Inside Whatnot's Bet on Live Shopping | The a16z Show Transcript, AI Summary & Key Points

00:00 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 [music] 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 wasn't payments, discovery, CX, and we just thought we could build a better one of those.

00:22 >> I want to start all the way back when you were a kid. Your first online sale was a a [snorts] holographic Pokemon card. >> At [music] that point in time was when like eBay was getting started and I was like, "Wait, you can make money from Pokemon cards? Like I love Pokémon cards and I can make money from doing it." The first one sold for 10 bucks.

00:38 [music] That's probably the true origin stories of whatnot. >> Users spend 95 minutes a day on the platform. >> Yeah, about 95 minutes. >> It's incredible. >> Users don't give a about the market. They care about whether they're going to enjoy the [music] 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 [music] towards that you want to grow into over the coming 12 months?

01:02 >> Yeah. I mean, okay, I want to start all the way back when you were a kid. So, I understand that your first online sale was a holographic Pokemon card and that the buyer mailed you a money order and you cashed it at the post office and then you shipped the card. So, this was like a what age was this? This is like a formative young age. >> I must have been in third or fourth grade I want to say.

01:31 So, I don't How old are you there? Like seven, eight, nine, something like that. >> Yeah. Okay. So there's there's all these stories, you know, of a founder kind of finding their market like this early. Like tell me about like you kind of um having that experience and making it a formative piece of, you know, starting whatnot eventually. >> Well, I think like all kids back then, like there was just a Pokemon craze.

01:51 Pokemon cards became big, you know, get my dad to go bring me to the shop, >> open my Pokemon cards. I had my binder, had all my Charizards in it, had everything. And I, you know, down this down sort of this the street from where I was living it was like a little like lake and hangout area and my me and my friends used to go there and we'd like trade Pokemon cards and I'd try and hustle people on like getting the better cards.

02:14 And then at that point in time was when like eBay was getting started and then their biggest competitor was Yahoo Auctions. And [snorts] um I 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 Pokemon cards? Like I love Pokemon cards. I can make money from doing it." And so I [snorts] got my dad to help me set up an account and I you know posted my bunch of my holographic cards online.

02:35 The first one sold for 10 bucks and it was the the holographic um chancy card. >> It was the Chansy card. Yeah. And the the thing that always like um feels funny about that is that at that point in time the internet was so nent you weren't doing payments online which is just crazy. >> Yeah. Yeah. This is like clunky. I mean yeah early days like you know there was no trust to do it.

02:57 The infrastructure didn't exist but there was no trust either obviously. So >> yeah and it's but it's also pretty wild that like there was enough trust that someone would send you >> the like money order in the mail and sort of like hope you would then send the card back. So, I I remember I got the money order like, "Okay, I can send the card now. Dad, can you bring me to the post office?

03:15 I'm gonna wrap it up and and um you know, send it off and uh and so that is that's probably the true origin stories of whatnot. Whatnot's pretty funny in that uh almost all of my experience in like a life like the big the big bits, all of my like core jobs have come full circle and whatnot." >> Yeah. like Pokemon cards and I worked at YouTube for a long time and so did video and then I worked um I was I was working at Facebook and I was working on marketplace stuff and so I did some of that and then whatnot.

03:46 Sort of the amalgamation of all those things. >> Yeah, the perfect combination of all those trends. Yeah, it's awesome. So, um there's different stories about how you and Logan decided to start the company. How did you guys settle on doing this? >> Yeah, so there's Logan's story and there's my story. >> Yeah. Okay. And and look, both of both of them are like actually correct.

04:03 I I think Logan's just more um nostalgic about like Logan's story is actually like I don't know, [clears throat] maybe it's like slightly better. So I was Logan's origin story start in like January 2019, I want to say. We we did a trip to Tokyo over the holiday over like New Year's and we were drinking in a bar and we both of us had started businesses before and so like a couple drinks we just started talking about oh you know what could we do one day and then we started talking about you know building some marketplace

04:38 business we bought like 30 or 40 domains and then like the trip ended we got back to the real world and like you know sort of nothing happened for six seven eight nine months basically And so that that's all true. Like we talked about it and like we said we're gonna do it, but then there was like this >> that wasn't the launch moment. Yeah. >> Yeah.

04:57 There was this like huge intervening period. And so >> um you know mine really was sometime around like um you know October of 2020 or 2019. Yeah. Uh, and um, you know, I was like, Logan, remember we talked about doing those businesses and we brought those hundred domains when we were drinking in a bar in [laughter] Tokyo that we never that we never used?

05:21 Uh, maybe maybe now is the time. Logan was like wrapping up his job. And um, you know, I still had mine, but I was like, you know, I need to go back to to building some stuff. And we could see a bunch of our friends getting back neglecting. So it was like Funko Pops and comic books and sports cards and I was like you know I know a little bit about that that industry and you know I'd always dabbled even after you know Pokemon cards I did um sneak I got into sneakers for a while and then I was doing some of the Funko

05:51 stuff for a while and so I sort of like knew that market and it just like just hasn't changed in a really long time and like everyone uh like us now is is is older. They're starting to have some disposable income. They grow up on a mobile phone. I think there's something around collectibles and social commerce. Like, you know, if someone's going to figure it out, maybe why not us?

06:12 Let's see what we can do. >> Yeah. >> Uh, and so then December 2019, we both quit our jobs and then we went full-time and launched our authenticated Funko Pop marketplace. So, I got to ask, was not one of the domains that you had bought? >> Uh, no. That would have been Can you imagine? Um, [laughter] pretty good. That would have been amazing forite.

06:34 Yeah, it would have been amazing actually. So the the the origins of whatnot name which everyone always asks cuz like whatnot's like a very very memorable good name. We've had it for a very long time. >> Um so actually one of the domains we bought again think we were drunk in a bar in Tokyo so it wasn't as if our judgment was [laughter] immensely good was like always legit.

06:53 And I'm not joking because that was the first domain for whatnot. And the reason it was the first domain for whatnot is we're always just obsessed with like 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. >> Yeah. >> For days.

07:13 >> Just go. >> Let's just go. >> Yeah. >> And so it was always legit. And then our the first designer on whatnot, this guy John, who I worked with on my my prior startup before we were about to launch, he's like, I cannot be associated with a company called Always Legit. That is a horrific name. And it was I named it and it was a horrific name. But I was like, it doesn't matter.

07:32 We don't have a product. Who cares what it's called if you got nothing? >> Yeah. >> Um and and so he made us uh get into a room, do a brainstorming exercise for like an hour. We we got to like a list of 10 names. We're like, "All right, we'd be comfortable if we got any of these. Let's go see if we can buy the domain." And so I got like three, John got three, and Logan got like three or four.

07:54 And um Logan got whatnot. And of all those domains, all of them, you know, would have cost like $100,000 plus dollars and we had raised no money. Logan got a hold of the guy who had whatnot. And he, the guy goes, I'll sell it to you for a Bitcoin. So I was an early Bitcoin investor, so I had Bitcoin. [laughter] >> This is amazing. >> And Bitcoin back then was worth $10,000.

08:20 So not like what it's worth now. And Logan haggled them down to half a bitcoin. >> No way. Yeah. For five grand. >> Yeah. For five grand. And so >> I hope you guys held on to it. [laughter] >> I hope so too. What a I mean a great price for that domain. And um so so then the the plas service we were using it was kind of funky because they hadn't really used Bitcoin before.

08:43 So anyways, we sort of like sent the Bitcoin off and then he sent the domain to us and he sent us the wrong domain. He sent us why not instead of whatnot. But we're like, you know, not a bad also a pretty good option, pretty good name. Um, but we're like, let's try and see if we can get whatnot because we do like we always had this idea that we're going to sell lots of different categories of items and collectibles and so whatnot always felt a little better.

09:06 >> Um, and luckily, you know, the I think it took us 36 hours to get a hold of the guy, but you know, 36 hours later, we were able to to to get whatnot and we were almost why not 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. Um okay so at the time that you guys were getting started in the US Facebook marketplace was working right in the sense that there was a lot of activity right and you could sort of see the network

09:32 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 was early and then in the US and the western world you had like QVC so like 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.

09:55 >> So I guess the the state of the market um when we started it. So keep in mind this is sort of December 2019 going in just before co um so so one I'll preface it with saying we probably weren't very sophisticated on the state of the market. Um we had no idea like live shopping in Asia. We had heard of QVC. >> Yeah. >> Um and my impressions of QVC was like no one wants to shop on QVC.

10:18 like it's like crannies shopping on QVC so no one my age wants to shop on QVC >> um and look there's a bunch of other big marketplaces around um >> but we sort of you know there was a bunch for our market initially which was collectibles uh you know there were a bunch of players who were doing it but sort of felt like it was a little bit stagnant like the space hadn't changed in a while so that was that was sort of like the state of the market >> and and by the way I would just say I think it's probably an asset not a

10:46 liability that you guys didn't know much about the market because if you knew a lot about the market, you'd probably try to build what existed in the market but like iterate on it as opposed to a new an entirely new thing. >> Yeah. The I was 1,000% an advantage. Yes. >> Um because look, I I think the the punchline and I can get into it is um users don't give a about the market.

11:10 >> Yeah. >> Um they don't care about the market at all. They care about whether they're going to enjoy the thing. It provides value. >> Yeah. And so there there's this um counterintuitive thing which is if you built try and build a market it oftentimes distracts from like are you building a really great user experience. Yeah. Because again like no one's the consumer is not making a going like oh this is a live shopping market and you know I can transact all these things in this market and they're going like well no

11:34 what are what are you going to provide for me? What's the value? And so um there were a bunch of players who were trying to do that because they sort of saw what was happening in Asian. It's a it's a monster market. It's like a trillion dollar plus market today. Um, and we were like, we don't know. Uh, we were building our Funko Pop marketplace and we were talking to our customers every single day and then we saw our customers hacking social media in interesting ways and the way they was were trying to hack it by was

11:55 selling like um the selling items and live video but the experience was really broken. >> Yeah. >> Uh, transactions weren't integrated well. Shipping wasn't payments discovery CX. Um, and we just thought we could build a better one of those and it would solve uh the problems of the customers we had in the platform. Um, Logan locked himself in his room for a few weeks, came out with the first version of the product and um, I went live, sold out, sold a lot of items and the rest is sort of, you know, history from there.

12:28 >> That's incredible. Yeah. Awesome. The So, it's interesting to think about what you all provide. So, I think it's a super insightful way to say like customers don't give a about a market. Like they want a like they want a product that's compelling to them. Like what do you what value do you provide to them? Shopping often starts with intent. So, how much of the idea of this is like entertainment versus intent and like how do you think about the distribution of the behavior of the buyers and what they're getting out

12:57 of you? Yeah, I think um [clears throat] whatnot is sort of like analogous to visiting a store. >> Yeah. >> Um which is I don't know if I go to the mall or I go to set of retail shops. >> I'm sort of like I I kind of know I want a thing but I don't know exactly what that thing is. I'm going to go walk in that shop. I'm going to go browse around. And so >> I don't what have I what have I bought recent?

13:20 I bought some some new shoes. And so I I went on to go get some new sneakers. I was like, "Okay, I need some sneakers. I'm going to type in the website and I'm going to go like I spent 30 minutes browsing. Didn't know what I wanted. I came away on the other side. And that's sort of the whatnot journey. Whereas if you look at a lot of the e-commerce um companies that have been built in the past, you know, prior to us, you sort of know exactly what you want.

13:43 It's not really great for discovery. It's not really great for experiential or having fun or being entertained. Uh so I think that's that's sort of the 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. Um, you're going to look for it. You're going to have some fun along the way.

13:59 >> Yeah, that's awesome. So, there's all of those elements embedded in the product. So, watching, chatting, bidding, buying, returning. Are there pieces that I'm missing? >> Um, you mean just generally discovery? >> Yeah, I think Yeah, I think you've covered a lot. I mean the the the one of one of the reasons why whatnot has worked so well to to date is that there's a lot of value because it's such a you can do so many different things.

14:28 Sometimes you're going to look for a great deal. Um a lot of times you're going to just have an experience and be entertained. So on any [snorts] 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 and they're watching and they're talking with people. Yeah. >> Yeah.

14:43 Um, and so that's that's why I I continue like it's not a perfect analog, but I I like the sort of analog of like going to the shopping mall. Like you'd go to the shopping mall, I hang out with your friend, at least, you know, when I was growing up, hang out with my friends, walk around the mall, have some fun. You know, many times I wouldn't purchase something, just go there for an experience.

15:00 I am struck by obviously we're longtime investors with you and so you know this is 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 so you know 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 about 30 to 40% of all commerce is is live commerce in in China >> yeah and then what is what is it in the US today?

15:31 >> Oh, I I mean sing single digits. Really? >> Single digits. And do you think there's any is there any reason why you don't think that that gap could close over time? >> No, I think it's it's clearly going to close. Um it's just a richer way in which to to sell and build a business. Um and it's it's just more efficient. So, you know, um if you're a fashion brand or store, you could go and set up a brick-andmortar shop on, I don't know, pick a famous streetth Fifth Avenue that cost you millions of dollars and and rent

16:06 >> and you're restricted to a set of people who come to your shop at a, you know, 9 to5 on >> um whoever is in New York City. [snorts] Um and like that's a great experience. You can feel it. You can talk to people. You can discover things one whatnot. you can set up for $0 and you can have an entirely global audience that is, you know, unbounded. >> Yeah.

16:24 >> And so I think that that value prop means if you're a business um you know selling consumer goods, uh 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 uh in China. >> Yeah. So it's like the if you think about just sort of marketplace dynamics and the network effect the supply side is so compelling because it's zero it's effectively zero cost and with

16:50 a very compelling supply uh dynamic lots of sellers that that drives demand right >> yeah it makes total sense I mean the numbers are just staggering you said it's about a trillion dollars in in Asia um that's a huge number I looked it up before this so uh I think US e-commerce is about a trillion too if I have that roughly right. Um, and one of the historical knocks I've heard people say about whatnot is well, you know, Etsy is only so big or eBay is only so big.

17:23 Uh, and I always find it funny when people mention that, you know, e eBay was actually, if you go back something like 10 years, it was like 15% of the overall market. And it's 80 billion of volume still, by the way. it was like 15% of the overall market. 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.

17:46 And so I always say it's way too limiting to think about, you know, what your market is or what you can go get to think about that. e eBay is sort of a a proof point to me that there's at least an $80 billion market of longtail commerce to go get online. But the real thing is like how much of the gap between 80 billion and 1.2 two trillion do you go capture because the experience is so much better.

18:11 Is that a would you agree or disagree with all that? >> Uh yeah, look I I think um [clears throat] you know to tear it apart a little bit um people will peg us to eBay because we sort of got started in collectibles and that's where you know eBay got started but actually the live format is just very very different. >> Yes. >> Um it means that a whole swath of different types of sellers can use the product.

18:37 >> Yes. anywhere from, you know, when eBay got started, a lot of it was like smaller resellers. If you look at whatnot today, it's fundamentally like small business and then we're getting into brands. So, and a lot of those brands and small businesses would typically not be on eBay. >> Yeah. They would never Yeah. wouldn't it wouldn't make sense. Yeah.

18:55 Maybe they have a brick-and-mortar shop or they have a Shopify store or, you know, a bunch of things like that. So, I think the the seller base is inherently much more diverse. And then the thing with live is it's it's um demand expansionary because um you go in and discover new things you didn't know that you would be interested in. >> Yes. >> Uh and so if you look at e-commerce today, it's so you have to know exactly what you're looking for.

19:27 So all it's really done is take a bunch of offline sales and bring them online in a more efficient way. But you still got to know exactly what you want. And as like live commerce >> uh proliferates, it's just going to expand that market. So, not only could it be 30 or 40% of that market, um that market is going to get a lot bigger. >> Yeah. It's sort of like it would be more akin to not so much like e-commerce, but more like the inception of department stores or shopping malls.

19:56 Yes. >> Right. Which is like actually expanded the the demand characteristics of the market. >> Yeah. Exactly. >> Yeah. That makes total sense. So the other thing that is 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.

20:16 Is that right? >> Yeah about 95 minutes. >> It's incredible. >> That's like a shocking number and puts you on par with social platforms like the entertainment platforms. >> Yeah. And it's because it's fun. Yeah. Yeah, you know, if you were if you were to sort of simplify whatnot down on like the buyer value prop is it's a fun experience to shop and there's not a whole lot of fun experiences shopping online.

20:39 Um, and you know, historically you'd go to a shopping mall and you know, the dynamics there are all changing so it's not even as fun to to do that anymore. And and as I said earlier, most people aren't even purchasing. They're actually just going to have a good time and experience it. Most people don't p like you know greater than 80% of people don't purchase on a given day.

20:58 They're just there watching, having fun. >> It's amazing. Yeah, it's an it's an incredible sort of blending if you go back to your history of entertainment plus filling the shopping need um on the demand side with new discovery and over 80% of people not actually even transacting. It's like clearly a form of entertainment. I actually I spend a lot of time on there uh entertaining.

21:19 I transact too, but uh yeah, I I get it. That makes sense. Um, okay. So, that's like the origin story, like the layout of the market at a high level. And I want to go into categories and stuff, but I'd love to talk about the supply side, like the sellers on the platform. Talk about the scale that you have of sellers. Um, and you know, this is sort of one of the underrated things.

21:44 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. >> Yeah. I mean I think the one of the most fun things about whatnot is it's it's fundamentally empowering small business. And if you look at a lot of what's happened again in e-commerce over the past 20 or 30 years is it 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

22:12 ability for people to like build brands and businesses around it. And 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, you're going to have your customers, they're going to come back to you. And so, you know, I think that's one of the one of the best bits of the platform is, you know, we're generating billions and billions and billions of dollars for small businesses.

22:32 And these are anywhere from, you know, one and two person operations all the way up to maybe a couple hundred folks at the high end. >> That's amazing. Yeah. The uh I I think you've compared it in the past to like a local shop owner or like a local pub owner. And if you think about what whatnot allows that person to do compared to say Amazon which is like highly utilitarian um you know highly gamified and like competition among first party third party international sellers like it's just an entirely different

23:02 experience on the sell side >> um 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 the prior trend was to almost disempower small business and obscure them away. Yeah. Yeah. That's well said.

23:22 That's well said. Um so you have really interesting insight into all of these different types of entrepreneurs, right? So, um I'd love to maybe start with just, you know, the original categories like collectibles, cards, like what are you seeing uh about the behavior in that market? >> Um [clears throat] so I think we're we're seeing a continuation of the trends that we saw when we first started the business, which was one of one of the reasons we we we came back into collectibles.

23:52 We saw a bunch of people getting back into the market. it was people like us who were had maybe some money and were buying things that were nostalgic from childhood and getting back into unique um you know things that they loved. Um and that trends basically continued unabated for the past 6 and a half years. And so um you know I think collectibles is is largely going like mainstream now for like lack of a better term.

24:18 You have you have mainstream celebrities in it. You have athletes in it. And so I think a lot of people thought collectibles thought think of collectibles like a niche thing, but it's actually becoming a core part of of pop culture. And I think over the past six years, we've just seen that evolution continue to grow and grow and grow and grow. And you know, in fact, you know, a lot of the new art that people are collecting is now like trading cards with that are going for millions of dollars.

24:43 And you know maybe your parents if they were doing high-end art or you know you were lucky enough to have parents who could do that they're buying you know famous artists and now people are buying like the one of one you know LeBron James refractor or something like that. >> Yeah. Yeah. Yeah. Yeah. It's super cool. Uh yeah and it's obviously there's an entertainment element of that as well.

25:03 I I I've been struck by the scale of some of the businesses that are on whatnot. So obviously you're empowering I think millions of small businesses but you know if done right uh a business owner can actually build something north of $100 million of revenue and highly profitable all all on the back of whatnot. >> Yeah. You know the biggest businesses on whatnot are probably doing upwards of hund00 million in in revenue and you know with like very strong ebida margins 20 30 40 plus percent.

25:30 you know what we what we try and do um you know so if you looked at whatnot last year we did you know over eight billion in sales and um so far this year we've done over eight billion in sales and we don't we take a small fraction of that and you know we we and we'd like to we're we want to 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 with all those businesses.

25:54 So [snorts] we just spend you know 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. Yeah. It's awesome. It's it's it's one of the great and probably lesser known, less covered stories of small business empowerment in the US and increasingly now in Europe, which we can talk about, but it's uh >> it's super exciting.

26:16 Um I I want to shift gears now. You know, that's obviously a little bit on the supply side. Um you know, talk about some of the categories that you're working on. Obviously, you know, started with collectibles and and cards and then now you have success, you've had a lot of success in fashion. um which is obviously one of the biggest categories in commerce and there's many others.

26:34 So just talk about the category expansion evolution over time. >> Yeah, I mean I guess [clears throat] if you look at whatnot today, we're selling things in 100 plus categories. Um and then we're [clears throat] always investing in new areas to help people grow their business. So some of the fun ones today are like fresh food and drink where you can buy fresh fish sourced from the dock in San Diego or um >> by the way Ben Ben and I started buying it after dinner.

27:01 >> Yeah. Yeah. Yeah. Yeah, all that. It's awesome. Um, another one of my favorites, there's a a barbecue restaurant where you can get amazing barbecue and, you know, I have a bunch of it sitting in my freezer. [laughter] Um, you know, and I just I think, you know, the fresh it's 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 US and it's really nice to know where your food comes from and be able to get the story around it.

27:27 um you know, flipping gears. Uh I don't, for whatever reason, all my friends golf now. I'm at that age in my life. >> Because you're getting old. Yeah. >> Yeah. Um my hip's bad, so I can't do any other real sports. Um and so golf on whatnot is having a huge surge, you know, that's growing hundreds of percent year-over-year. We have all these golf shops selling.

27:46 And so that's, you know, another another fun category that uh I've been buying in and the team's been investing in. And you sort of there's so many beyond that even. >> Yeah. It's a [clears throat] sort of like anything that's highly considered, right, should be a fit for whatnot where, you know, an an explanation, a personality that goes along with it, you know, a story behind it, like would would >> I think anything that someone would build a retail shop around would work on whatnot.

28:15 >> Anything Anything that would be in the shopping mall. Yeah. >> Just literally anything because if you were going if you were going to go visit a store, well, you can do it from your couch on your phone. >> Yeah. That's awesome. What about uh clothing and apparel in particular? >> Um I mean women's fashions woman is now our biggest category. >> Wow.

28:31 >> Um and you know there's there's a huge range of of stuff in there. Um I'd say you know the dominant is is actually sort of looks like almost TJ Maxx-L like yeah which is like old season inventory really good pricing and so you can get some like amazing deals on like great brands. Same with sneakers on whatnot. Um, it's almost I forget the name. Like I I when I was growing up there'd be those like discount shoe stores where you get like the nights for like 40 bucks or something.

28:57 There's there's a lot of that and it's just like great deal. >> I shopped I shopped at a lot of those. >> Yeah, it's like if you know you there's there's nothing that beats a good deal when you're shopping. >> DSW. >> Yeah, D. That's that's the one. It's like the TJ Maxx shoes. Yeah. >> Yeah. And so there's there's a a ton of that popping up in like the fashion apparel side and and Live's really great.

29:16 helps you move a lot of volume and that when you can move that much volume you're willing to take the discounts and it gives customers a really good price. >> Yeah, 100% 100%. Um the other part of you know expansion is obviously you've had a tremendous amount of success in the US. Um talk about the expansion into Europe and what's worked, what's not, what are the learnings.

29:37 >> Yeah. Um so today I think we're in about we're in 10 countries. So, uh, US and Canada and and North America, uh, five countries in Europe, and we're also now in Japan and Australia. So, we're we're sort of, um, you know, have a good chunk of the globe covered. Um the the I think the most interesting thing that that I don't that I think would [clears throat] be counterintuitive to folks is that we've just seen it work in the same way across all of those countries, >> which is there's um all the small businesses that

30:07 we've helped create in the US, we've been able to help create there and collectibles and fashion and electronics and a lot of the dynamics are incredibly incredibly um incredibly incredibly similar. Uh and so um you know we're just incredibly bullish that like live is an incredibly durable value medium in which to shop from. >> So one of my favorite stories is the is the recent one that you've you told us about the the seafood distributor uh who messaged you on LinkedIn and uh first of all like what an inbound.

30:39 Uh and and then you went live the following week and he sold I think between three and $4,000 of fish during the pilot phase. Um, so what happened that caused that and like how did that even come about? >> Um, again I I think the the punchline there is that live is just a really good median to discover things, right? And so his story is, you know, he's been in the fish business for a while.

31:05 Deeply knows what he's selling. He's going to bring you the the freshest um fish from San Diego at that time of year and he's rotating the stuff in when it's seasonal. Um, and he he's so incredibly knowledgeable. So, you watch a show and you see this type of fish you've never heard of and you talk about how it's sustainable and, uh, that it just got off the pier today and here's a fisherman who caught it.

31:29 That's just a great experience. And so, um, you know, we can take him and we can push him to whatnot now has a large, you know, buyer base and and, you know, it's pretty easy then to generate thousands of dollars an hour in sales um, with that experience. And so, >> yeah. And imagine him trying to sell over the internet at large. Like there actually like is like he can access his local market, but there's probably no way for him to really access a nationwide market for something like this.

31:59 >> And I think it's really hard like buying food on the internet like fresh fish like cuz it's one of it's one of those things you're like wow fresh fish on the internet like how do I know if it's good if I can get sick from it? >> Um and so video just really enhances the trust. >> Yeah. Yeah. Yeah. and like a a real identity of the person the other end you can ask questions you can know how he's going to pack it >> and if you're on a static website like well I hope it's good >> yeah [laughter] that's true that is very

32:25 true okay so if you think about the platform and you've talked about the scale that you guys are running it's just massive massive scale um and so you one of the things I've used to describe you and Logan is relentlessness like 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?

32:52 And I think this is a big like obviously now you're big and you have a network effect, but I think this is one of the big underrated things that allowed you to win in the early days is that you guys were constantly on top of anything that could break. So I'd love to understand some of those big things. >> Yeah, I mean it's it's it's challenging. Um I mean you know there's so many dimensions to to trust.

33:15 So there's sort of like is the platform reliable and is it working and is it stable and is it fast and so um you know we measure just everything. >> Yeah. >> Um like I I think the the punch line on trust is measure everything. Um and uh we have a invest a lot in it. So I think um trust and safety particular on whatnot is about 40% of employees. Yeah.

33:42 So, it's au it's a huge huge investment from us because it's it's a challenging one and you don't want to put your >> credit card in a place you you don't trust. You certainly don't want to buy fresh fish from a place you don't trust, >> right? >> Um and and so so so those you know I think lot of measurement, lot of user feedback um and then a big just people investment to get the thing done is is sort of what drives it.

34:07 Um, and then you know the problems are are pretty diverse and you have to make sure you're building the right set of things for it. So as an example, [clears throat] we have a a system in the background um which is called our our rules engine and it um takes in billions of data points at this point in sub 1 second to be able to take down or find any range of bad behavior on the platform.

34:38 So if you harass someone in a live stream, the LLM will detect it. It will get plugged into the our action rules engine will look at the history of the seller and based upon other signals programmatically take them down, suspend them, ban them, warn them. If you are not shipping on time, the the rules engine will do the same thing. If you have a high refund rate, the rules engine will do the same thing.

35:00 And so, um, and look, these are ever changing, you know, problems and issues. >> Waiting of scoring and things like that will always change. Yeah. Um and and so you constantly have to uh be on top of these things. >> Yeah. Yeah. I mean, you know, if you think about just how many concurrent users you have and how many transactions you process per day.

35:25 >> Yeah. I I always the the the analog I like for trust and safety is so you know tens of millions of people use whatnot every >> Yeah. Yeah. >> And so um the trust and safety team is basically the police force and the the legal system of of whatnot. You got to write your policies. You got to be people who enforce your policies. And you know, in a city that has 10, 20 million people, you're looking at a city the size of Tokyo or I mean, maybe a better analog would be like I mean, it's a couple couple New York cities.

35:55 >> Yeah. Two New York cities. >> Two New York cities. And um uh you know, in in New York, um it's not not perfectly run. Uh and so there's going to be some bad things that happen. and people get arrested. But at at our scale, because of some of the systems we build, there's actually far far fewer Yeah. >> problems. And and then of course, look, if whatnot is a business for a small small business, everything's on video.

36:19 So if you're so if you're a small business, you want to build a great business. >> Any good business knows you got to have repeat customers, you got to invest in a customer experience. So our sellers reinforce it. >> Then you're on live video. [laughter] So there's not, you know, you're not going to get away with too much on live video. You know, things things happen.

36:32 Um, and then you you sort of go, okay, we put 40% of the company on, you know, law enforcement effectively, their trust and safety team. And so, um, it, you know, it still means it's challenging because if you're running the >> the the um police and legislative system of of New York City, that's a challenging and hard job that you always have to be on top of and be, you know, looking for what the new areas are to invest in and and improve.

36:58 >> Yeah. Yeah. Absolutely. This makes total sense. um the so it's actually a good segue um into the topic of AI because obviously you're using cutting edge AI to to do a lot of the trust and safety work. Maybe taking a step back with AI though um you know maybe front facing in the product side you know not not the back end. Um you know you have a very inherently human platform where buyers and sellers are engaging as humans.

37:25 What are the learnings about how to employ AI most effectively while also preserving that human connection? Yeah, I mean I think the good thing is some of the platforms self-reinforcing which is um [snorts] you know if someone goes over top thon I don't know building an AI avatar people aren't going to come back to them right it's not it's not a business because the core 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

38:00 makes it fun and and keeps you coming back [snorts] >> and so Anyone who's good is not um trying to rip out the human experience. Anyone who's good is is going to enhance is going to try and enhance that. And so then where where AI comes in is well, how do you help someone keep it human but run their business more efficiently? >> Yeah. >> So whether that's like listing items, we can make that much better.

38:24 Um we, you know, when you're setting up a live stream for the discovery systems, often time you need to add a lot of metadata. Well, we can infer all that metadata with LLMs. Um, we're investing in it from an analytics perspective. So, let we'll tell you where your business is doing well, where it's not doing well, where you can improve it. And so, you know, honestly, in like a fairly succinct way, what we what we generally do is um look [clears throat] at where we're deploying AI and where it's being efficient for us

38:53 and then try and expose it to the sellers. >> Yeah, that makes total sense. And if I hear you right, that doesn't involve like giving sellers avatar tools or something like that to >> No, I mean, look at >> try to build scale or something like that. >> Look, at the end of the day, we'll we'll put energy into what's going to be good for the buyer and it's going to be good for the seller.

39:15 Um, but today we don't see a need for uh avatars because that's not why people come to what? >> Yeah, they come for the human connection. Yeah, totally agree. That makes a ton of sense. We've covered a ton of ground like we've talked about, you know, the platform today, the origin story, supply side, demand side, whatnot is definitively one of the most interesting and unique companies that we've invested in.

39:38 Um, and you know, I've been very fortunate to be part of your journey. In closing, I would love to hear just what is next, like what are the most exciting things that you're building towards uh that you want to grow into over the coming 12 months? Yeah, I mean in in some ways it's it's relatively simple, which is um there's just an incredible amount of work to do to help more and more businesses grow on whatnot.

40:02 And so over the next 12 months, 24 months, 36 months, a lot of it is just like making sure sellers can run better businesses on whatnot, giving them the tools to run better businesses, opening up and making the experience better for more categories on whatnot. So, one of the ones that I've been dying to do um is like I want to do cars on whatnot because you should be able to buy a car on whatnot.

40:25 And how cool would it be to be able to like see the full experience, get the video behind it? >> Oh, this is that's an awesome idea. >> Yeah, it's going to be um it's going to be amazing. It might be not good for um uh my bank account. [laughter] Um and I'm I'm obviously obligated to to try it out. You got to dog food it. Um, and so, so I think there's a, you know, just a huge amount of investment just continuing to make sure make people help people build better businesses.

40:51 Uh, and then, you know, in order to do that, we have to have a really great buyer experience. >> Yes. Because we 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, improving the selection and quality of the products on the platform.

41:09 And that's that's really it. Now, maybe we'll launch in some more countries. We'll do some cool stuff like cars. You know, eventually we'd like to get into liquor, beer, and wine. So, there's a whole litany of things that we we're we're excited to do, but fundamentally it boils down to help more people build businesses and make sure that the people transacting those businesses are having a great experience.

41:28 >> 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, um, thanks for the time, Grant. So fun to be with >> you. [music]