Whatnot raises $545M Series G at $20B valuation as live shopping builds a large middle class of millionaire sellers

Speaker 1: Wanna change the world? Raise capital at the New York Stock Exchange.

Speaker 2: Now who should do that?

Speaker 1: Databricks. That's right. And well, let me also tell you about Codex. Codex is a powerful workspace for getting work done with AI agents, whether you're writing code, analyzing data, creating content, automating business workflows. Codex helps you move projects forward from start to finish. We have a surprise guest. Surprise guest. We got a massive round. We got to warm up the gong. How are you doing? What happened? Tell us. Introduce yourself. Sorry. We're very excited. We have Grant from Whatnot. How are you doing?

Speaker 4: Hey. How's it going, guys?

Speaker 1: We're doing well.

Speaker 2: Great to see you.

Speaker 5: Great to

Speaker 1: see you. Give us the news. What happened?

Speaker 4: Good to good to be back. I guess the news, we just round raised a series year round for 500,000,000

Speaker 2: could hear you. I can barely hear you over the sound of the gong, but you said $20,000,000,000 valuation. Massive. Wow. Massive.

Speaker 4: Yeah. Big a big dollar amount.

Speaker 1: So so what's driving the growth? Because this isn't an AI story. This isn't an AI build out story. Is it a secret to the is this in the product? Or is this just an overall culture is changing and that's driving whatnot growth? What unlocked this round?

Speaker 4: I I think it's relatively simple, which is that live video is an incredible median if you're running a business, any retail business. And, you know, we've got hundreds of thousands of people building large businesses on whatnot. The format's equivalent to basically having a brick and mortar retail store with no fixed cost. And so as our sellers grow, we grow and and that's why we've been able to close this round.

Speaker 1: Okay. Talk to me about those mature businesses that are being built. That's the key to so many of these types of businesses. When you get a Doug Dumero on YouTube where it's a whole company that's built on, there's reliable stream of content happening, what do the most mature whatnot creators look like? Do they have teams? Do they have staffs? Have they raised money? What does that side of the business look like?

Speaker 4: Yeah. I'd say the most mature businesses are sort of like medium sized enterprises. They may have anywhere between, you know, a couple people working with them all the way up to a 150 or 200 folks. They'll have pretty sophisticated logistics Yep. Sourcing, multiple streamers, and, you know, they're running really legitimate operations.

Speaker 1: Mhmm. And what's the shape of the content? In YouTube, there might be like series of formats. Like Doug Jamiro does car reviews, but then he also talks about his career and talks about the news. Are there different elements where a creator and whatnot might have like a series of sort of media products that they do within a stream or over the course of a week or a month?

Speaker 4: Yeah. I think a lot of it does depend on the seller and what is the thing that makes the business work. Say one of my one of my favorite people, always bring up because it's fun, is a seller called e fish co. Okay. And they sell fresh fish from San Diego. So a seafood distributor. Amazing. And so they'll they'll have just just different theme shows based on what's in season. You have like a caviar show, you have a crab show, you have a bluefin tuna show. And so what they're doing is they're theming their shows around whatever is freshly caught at that time of year or even that time of day.

Speaker 1: Yeah. That makes a lot sense.

Speaker 2: So a company is interested in getting a lives into live streaming. Talent feels like a like a bottleneck Mhmm. To that. You guys can provide all the tools, but they need to have somebody that's like excited and comfortable being on air. And we we've gotten very used to just coming on every single day. We basically come in here, we're prepping the show, hanging out, and then there's like five minutes until we're supposed to go live. We just have to count down and go. And it's very much like, just like clockwork at this point. But I remember early on going live, it was a little bit nerve racking sometimes even though our audience was small. We didn't we didn't have this sort of like well oiled machine yet. And so what advice are you giving to people? Let's say like more a company that's already an established like retail business that wants to start selling on whatnot. Are you advising them like find two or three hosts? Are you saying, you know, it should be founder led? Like, what is the what is the guidance that Whatnot gives at a plat as a platform? Or what are you seeing working?

Speaker 4: Yeah. I mean, I think what works does span the spectrum. Sometimes the people who are starting these businesses are already used to creating content on social media, in which case they're like a really great person to go in front of camera. The other thing that people have a misconception of is that you do have to be like the most entertaining person in the world. Actually, what people are looking for is someone who authentically knows the stuff that they're selling. And so even if that's not you, as long as you know your product inside and out, you can get a good audience, you can get people into the shop, and you can build really big businesses. And then maybe for like bigger businesses, you know, oftentimes looking at the social media team and people who have some experience building content, testing it out that way and then scaling from there.

Speaker 2: I'm surprised that Zac hasn't cloned you guys yet. Oh. Like, it actually is like is Zach anything that's hot and working and in consumer, Zach will come for it eventually. Not that the not that the hit rate is, really that high, but this feels like I imagine so much of the discovery, whatnot seller discovery is happening on on meta platforms. Mhmm. You know, how do you answer how have you answered that kind of question that I imagine you've gotten at every single round to date?

Speaker 1: Because you're now bigger than some of the public companies that Zuck has cloned.

Speaker 4: Look, I For six and a half years, we've always had competitors whether it's big social media platforms, big e commerce platforms. It's a who's who of names

Speaker 1: Yeah.

Speaker 4: Because the live shopping market is is going to be, you know, absolutely enormous. Mhmm. No matter what, we've grown every single year, you know, basically at least double the business Wow. Every year and we just we just we just do that by focusing on our customers. And and we think there's an opportunity for a standalone business here where we just do all the things better than any individual business who's doing a 100 different things.

Speaker 1: Yeah. I feel like we can hit the soundboard way more aggressively because we're we're in a very safe space here. It's not it's not an enterprise, you know, chip CEO who maybe is less familiar with this stuff. What do you think like the most mature whatnot content will look like in a decade? Is this going to turn into I don't know. We've seen like the Mr. Beastification of YouTube where he's like basically creating game shows at a higher budget than what's on like network television. But where do we go? Do we get like soap operas? Like the original story of the soap opera was like soap companies went and created this whole genre. How how cinematic is content going to get or is the is is raw authenticity something you see as like durable and going to stay around for a long time?

Speaker 4: I think look, no one's going to purchase a thing from someone they don't trust and believe in. Mhmm. Like putting a credit card into a thing is is a trust based decision. Yeah. So I think authenticity is always going be core. That doesn't mean that people aren't going to blow up production values, make it really fun. Like, Mr. Beast, think a lot of people would say is incredibly authentic Yeah. Despite, you know, the, you know, the huge production values. And so my prediction would be it sort of bifurcates. You're gonna have I think every retailer in the future is gonna have a live presence. There's just no question about it.

Speaker 1: Yeah.

Speaker 4: And that means you're just gonna see a huge range anywhere from a mom and pop shop all the way up to bigger brands doing it and and sort of the production value that follows that. And then you're gonna see that some sellers like a MrBeast will just continue to up level the game and try and become the, you know, the best known person in the industry. And that'll that'll come with production to follow.

Speaker 2: How do you how do you think about where whatnot streams should show up on the Internet? Like, you only want people watching on whatnot.com or or in your app? Or is there a world in the future where you would be powering effectively a pop up on a retailer's, you know, website? If I land on a website and a retailer happens to be in the middle of selling something, I probably should be aware that I can just go watch and and interact with the stream live. But how do you think about that?

Speaker 4: Yeah. I I think we're the only thing we're really precious about is making sure we're constantly improving the the buyer and seller experience as much as possible. And because we do have the platform today, oftentimes, the the biggest impact for the effort is in improving the platform versus doing something white label or embedding. But we wouldn't rule it out entirely in the future if that's what our customers wanted.

Speaker 2: What about streaming on smart TVs? I, you know, I think everyone most people are surprised when they realize how much streaming on YouTube is happening on televisions. I could imagine people putting whatnot on the TV and then being ready to buy just on their phone. Is that happening already? Is that am I am I off?

Speaker 4: No. Mean, a lot of people are Chromecasting on their TVs. We haven't built any native app yet. That definitely may on the road map at some point in the future. It's it's not on it now, but we know people do wanna lean back. They watch with friends, and so it is a and sort of a natural median to do it well on on a big You

Speaker 2: don't think you could afford to make a native app yet?

Speaker 4: Well, look, it's it's always it's always just about you need a deep amount of focus to do anything well. And there's about a 100 different things that we can do. You know, there's tons more categories that we want to get into. High OV items, cars, liquor, beer, and wine, more countries, just improve the shipping experience, improve the purchase. So so if if you looked at our roadmap, there's probably like thousands of things that we want to do. And so you always are in this world of despite the amount of resources available, there's a finite quantity of things that can be done. So when we do a thing, we try to do it well. And so we still maintain a pretty ruthless focus as a company today.

Speaker 1: Last question for me. Talk walk me through two hypothetical scenarios and and test if I have this correct. So we were talking about Authentic Brands Group earlier. They own a whole host of clothing brands from Volcom to DC Shoes to Brooks Brothers and Nautica. And it feels like that would work really well on whatnot because you have so many different items, so many different brands, everything is very visual versus let's say Diet Coke. It's sort of one product. People know it. They advertise a lot but I don't know if I was hired as the livestreamer at Diet Coke. Basically, How I would fill out yeah, yeah, basically I am. But how how am I filling out, you know, a full livestream if I have a smaller product catalog is basically the question or a less visual product?

Speaker 4: Yeah. I mean, think so look, I don't think Diet Coke is going to be making live streams anytime soon. Okay. That that said, we do see a lot of success from people who do have smaller product catalogs. Okay. And so a lot of it depends on can you make the show interesting.

Speaker 1: Yeah.

Speaker 4: As well as like, there are a lot of people who come to whatnot and so you can still drive people into the show. Yeah. Again, I sort of think about it akin to a store in the mall. Sure. So there are stores in the mall that maybe only have a small number of product SKUs. They're still successful in the mall because you have a bunch of people who are coming in. Yep. They're looking at it, discovering it. So that that happens on whatnot as well. But you look, yeah, if you have one SKU, you know, I don't know. You'd have to be one of the most creative people in the entire world in order to make that show interesting consistently through time.

Speaker 1: Now I just want my diet coke store at

Speaker 5: the mall.

Speaker 2: At the same time, it's it's not unreasonable to think in the future you have a brand, even a brand with a relatively small number of SKUs that just like within normal business hours, they just have someone that's effectively there ready to stream. Mhmm. And even if there's one or two viewers, you know, small number of viewers, they can talk and interact and they can ask questions and they, it it's it's like there's plenty of stores in the world that that exist. You look at like brands, you know, fashion brands

Speaker 3: Mhmm.

Speaker 2: Luxury brands where there's not that many people that really go into the store, but it's important for the store to be there Yeah. In case those clients actually come through.

Speaker 1: Flagship. Yeah.

Speaker 2: But I saw I saw a brand like True Classic that you now, at least for moment, if you land on their website, they just have a livestream I don't know if it's all the time but at at least cool. Yeah.

Speaker 4: I mean, it doesn't for the economics to work in live, they are roughly equivalent to a physical brick and mortar store. And so if you were to go look at any store, you know, the average store doesn't generally have more than 15 or 20 people in it. So if you have 15 or 20 people, you can make the economics work and and work really well. That said, there's a reason there isn't a Diet Coke store today, right? Yeah. That's that's still a pretty boring store to go to. But I think the store analog is

Speaker 2: be a good good marketing stunt for Yeah.

Speaker 4: Like a one time.

Speaker 2: Have somebody just there on stream all day. They're not even talking.

Speaker 1: And I I I think they have done like the world of Coca Cola activations with the polar bears and the Santa Claus because they built out this world that can actually inhabit more even though it is a narrow product. The brand is so big that it actually does work. Does does monetization happen at a different if I look at the slope of monetization, does it happen on a different sort of curve than, say, YouTube where I had a YouTube channel for a full year, I think my maximum payout was like $5 a month. And then all of a sudden, ramped and it got much bigger. And I'm wondering if there's, like, more of a middle class, less of a middle class. Like, what the shape of the like, how power law is it on whatnot amongst the creators?

Speaker 4: So I'd say the power law exists, but the monetization is an order of magnitude better than any existing platform. Yeah. That's Because you don't need a ton of audience. Yep. And so there is a there's a large middle class. Yeah. Now, doesn't take away from the fact that there were also some like monster winners like most media platforms. Yep. You know, if if you went live a couple times a week and had consistent products to sell, you would you very easily do hundreds of thousands of dollars a year in sales.

Speaker 1: Yeah. That's crazy. Because on YouTube, like, you can be putting up channel that gets a a couple thousand views every time you upload. You can be doing it for a full year and make like 3 figures. Yeah. As I did. I think that's actually what I made.

Speaker 2: 3 figure YouTube entrepreneur.

Speaker 1: 3 figures. That was me in 2021.

Speaker 4: I was looking pretty recently at the sell sellers who have or who earn over $1,000,000 a year at what

Speaker 1: now.

Speaker 4: And 75% of them get to a $500,000 run rate within ninety days.

Speaker 1: Mhmm. Wow. That's

Speaker 2: insane. You look at you look at Shopify is like we're trying to get three sales. What was it in the first fourteen days? That's like that's good

Speaker 1: Yeah.

Speaker 2: Effectively for a new Shopify store.

Speaker 1: It's fantastic. Wow.

Speaker 4: If you if you didn't get 50 sales in your first show, you'd probably be doing it wrong and whatnot. Is there Or you guys explicit. You guys explicitly.

Speaker 1: Sure. Sure.

Speaker 4: Sure. Like if you Yeah. Yeah. Since people know you. Yeah. Yeah. But but even like many early shows have lots and lots of sales and will make thousands of dollars.

Speaker 2: What is the state of the team where people set up?

Speaker 1: I think

Speaker 2: I remember you have you have multiple offices but you do still have one in LA. Is that correct?

Speaker 4: Yeah. So so let's see. We're about 1,400 full time folks. We're in 10 countries. US offices all over. We still have our LA office, San Francisco, Phoenix, New York, and what am I missing? Probably miss Seattle. Mhmm. And then we have a bunch of overseas offices.

Speaker 1: Very cool. Yeah. We got a bunch of good ideas in the chat. Everything from a Coke factory tour to TBPN merch and whatnot. I think

Speaker 2: sell game drink diet Cokes. Just the empty cans? The empty cans. Sign.