- Grant Lafontaine, the co-founder and CEO of Whatnot, discusses the first 5 launches of his company, a live stream shopping platform and marketplace.
- The first launch was a website for buying authenticated Funko Pops, with fake listings that were later purchased and authenticated by Grant.
- Funko Pops were chosen as the initial product due to the large collectibles market and lack of alternatives.
- The second launch was a mobile app with a feature called "the drop" that used raffle tickets to drive user engagement and acquisition.
- Building trust with customers was a challenge, so Funko Pop influencers were brought in to vouch for the platform's safety and trustworthiness.
- The fourth and fifth inflection points involved building a strong buyer base and then focusing on building the sell side of the marketplace.
- A cross-listing tool was created to list inventory on both Whatnot and eBay, leading to increased sales for sellers.
- Early sellers on Whatnot were attracted by the positive buying experience and the platform's reputation on eBay.

- Whatnot was a seller on eBay and helped newer sellers grow their sales by leveraging the trust built around the community on eBay.
- The fifth inflection point for Whatnot was when they built and launched their live shopping feature in June 2020.
- They believed in the potential of social commerce and wanted to create a more fun experience for collectors and enthusiasts.
- They approached Logan to build the live shopping product, which he did in about 6 weeks.
- When they tested the product, they sold out of $5,000 worth of Funko Pops within 2.5 hours.
- This marked a significant growth point for the business, with growth shooting up from 20% to 120%.
- The success of the live shopping feature confirmed the power of this new format in the collectibles category.

Today Whatnot (W20) is a lively platform where collectors can buy, sell, go live, and geek out with other like-minded people across a wide variety of product categories. But, like every startup, the founders of Whatnot began with only an idea. YC’s Anu Hariharan sat down with the co-founder and CEO of Whatnot Grant LaFontaine to discuss their first five launches. 

Chapters (Powered by https://bit.ly/chapterme-yc) - 
00:00 - First Five Launches
00:40 - Buyer Hacks
04:26 - Creative Marketing
06:17 - Working with Influencers
07:19 - Easy Selling Tools
10:26 - New Content Formats
12:57 - Outro

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#startups #business #launch

Welcome to the first 5, where growth stage companies funded by Y Combinator look back on their first 5 launches.

I'm a managing director at Y Combinator and work with our growth stage companies.

I'm here with Grant Lafontaine, the co-founder and CEO of Whatnot, a live stream shopping platform and marketplace.

Whatnot was part of Y Combinator's Winter 2020 cohort.

Grant, can you tell us about that first launch?

What was the first launch of the product?

The first launch at Whatnot was a website where you could buy tens of thousands of authenticated Funko Pops.

And at Whatnot, in the early days, we were trying to build a marketplace for Funko Pops as our wedge into the market.

And you need both buyers and you need both sellers to do that.

Well, you can't get buyers if you don't have sellers, you can't get sellers if you don't have buyers.

And so what was on the website was tens of thousands of Funko Pop listings that we actually didn't have.

And when people would buy them, we would go and purchase them off eBay and I would authenticate them myself and then send them off to customers.

And so that was our first thing that we put out in the world was just a website for buying authenticated Funko Pops with many, many fake listings.

I want to unpack so many things there because this is such a hard cold start problem for consumer companies, right?

And how did you, you said you used a pricing algorithm or some kind of pricing tactic to show tens of thousands of listings.

So the, the early thesis of whatnot was that, there was a new generation of collectors entering the market.

And there was an opportunity to build a really great marketplace experience for them.

And we wanted to like, make the problem of building a good product much smaller in the early days, because we had so few people to do it.

And so we needed to pick a collectibles category.

We ended up choosing Funko Pops because it's a surprisingly large collectibles market.

At the point in time when we launched Whatnot, there were more Funko Pops being sold on eBay than comic books.

And as the collectible has really probably taken off in the past decade or so, there were fewer really good alternatives in which to buy from.

And so we felt like, given that it was reasonable in size, so think comic books size or bigger, and that there were no really great alternative places, we could build something great around that that people would come to.

And in retrospect, we obviously were able to do that, but It was very unclear in the early days.

And so it was just like a hypothesis that we were trying to prove or disprove.

So tell us a little bit about the launch, because it's, you know, when you talk to a founder in the badge, it's daunting.

It's like, okay, I pushed it through the app store.

How do you know how customers discover you?

Yeah, I mean, our first launch was we built the website and we turned it live and then we threw out Facebook ads.

And then we got like no sales for a really long time.

And so then we had to spend all of our time figuring that out.

Now that we have some customers, do they actually like it?

And so we started, we pushed it out through on Facebook ads.

The customer acquisition costs were astronomically large and so then we set out to like find different channels and like figure out what was wrong with our product.

Like you do from launch to like, from basically idea to launch, right?

Yeah, probably was 6 weeks to like get v0 out, I would say.

And then what was your second launch moment?

The second launch was us building our mobile app.

And so after getting some data on our site, we had kind of 2 hypotheses.

1 was that like a website just wasn't engaging enough to get people to return back to it.

And then the second was we needed to figure out another growth channel, because paid ads on Facebook was not gonna work.

And so It was in, we still kept the website live, like half of the mobile app was just a web view of our website so we could build it fast.

And then we built in this feature that we called the drop, which was a, was basically a raffle and you would, you would get raffle tickets for sharing referral codes and content assets that would draw people back to whatnot.

And so we would give away like a $500 Funko grail.

And then you get, every time we shared it, you'd get an entry.

And so we, you know, what we're trying to do is get people talking and use and kind of hack word of mouth in order to drive efficient acquisition.

So literally pretty much within 2 to 3 weeks of your first launch, you did your second launch, which is mobile, and you also introduced this.

We launched the app and then we had the drop feature in it.

And the first drop that we had, we had 100 people enter and share it out.

And then the second 1, we had 200 people.

And so we slowly started to build momentum in terms of users on our app.

So you saw that the drop feature and the raffle tickets was really taking off and more and more people were coming.

Clearly you had more feedback loop from your second launch.

So what is the third launch moment for Whatnot?

So I don't know, this isn't really a launch moment, but I'll give you like another inflection point in the business.

So we started having all of these people come to the app, but they were mainly using the Raffle system and they weren't purchasing that.

And so from talking with people, we had this hypothesis that people didn't trust us.

Like there's this new app that's seemingly giving away things you don't give away.

And so I spent a lot of time trying to convince Funko Pop influencers to work with us because people trust them in the community.

And sometime around the third or fourth week of December, I was able to get a Funko Pop influencer to work with us and start doing YouTube videos talking about the experience of whatnot and how it was safe and trusted and all of those sorts of things.

So now we had built like audience and we had built some trust.

And is that a fourth and fifth inflection point that you want to share in the first year of the company's journey?

At that point we started to build a pretty strong buyer base but we were trying to build a marketplace that we didn't have any real sellers except for us kind of managing all the inventory and pulling it off of eBay.

And so we're like, okay, we have buyers now we can start to actually have real sellers and get away from this like priced inventory.

And so we started building the sell side.

I think the interesting thing there is as we built the sell side, we were still worried that people would sell, would not love selling on what not enough because there wouldn't be enough sell through.

We had some buyers, but it wasn't high enough.

And so we were trying to think about, all right, how do we deliver even more sales for sellers?

And what we were able to do was we were able to build a cross-listing tool such that every seller on what not would have all of their inventory cross listed to our eBay account.

And this ended up being 1 of the big inflection points for the business because for almost every seller of Funko Pops, because we had our audience and eBay's audience, you delivered more sales by listing through what not.

How did you convince those first few sellers for the inflection point and How did they see this as like, you know, the audience, I mean, I would have thought there was a huge overlap in audience between Whatnot and eBay, but it doesn't sound like that is, and they saw it as, you know, 2 different sets of groups and they can get both.

So can you touch a little more on that, unpack that for the group here?

What ends up happening, what ended up happening was we built this buyer base and most people in collectibles are both buyers and sellers.

And so we started to get a like a group of people who really liked the experience we built on whatnot and we're buying from them And they ended up being our first set of sellers.

And so they were selling not necessarily because they were convinced they were gonna get a great number of sales when they were selling, because like, oh, this is a new product.

I like buying from them, so let me try selling from them.

And then the other thing that happened was we had an eBay account with like a lot of ratings and a very high, high stars.

And so if you hadn't built like a reputation on eBay, that takes a long time.

And so some of our early sellers were just folks who had sold on eBay and were able to leverage our reputation to deliver sales.

And so that's how we were for a large chunk of people were able to deliver greater self-worth.

So basically, Whatnot was 1 of the sellers on eBay and the newer sellers could also leverage that.

And you sort of helped them grow their sales by leveraging what not strength in the trust that you had built around the community on eBay.

I always say it takes certain level of scrappiness to find the different inflection points like that's very unique and probably 1 of the first of its kind I've heard in marketplace.

The fifth inflection point was when we built and launched our live shopping feature.

So we started working on it in June of 2020.

And at this point, we had built what I would consider the best Funko Pop marketplace in the world.

We had all this liquidity for sellers, we had a really solid buyer experience, but we didn't feel like the business, well, it was twofold.

We didn't feel like the business was transformational.

It just, it was growing at a nice clip, but not an amazing clip.

And the second was it was, you know, during COVID when everyone was locked up.

And so we always had this hypothesis on social commerce and how we could build a way more fun experience for collectors and enthusiasts.

And so we just thought we could build a really interesting product around live.

We were part of the collectibles community and we could see people using live video in really interesting ways on Instagram and Twitch and YouTube.

And we thought we could just build a really great integrated product that just fit really nicely as a seller tool on our marketplace.

And so when I go and I talk with Logan, like, do you think you can figure out how to build some live video products?

And you know, It was a conversation for about a week and then I got him excited and then he was like, yeah, I think I can figure out how to do it.

And he locked himself in his room for about 6 weeks and came out with our live shopping product.

I think the night he finished it, we were like, all right, we're going to test it.

Again, like we don't, there's like for us at whatnot, there is no, there is no launch launch doesn't exist.

It's like when the product is ready, you just put it, you put it in consumer.

And there's nothing gets in the way of shipping anything.

And so I went live because Logan was too nervous because he wasn't sure if it would actually work.

So actually what we needed, like Logan sat next to me because he had to enter products in via the command line because we had to build like adding products in the UI or anything like that.

And within 2 and a half hours, I sold out of $5,000 worth of Funko Pops, which is like more than almost anyone would sell in an entire year on eBay.

The next morning we go into the team meeting, we're all in online And that's it.

And that month, you know, growth shot up from say, like 20 months, 20% a month prior to 120%.

And that was the real killer inflection point of the business.

That's such a fascinating story, because it shows that you had an instinct about live commerce.

You went live, and you were able to sell more than anything that was sold in the last few weeks.

And that gave you conviction that this new format in the collectibles category was actually really powerful.

If you want to work for Whatnot, visit whatnot.com slash careers.

If you're looking to be 1 of the first employees at a startup like Whatnot, check out Y Combinator's job board at workatastartup.com.


Speaker 0: Welcome to the first 5, where growth stage companies funded by Y Combinator look back on their first 5 launches. Hi everyone, My name is Anu Hariharan. I'm a managing director at Y Combinator and work with our growth stage companies. I'm here with Grant Lafontaine, the co-founder and CEO of Whatnot, a live stream shopping platform and marketplace. Whatnot was part of Y Combinator's Winter 2020 cohort.

Welcome Grant.

Speaker 1: Thanks for having me.

Speaker 0: Grant, can you tell us about that first launch? What was the first launch of the product? What did it look like? And how did you go about doing it?

Speaker 1: The first launch at Whatnot was a website where you could buy tens of thousands of authenticated Funko Pops. And at Whatnot, in the early days, we were trying to build a marketplace for Funko Pops as our wedge into the market. And you need both buyers and you need both sellers to do that. Well, you can't get buyers if you don't have sellers, you can't get sellers if you don't have buyers. And so what was on the website was tens of thousands of Funko Pop listings that we actually didn't have.

We put together like a pricing formula. And when people would buy them, we would go and purchase them off eBay and I would authenticate them myself and then send them off to customers. And so that was our first thing that we put out in the world was just a website for buying authenticated Funko Pops with many, many fake listings.

Speaker 0: I want to unpack so many things there because this is such a hard cold start problem for consumer companies, right? It's incredibly hard. So why did you pick Funko Pops? And how did you, you said you used a pricing algorithm or some kind of pricing tactic to show tens of thousands of listings. Can you unpack that for us?

Like what is, what was it exactly?

Speaker 1: Yeah. So the, the early thesis of whatnot was that, there was a new generation of collectors entering the market. And there was an opportunity to build a really great marketplace experience for them. And we wanted to like, make the problem of building a good product much smaller in the early days, because we had so few people to do it. And so we needed to pick a collectibles category.

We ended up choosing Funko Pops because it's a surprisingly large collectibles market. At the point in time when we launched Whatnot, there were more Funko Pops being sold on eBay than comic books. And as the collectible has really probably taken off in the past decade or so, there were fewer really good alternatives in which to buy from. And so we felt like, given that it was reasonable in size, so think comic books size or bigger, and that there were no really great alternative places, we could build something great around that that people would come to. And in retrospect, we obviously were able to do that, but It was very unclear in the early days.

And so it was just like a hypothesis that we were trying to prove or disprove.

Speaker 0: So tell us a little bit about the launch, because it's, you know, when you talk to a founder in the badge, it's daunting. It's like, okay, I pushed it through the app store. Is that it? Is this a website? Is this an app?

How do you know how customers discover you? Like, what was it like? What was your first launch?

Speaker 1: Yeah, I mean, our first launch was we built the website and we turned it live and then we threw out Facebook ads. And like that, that was, that was it. And then we got like no sales for a really long time. And so then we had to spend all of our time figuring that out. Like how do we get customers?

Okay. Now that we have some customers, do they actually like it? What's wrong? And how do we go from there? And so we started, we pushed it out through on Facebook ads.

The customer acquisition costs were astronomically large and so then we set out to like find different channels and like figure out what was wrong with our product.

Speaker 0: So very quick iteration, right? Like you do from launch to like, from basically idea to launch, right? You moved very fast.

Speaker 1: Yeah, probably was 6 weeks to like get v0 out, I would say.

Speaker 0: That's amazing. That's really good pace. And that's how you get feedback. Okay, talk about the second launch. So you shut it down, you shut Facebook.

And then what was your second launch moment?

Speaker 1: Yes. The second launch was us building our mobile app. And so after getting some data on our site, we had kind of 2 hypotheses. 1 was that like a website just wasn't engaging enough to get people to return back to it. And then the second was we needed to figure out another growth channel, because paid ads on Facebook was not gonna work.

And so we built a mobile app. And so It was in, we still kept the website live, like half of the mobile app was just a web view of our website so we could build it fast. And then we built in this feature that we called the drop, which was a, was basically a raffle and you would, you would get raffle tickets for sharing referral codes and content assets that would draw people back to whatnot. And so we would give away like a $500 Funko grail. And then you get, every time we shared it, you'd get an entry.

And so we, you know, what we're trying to do is get people talking and use and kind of hack word of mouth in order to drive efficient acquisition.

Speaker 0: So literally pretty much within 2 to 3 weeks of your first launch, you did your second launch, which is mobile, and you also introduced this. So what happened?

Speaker 1: We launched the app and then we had the drop feature in it. And the first drop that we had, we had 100 people enter and share it out. And then we would run them weekly. And then the second 1, we had 200 people. And the third 1, we had like 400 people.

And so we slowly started to build momentum in terms of users on our app.

Speaker 0: So you saw that the drop feature and the raffle tickets was really taking off and more and more people were coming. Clearly you had more feedback loop from your second launch. So what is the third launch moment for Whatnot?

Speaker 1: So I don't know, this isn't really a launch moment, but I'll give you like another inflection point in the business. So we started having all of these people come to the app, but they were mainly using the Raffle system and they weren't purchasing that. And so from talking with people, we had this hypothesis that people didn't trust us. Like there's this new app that's seemingly giving away things you don't give away. Is this a scam?

And so I spent a lot of time trying to convince Funko Pop influencers to work with us because people trust them in the community. And sometime around the third or fourth week of December, I was able to get a Funko Pop influencer to work with us and start doing YouTube videos talking about the experience of whatnot and how it was safe and trusted and all of those sorts of things. And that was another inflection point. So now we had built like audience and we had built some trust. And then things started to grow.

Speaker 0: And is that a fourth and fifth inflection point that you want to share in the first year of the company's journey?

Speaker 1: At that point we started to build a pretty strong buyer base but we were trying to build a marketplace that we didn't have any real sellers except for us kind of managing all the inventory and pulling it off of eBay. And so then we started to build selling. And so we're like, okay, we have buyers now we can start to actually have real sellers and get away from this like priced inventory. And so we started building the sell side. I think the interesting thing there is as we built the sell side, we were still worried that people would sell, would not love selling on what not enough because there wouldn't be enough sell through.

We had some buyers, but it wasn't high enough. And so we were trying to think about, all right, how do we deliver even more sales for sellers? And what we were able to do was we were able to build a cross-listing tool such that every seller on what not would have all of their inventory cross listed to our eBay account. And this ended up being 1 of the big inflection points for the business because for almost every seller of Funko Pops, because we had our audience and eBay's audience, you delivered more sales by listing through what not.

Speaker 0: How did you convince those first few sellers for the inflection point and How did they see this as like, you know, the audience, I mean, I would have thought there was a huge overlap in audience between Whatnot and eBay, but it doesn't sound like that is, and they saw it as, you know, 2 different sets of groups and they can get both. So can you touch a little more on that, unpack that for the group here?

Speaker 1: What ends up happening, what ended up happening was we built this buyer base and most people in collectibles are both buyers and sellers. And so we started to get a like a group of people who really liked the experience we built on whatnot and we're buying from them And they ended up being our first set of sellers. And so they were selling not necessarily because they were convinced they were gonna get a great number of sales when they were selling, because like, oh, this is a new product. I like buying from them, so let me try selling from them. And then the other thing that happened was we had an eBay account with like a lot of ratings and a very high, high stars.

And so if you hadn't built like a reputation on eBay, that takes a long time. And so some of our early sellers were just folks who had sold on eBay and were able to leverage our reputation to deliver sales. And so that's how we were for a large chunk of people were able to deliver greater self-worth.

Speaker 0: Oh, that's amazing. So basically, Whatnot was 1 of the sellers on eBay and the newer sellers could also leverage that. And you sort of helped them grow their sales by leveraging what not strength in the trust that you had built around the community on eBay. I always say it takes certain level of scrappiness to find the different inflection points like that's very unique and probably 1 of the first of its kind I've heard in marketplace. So that was your fourth.

What was your fifth inflection point?

Speaker 1: The fifth inflection point was when we built and launched our live shopping feature. So we started working on it in June of 2020. And at this point, we had built what I would consider the best Funko Pop marketplace in the world. We had all this liquidity for sellers, we had a really solid buyer experience, but we didn't feel like the business, well, it was twofold. We didn't feel like the business was transformational.

It just, it was growing at a nice clip, but not an amazing clip. I don't know, maybe 20% fun. And the second was it was, you know, during COVID when everyone was locked up. And so we always had this hypothesis on social commerce and how we could build a way more fun experience for collectors and enthusiasts. And so we just thought we could build a really interesting product around live.

We were part of the collectibles community and we could see people using live video in really interesting ways on Instagram and Twitch and YouTube. And we thought we could just build a really great integrated product that just fit really nicely as a seller tool on our marketplace. You know, I got excited about this idea. And so when I go and I talk with Logan, like, do you think you can figure out how to build some live video products? And you know, It was a conversation for about a week and then I got him excited and then he was like, yeah, I think I can figure out how to do it.

And he locked himself in his room for about 6 weeks and came out with our live shopping product. I think the night he finished it, we were like, all right, we're going to test it. We're going to go live. Again, like we don't, there's like for us at whatnot, there is no, there is no launch launch doesn't exist. It's like when the product is ready, you just put it, you put it in consumer.

Sandra,

Speaker 0: shipping. That's what it

Speaker 1: is. And there's nothing gets in the way of shipping anything. And this is still how we are today. And so I went live because Logan was too nervous because he wasn't sure if it would actually work. And it was like really bare bones MVP.

So actually what we needed, like Logan sat next to me because he had to enter products in via the command line because we had to build like adding products in the UI or anything like that. And within 2 and a half hours, I sold out of $5,000 worth of Funko Pops, which is like more than almost anyone would sell in an entire year on eBay. The next morning we go into the team meeting, we're all in online And that's it. And that month, you know, growth shot up from say, like 20 months, 20% a month prior to 120%. And that was the real killer inflection point of the business.

Speaker 0: That's such a fascinating story, because it shows that you had an instinct about live commerce. You launched it, but you sold it. You did the first sale. You went live, and you were able to sell more than anything that was sold in the last few weeks. And that gave you conviction that this new format in the collectibles category was actually really powerful.

Thank you for your time, Grant. If you want to work for Whatnot, visit whatnot.com slash careers. If you're looking to be 1 of the first employees at a startup like Whatnot, check out Y Combinator's job board at workatastartup.com.

Speaker 1: You

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Growth Hacking To A Billion Dollar Marketplace