Whatnot如何让线上购物重新变得有趣

If you look at e-commerce today, you have to know exactly what you’re looking for. Live commerce is over a third of all commerce in Asia. Is that right?

30% to 40% of all commerce is live commerce in China.

What is it in the US today?

Single digits, really. The experience is really broken. Transactions weren’t integrated well—shipping, payments, discovery, CX—and we just thought we could build a better one of those.

1. The Holographic Pokemon Card That Started It All

I want to start all the way back when you were a kid. Your first online sale was a holographic Pokémon card.

At that point in time, eBay was getting started, and I was like, “Wait, you can make money from Pokémon cards? I love Pokémon cards, and I can make money from doing it.” The first one sold for $10. That’s probably the true origin story of Whatnot.

Users spend 95 minutes a day on the platform.

Yeah, about 95 minutes.

It’s incredible.

Users don’t give a fuck about the market. They care about whether they’re going to enjoy the thing. It provides value, and that’s the experience that makes it fun and keeps you coming back.

What are the most exciting things that you’re building toward that you want to grow into over the coming 12 months?

I want to start all the way back when you were a kid. I understand that your first online sale was a holographic Pokémon card, and that the buyer mailed you a money order. You cashed it at the post office, and then you shipped the card. What age was this? This was a formative, young age.

I must have been in 3rd or 4th grade, I want to say. So, I don’t know—how old are you there? Seven, eight, nine, something like that.

Okay. There are all these stories of a founder finding their market early. Tell me about having that experience and making it a formative piece of starting Whatnot eventually.

Well, I think, like all kids back then, there was just a Pokémon craze. Pokémon cards became big. I’d get my dad to bring me to the shop to open my Pokémon cards. I had my binder with all my Charizards in it; I had everything.

Down the street from where I was living, there was a little lake and hangout area. My friends and I used to go there, and we’d trade Pokémon cards. I’d try to hustle people into giving me the better cards. At that point in time, eBay was getting started, and its biggest competitor was Yahoo Auctions. I don’t know how I found out about it, but I found out about it. I was like, “Wait, you can make money from Pokémon cards? I love Pokémon cards, and I can make money from doing it.”

So, I got my dad to help me set up an account, and I posted a bunch of my holographic cards online. The first one sold for $10, and it was the holographic Chansey card.

It was the Chansey card. The thing that always feels funny about that is that, at that point in time, the internet was so nascent. You weren’t doing payments online, which is just crazy.

Yeah, this was clunky. In the early days, there was no trust to do it. The infrastructure didn’t exist, but there was no trust either, obviously.

It’s also pretty wild that there was enough trust that someone would send you the money order in the mail and hope you would then send the card back.

I remember I got the money order and thought, “Okay, I can send the card now. Dad, can you bring me to the post office? I’m going to wrap it up and send it off.” That’s probably the true origin story of Whatnot.

Whatnot’s pretty funny in that almost all of my experience in life—the big bits, all of my core jobs—have come full circle in Whatnot. I had Pokémon cards, I worked at YouTube for a long time, so I did video, and then I worked at Facebook on marketplace stuff, so I did some of that. Whatnot is sort of the amalgamation of all those things.

2. How Grant & Logan Settled on Whatnot (Drunk in a Tokyo Bar)

Yeah, the perfect combination of all those trends. It’s awesome.

There are different stories about how you and Logan decided to start the company. How did you guys settle on doing this?

There’s Logan’s story, and there’s my story. Both of them are actually correct. I think Logan’s is just more nostalgic. Logan’s story is maybe slightly better.

His origin story starts in January 2019, I want to say. We took a trip to Tokyo over the holidays, around New Year’s, and we were drinking in a bar. We had both started businesses before, and after a couple of drinks, we started talking about what we could do one day. We started talking about building some kind of marketplace business. We bought 30 or 40 domains, and then the trip ended. We got back to the real world, and nothing happened for 6, 7, 8, 9 months, basically.

So, that’s all true. We talked about it and said we were going to do it, but there was this huge intervening period. That wasn’t the launch moment.

My story really was sometime around October 2019. I said, “Logan, remember we talked about doing those businesses and bought those 100 domains when we were drinking in a bar in Tokyo that we never used? Maybe now is the time.”

Logan was wrapping up his job, and I still had mine, but I needed to go back to building some stuff. We could see a bunch of our friends getting back into collecting. It was Funko Pops, comic books, and sports cards. I knew a little bit about that industry, and I’d always dabbled. After Pokémon cards, I got into sneakers for a while, and then I was doing some of the Funko stuff for a while.

I knew that market, and it just hadn’t changed in a really long time. Everyone like us was older. They were starting to have some disposable income, and they grew up on a mobile phone. I thought there was something around collectibles and social commerce. If someone was going to figure it out, maybe it could be us. Let’s see what we can do.

Yeah.

In December 2019, we both quit our jobs, went full-time, and launched our authenticated Funko Pop marketplace.

Was Whatnot one of the domains that you had bought?

No. That would have been—can you imagine? That would have been amazing. It would have been amazing, actually.

The origins of the Whatnot name are something everyone always asks about because Whatnot is a very memorable, good name. We’ve had it for a very long time.

One of the domains we bought—again, we were drunk in a bar in Tokyo, so it wasn’t as if our judgment was immensely good—was Always Legit. I’m not joking, because that was the first domain for Whatnot. The reason it was the first domain for Whatnot is that we were always obsessed with, “Let’s just make progress.”

Yes. Let’s just do a thing.

I was like, “We don’t even have a product. We don’t have anything. I don’t want to sit here and talk about a branding exercise for days.”

Just go.

Let’s just go.

Our first designer on Whatnot, a guy named John who I worked with at my prior startup, said, “I cannot be associated with a company called Always Legit. That is a horrific name.”

It was a horrific name—I named it—but I was like, “It doesn’t matter. We don’t have a product. Who cares what it’s called if you’ve got nothing?”

He made us get into a room and do a brainstorming exercise for about an hour. We got to a list of 10 names and said, “We’d be comfortable if we got any of these. Let’s go see if we can buy the domain.”

I got 3 names, John got 3, and Logan got 3 or 4. All of those domains would have cost more than $100,000, and we had raised no money. Logan got hold of the person who owned Whatnot, and the guy said, “I’ll sell it to you for a Bitcoin.”

I was an early Bitcoin investor, so I had Bitcoin.

This is amazing.

Bitcoin back then was worth $10,000, not what it’s worth now. Logan haggled him down to half a Bitcoin.

No way—for $5,000.

Yeah, for $5,000. I hope you guys held on to it.

I hope so, too. What a great price for that domain.

The platform service we were using was kind of funky because they hadn’t really used Bitcoin before. We sent the Bitcoin off, and then he sent the domain to us—but he sent us the wrong domain. He sent us Why Not instead of Whatnot.

We thought, “Not bad. That’s also a pretty good option and a pretty good name.” But we wanted to see if we could get Whatnot because we always had this idea that we were going to sell lots of different categories of items and collectibles, and Whatnot always felt a little better.

3. The State of the Market: Facebook Marketplace, China & QVC

Luckily, I think it took us 36 hours to get a hold of the guy. Thirty-six hours later, we were able to get Whatnot, and we were almost WhyNot for a period of time, which also would have been okay. [laughter]

That's great. That's an awesome story. I haven't heard that piece of it before. Okay, so at the time that you guys were getting started in the U.S., Facebook Marketplace was working, right, in the sense that there was a lot of activity? You could sort of see the network-effect behavior at that time—is that right? And then—

In China, this had actually started to happen, right?

The live-shopping trend had become a category. It was early. And then in the U.S. and the Western world, you had QVC. Talk about just the state of the market when you guys were actually starting and what you saw that made you have conviction that this was going to be a really good idea.

So I guess the state of the market when we started—it was December 2019, going into just before COVID. I'll preface it by saying we probably weren't very sophisticated on the state of the market. We had no idea about live shopping in Asia. We had heard of QVC.

Yeah.

My impression of QVC was, "No one wants to shop on QVC. It's granny's shopping on QVC, so no one my age wants to shop on QVC."

And look, there are a bunch of other big marketplaces around.

There was a bunch for our market initially, which was collectibles. There were a bunch of players who were doing it, but it felt like it was a little bit stagnant. The space hadn't changed in a while, so that was sort of the state of the market.

By the way, I would just say I think it's probably an asset, not a liability, that you guys didn't know much about the market. If you knew a lot about the market, you'd probably try to build what existed in the market, but iterate on it, as opposed to an entirely new thing.

Yeah. It was 1,000% an advantage. Yes.

Because, look, I think the punchline—and I can get into it—is users don't give a shit about the market.

Yeah.

They don't care about the market at all. They care about whether they're going to enjoy the thing and whether it provides value.

Yeah. And so there's this counterintuitive thing, which is that if you try and build a market, it oftentimes distracts from whether you're building a really great user experience. The consumer isn't going, "Oh, this is a live-shopping market, and I can transact all these things in this market." They're going, "Well, no. What are you going to provide for me? What's the value?"

There were a bunch of players trying to do that because they saw what was happening in Asia. It's a monster market—it's like a trillion-dollar-plus market today. We were like, "We don't know." We were building our Funko Pop marketplace and talking to our customers every single day, and then we saw our customers hacking social media in interesting ways. The way they were trying to hack it was by selling items in live video, but the experience was really broken.

Yeah.

Transactions weren't integrated well—shipping, payments, discovery, CX. We just thought we could build a better version of that, and it would solve the problems of the customers we had on the platform. Logan locked himself in his room for a few weeks, came out with the first version of the product, and I went live, sold out, sold a lot of items, and the rest is history from there.

4. Entertainment vs Intent: What Whatnot Actually Sells

That's incredible. Awesome. So, it's interesting to think about what you all provide. I think it's a super-insightful way to say customers don't give a shit about a market. They want a product that's compelling to them. What value do you provide to them? Shopping often starts with intent, so how much of the idea of this is entertainment versus intent, and how do you think about the distribution of the behavior of the buyers and what they're getting out of you?

Yeah, I think Whatnot is sort of analogous to visiting a store.

Yeah.

If I go to the mall or a set of retail shops, I'm sort of like, "I kind of know I want a thing, but I don't know exactly what that thing is." I'm going to walk into that shop. I'm going to browse around.

And so—

What have I bought recently? I bought some new shoes. I went to get some new sneakers. I was like, "Okay, I need some sneakers. I'm going to type in the website," and I spent 30 minutes browsing. I didn't know what I wanted; I came away on the other side. That's sort of the Whatnot journey.

Whereas if you look at a lot of the e-commerce companies that have been built in the past, prior to us, you sort of know exactly what you want. It's not really great for discovery. It's not really great for experiential shopping, or having fun, or being entertained. So I think that's sort of the analog with Whatnot. Maybe you know you want a thing, but you don't know what that exact thing is. You're going to come on Whatnot, you're going to look for it, and you're going to have some fun along the way.

Yeah, that's awesome. So there are all of those elements embedded in the product: watching, chatting, bidding, buying, returning. Are there pieces that I'm missing?

Do you mean just generally discovery?

Yeah, I think you've covered a lot.

I mean, one of the reasons why Whatnot has worked so well to date is that there's a lot of value because you can do so many different things. Sometimes you're going to look for a great deal. A lot of times, you're just going to have an experience and be entertained. On any given day, most people on Whatnot don't purchase anything. The vast majority of people don't purchase anything on Whatnot. They're just going, watching, and talking with people.

Yeah. And so that's why I continue—it's not a perfect analog, but I like the analogy of going to the shopping mall. You'd go to the shopping mall and hang out with your friends, at least when I was growing up. You'd walk around the mall and have some fun. Many times, I wouldn't purchase something; I'd just go there for an experience.

I am struck by—obviously, we're longtime investors with you, so this is not new news to us—but it is striking when I describe it to other people how big the market for this is and how big Whatnot actually is. You talked about Asia live commerce. I think the latest is it's over a third of all commerce in Asia. Is that right?

Yeah, I've heard anywhere from 30% to 40% of all commerce is live commerce in China.

Yeah, and then what is it in the U.S. today?

I mean, single digits.

Really? Single digits. Do you think there's any reason why you don't think that gap could close over time?

No, I think it's clearly going to close. It's just a richer way in which to sell and build a business, and it's just more efficient. If you're a fashion brand or store, you could go and set up a brick-and-mortar shop on—I don't know, pick a famous street—Fifth Avenue. That costs you millions of dollars in rent.

And you're restricted to a set of people who come to your shop from 9:00 to 5:00—

Whoever is in New York City. And that's a great experience. You can feel it, you can talk to people, and you can discover things. On Whatnot, you can set up for $0 and have an entirely global audience that is unbounded.

Yeah.

And so I think that value proposition means if you're a business selling consumer goods, I think you're eventually going to get into live commerce. I don't think you're going to be able to ignore it. I think you're going to be able to bring in lots of audience, and that's why you see that 30% or 40% number in China.

Yeah. So if you think about just marketplace dynamics and the network effect, the supply side is so compelling because it's effectively zero cost, and with a very compelling supply dynamic—lots of sellers—that drives demand, right?

Yeah, it makes total sense. The numbers are just staggering. You said it's about a trillion dollars in Asia. That's a huge number. I looked it up before this, so I think U.S. e-commerce is about a trillion too, if I have that roughly right.

One of the historical knocks I've heard people say about Whatnot is, "Well, Etsy is only so big, or eBay is only so big." I always find it funny when people mention that. eBay was actually, if you go back something like 10 years, about 15% of the overall market. It's $80 billion of volume still, by the way. Now it's less than 1% of the market.

So the big change that's happened is the market has actually just grown beyond it. I always say it's way too limiting to think about what your market is or what you can go get. eBay is sort of a proof point to me that there's at least an $80 billion market of long-tail commerce to go get online. But the real thing is, how much of the gap between $80 billion and $1.2 trillion do you capture because the experience is so much better? Would you agree or disagree with all that?

Yeah, look, I think—to tear it apart a little bit—people will peg us to eBay because we got started in collectibles, and that's where eBay got started. But actually, the live format is just very, very different.

Yes.

It means that a whole swath of different types of sellers can use the product.

Yes. Anywhere from, when eBay got started, a lot of it was smaller resellers. If you look at Whatnot today, it's fundamentally small business, and then we're getting into brands. A lot of those brands and small businesses would typically not be on eBay.

Yeah. They would never—it wouldn't make sense. Maybe they have a brick-and-mortar shop, or they have a Shopify store, or a bunch of things like that. So I think the seller base is inherently much more diverse. And then the thing with live is it's demand-expansionary because you go in and discover new things you didn't know that you would be interested in.

Yes.

And so, if you look at e-commerce today, you have to know exactly what you're looking for. All it's really done is take a bunch of offline sales and bring them online in a more efficient way. But you still have to know exactly what you want. And as live commerce—

proliferates, it's just going to expand that market. So not only could it be 30 or 40% of that market, that market is going to get a lot bigger.

Yeah. It's more akin not so much to e-commerce, but to the inception of department stores or shopping malls. Yes.

Right, which actually expanded the demand characteristics of the market.

Yeah. Exactly. That makes total sense. So the other thing that's so striking about the demand side—and then I want to talk about the supply side in great detail, because I think that's one of the most exciting things about the platform—is on the demand side, I understand users spend 95 minutes a day on the platform. Is that right?

Yeah, about 95 minutes.

It's incredible. That's a shocking number and puts you on par with social platforms, like entertainment platforms.

Yeah. And it's because it's fun. If you were to simplify Whatnot down, the buyer value proposition is that it's a fun experience to shop, and there aren't a whole lot of fun experiences shopping online. Historically, you'd go to a shopping mall, but the dynamics there are all changing, so it's not even as fun to do that anymore.

As I said earlier, most people aren't even purchasing. They're actually just going to have a good time and experience it. More than 80% of people don't purchase on a given day. They're just there watching and having fun.

5. The Supply Side: Turning Sellers Into Real Businesses

It's amazing. It's an incredible blending of entertainment plus fulfilling the shopping need, with new discovery and more than 80% of people not actually even transacting. It's clearly a form of entertainment. I actually spend a lot of time on there entertaining myself. I transact, too, but I get it. That makes sense.

So that's the origin story—the layout of the market at a high level. I want to go into categories and things like that, but I'd love to talk about the supply side, the sellers on the platform. Talk about the scale that you have of sellers.

This is one of the underrated things. By being a marketplace, you enable all this new business creation, or business growth of existing businesses, that otherwise would not exist. So I'd love to explore that a little bit.

I think one of the most fun things about Whatnot is that it's fundamentally empowering small business. If you look at a lot of what's happened in e-commerce over the past 20 or 30 years, it got so efficient, and one of the ways to make it so efficient is to obscure who you're buying from and obscure the ability for people to build brands and businesses around it.

Whatnot is sort of the polar opposite. If you're on Whatnot, you're going to have your store, you're going to have your brand, and you're going to have your customers. They're going to come back to you. I think that's one of the best bits of the platform: we're generating billions and billions and billions of dollars for small businesses.

These are anywhere from 1- and 2-person operations all the way up to maybe a couple hundred folks at the high end.

That's amazing. I think you've compared it in the past to a local shop owner or a local pub owner. If you think about what Whatnot allows that person to do compared to, say, Amazon, which is highly utilitarian, highly gamified, and has competition among first-party, third-party, and international sellers, it's just an entirely different experience on the sell side. That will allow someone who's creative and ambitious to thrive, maybe in a way that they wouldn't otherwise on those platforms. Is that fair?

Yeah, I think it just empowers small business in a way where maybe the prior trend was to almost disempower small business and obscure them away.

Yeah. That's well said. That's well said. You have really interesting insight into all of these different types of entrepreneurs, right? I'd love to maybe start with just the original categories: collectibles and cards. What are you seeing about the behavior in that market?

I think we're seeing a continuation of the trends that we saw when we first started the business, which was one of the reasons we came back into collectibles. We saw a bunch of people getting back into the market. It was people like us who had maybe some money and were buying things that were nostalgic from childhood and getting back into unique things that they loved. That trend has basically continued unabated for the past 6.5 years.

Collectibles is largely going mainstream now, for lack of a better term. You have mainstream celebrities in it. You have athletes in it. A lot of people think of collectibles as a niche thing, but it's actually becoming a core part of pop culture. Over the past 6 years, we've just seen that evolution continue to grow and grow and grow and grow.

In fact, a lot of the new art that people are collecting is now trading cards that are going for millions of dollars. Maybe your parents, if they were doing high-end art—or you were lucky enough to have parents who could do that—were buying famous artists. Now people are buying the one-of-one LeBron James refractor or something like that.

Yeah. It's super cool. Obviously, there's an entertainment element of that as well. I've been struck by the scale of some of the businesses that are on Whatnot. Obviously, you're empowering, I think, millions of small businesses, but if done right, a business owner can actually build something north of $100 million in revenue and highly profitable, all on the back of Whatnot.

Yeah. The biggest businesses on Whatnot are probably doing upwards of $100 million in revenue, with very strong EBITDA margins—20%, 30%, 40%-plus.

What we try and do—if you looked at Whatnot last year, we did over $8 billion in sales, and so far this year we've done over $8 billion in sales. We take a small fraction of that, and we're not raising fees or doing any of that. It's really important that the businesses take the majority of that, and then our business grows with all those businesses.

We just spend all of our time trying to help build great businesses and make sure that people who are transacting with those businesses have a great experience.

Yeah. It's awesome. It's one of the great and probably lesser-known, less-covered stories of small-business empowerment in the U.S., and increasingly now in Europe, which we can talk about, but it's super exciting.

I want to shift gears now. That's obviously a little bit on the supply side. Talk about some of the categories that you're working on. Obviously, you started with collectibles and cards, and now you've had a lot of success in fashion, which is one of the biggest categories in commerce, and there are many others. So just talk about the category expansion and evolution over time.

Yeah. If you look at Whatnot today, we're selling things in 100-plus categories. We're always investing in new areas to help people grow their business. Some of the fun ones today are fresh food and drink, where you can buy fresh fish sourced from the dock in San Diego, or—

By the way, Ben and I started buying it after dinner.

Yeah. All that. It's awesome. Another one of my favorites: there's a barbecue restaurant where you can get amazing barbecue, and I have a bunch of it sitting in my freezer.

It's early days in fresh food for us, but I'm excited to buy it because I think the food supply chain is so opaque in the U.S., and it's really nice to know where your food comes from and be able to get the story around it.

Flipping gears, for whatever reason, all my friends golf now. I'm at that age in my life.

Because you're getting old. Yeah.

Yeah. My hip's bad, so I can't do any other real sports. And so golf on Whatnot is having a huge surge. That's growing hundreds of percent year over year.

We have all these golf shops selling. That's another fun category that I've been buying in, and the team's been investing in. There are so many beyond that, even.

Yeah. It's sort of like anything that's highly considered, right, should be a fit for Whatnot—where there's an explanation, a personality that goes along with it, and a story behind it.

I think anything that someone would build a retail shop around would work on Whatnot.

Anything—anything that would be in the shopping mall. Yeah.

Just literally anything, because if you were going to go visit a store, you can do it from your couch on your phone.

Yeah. That's awesome. What about clothing and apparel in particular?

Women's fashion is now our biggest category.

Wow.

There's a huge range of stuff in there. I'd say the dominant segment actually looks almost like TJ Maxx, which is old-season inventory at really good pricing, so you can get some amazing deals on great brands. It's the same with sneakers on Whatnot. I forget the name, but when I was growing up, there'd be those discount shoe stores where you could get Nikes for $40 or something. There's a lot of that, and it's just a great deal.

I shopped at a lot of those.

Yeah. There's nothing that beats a good deal when you're shopping.

DSW.

6. Expanding Into Europe & the Seafood Distributor Story

Yeah, DSW. That's the one. It's like TJ Maxx for shoes. There's a ton of that popping up on the fashion and apparel side, and live is really great for helping you move a lot of volume. When you can move that much volume, you're willing to take the discounts, and it gives customers a really good price.

Yeah, 100%. The other part of expansion is, obviously, you've had a tremendous amount of success in the US. Talk about the expansion into Europe and what's worked, what's not, and what the learnings have been.

Yeah. Today, I think we're in about 10 countries: the US and Canada in North America, 5 countries in Europe, and now Japan and Australia. We have a good chunk of the globe covered.

The most interesting thing that I think would be counterintuitive to folks is that we've just seen it work in the same way across all of those countries. All the small businesses that we've helped create in the US, we've been able to help create there, too, in collectibles, fashion, electronics, and a lot of other categories. The dynamics are incredibly similar. We're incredibly bullish that live is an incredibly durable medium in which to shop.

One of my favorite stories is the recent one that you told us about the seafood distributor who messaged you on LinkedIn. First of all, what an inbound. Then you went live the following week, and he sold between $3,000 and $4,000 of fish during the pilot phase. What happened that caused that, and how did it even come about?

Again, I think the punchline there is that live is just a really good medium to discover things. His story is that he's been in the fish business for a while and deeply knows what he's selling. He's going to bring you the freshest fish from San Diego at that time of year, and he's rotating the inventory when it's seasonal.

He's incredibly knowledgeable. You watch a show and see this type of fish you've never heard of, and he talks about how it's sustainable, that it just got off the pier that day, and that here's the fisherman who caught it. That's just a great experience. We can take him and push him to Whatnot, which now has a large buyer base, and it's pretty easy to generate thousands of dollars an hour in sales with that experience.

Yeah. Imagine him trying to sell over the internet at large. He can access his local market, but there's probably no way for him to really access a nationwide market for something like this.

I think it's really hard buying food on the internet, like fresh fish. It's one of those things where you're like, “Wow, fresh fish on the internet. How do I know if it's good? I could get sick from it.”

And so video just really enhances the trust.

Yeah, yeah, yeah. There's a real identity of the person on the other end. You can ask questions, and you can know how he's going to pack it.

And if you're on a static website, you're thinking, “Well, I hope it's good.”

Yeah, that's true. That is very true.

7. Operating at Scale: Staying on Top of What Breaks

Okay, so if you think about the platform and the scale that you guys are running, it's just massive, massive scale. One of the things I've used to describe you and Logan is relentlessness. You guys are relentless in execution. What are some of the things that you encounter with that amount of scale that you constantly have to be on top of?

I think this is one of the big, underrated things that allowed you to win in the early days: You guys were constantly on top of anything that could break. I'd love to understand some of those big things.

Yeah, I mean, it's challenging. There are so many dimensions to trust. There's whether the platform is reliable and working, and whether it's stable and fast. We measure just everything.

The punchline on trust is: measure everything. We invest a lot in it. Trust and safety, in particular, is about 40% of employees.

It's a huge investment from us because it's a challenging problem. You don't want to put your credit card in a place you don't trust. You certainly don't want to buy fresh fish from a place you don't trust, right?

A lot of measurement, a lot of user feedback, and then a big investment in people to get the thing done is what drives it. The problems are pretty diverse, and you have to make sure you're building the right set of things for them.

As an example, we have a system in the background called our rules engine. It takes in billions of data points in under 1 second to detect any range of bad behavior on the platform. If you harass someone in a live stream, the LLM will detect it. It will get plugged into our action rules engine, which will look at the history of the seller and, based on other signals, programmatically take them down, suspend them, ban them, or warn them.

If you're not shipping on time, the rules engine will do the same thing. If you have a high refund rate, the rules engine will do the same thing. These are ever-changing problems and issues. The weighting of scoring and things like that will always change, so you constantly have to be on top of these things.

Yeah. I mean, think about just how many concurrent users you have and how many transactions you process per day.

Yeah. The analogy I like for trust and safety is that tens of millions of people use Whatnot every day. The trust and safety team is basically the police force and the legal system of Whatnot. You've got to write your policies, and you've got to have people who enforce your policies.

In a city that has 10 or 20 million people, you're looking at a city the size of Tokyo. Maybe a better analogy would be a couple of New York cities.

Yeah, 2 New York cities.

2 New York cities. In New York, it's not perfectly run, so there are going to be some bad things that happen and people get arrested. But at our scale, because of some of the systems we build, there are actually far fewer problems.

And then, of course, if Whatnot is a business for a small business, everything's on video. If you're a small business, you want to build a great business.

Any good business knows you've got to have repeat customers. You've got to invest in the customer experience.

Then you're on live video. There's not much you're going to get away with on live video. Things happen, but you put 40% of the company into law enforcement, effectively—the trust and safety team. It still means it's challenging, because if you're running the police and legal system of New York City, that's a challenging and hard job that you always have to be on top of, looking for new areas to invest in and improve.

Yeah, absolutely. This makes total sense. It's actually a good segue into the topic of AI because, obviously, you're using cutting-edge AI to do a lot of the trust and safety work. Taking a step back with AI, though—front-facing in the product side, not the back end—you have an inherently human platform where buyers and sellers are engaging as humans.

What are the learnings about how to employ AI most effectively while also preserving that human connection?

Yeah, I think the good thing is some of the platforms are self-reinforcing. If someone goes over the top on building an AI avatar, people aren’t going to come back to them, right? It’s not a business because the core of Whatnot is: you visit a shop, you know the shop owner, and then you know the people who frequent that shop.

And that’s the experience that makes it fun and keeps you coming back.

And so anyone who’s good is not trying to rip out the human experience. Anyone who’s good is going to try and enhance that. And so then where AI comes in is: how do you help someone keep it human but run their business more efficiently?

Yeah.

So whether that’s listing items, we can make that much better. When you’re setting up a livestream for the discovery systems, oftentimes you need to add a lot of metadata. Well, we can infer all that metadata with LLMs. We’re investing in it from an analytics perspective, so we’ll tell you where your business is doing well, where it’s not doing well, and where you can improve it. And so, honestly, in a fairly succinct way, what we generally do is look at where we’re deploying AI and where it’s being efficient for us, and then try and expose it to the sellers.

Yeah, that makes total sense. If I hear you right, that doesn’t involve giving sellers avatar tools or something like that to try to build scale?

No. I mean, look, at the end of the day, we’ll put energy into what’s going to be good for the buyer and good for the seller. But today, we don’t see a need for avatars because that’s not why people come to Whatnot.

8. What's Next: Cars, More Countries & Better Businesses

Yeah, they come for the human connection. Yeah, totally agree. That makes a ton of sense. We’ve covered a ton of ground. We’ve talked about the platform today, the origin story, the supply side, and the demand side. Whatnot is definitively one of the most interesting and unique companies that we’ve invested in, and I’ve been very fortunate to be part of your journey. In closing, I would love to hear what’s next—what are the most exciting things that you’re building toward, that you want to grow into over the coming 12 months?

Yeah, I mean, in some ways it’s relatively simple: there’s just an incredible amount of work to do to help more and more businesses grow on Whatnot. And so over the next 12 months, 24 months, and 36 months, a lot of it is just making sure sellers can run better businesses on Whatnot, giving them the tools to run better businesses, and opening up and making the experience better for more categories on Whatnot. One of the ones that I’ve been dying to do is cars on Whatnot, because you should be able to buy a car on Whatnot. How cool would it be to be able to see the full experience and get the video behind it?

Oh, this is an awesome idea.

Yeah, it’s going to be amazing. It might not be good for my bank account, and I’m obviously obligated to try it out. You’ve got to dog-food it. And so I think there’s a huge amount of investment in continuing to help people build better businesses. Then, in order to do that, we have to have a really great buyer experience.

Yes.

Because in order to build a good business, people have to come back. And so we’re going to continue to make sure we’re investing in customer support, trust and safety, bringing down shipping prices, and improving the selection and quality of the products on the platform. And that’s really it. Now, maybe we’ll launch in some more countries. We’ll do some cool stuff like cars. Eventually, we’d like to get into liquor, beer, and wine. So there’s a whole litany of things that we’re excited to do, but fundamentally it boils down to helping more people build businesses and making sure that the people transacting those businesses are having a great experience.

That’s an awesome way to close. Your maniacal, relentless focus on the seller experience obviously drives the buyers, and then making the buyer experience as affordable and as good as possible is clearly working. So thanks for the time, Grant. So fun to be with you.