How Whatnot Became a $20 Billion Company

The first item ever sold on eBay was not, as company legend has it, a broken Pez dispenser. It was a broken laser pointer, bought by a man who collected broken laser pointers. Whatnot founder Grant Lafontaine tells this version of the story with some relish (17:23), because it makes his point for him: nearly every giant marketplace begins as something almost embarrassingly small. Whatnot, the livestream shopping app Lafontaine built with cofounder Logan Head, is now valued at $20 billion (00:00), more than the combined market value of Wendy's, Under Armour, Hertz, Harley-Davidson, and American Airlines. It got there by selling plastic Funko Pop figurines to strangers on the internet.

Lafontaine is oddly unbothered by the number. Asked what it feels like to have built something worth that much, he says the size of it is easy to avoid thinking about.

"If you focus on it, it sort of seems obscene... and so I just try not to think about it and just sort of look at, like, the problem ahead and put one foot in front of the other." — Grant Lafontaine (00:45)

That instinct, to look away from the scoreboard and back at the next problem, turns out to be the through-line of how Whatnot actually got built. The company did not start as a collectibles marketplace. It started, six and a half years ago, as a drunken idea in a Tokyo bar. Lafontaine and Head, both veterans of consumer tech at places like Facebook and YouTube, decided over drinks that they wanted to build a better, fuller version of Craigslist, the classified-ads site known for its ugly, bare-bones listings. They bought about 50 domain names that night (05:21). Within weeks, the idea was dead. A marketplace for secondhand goods only works if delivery is cheap, and when Lafontaine called logistics managers at companies like Bob's Discount Furniture to price out deliveries, the math didn't clear (08:10). "The unit economics just don't make any sense," he says of the full-service Craigslist idea (05:55). Unit economics, in plain terms, means what it costs to serve one customer versus what that customer pays. On used furniture, the delivery cost alone ate whatever value was left.

So Lafontaine went looking for a broken marketplace worth fixing, and he kept circling back to eBay. Using a sales-analytics tool called Terapeak, he and Head pulled sales data across every eBay category and noticed collectibles were, in his words, going gangbusters (12:15). Funko Pops, the vinyl figurines that fill comic shops, were outselling even comic books on eBay at the time (12:45). That data point, not a grand vision, is what pointed Whatnot at Funko Pops. It is a small, almost silly niche to bet a company on, and that was, paradoxically, the strategy.

Solving the oldest problem in marketplaces

Every two-sided marketplace faces what's called the chicken-and-egg problem: buyers won't show up without sellers, and sellers won't show up without buyers. Whatnot's answer was blunt. It became the seller. In the earliest days of the app, every single listing was Lafontaine's own inventory (20:29). He and a small team in Brazil hunted down Funko Pops across roughly 100 online stores, authenticated them, and built a pricing algorithm that scraped competitor prices and required what he calls a liquidity floor, meaning an item had to have sold a minimum number of times recently before Whatnot would risk listing it (21:14). Only once buyer demand was strong enough, around February 2020, did Whatnot open the platform to outside sellers at all (28:02).

To pull in buyers without an ad budget, Whatnot built a giveaway mechanic instead. Once a week, the app raffled off a rare, expensive Funko Pop, and entrants could earn unlimited extra raffle tickets by sharing a referral link on Reddit, Facebook, or Twitter (22:45). The first attempt flopped: 104 total entries, roughly 30 to 40 people, and zero purchases (26:22). The second attempt did about 2.5 times better. That compounding, week over week, is what let Whatnot take over Funko Pop communities online without spending on paid acquisition. "We spent virtually no money on paid ads in the early days," Lafontaine says. "It was never gonna be an effective acquisition channel for us" (25:32).

From $2.3 million to $1 billion

The company's first full month, December 2019, produced 30 total sales (29:32), some of them at a loss because the pricing algorithm was still miscalibrated. Growth stayed slow until July 2020, when Whatnot launched live video auctions, letting sellers show and sell items in real time rather than through static listings. That single feature changed the trajectory. Whatnot closed 2020 with $2.3 million in total sales and about 17 employees (34:58). It closed 2021 at $168 million (35:15). By 2022, it had crossed $1 billion (35:45). The company now employs about 1,400 people (39:59).

Underneath the growth curve sits a philosophy Lafontaine returns to more than once: build for the customer first, not for a founder's vision.

"We're not a sort of vision-driven company. We're a user-driven company. So we were never beholden to, like, our idea needing to be, like, the idea." — Grant Lafontaine (13:53)

He extends this into a broader skepticism about the startup mythology of the visionary founder, the Steve Jobs figure who supposedly saw the future before anyone else. "Stories are sort of BS," he says. "A lot of stories in terms of, like, business are, are really a mechanism to convince people to follow you versus something of, like, real substance" (15:24). His evidence is that almost every company he can think of, eBay included, started in a market too small for a serious investor to take seriously, then expanded once the small version worked (16:30).

That same appetite for substance over polish shapes how Lafontaine runs meetings today. Sean describes learning a habit from watching Twitch executive Emmett handle product reviews: ask simple questions, over and over, until a confident-sounding answer either holds up or falls apart (47:09). Lafontaine has adopted the same approach at Whatnot.

"If you start to use a bunch of fancy words, I'm going to make you explain it to me like I'm in, you know, in middle school." — Grant Lafontaine (46:52)

He applies the same distrust to statistics. He notes that AB tests, the standard method of comparing two versions of a product to see which performs better, are often misleading on marketplaces like Whatnot's, because changing what one group of users sees changes seller behavior too, contaminating both sides of the test (44:00). His fix is to plot what he calls elasticity curves, tracking how an individual seller's business grows or shrinks as their visibility on the app rises or falls, rather than trusting an aggregate test result.

Lafontaine is equally blunt about pace. "Almost everyone who says they're moving fast is moving slow, if I'm being honest," he says. "If you have to talk about it, you're moving too slow" (54:31). It's a strange thing to hear from someone running a 1,400-person company, but it fits the pattern: less narrative, more verification.

Where does all this land? On a bet that livestream shopping, where a seller shows and describes an item on video while buyers bid or buy in real time, is still near the beginning of a much bigger curve. Lafontaine estimates that live commerce today makes up only a single-digit percentage of e-commerce in the US and Europe, where the live commerce market is worth around $30 billion (57:05). In China, by contrast, live commerce already accounts for roughly 40 percent of all e-commerce (57:28). He expects the US and Europe to eventually approach that same share, calling for something like a 20 to 30 times increase in market size from today's base (57:15). Whatnot's own biggest sellers already do, in his words, "well over" nine figures in annual revenue (58:08); China's biggest live-shopping sellers clear $1 billion a year (59:01).

It's worth sitting with how strange the arc actually is: a Tokyo bar, a dead Craigslist clone, a broken laser pointer as a parable, and then a $500 Funko Pop raffle that eventually scaffolds into a $20 billion company. Lafontaine's own explanation for it keeps refusing to be dramatic. Pick a small, provable niche. Solve your own supply problem before asking anyone else to. Get suspicious of anyone, including yourself, who can't explain the mechanism in plain words. None of that is a story built to impress a room. It's closer to a checklist, which may be exactly why it worked.