How Whatnot is pushing social commerce forward amid TikTok's uncertain future

0:04Hello, everyone, and welcome to the Modern Retail Podcast.

0:30platform. It's been gaining a lot of ground. It's raised a lot of money. It's seen an insane amount of GMV over the last year. And I wanted to talk with Armand just about A, the platform, its history. It's been around for a few years. And I think this last year, it really hit its stride. But also B, we're in this weird place with live stream, with commerce, especially with the TikTok ban, which is sort of here, sort of not here. And so I wanted to talk with someone who's in the weeds of it, who's dealing with creators, who's thinking about the future of video commerce and especially social apps.

0:59Social commerce is at a real inflection point right now. And so I wanted to talk with him about what he's seeing, what he's thinking about, and all that jazz. But Armand, how are you doing? I'm great. I'm great. Thanks so much for having me. I'm excited to have you here. So let's first back up a little bit before we get into the meat of it. But let's start with you. You've been at WhatNot since 2021. Is that right? Yeah, four years. Wow. An entire presidency. Yeah, truly. I think it's four years to this day, actually, which is fun. Oh, wow. Happy anniversary. Thank you. So what were you doing before and what made you decide to go to Whatnot?

1:32Yeah, for sure. Right before this, I was working at Spotify. I was actually, funny enough, I was working at a podcasting startup called Anchor that was acquired by Spotify. Then before that, I was at another startup called Kit, which was also in the creator economy. And so I was kind of working in a similar space, but I think the throughput to Whatnot is I do creators of small businesses. And I think what really attracted me to whatnot, you know, when I joined back then, it was a very different product. We were, you know, we were in one category, we were just selling these little vinyl toys called Funko Pops.

2:03But I think what got me really excited was I was seeing us create real, real business and real opportunity for real people to really make a living off of things that they were passionate about. And then it was a small, flexible category. But since then, we've launched into, you know, now hundreds of categories, multiple countries, And it's been really fun to just try to help people really fulfill that mission of earning a living off their passions. Got it. Yeah. So can you actually I wanted to ask about this. So we've covered whatnot at Modern Retail for a few years now. And I've always been fascinated because it's been really big in the collectible space.

2:35I know that like I think trading cards is one of your biggest movers. Is that correct? Yeah, exactly. Trading cards was our second category we launched into. So trading cards like Pokemon cards and then quickly after sports cards like baseball cards. And one of the big behaviors you see is people opening these boxes of cards and you see a bunch of people watching it and you're able to like buy into a pack of something. And so it's super exciting and engaging. And it's like a good example of like why live really works for different verticals. Got it. And can you just explain exactly how the platform lives, especially from the consumer experience?

3:08So it's an app. They watch live streams. Do they follow these creators? How does that all work? Yeah, for sure. You know, we have a mobile app, both on iOS and Android, but you can also watch whatnot and engage in a desktop product. But most people are using it from their app. Generally, what happens is, you know, you download the app from the App Store, you log in, you go through an onboarding where you pick a bunch of different interests. So you could say, like, I'm super into the sneakers or maybe handbags or comic books. And then that guides you throughout the onboarding experience. And then once you're on whatnot, I always find it harder to describe.

3:43So I really encourage folks to like download the app. And once you see it and find something you're into, I think it makes sense like right away. But essentially you get into a live stream, which is I think the best analogy that we've seen for lack of good analogies was eBay meets like an Instagram live. And so you have a bunch of sellers, small businesses, think of like shops selling different products on these lives. And you'll generally see people auctioning products. So you can like swipe to bid on different things. And it really kind of takes some of the best experiences of in-person retail.

4:14So like, you know, when you go to a brick and mortar shop, you know, you know, you have a relationship with the person working there. They help guide you through a purchasing experience. It's trying to take a lot of that with all the convenience of, you know, having having a cell phone and the internet. And so you're able to like go and shop from your couch and get really great recommendations and personalized experience all from the excitement from a cell phone. Got it. Got it. And can you talk about the initial strategy with category expansion? So you said you started with Funko Pops first, then you went to trading cards, and now you're in hundreds of categories.

4:45You're kind of the guy who's been thinking about where to go next. So how have you thought about what categories would do best on the platform? Yeah, for sure. I think even just before that, we started with Funko Pops, but our main product wasn't a live shopping product. So beyond the live, we have kind of your traditional peer-to-peer marketplace online where you can buy and sell collectibles. And so that was the original idea was this marketplace for Funko Pops and Grant and Logan, our founders, were really just deeply focusing on how do you solve this one use case, this one pain point of providing a really good experience for Funko Pop buyers.

5:22So they just focused deeply on that community. And then they went live themselves. They saw one of their sellers going live and selling things in kind of like a janky way with little post-it notes. And they thought that it was super engaging, but it was a real area where we can add a lot of value to. And so they built a live product. And then once we launched live about four and a half years ago, the structure of the company really changed and it really hit in the community. It was just a new way to sell things and sell things much quicker than traditional. And so it was really that focus of just solving deep community problems.

5:54And that deep focus on Funko Pop just seems like a small market. It definitely felt like a small market. So investors and other people that we would tell about whatnot was, I think, the real unlock for us of just solving really deep problems. And so after Funko Pops, we just went to other communities that we thought had very similar dynamics, whereas like, maybe there's, there's fraud in the marketplace, a lot of like fakes and things like that, or the buying and selling experiences wasn't great online for various reasons. And that we thought that, you know, our focus can really like add value to.

6:24And so that's been like the main focus. And we've gone category by category in a very singular way. And I think now I've been, you know, now there's things like, like plants being sold on whatnot, like categories I would have never imagined. But I'm pretty convinced. I'm obviously drinking the Goulet, but I'm pretty convinced that there's very few categories that live video can add value to, especially if it's something that's sold online. It's just you get more context, much more context, and it's much more fun and engaging than a standard product, static product page that you see online. This is something I wanted to ask you about, which is a lot of live shopping is about creators and influencers having sort of a social persona surrounding it.

7:04Did these creators come before Whatnot was doing live streaming? Or did they rise as a result of they wanted to live stream and then they had a personality tied to it? Do you understand what I'm asking? Yeah, yeah. I think it's essentially like our sellers, did they have audiences before this? Yeah. It's a mix, but our typical seller did not have a huge following before they found Whatnot. I think when we look at the sellers who've been most successful, and there's a ton of different personas. Those are people who may have just been super passionate about selling sneakers. And they have a nine-to-five, and they'll sell sneakers at night.

7:41And then maybe that will evolve into becoming a full-time thing. And then maybe they can hire some people and build out a full team. And now if you look at our biggest sellers, they have hundreds of employees. They're really, really big companies now. But they've all scaled very organically with whatnot, our biggest sellers. And so most of them come on. and what they have, like the two characteristics, I would say, is like they're super passionate about whatever they're selling. And I think it's a differentiator for whatnot is our sellers that do the best know what they're talking about and they're super engaged and they love the things that they're selling.

8:14So it makes, as a buyer, you enter that live show and you're able to like, it's engaging. You can learn about the products you're buying. And so I think the best sellers do that really well. And then I think the second quality is like, it's really hard to scale a business, like like especially with live where, you know, you might've been selling things on other marketplaces and you had list a hundred items and they would casually sell over the course of a month. Whereas you can go live on whatnot and you can sell a hundred things in a couple hours and then you have to immediately ship them all out.

8:42And so the second quality is just like being able to really scale and wanting to scale and like build a real business. That's kind of the two things. And we don't think that like, we have, we've seen a ton of people with huge audiences like come on and some have done great. Some have just not been really wanting to build a business. And so they came on and then they ultimately churned or whatever it may be. And really most of the big sellers are made up are just homegrown folks. Got it. Can you talk about the last year? So I think that live stream shopping, as long as I've been writing about retail, it's always been social shopping.

9:14It's going to catch up to China and the US. Not really there yet, but I feel like this past year was a pretty big inflection point. Did you witness that or did you see more people taking to the platform, more sellers trying it out. What did you notice and how did that change your strategy for growth for this past year? Yeah, it's definitely felt like, particularly at the tail end of last year, we're hitting this kind of inflection point where we've known for years how engaging it is. And I think when people kind of discover whatnot, it's like the people who know, it's like very one of those, like, if you know, you know.

9:43And so the people who have discovered whatnot, the engagement is just pretty incredible. So the typical buyer buys 12 things per week. They spend upwards of 80 minutes on the app per week, which is like more than any other social media platform. And so like when people find whatnot and they find like a category, they're super engaged and they kind of fall in love with it. I think what we're seeing is like live shopping is just becoming more and more mainstream, especially as we launch into more mainstream categories. And so whereas, you know, maybe not everyone knows what Funko Pop is. The people who do are super passionate about it.

10:15But like, you know, sneakers or handbags or women's fashion or vintage band tees, like as we keep launching into more categories, it becomes more and more into like the more popular zeitgeist. And I think we've just seen that naturally that more and more people have like caught on and we're just able to build real businesses. And so I think both from like a consumer perspective where we've entered more categories at this point, you know, most people can enter whatnot and find something they're into, which wasn't always the case a couple of years ago. And then I think entrepreneurs are really understanding the power of live and how that can augment or really change their business.

10:48And so we're starting to see more and more people really invest in becoming full-time sellers and live, whether that's on Whatnot or somewhere else. And how are buyers predominantly finding about Whatnot? Is it through the profiles of sellers on other social platforms? Or what are you seeing there? Yeah, it's honestly quite a mix. A lot of people hear through their friends or come in through other sellers. we've definitely had some like different creators that do have followings that go live and then bring in their audience. We do big events like conventions or where these communities really live.

11:20And so kind of the way that we've organized our team is very focused on each of the different communities that we serve. And so we always try to go in there and like make a lot of noise and make sure that the people that we think can get a lot of value from whatnot know where we are and what we're doing. Got it. So let's talk about like I'll first start with the backstory of why I wanted to talk with you specifically about the TikTok ban, which is that like one thing that I think is really interesting with all of the TikTok stuff is that on the commerce side with TikTok shop, it's been focused for the last six months so much on live shopping and live selling.

11:50Like it's been telling creators to go live and pretty much do something very similar to what whatnot has been offering. And so when pretty much last summer or whenever it was, when there was talk of a ban, there was a new bill. Did your radar go up and say this is something that we need to keep track of? What were you thinking about from the business perspective of your platform? Yeah, I mean, for us, it was kind of like noise. But I think that was more like just how we always operated internally, where we really, truly tried to not spend a ton of time thinking about competition. We think live is really the future.

12:21You know, one of the stats that we're excited about is there's a McKinsey report that reported that 10 to 20 percent of all e-commerce by 2026 will be through live commerce. And so for us, we've just been really focused on that and how do we build the best platform that really helps anyone build a really strong business off of the back of live. And so that's been like the focus where competition has like come up a bunch of different times throughout the years of whatnot. And I think it's validating because it shows I think that we're on to something, but we never let it become a distraction to like what our main purpose is, which is just listening to users and consumers and trying to build the best product for them.

12:59And so that is the truth. But then I would say over the last month, when I feel like the band became a little bit more real for folks, we've definitely seen a ton of sellers reach out to us that have built real businesses on TikTok. And now there's a ton of uncertainty in how to run those things, which is honestly just super unfortunate because, again, the reason I came to it now was to help support small businesses. And we talk a lot about how hard it is to run a small business. And so when you have that uncertainty, when you're just trying to build something off the backup, I think it's been challenging.

13:31But we've been trying to help folks when we can. And yeah, so we've seen crazy growth even in just the last few weeks of new seller signups and things like that. Yeah. Can you give some numbers about that? So what were the new seller signups or what did you see on a sort of data standpoint? So we've actually seen a ton of new signups. So over that weekend, when the ban was going into effect and TikTok blacked out for a hot second, it was our biggest weekend for new sellers, both in terms of new signups and also sellers who went live for the first time. And so over that Saturday, Sunday, Monday, we saw a huge spike, and we've continued to see those numbers since then.

14:11And is it, for to be a seller, is it an application process, or is it just if you want to sell, sign up, and then you can go live? Yeah, we have an application process, but it's generally, we just check that if you're a trustworthy seller. And so there's like an onboarding process to make sure that you're going to be a good part of the community. And as long as you do that, you can come and sell and whatnot. Got it. And so, especially in this run up, when you said you saw this spike in demand, especially from the seller's side, did it come from all types of categories? Were there new categories that you saw people reaching out being like, oh God, my audience might go away.

14:45We should go here. What did you see on that front? Yeah, I mean, there's definitely some of the bigger categories or categories that we live in. And so they have a ton of card sellers that go live. They have a ton of handbag sellers as well. And so I think those two categories in particular saw a really big growth spurt. But then we also did see some more organic signups from categories that we haven't traditionally invested in, as well as different types of sellers. And so there's a lot of brands that applied since I think a lot of brands are living on TikTok and trying to build where they have like a social following.

15:17And so it's been really fun to engage with them and figure out how we can solve problems for them. Yeah. So this is something I wanted to ask about. So first thing, going back to I think over the fall and late summer, TikTok had been pushing most of the brands and most of the creators to go live. Like that was part of its big emissions. Did you notice a correlation with more people being adept and able to sell when one of the other major platforms started pushing it? Did you notice something at the end of the year where they were like, oh, yeah, this is more part of my muscle memory now? Yeah, I mean, I think for brands, it's still pretty slow moving as people like kind of really big companies try to figure out what is their approach to social.

15:55But yeah, we've definitely seen – I mean, that's kind of why we think competition is a good thing. is it's getting more eyes on what we already believe in and we see the power of live shopping. So we've definitely seen a big growth in live shopping as a whole. And I'm sure some of that can be attributed to some of our competitors pushing and getting more vocal. So this is something that I've talked about with brands where they feel the need to go on these platforms, test out different ways of selling to their shoppers, but also they're very reticent to do live shopping because it's live and it's not as, you can't have as curated as a look.

16:33If you mess up, something could go wrong. So talk about what you're seeing from brands and how you are specifically working with brands that potentially is different than how you've worked with people in the collectible community who are used to this type of commerce. For sure. There's a couple of brands that we've seen do some interesting things on whatnot. There's a brand called Dolls Kill that sells women's fashion. And their ethos of their brand is super authentic and they talk to their customers in a very direct way. And so I think that is a really good fit for live where it's, you know, authenticity matters and that really shines through.

17:09And so I think brands that want that direct connection with their community, it's like a perfect match for us. And so what Dolls Guild does is they go live from their warehouse and they sell everything from like, you know, new drops to like excess inventory for like last season stuff. And because so much of the activity is like auctions, you can auction off kind of these one-of-one pieces that people can't find elsewhere. And they do it in a really fun way where they can also tell a bit about the product, tell the story behind things that you may miss if you saw it elsewhere on the internet. And so they've seen a ton of success.

17:42They've gone live for years now on whatnot. We've seen other people do different types of drops. Staud did a drop with us where they took us kind of like they did a live behind the scenes on one of their fashion shows. and then released some like limited products on the platform that accompanied it, which is really fun. Callaway, the golf brand, went live from their factory and were selling a bunch of different like misprinted balls and like these like really one-on-one fun, engaging like different products that, you know, I'm not even super into golf, but it was making me like kind of geek out over the products.

18:15And so those have all been like fun examples. There's also been more like collectible type things like Gary Vee has a brand called Vee Friends. It's like a card games and they sell a bunch of things directly. But I think really like the throughput is like it's brands that are trying to sell something that's that's unique and differentiated from what you can just go and buy if you just go on Callaway's website. And so I think that's where we've seen like the most the most success from our partners. Is there a big golf community on whatnot or is that where Callaway was just like we're going on this platform and then they all signed up?

18:48No, I think there is a big golf community on whatnot. like used sports equipment in general has done really well on whatnot. And so there's actually a bunch of people who are selling golf clubs, like used Scotty Cameron putters and things like that. And so that community is so passionate. And that's kind of like the perfect match for us, where it's like you get a really passionate community that can really go deep and geek out over like different types of products, whether it's a golf putter or a pair of sneakers. That's like a perfect match for us. Got it. So you mentioned how the weekend of the band was one of the biggest, or if the biggest weekend that you ever saw.

19:23When you get an influx of new signups, has that shifted the categories that are trending the most? Because you have so many more people on there. What are you thinking in terms of churn? Like, are people testing it out? Like, I imagine we need a lot of signups. Some people stay, some people won't. So what are you seeing on that front? Yeah, I mean, I would say nothing like nothing abnormal from like what we what we normally see. I think a bunch of people are coming on and seeing the value and a bit of the differences and all that we put into behind the scenes of like a live. And so we spent a lot of time thinking, from a seller perspective, like, how do you really streamline operations and make it so they can do what they feel they want to do most, which is go live and be engaging and talk to their community and sell.

20:03And so a lot of the power of whatnot is behind the scenes. And I think a lot of people are new sellers. like have seen that which is awesome and then yeah it's it's truly like i mean we've experienced you know crazy growth over the last four years so we haven't changed much about our go-to-market motion or our focus we have a launch team led by uh the bike christina who's amazing and she thinks deeply about like what are these next categories that we want to put energy behind and a ton of of what goes into that is like what's organically popping up on the platform uh didn't always used to be that way in the early days we had to really force to get a category off the ground by sheer willpower.

20:38But now we see a lot of people just testing out whatnot because we've become a much bigger brand. And so that is just another input into the recipe for what we go after next. Got it. And can you talk about, just in terms of the going after next, are you seeing interest or are you seeing more signups from just pure creators or influencers? Those are people who have been on other platforms and are also looking for ways to monetize their products and their brands. are they coming to whatnot and how are you working with them? Yeah, they definitely are. But I think the main characteristic is like you have to have something that you really want to sell.

21:14And so I think a lot of what was happening on other platforms is like it may be a creator with a big following doing some sort of affiliate model to like sell someone else's products. And so if like building a business is like you're true and you're like really passionate about a product, then I think that is like the perfect combo. And so I mentioned V friends like Gary V, you know, is a huge personality and he's He's been going live. He's one of them shouting about live shopping from the treetops for the last few months in particular. But he's been going live nearly weekly. And it works for him because he has a bunch of products that he's selling himself.

21:48And so that's kind of like the perfect match where it's like a creator that wants to really invest in live shopping because they're trying to build a business off the back of it. And that's where we really optimize for. Got it. I know you say you're not really paying attention to the competition, but do you think all of this uncertainty with TikTok and it's all anyone has been talking about for many weeks, has that changed the way you're thinking about 2025 going forward? Or are you still just thinking about what you were before? I honestly wish I would like, I wish I had a more exciting answer to say that we did like really like hit, like struck something and then we like fully pivoted, but it truly hasn't.