A few years ago, you went to eBay to bid on limited edition sports cards or out-of-print comic books. Then, livestreaming came to town.
Two weeks ago, one Pokemon collector dropped $17,500 on a Skyridge Charizard Holo card during a broadcasted event streamed live on Whatnot.
What began as a social app for collectors to swap stories and photos has ballooned into a digital stage for live auctions and unboxing videos. Since January, the Los Angeles tech startup has hired some 40 employees and leased a 10,000 square-foot office space in the Marina Arts District.
And on Tuesday — just a few months since its last big boost — the startup closed a $50 million Series B round.
Whatnot recently closed a $50 million Series B round.
"It's probably one of the fastest growing marketplaces we've ever seen," said Y Combinator's Anu Hariharan, who led the round.
It's been over a year since consumers moved online in droves and investors are still sinking millions into retail technology —livestream shopping especially.
L.A.-based Popshop Live was valued at $100 million last fall after an investor bidding war to lead its Series A. Talkshoplive, which hosts celebrities livestreaming about their memoirs and latest albums, scored seed capital in February from a venture firm backed by eBay's founder.
One Pokemon collector dropped $17,500 on a 1st Edition Shining Charizard card during a broadcasted event streamed live on Whatnot.
What gives? Hariharan said U.S. ecommerce has only embraced video in the last three to five years, and now it's everywhere. Even retailers like Home Depot introduced livestream demos and workshops during the pandemic.
Grant Lafontaine, the CEO and co-founder of Whatnot, brought the technology to a niche, well-connected community of online shoppers. He founded the company in 2019 with Logan Head, a former product manager at the online sneaker marketplace GOAT.
Their users are 18 to 32-year-old collectors who spend hours browsing eBay listings but crave something more interactive.
"They're on eBay because they're buying the collectibles, they're on Instagram to show them off," Lafontaine said. "They come to Whatnot because they can do both."
The company got its start as a social platform and marketplace — sans video livestreaming. That function came later, after a steady pool of users made checking Whatnot a daily habit.
"I was the first person to go live," Lafontaine said. "I sold out $5,000 worth of collectibles in two-and-a-half hours. The experience kind of spoke for itself. Anyone who saw it wanted to use it."
Other investors include Andreessen Horowitz, Animal Capital, musicians Ryan Tedder and DJ Skee with Min 10 and NFL players DeAndre Hopkins, Bobby Wagner and Jeremy Padawer. The company has raised $75 million to date.
Whatnot now boasts 15 categories of collectibles, from FunkoPops to sports cards (the most popular category on the app) to a few newer experimental verticals like vintage clothing. Within the next year, Lafontaine said he hopes to hit 30.
"For a young startup, it's always important to start with one or two categories, not with everything," said Hariharan. "What Whatnot has done really well in collectives will help them scale pretty much any product."
The app, she said, is on its way to becoming "eBay 2.0."A previous version of this story stated Whatnot closed a $40 million Series B Round. The correct amount is $50 million.
Quibi launched this week into a world turned upside down by the novel coronavirus. How do things look on day two? dot.LA caught up with Chief Executive Officer Meg Whitman – former boss of eBay and Hewlett-Packard, and one-time California gubernatorial candidate – to discuss.
Whitman shares her reaction to the initial flow of real-time data on Quibi users, what she'll be watching closely over the next few months, and what the well-heeled company's future may hold. She also forecasts how the streaming wars may play out, reflects on lessons learned about the tech world, and reveals her thoughts on the burgeoning innovation ecosystem in Los Angeles.
You've spoken about looking forward to Quibi transitioning from an organization driven by intuition and experience to one driven by data. What is the initial data telling you?
First of all, we're really excited about our day one launch and our day one performance. The fact that we are number three in the App Store and number two in the entertainment segment of the App Store is a remarkable accomplishment. So we're thrilled.
And the social sentiment — we have social listening tools, like everyone else — the social sentiment is 80% positive, which is extraordinary. All the feedback we've been getting from users through our customer support team, they've embraced our innovative approach to what we're doing here. And Turnstyle, our technology: interestingly, the data shows 50% of the viewing was in portrait, 50% was in landscape--which is fascinating. So we're thrilled about that, super excited, and going onto day two here.
Over these next 89 days until the free trial ends and as the launch continues to unfurl, what will you be watching most closely?
Well, because the tech platform is not a legacy platform — it was built for Quibi — we were able to instrument into our data layer just about every piece of data that we could ever imagine we would want. So we can see, not individuals, but what are the trends in how people are watching, what are our top shows, what is our customer support team telling us every single day about what people want? Then we will prioritize those observations and requests into our product roadmap and into the kind of content that we produce. So we're looking for all the signs of how people use this app and what we can learn from it. And then of course we look at the metrics of downloads, trials, net paid subscribers, number of Quibi's (Quick Bites) per day that people watch, hours per day that people watch. We'll be watching all of that data for things that we should be doing, and adapting along the way.
Now that you've launched, can you talk a bit more than you have previously about the path to profitability?
I don't know about more than the past, but Jeffrey (Katzenberg) and I have run businesses for many, many, many years, and ultimately we know that revenues have to be greater than costs. Sometimes, not everyone subscribes to that, but we certainly do. So we've got a very clear path to profitability. The fundraise ($1.75 billion) gives us a nice long runway to get there. But we're very eye-on-the-prize in getting to a self-sustaining business. We've not told people what that number is yet, because we haven't even launched really; we're on day one. Over time, we'll communicate that to our investors and maybe even more broadly. We're very focused on getting to profitability.
When do you expect to be able to communicate the number of subscribers you're shooting for and the timeframe for doing so?
Well, remember we're a private company; certainly our investors have a window into that. But my view is we will take stock at a year. And we'll look back and maybe we'll give a more broad report on how we did in our first year. But we'll see. We're still new at this and it's the unknown unknowns that we're trying to figure out. I can't give you an exact date but I would think after a year; I'm very focused on "where are we after a year?"
To what extent has the coronavirus affected your projections and forecasts, if at all?
It hasn't at all, really. It's affected our launch plans. We had a physical launch event; we moved to a virtual launch event. We were going to do our Daily Essentials (daily news and culture segments) every day from the studios of our content partners; most of those now are being done at home. We were originally going to do a two-week free trial; but we did if you sign up by the end of April, we now have a 90-day free trial. So we made some adjustments, but in terms of our goals and aspirations for net paid subscribers and things like that, unchanged. Because I think we'll get through this. I don't know whether it'll be the beginning of summer, end of the summer, middle of fall, but we'll get through this and I think things will ultimately return to normal. So we didn't think it made sense to change the projections just yet.
Thinking back to when Jeffrey Katzenberg first approached you with this idea, what advice would you give to that past version of Meg, with the benefit of hindsight?
I think you will appreciate this, given that you are at the intersection of tech and media: these two worlds are very different. I knew that, but the difference between the San Francisco Bay area and L.A. is even bigger than I had thought. Neither is better than the other; they're just different. I took that into account, but I don't think, until I moved to L.A. and really tried to bridge these two worlds, that I understood how different they are.
It is our superpower: putting the engineering team right next to the content team was absolutely the right decision. All the advice I got from my friends in Silicon Valley was I had to put the tech for Quibi in Silicon Valley, or Seattle, or Austin or someplace like that. And I spent about two months trying to figure out whether the bench of tech talent here in L.A. was deep enough to support the launch of Quibi, and I ultimately determined that it was. It was absolutely 100% the right move.
I think we have a huge and wonderfully burgeoning tech community here in L.A., and I hope we can be a part of having that community grow and thrive. Because there's a lot of talent here. Not as deep as in the Bay Area, but a lot of talent, and we're super glad we put the tech team and the content team together. That helped bridge two very different worlds.
To what extent does L.A.'s burgeoning scene represent some of the earlier days that you saw in the Bay Area?
Well first of all, it's a smaller community. L.A. is still probably more of an entertainment-focused city than a tech-focused city. The Bay Area is all tech, all the time. So it's a smaller community here.
What I will say that I think ultimately advantages L.A., is the number of undergraduate institutions in the community. Think about it: it's USC, it's UCLA, it's Harvey Mudd, it's Pitzer, it's Pomona, it's Cal Tech, it's Occidental, it's Loyola-Marymount, and many, many more. So I think the future here is incredibly bright, because you've got all these schools focusing on computer science, focusing on engineering, so I think there will be a huge group of next-gen engineers who went to college here and want to stay. Up in the Bay Area it's just a few schools. It's UC Santa Cruz, it's Stanford, it's Berkeley, Santa Clara University -- fantastic schools, but not as many. And I think that bodes well for the future with the next generation of engineers.
Silicon Valley has been a tech hub since 1939, with the founding of Hewlett Packard; it was founded way back in the day, so there's a lot more history there. But I don't think that means L.A. can't be fantastic in terms of a tech hub.
Keeping your forecasting hat on, as media content and platforms continue to proliferate and improve, what must companies competing in the space do to emerge on the other side among the winners?
I think there's never been a better time to be a creator in Hollywood. There's tremendous demand for writers, directors, producers, actors, actresses, and all the people that surround these productions. It's literally like a renaissance in Hollywood. And I think the eye on the prize is always, is it a great story? Does it tell a new story, tell a story differently? And does it capture people's hearts and, secondarily, their minds? So you've got to keep your focus on the quality and the diversity of content that people want. That sounds a bit motherhood and apple pie, but I think that's always been true here and probably still is.
As an equilibrium eventually emerges in this space, how do you think that might look?
I think it depends on how things unfold. There's always been transitions in entertainment. Movies, to television, to streaming, to what we hope will be content designed and made for your phone, which opens up a whole new way to tell stories. I don't think there will necessarily be winners and losers, I think there will be big winners and good winners. Because there's such a hunger for content.
The other thing I would say is that every business now is a technology business, whether it's the entertainment industry, whether it's agriculture; every single business is a technology business. So I do think companies that focus on what are the trends in technology, what are some of the underlying trends that consumers adopt around technology — that will help them be winners and it will complement their fantastic content.
In your career, particularly with eBay, you had the tall task of getting people to be comfortable with the unfamiliar. You have a similar task here with Quibi. What have you learned about how to do that?
If it's compelling, people do it by themselves. One of the worries about eBay was trust and safety. So we instituted this notion of trust and safety, and the feedback profile was something we did to improve people's confidence buying online. You have to remember, in 1998 people were not buying online. Amazon was a tiny little company and there were just a few ways you could buy online back in the day. Some of it's just time, some of it is features and functionality that you build in that make people feel comfortable. But much of it, often when you're doing something entirely new, it has to get out there, people have to try it, recommend it to their friends, and people have to appreciate what you have to offer. There's no way to make people feel comfortable. It's just giving people the opportunity to try it.
How do you envision our phones changing and the way we interact with them?
The question we ask ourselves is: How can this new way to consume very high quality content on your phone continue to help enable storytellers to tell stories in new ways? The way we think about it is, what does your phone have to offer that we could take advantage of? GPS, gyroscope, camera, touchscreen, easy access to every social network. How can we take this remarkable device that has changed everything in the last 13 or 14 years, and enable storytellers to take advantage of it?
We have started with a couple interactive shows. We've got a dating show coming down the road. We've got Steven Spielberg's After Dark coming. What can we do to utilize this camera? We have a show coming in the next month or two where the horizontal view of what's happening is different than the vertical view. It's two views of the same scene, as opposed to the same view of the same scene, just told with the horizontal or vertical position of your phone. So we're really thinking through, how do we help creators do things that take unique advantage of the phone? That's going to be our focus for the next 12-18 months: what is the next Turnstyle, if you will.
Sam Blake covers entertainment and media for dot.LA. Find him on Twitter @hisamblake and email him at samblake@dot.LA
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