue of limitations yeah yeah hey let's take a quick break you know that feeling when strategy is done the brief is written everyone's aligned and you realize someone still has to sit down and actually create all the content that someone is usually you and it's due tomorrow well the breeze assistant from hubspot can help it works right inside hubspot you can draft campaign copy blog posts emails all in your brand voice all using your actual customer data so you don't create just content you create content that converts check out hubspot dot com the agent customer platform for growing businesses there's some unique tactics at play i think by by march twenty twenty we probably did have in the hundreds or maybe maybe a thousand sellers at that point so the way we got things going is so classically with the marketplace you have a chicken and egg problem how do you get sellers if you don't want buyers how do get buyers on sellers so the way you solve that is you solve for one side of the equation and so we were initially the the the seller on whatnot and so all of the early inventory was was us now obviously we can't own twenty eight thousand funko so what we did is we would go and authenticate them and by doing that that gave us additional value add to the customer and then we would when someone would purchase them we'd go and buy it from a number like a hundred different stores online i had like a team of people in brazil who would help me hunt down the right funko pops oh so you they they they didn't exist then it was just photos of them and you're like but i'll i'll go out and find them and i'll i'll buy them yeah i mean it was it was a little more you know there's a little bit more nuke to it than that so one of the things that we did i don't there's like hundred thousand funnel dollars like i'm seeing number of funko bonds and so you do have to be able to secure them and secure them at a reasonable price and be able to price and at a reasonable price and so we ended up having to build like a pricing all growing we basically scraped all of the sites that had various funko pops and then looked at the amount of liquidity in each version of the funko pop and based upon like we'd sort of set a liquidity floor because if they had thing had like one you know one sold over ninety day period you're never gonna be able to secure it i forgot what the liquidity floor it was now but let's just say you had to sell ten over a a thirty day period we'd use the past ten sales plus the amount of liquidity per item to then be able to price it at a reasonable price such that we could then go and resell it authenticated and then make sure we could actually secure it from one of the sites and then did you buy google ads for the buyer were you buying google ads or posting on reddit or something to get the the buyers there there's two two tactics that we initially used so tactic number one was we partnered with a bunch of funko pop influencers on youtube so you know i can remember in december calling up every funko pop influencer and they're like who is this company i don't trust you i found someone that i knew from prior world to to work with and that was sort of the starting place so that was tactic number one then tactic number two was we built this sort of viral funko pop giveaway mechanic in the app so if you're into collecting anything the thing that you most wanna collect are like the grail or the chaser so if you're a sports card maybe maybe that's yeah rookie tops lebron if you're in into funko maybe that's like the tony the tiger flock funko and what we would do is once a week we'd give away like a five hundred dollar a thousand dollar funko pop and in order to be able to enter you would have to share and and we sort of built these mechanics where you could sort of have like unlimited sharing so someone could sign up with your referral link someone could sign up with your code you could share it on twitter you could share it on instagram each time someone used your link or your code they would get an extra ticket in the raffle so it gave this like it it sort of encouraged everyone who wanted to win it to share it with everyone that they knew and keep on sharing it right and so we basically took over all the funko pop subreddit facebook groups etcetera because of we were giving away the best stuff this is basically stuff like this is gritty internet entrepreneurship stuff that everyone sean and me everyone listening who's has an internet business everyone has done something where it's like we're just gonna like do this to do this and maybe i won't wanna tell everyone like ten years looking back so it's really cool to see that that was only six years ago now you're worth twenty billion dollars it even extends the we had mike pos the music artist who did i took a pill in ibiza on and he's he you know i think a lot of people didn't even list the episode it's like oh it's like a musical artist on our business show but he had this amazing story that was just like any other entrepreneur where he was into college when he was trying to be an artist so he realized he could post onto to he wanted to be on on the top of the charts of itunes but that's where like you know jay z and rihanna whoever were at the top he realized itunes had a itunes u section for like college lectures so he's a student so he called the guy he hustle find the guy who like controls that board he's like i'm a student can i upload audio to that and he became the number one on itunes u then he emailed all these campuses being like i'm number one on itunes parenthesis you you people if people didn't realize the distinction and he got booked for for gigs and then he had all his friends at other colleges in in and f fatalities he was in f attorney so he said great everyone in the this same f attorney in every college on this day change your profile picture to this picture just to create some like what is that and then people went hunted down that oh it's about this album release and that was the start of his music career he growth hacked his way to success there too and i love these stories as a founder like you know the front door is not the not always the only way in yeah what my my theory is always been the same which is if you try and copy the obvious pathways your base so you're gonna get stonewall because you don't have the resources in the early days everyone wants to spend a ton of money on paid ads so know we spent virtually no money on paid ads in the early days it was never gonna be an effective acquisition channel we spent an obscene amount of money on paid ads today yeah but you have to get your way there and in each step of the way you know sort of unlocks new and interesting things but do think in the early days you have to find unique advantages the other people aren't gonna be able to leverage do you remember when you first started doing the grail giveaway because you know some party of you've gotta be nervous you've given away things that are worth thousands of dollars did it work right away did it take you know a few tries i guess do you remember the math the first time it worked or you like holy shit we just the this is like ten cents a user or whatever you know like could you take us back yeah i i do the first the first one was definitely a flop so we avoid this like five hundred dollar item and i think a hundred and four people there were a hundred and four entries total in the raffle you know maybe that's like thirty or forty accounts or something like that and no one purchased anything show like oh and we didn't we we had like you know no money for the business back then and it was like coming out of my bank account so like oh this just painful and i'm not working so like you know the bank accounts dwindling at that point yeah i i think there's there's always just a sweet spot between when do you know if things actually when have you proven a thing wrong that it's not going to work and when have you given enough legs to make it work and so for us it was like okay well now we have all those accounts who joined and we can send a push notification and when we do the next one and then the next one they're gonna be encouraged to share up to more people and so if we can see that in the next one we can go from like a hundred to three hundred maybe there's a pathway there and so i think i i forget what the the the second one is two fifty sort of rings to mind so maybe it wasn't exactly three x but it was two and a half x and so you started to get this like exponential on it and then you can sort of make the math work was the number of sellers like the metric where you're like we need more sellers more sellers more sellers well back then it was just us as the seller and what we were trying to do is we're were trying to build the buyer base because we couldn't add any seller other than us because no one was gonna purchase anything from any of the new sellers and they weren't gonna stick around and so the early days were about was about getting enough demand on the platform such that we could open up selling and so i think we you know we we launched the platform and think december twenty nineteen was when we launched our app and then we didn't open it up to our first seller and until i think towards the end of february was when we started to have enough demand in the marketplace and even then we we did an another hack which was anytime a seller would come on whatnot they'd get our audience and then we figured out a way to cross listed across other marketplaces using our not account gotcha and so which is like another classic thing right that's what airbnb did that's what a lot of people did that's what i did when i a miniature marketplace you post on craigslist yeah and so between our demand plus the demand for other marketplace so that we got to a place where we were able to retain sellers and then slowly leak get that flywheel spending and it probably didn't take a lot probably like if you just get us sale within the first x hours or days you'll stick around is did you find some metric like that i i think our data was too spa and we were just like i don't know let's just try and get them as many sales as weekend can such that people stick around it took us a long time to get the precision around the metrics that mattered and retained and kept people coming back we definitely weren't that sophisticated that then how many transactions happened in the first twelve months and did that account for any meaningful revenue to you guys at all so start of the the the journey for us was december twenty nineteen we started it and i bet you we did thirty sales yeah like pretty pretty grim numbers thirty in the first month third thirty sales is pretty exciting one a day that's exciting yeah but so most so the way it actually went was the first first week of december which was the first time we were all full time on what it was like one sale in the second we of december was one sale and then i managed to like work with a funko pop influencer before week of december and then we got like thirty sales something something like that and a bunch of them we priced incorrectly so there's like a bunch of the sales were people finding mis pricing in our algorithm and taking us some cleaners the bounty hunter yeah and it's like selling a five hundred dollar funko pop for a hundred and fifty bucks because the liquidity bit of the equation wasn't very good so that that was that was december and then we in july of twenty twenty is when we launch our first version of for live and and that's when the business really started with where did that insight come from because it sounds like the insight for funko came from looking at data and trends on the ebay where did the the second big insight which was live selling where'd did that come from so we when we first started the business january went through y comb so we originally we're were in la and went up to san francisco to go to y comb and we thought we were doing well the business was growing etcetera and then we went to up fundraising raised in the middle of covid as a funko pop marketplace and like everyone hated our business by the way why did yc see bet on you like god damn w he's good that they bet on you guys when nobody else would one month into a funko pop marketplace what the hell did they see they were they were very smart to be honest and they've bet on many times throughout our journey like when the business started the take off they were like tremendously helpful and help put in more money into the business ahead of when many of the other investors who you would know their names we're passing the thing we were really good at and are are still pretty good at is we're we have pretty good taste and we'd know how to execute and so if ever we said we were gonna do a thing we did the thing but that first one was the interview is fifteen minutes what could you have shown them i'm in the that first fifteen minutes i don't i slip a coin you know we we we we we had pretty good backgrounds relative to like what we were to in i see wait that's a funny line we had good back backgrounds relative you meaning like there's no way so like this smart is working on something so silly surely that's a sign well i guess like the logan was like running or weren't engineering at like pretty large resale marketplaces i worked at facebook i worked at youtube so like you know we i'd started the company before i got aqua hired we weren't like hugely known commodities but clearly had a background for doing things we built our product for the yc interview in like a week like we built it and launched it and pushed it live so that we had something and could like talk about real stuff that we had done so yeah we just went all in do you wanna hear read my hear my notes from that i i found my my notes from when doctor grant and i was looking at investing out by the way this is by these are my personal notes no no no it's all to today i go looks like a soccer dad quiet intensity humble confidence he seems like a serious person who's actually doing this i don't know those are my those are five things that i wrote love the ending i wrote winter energy we should invest soccer dad yeah you only heard one thing i you knew he would only hear the one thing get a grant don't take that shit i i i like that but dude here's what's the reason why i'm being kinda na about timelines is because you're describing being like my banks dwindling i'm just trying to make this work we only got thirty transactions in the first month but what's insane is that i think it's something like twenty months later you raised money at a billion dollar valuation is that right that's probably about right yeah so like the rate of the the rate of growth is is astounding here do you remember how much funding did you raise and how many employees did you have at the time so we came out of yc we raised probably two hundred and fifty thousand dollars out y maybe a little bit less it was a bunch of people who knew me and felt bad for me and like maybe they were like sc checks and some stuff like that so you know i think we a few hundred thousand dollars in the bank and we were at that point we we brought in one more engineer and then before our seed round we probably got to like six and a half folks so march when we came out of see we did probably twenty to twenty five thousand dollars in sales total total transaction volume then we did our seed rounds in i wanna say like august or september that was sort of like the business started didn't flex when we we launched live like growth went to like hundred plus percent month over month and probably in september we did two hundred fifty to three hundred thousand in sales so like ten next gross gross volume yeah our takes probably like ten percent of that then you know continued to in select up by december of twenty twenty we sort of ended the year at two point three million dollars in total sales and the number of employees in the business would have been i think about seventeen or eighteen then we closed the following year at a hundred and sixty eight million two million to a hundred hundred million plus a hundred and sixty three million and we would have closed that year at about one hundred employees say one employees too and then so the following year we did a billion in sales what happened how did you go from two million to a hundred sixty three a hundred sixty three to a billion what happened the core live experience we bill this is really fine and it and on the seller side you know transformational for business building and so if you're a seller what was happening to you was you were very quickly starting on whatnot and and and again guys not for everyone but for you know a lot of the people who invested deeply and and and and tried to build a really large business whatnot was a bigger channel than anything else you're done and and that that was also the time like this is during covid and so you have people like hey i had a comic books shop and people stop coming in nail on whatnot and my comic books shop is doing more sales on whatnot than than it ever did in the physical brick and mortar shop i'm closing down on my brick and mortar shop you had the covid forces everything online but then you had the benefit of if i'm a if i'm selling a niche thing i'm gonna find more buyers when i use the the sea of the internet versus just whoever's in a five mile radius ten mile radius of wherever my shop is so that helped for sure in that first year yeah i mean covid definitely helped but you know our business has continued to do you know incredibly well for covid so i think anyways the core value is there and then i think we we had a really good team it's like the first thirty people we hired at whatnot are lights out good and we knew we figured out how to like the big unlock was sort of how how do you launch multiple categories and what is the mechanism for doing that fast and as you start to launch multiple categories on marketplace people in each one of those categories start to cross poll eight and everything that you had working in one category sort of compounds across all the categories what did you have to change about your personality to grow because you went from being a very scrappy guy doing everything to being the ceo of a company that's worth a billion plus dollars what had to that you've just compressed a lot of personal growth in a very short amount of time i'd imagine i i think probably people over emphasize like i need to change because i'm a leader of a large organization because i think they look at certain models of what success looks like at really large companies and those are sort of like stoic slightly still did people who operate in a corporate manner and you know there are there are definitely things that you have to learn and adjust as you go but i would say i actually just generally try and be me and you know the the nuances to that of course though are and by way had to learn this i i thought i would have to change more like i think one of one of the mistakes we made early on the business was just trying to be you know to corporate for lack of a better word which is like hire some executives from well known companies hire people from well known companies and it's sort of like one of those things with the story sounds good but the reality is is often you know a lot different because you you'd sort of go like oh you ran such and such at this big company you must know what you're doing and that's actually turns out to be like broadly incorrect like no someone needs to know and be able to sort of articulate in specific detail what what they're doing and how they're doing it so one of one of the biggest lesson that i've learned through the the history of of what whatnot is to just be really man focused on what the problems and opportunities are and don't let anyone necessarily tell me what the right pathway is into those problems because running whatnot i i tend to have a much in my team as a much better grasp of what the nuance and context around those things is and so be focused on what we're trying to achieve and then be really really nimble around how to achieve it as long as we know the details around it okay now back to your question what do i have to learn and change so one was actually not to change too much because actually we're pretty good at what we do there's a real you know the again we got really lucky but you know there's also a reason we were able to take advantage of the lock then the things that i had to personally adjust is you know the company fourteen hundred people today as an example and you do need really good systems in process to run a company at the scale and so you have to learn how to like you know one of the products you had a building is yeah i've called my operating system how do i run the company to make sure that we're moving in the right direction we're making good decisions and we're executing it really fast pace so i had to learn how to like construct an operating rhythm across the business there were certain points in time in the business where the accountability wasn't high enough growth drifted people's focus drifted and we had to like fix that we're a pretty straightforward group of people we always have been like if you went into the early slack of whatnot when someone did bad work we've like you did bad work this is bad let's fix it and as you get bigger the peep you know four hundred people at whatnot there's a bunch of people who sort of like know me is like the person on zoom they've seen in like a a a team meeting and the like a a title that would scare people and so i've had to soften my approach to try and get the best out of people and again because we always wanna get the best out of people you wanna get the best work you know what would have worked in the early days be like you this sucks we gotta do better someone might cry today if i do we don't want anyone to cry and so you you just sort of have to like know how to flex a little again you don't wanna be dishonest and you don't wanna be like this fake person but you have to know how to flex get the best out of people i think those are probably my my biggest things it's just like be man focused on the problem be be conscious of the context and around how other people are going to view things and and adjust that to make sure you're getting the best out of people in the company there's so much corporate gobble goo from people i think most of its bullshit it's all about like what's your problem how do you solve all your problem and how are you doing it the best way you're you we we've kind of coined this term we call like all shu success like if you read warren buffett book you learn that even though he has this attitude that he this image that he's like oh i just you know i just hold forever and i just buy good companies and you're like oh anyone can do it and then you read about them and you're like oh you are a math prodigy at a very young age and you've been like you're just super high iq and patient and you have this beautiful temperament with you you have that same thing where you sort of are like you kinda have this canadian midwestern energy where you're like you know we're just i think we just made decent decisions and we got a little bit lucky and then but the reality is is that there's like personality traits or something underneath there that is like world class and it's very clear you have that what would you say your reports would say or investors would say this guy's a world class at blank i think one of the coming back to like my dis tasting stories one of the one of the faults in human behavior as people tend to follow stories and i tend to follow the human things one of the things that i consider myself lucky you with is i've i've obviously learned to shrine been over six and a half years but i i was put in this situation and there will be plenty of other people if they were the right set of situations would be able to learn so that's you know the luck element the things that i i think we're we're pretty good at are getting to the root so when you like what is actually happening here and how do we know so seeking the truth maybe is a as a as a simple form and so one of the things that always breaks at whatnot is our discovery systems as the company grows and grows and grows you get more and more supply and and you're balancing all sorts of like competing objectives you gotta make comic book succeed and you gotta make women's fashion succeed and you gotta make fresh food succeed and you gotta make the uk succeed and we have this feed that recommends people all these things and our discovery team is very studio they'll really deep the data little ab b test a bunch of things i'll see something a metric go down the business and i'm like this looks like a discovery problem i've seen this before i'll talk to the team team like no we tested it we know exactly what's happening i'm like now how you know exactly what's happening walk me through every little thing in the system so what's happening to this seller have you gone and looked at every individual seller how impressions have changed for that seller how that's happened across category how it's happened across country how many lost this much impressions how many gained this many because just because the ab b test as an example so ab ab b test notoriously bad on network systems so if you like ab b test a thing you change the feed which means you change what users see and then people will all of us sudden start to go in different streams now as they start go into different streams the sellers will behave in different ways which means you poll loop both sides your ab test as an example you know there's an example where we start going through all this and you know we we sort of get to the bottom we dissect every bit of bit of seller behavior and like okay well you know maybe these sellers their discovery change a little bit but these ones increased in increased engagement i'm like well i'm looking at the metrics the metrics say everything went down on a macro level even if it's not in your ab b test how do you actually know that then we plot the elasticity curves of those sellers we actually see that there are certain parts of the platform where if you even if you improve buyer engagement if you take away certain impressions from certain sellers their business to shrink more than the engagement draw increases it and so you have to look at these things on a much larger time horizons in different ways and so you know the a classic way someone approach that problem particularly like a lot of the ranking companies are like social media companies at near term engagement and you're go okay of course you're right you've done this before you've worked at facebook and google and wherever and i will go like i don't think how do you actually know that everything's a little bit different let's go all the way to the bottom and then we honor like an incredible insight that will shape our discovery systems for the future so that would be like the example of like just going immensely deep into the problem i love out like too men ago you're like business is not that complicated and then you're like so we you know our sellers in our fresh food department we plotted the elasticity curve if the you know it's like yeah super simple beanie we do the same thing yeah it's great well we sort of answered the question in a way where your answer is probably true you are world class at that but the real answer is the way that you answered it you're just i think you are very smart and more so your rate of learning seems very very very high yeah you look you you do have to learn fast but even even what i just described you if you would it down to simple components all all the elasticity curves is is like what happens to a seller when you increase their viewership and then you decrease their viewership how much is their business and that's like you know if you're if you're running a platform where you have a feed and your sort of direct traffic around things it's probably a thing you should know and it's it's this it sounds more complicated complications use elasticity but actually like how much the business is growing and shrink subject to the number of buyers that you throw in they're put in their feed one of the things that tends to happen you know we hire all these smart people with intact there's all these like smart people they went to like all these fancy schools and what have you and they like to be smart they like to sound smart so they use big words and and the big words will just like obscure a bunch of things and so off my job oftentimes is to try and get to like the symbols that's of truth around things what is the simple sense of things what do we know and how do we know it and so if you start to use a bunch of fancy words i'm going to make you explain it to you like i'm in you know in middle school and if you can't explain it to me like i'm in middle school you probably actually don't know what you're talking about and i just will keep going and going and going and going and going until it can be explained i love that i when i so we got a acquired by twitch and i got to just be at twitch for a couple two years and you know i didn't i i've probably learned many things something's not to do in the company something see to do but one of most important to do was emmett was like this he would sit in these meetings and some something you know team would come in and they would say something and he would ask them this is that well what do you mean how do we know that what does that mean so no what what exactly did we do why why do we think that that was the right thing to do very simple questions or questions you know that a second grade reading level and then the answer would come back at a phd level then he would bring them back down no hold on hold on hold on let's walk me through this and then by the you know within fifteen minutes they've sort of been un dressed you realize they don't know they did themselves don't know what the hell of time but they weren't trying to mislead they just didn't really themselves get to the root of it and everybody was taking things at face value and it was leading to bad decisions i loved it i was like this is amazing this is like this is finally like you know the the best work is happening in those sessions most people in the company hated it and they used to give them feedback all the time that this sort of soc sarcastic method of of sort of debating almost like semantics and getting down to like the the base level of things they're like talking in binary basically i do that with my wife i'm like were you thinking of me when you made this meal because you know i don't like zucchini no i just wanna know but i anyways i loved it and i i almost gave me i i liked that you said it here because when i saw him doing that in in a way gave me permission that like i didn't really fully do before that meaning a i didn't wanna be a jerk but b i didn't wanna be an idiot hired all these smart people they're telling me things are sounds smart maybe i shouldn't get caught up trying to like get you know base level understanding of this myself and what i realized was no no that was actually a very good value virtue to have inside of a company and when people knew that they showed up very differently to every meeting after the first three times that it happens yeah i think one of the one of things that we've tried do here is we try really hard for the culture to be about getting to the right answer and so if we find people sort of recoil from that we'll give them feedback and when i hire executives they'd i will let them know upfront they're not beyond rep approach their their methods are at best sort of neutral when they come in and so we've we've sort of built this team now who likes that way of working who's giving permission to work and seek the truth and go to the bottom and i think that's been i think if you don't have probably both of those it doesn't work well now that there's a challenge of or we're hiring i don't really have like five hundred people to share something you know keeping up with that but if you look at like my team of people my team i've been working with most of my team for four plus years now and then most of their teams are pretty similar and so you get like a really nice no this is how we do things here this isn't meant to be me and this isn't meant to like understand the truth because it's quite natural to be challenged at that level of detail hey can i ask you about the challenge because i'll i there's two phrases and words that i really dislike one is first principles and two is contra because typically the people who talk about that stuff are either kinda dumb or they're smart but they're an asshole when they deliver it you seem smart and you seem like a pretty kind likable guy was there a person or a book or something that inspired you to be disagreeable but not rude because it's quite challenging i think for for me what i always try to do is imagine myself and someone else's shoes and imagine when i had certain stuff like this you know happen to me and what would enable me to do my best work and i'm not saying i'm perfect at this there are definitely times where i am not as nice and where i will you know you know sort of be at the end of my my level of patients i i try to make it few far between but it happens one of the examples that sticks with me for all a lot for a while is and and it's actually one of the reasons i ended up leaving facebook i was in this big product review with a bunch of very well known and very senior people and there was the thing i was bringing to a broad review was was a project that i unfortunately got stuck i did not wanna work on and it was one of the most politicized projects across the entire business and you know i put together this thing and i spent boat loads of time because all these freaking vp vps would never agree with anyone it was just me running in circles like this and you get to the review and the guy who's running every rear basically just start yelling at everyone and i'm like you know what i've been up the past couple weeks till past the night and i were like hell on this and no matter who you gave this thing to was gonna be a absolute cluster you know now running my own large organization i see what he did wrong i know what i would do differently but the way that was handled was never gonna make me wanna do more great work and so i basically at the end of that i was like i'm out of here i'm not dealing with this and and so i just think about ultimately what you wanna do is you wanna get good work out your organization and being mean nasty or combative walmart almost never do it i know that you don't you kinda said you don't like talking about numbers because you're like there's still a lot to do but of all the people who have done business which is like billions of people there's probably only like three or four or five hundred who are worth over a billion dollars below the age of forty and you're one of them i think according to forbes you're worth like two or three billion dollars surely there's been a moment where you're like this is pretty awesome have you had a moment like that from from from time to time it's it's nice to to reap some of the rewards of what's been built you know it's really nice to be able to take care of my family and take care of my family properly and yeah look i'm it's it's not lost on me that that like in six and half years we've been able to build something you know pretty massive millions of people build business or you know hundreds thousand people build businesses on whatnot making billions of dollars you know fourteen hundred people at whatnot a lot of people have been there for the entire journey yeah i you know it feels good but also i think we still have a lot that we wanna do and and again i i sort of you know you get a little i i don't wanna get complacent and so from time to time i'll have a you know i'll reflect for about five minutes and be like wow this is pretty insane but then you on mean my thirties still there's fourteen hundred people who came to work at whatnot that i have high accountability for raised a billion and half dollars from investors who we have high accountability for and so you know it doesn't do me any good patent myself on the back that doesn't get me to the next step same sam i'm gonna start saying that take care of my family take care my family properly i'll let you figure out what properly means i'm just gonna start using that i i i enjoyed that one that was good you said you get a good quote you said if you think you're moving fast you're probably not what what do you mean about that yeah almost everyone who says they're moving fast is moving slow if i'm being honest if you have to talk about it you're moving to you're moving too slow if you even have time to think about it you're moving too slow and frankly you can always move faster right thanks podcast is brought you buy my friends at mercury they make the world's best banking product i think you know this already i used mercury for all of my businesses i think i have like maybe seven or eight businesses we use mercury as our business banking across all of them and now they actually just launched a personal banking account so i have my personal account there i moved off of wells fargo and chase i'm just all in on mercury why i like products that are easy to use i like products that get me and the problems that i have so like it very easy to make a joint account with my wife very easy to spin up virtual cards one click and i get savings yield it just has all the stuff that i need in one place so if you're looking for the best banking product on the market it's definitely mercury i will fist fight anybody who dis disagrees me on that go to mercury dot com slash personal and learn more mercury is a fintech not an fdic insured bank banking services are provided through choice financial group and call them an a members fdic hey what's the weirdest trend of thing that's that people are buying and selling on whatnot that you know an average person wouldn't even wouldn't him realize there's the of craze going on or a a behavior that that you've seen on there yeah i mean probably the most popular thing this year other parents probably know about is like needles and squishy toys i don't know you guys have younger kids you know you brought some of the other ones that i think are really fun like just people selling crab and meat i think there's like people selling gold bars aren't there like miners selling bars yeah go bars of silver bars of gold like you know like from the mine like what's happening i mean you know huge ranch could be anywhere from like a coin shop to you know there are there are like mint that like mint coins and ourselves cutting out the middleman man and just selling direct on whatnot is that the kind of the idea yeah some some of them are do you think there's an opportunity like you know with twitch for example people built stream labs they built other like tools and and companies on top to service the ecosystem that you weren't that the platform wasn't gonna build what do you think is is kind of good tool or business that somebody could be doing on top of the the growth of whatnot yeah i mean i think so just stepping back like a macro level i think you're gonna see over the next decade that live commerce will be thirty plus percent of all commerce it means does just like an app so what enormous market what is it today i mean you take the top three biggest players in the market across like us and europe you're probably around thirty billion something something like that sorry but just to show the the you said it's gonna be thirty percent that means it's current it's currently a what like how much room do you think there is a single single digit percentages okay so it's gonna five x from here at least i think twenty thirty thirty x plus okay and the comp is sort of like what's happened in china and asia so in asia it's in china that's it's about forty percent of commerce and and if you looked at you know the growth of whatnot the engagement in the platform sort of look like it said that towards that direction and so you know that's that's a market in the hundreds and hundreds if not you know a a trillion dollars into the future if you go outside of china and so there's just gonna be a there will be a ton of opportunity so the biggest live shopping businesses are gonna like the peep people who are selling are gonna do a billion dollars plus in in revenue like our our biggest seller probably has a couple hundred million do you say your biggest seller is doing nine figures well well over yeah many multiple nine sellers selling them what collectible fat you know we have brands doing tens of million hundred million in fashion but are these like these is not individuals these are just like large companies or well just what's going on like i guess give us a hero story the bet it's probably like the the biggest are people who probably started as like individuals or maybe like two or three on whatnot and just took advantage and grew it so like the the operation the biggest operation that i can think of started initially as like three or four three or four people it's now probably a hundred and fifty two hundred people almost completely built on whatnot and they're just like really savvy business people who sort of jumped on the the live shop and train and build a really large business and so if you you know if you sort of imagine a future where there's by you know three four hundred billion dollars in sales in the us off of live there's gonna be an immense number of really large businesses built and like the biggest sellers in in china will do a billion dollars plus a year as as just like an example then there's there's a bunch of peripheral services around there so one of the things we're starting to see is like wholesale marketplaces directly supply supplying our sellers is a really big opportunity because they need a lot of inventory i've i've definitely seen a couple of wholesale marketplaces get pretty substantial fund raises and i know a huge chunk of that growth is off the back of whatnot as an example so i think there's there's a lot of opportunity around helping these people source really great supply and then you're sort starting to see what they call mc around this stuff so multi multitask networks which is a bunch of people who specialize in helping people run their their live shopping businesses so i think all three of those will will probably see a proliferation over the next decade this is nuts i you're just a killer i i didn't realize i knew what what not was i've i've used it i did not i guess i i i'd saw the numbers but it's kinda like now that i see what you're saying i'm like this is insane this is so much like originally when sean's first told me about this i had the reaction i imagine a lot of people did which is like this is silly this is small this this is nothing like a like a multi tens of billions in our company but this is insane and i understand why you have helped to lead it there sam you should start you should start start your denim shop on whatnot yeah i buy i buy a ton of i i'm my ebay power user i buy a ton of i i collect old denim it's very weird but i guess i gotta start using when whatnot that's that's a popular popular segment do you have any hobbies do you do you like any weird stuff now that you see all these other weird things that people buy and sell you any interesting hobbies nice i look like things but you know nothing like obscene i've sort of been collecting type one photos which are like original photographs that's probably the one thing i've been purchasing most recently and then other than that my hobbies are are pretty pretty tame i'm canadian so i still play hockey sean you had a good read on him man winter energy i told you winner great coming on man this is fun yeah but thank you guys for rob me as a really fun conversation you guys made it made it super fun well thank you we appreciate you that's it that's a pop i feel like i could rule world i know i could be what i want to put at all in it like a day's off on a road travel never looking back alright let's take a quick break i wanna tell you about marketing school it is a podcast that is part of the hubspot podcast network and it is run by neil patel and eric sue and these guys are both marketers who are running businesses and so if you want real world tactics from practitioners who are actually out there in the field doing it this is the podcast for you check it out wherever you get your podcast