20VC: Startups Fail Because They Do Not Take Enough Risk, Why A/B Testing is Inefficient and Slows You Down, Why It is Impossible To Hire Good PMs so Stop Trying & 3 Key Signals The Best Engineers Present with Grant LaFontaine, Founder & CEO @ Whatnot

Grant LaFontaine is the Founder & CEO @ Whatnot, the fastest-growing marketplace in the US, empowering people to make a living off their passion. To date, Grant has raised over $225M for Whatnot from the likes of CapitalG, a16z, YC, Scribble Ventures and Wonder Ventures to name a few. Prior to Whatnot, Grant was a PM @ Facebook working on the Oculus App Store and before that was the founder of Kit.com, ultimately acquired by Patreon. In Today’s Episode with Grant LaFontaine You Will Learn: 1.) The Founding of Whatnot: How did Grant make his way into the world of tech and startups? What were some of his biggest lessons from Facebook? How did that impact how he has built Whatnot? 2.) Impossible To Hire Product Managers: Why does Grant believe it is impossible to hire product managers today? How does this impact the decision-making powers of engineers? How does Grant test for this product knowledge in all engineers he adds to the team? What are clear signals of 10x engineers in hiring processes? 3.) A/B Testing and Risk Mindset: Why does Grant not believe in the effectiveness of A/B testing? Why does it not work? Why does Grant believe one of the biggest reasons for startups failing is they do not take enough risk? How does Grant try to ensure that his team takes as much risk as possible with everything that they do? How does mindset to risk change with scale of company and with leadership? 4.) AMA: Why does Grant disagree with founders angel investing? What are the biggest challenges Whatnot has faced in scaling? CEO coach? Who? When? What is the biggest lesson? What is the single driving metric of Whatnot? How does Grant advise founders to determine their North Star metric? Item’s Mentioned In Today’s Episode with Grant LaFontaine Grant’s Favourite Book: Foundation: 1/3 (Foundation Trilogy)

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  This is 20VC with me, Harry Stebbings. Today, we feature the founder of one of the fastest-growing marketplaces in the US. Oh, yes, we are joined by the one and only Grant LaFontaine, founder and CEO of Whatnot, the fastest-growing marketplace in the US. As I said, empowering people to make a living off their passion. To date, Grant has raised over $225 million for Whatnot from the likes of Capital G, A16Z, YC, Scribble Ventures, and Wunder Ventures, to name a few. Prior to Whatnot, Grant was a PM at Facebook, working on the Oculus App Store. And before that, was the founder of Kit.com, ultimately acquired by Patreon. I'd also want to say a huge thank you to Leder at Capital G, Elizabeth at Scribble, Dustin at Wunder, some amazing questions. And then also to Anu at YC for the intro. Such a team effort here, and really did make it so special.

• 0:45Harry Stebbings?

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• 1:28Harry Stebbings?

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• 2:10Harry Stebbings?

  Data warehouse, ETL and transformation tools to centralise data from all of your sources, clean it and prepare it for analysis. There's no easier way to get faster, more accurate insights and facilitate a data-driven culture. Go to mozartdata.com/20vc to get 15% off. And last but by no means least, AngelList has been a key partner for me in managing my investments. I love using the AngelList platform because it abstracts away all the complexity and operational burden of fund management. So whether you're running SPVs, a traditional venture fund like me, or even a rolling fund, AngelList has you covered. And I'm also super excited about their new product, AngelList Stack, which is purpose-built for founders. With AngelList Stack, you can create a fundraising-ready startup in just a few clicks. AngelList handles your company's

• 2:55Harry Stebbings?

  incorporation, banking, cap table and fundraising processes, all in a single place. This allows founders to focus on building. If you're a founder, you can launch your company at stack.angellist.com/20vc. Whether you're a founder or a funder, you're in great hands with AngelList. But enough from me. So now I'm so excited to hand over to the one and only Grant LaFontaine, founder and CEO at Whatnot.

• 3:24Speaker 01

  You have now arrived at your destination.

• 3:27Harry Stebbings?

  Grant, this is such a joy to do. As I said to you beforehand, I heard like the most lovely things from Anu, from Alex and Leila at Capital G, from Dustin at Wunder, from Elizabeth at Scribble. So thank you so much for joining me today first.

• 3:39Speaker 02

  Thanks so much for having me on, Harry. I appreciate it.

• 3:41Harry Stebbings?

  Not at all, man. I've been looking forward to this. But I did want to start, you know, we look at Whatnot today and we look at the recent round and see the successes that you've had. It all started somewhere. Where did it start and what was that aha moment for you with Whatnot?

• 3:51Speaker 02

  I think like, you know, many startups, it's a long process in there. I don't think there is an aha moment. I can bring you back to like the really early origins. We were going to start a better full-service Craigslist. Two weeks in, I was validating the business model and I was like, we can't make money from this business. We have to change. And then we switched over to building a collectibles marketplace.

• 4:11Harry Stebbings?

  Was it demoralising when you realised that it wasn't going to work? I hear a lot of founders who are like desperately upset at that moment. Was it tough when you realised that wasn't going to work? And how did you think about the reason?

• 4:20Speaker 02

  I think it's anxiety producing because I think uncertainty is anxiety producing. But I was always grounded in the reality that when you look at most of the really big successes, like the starting point and the ending point are very, very different. I think that was somewhat comforting. So I would say I wasn't like absolutely dying from it, but I had high anxiety.

• 4:39Harry Stebbings?

  You know, you spend time, obviously, at Google and Facebook pre-founding Whatnot. When you look back at those experiences, how do you think that impacted how you approached company building with Whatnot?

• 4:49Speaker 02

  Probably in two ways. One, I think you get an inside view of like some of the things that make those companies very successful and you want to steal that. I think both of those places have like really unique cultures. Being on the inside, you can see the pros and cons of each of those. When we defined our cultural principles, I actually kind of think of them as a mishmash between Google, Facebook and like, I haven't worked at Amazon, but I admire a lot of Amazon's principles. We actually did a principles-based approach versus values. So we did steal from Amazon too. Whatnot is not what it is today without me working at those places.

• 5:18Harry Stebbings?

  I mean, let's take it in kind of chronological there. You said one about stealing the processes that work. What did you steal that worked and how did you translate that to whatnot?

• 5:27Speaker 02

  So I think like when I look at a huge part of the success of both Google and Facebook, it was really about empowering engineers and allowing engineering to like go out and build and solve real user problems. Google is incredibly user problem focused and incredibly engineering focused. Probably taking that to more of an extreme F, I'm being honest. So today we have about 50 engineers in the team. We have one product manager and so our engineers drive the company and drive the product roadmap and drive the decision making. You know, we've had to, you know, adjust things a little bit. All of our engineers actually go through a product interview so that they can make sound product decisions and judgments. But when you have the people who are actually executing and building the thing, driving the decisions, they're way more empowered. You have fewer people in the equation, so you can get things done way faster.

• 6:11Harry Stebbings?

  Teeing me up so nicely. I always have these great schedules, which are very structured. And then I get into it and I'm like, ah, fuck it. I'm just going to go whatever way I want. You mentioned 50 engineers, you mentioned one PM. You said to me before the show, it's impossible to hire good PMs. Why is that? What's the solution? Is one to 50 okay? Help me understand this.

• 6:30Speaker 02

  I'll share a little secret. Our one PM, she did just go on maternity leave on Friday. So we're actually officially zero PMs and 50 engineers. We are going to build a PM team. We want to build a very exceptional PM team. We'll probably always keep the ratios very high relative to standard companies. Because we want to optimize for speed. The more people in the decision-making process, the slower it goes. It's just like no way to like solve that. In terms of hiring PMs, the biggest pool of PMs today are coming from like the FAANG companies, Facebook, Google, et cetera. And they tend to be strategy and numbers focused. You know, I strongly adhere to kind of like YIC's principle of build something people want. And so it just all flows from users.

• 7:14Speaker 02

  At this stage, the greatest superpower you can have is like deeply understanding your users and your user problems. You know, I think at scale, it's really hard to do, which is why Facebook and Google rely a lot more on strategy and data. But if you are really grounded and empathetic to your users, you can make high-quality decisions without huge amounts of data. Ultimately, what that allows you to do is speed everything up. Add value to users exceptionally fast.

• 7:42Harry Stebbings?

  Well, this was going to be my question. You said there about kind of the biggest advantage at this stage being the closeness to the user. For me, I always say the advantage is the speed of execution that one can move at that the big incumbents can't. I know that one of your principles is move uncomfortably fast. When you think about that and the speed of execution, how do you think about the things that one can move uncomfortably fast on versus the things where you have to really spend the time?

• 8:05Speaker 02

  I think my punchline is no matter what you're doing, you should always seek to do it fast, at least execution. Every bit of execution should be done fast. It's far too easy to get sidelines, get 100 disparate opinions, just get nervous and risk averse. You know, the framework that I think is the best is Amazon's framework, which is like one-way doors and two-way doors. You know, most things in software are two-way doors. If you make a mistake, you can always walk it back. And so even like if that is the case for the decisions that you're making, you might as well slack a little bit on the planning side, push into execution, because you tend to learn a lot. More in execution than you do from planning because you start to like get rid of the unknown variables. And so you just do those things exceptionally fast and you build.

• 8:47Speaker 02

  And there's some mechanisms you can have in place to just like make sure you don't mess anything up terribly. So we're a really heavy dog fooding culture. Once a feature is ready, we just spin up a Slack dog fooding channel and the whole company goes at it. And everyone sends the feedback and the engineers stack rank it and figure out what they want to fix and what they want to push out. On two-way doors, the difference is you do execution very fast and you try and let nothing get in your way. But you're probably more thoughtful in planning upfront, getting all the inputs, getting the feedback of the organization. Because the decision you make there is harder to pull back. And so that's kind of the way we think about things, but 99% of things that we do every day. You know, one-way doors are like hiring, culture, there's few, you know, platform level decisions, policy, fees, et cetera. Very, very, very few. And so with all things, you do it fast.

• 9:32Speaker 02

  There's some risks in that. Facebook is the, probably the one who like pioneered this the most was like move fast and break things. You know, what can happen? And we've run into this issue is like you can use speed as an excuse to slack on some other things. And so I think, you know, one of the things that we try and do is like speed on everything, absolutely. But that doesn't give you an excuse to do poor quality work. I mean, we're not A plus students. I like to say like we're B plus student. It's got to hit a quality bar, but that's kind of the, the framework and the way we talk about it internally.

• 9:58Harry Stebbings?

  I love that. You mentioned that the dog fooding culture, which, which I agree and love. My question is around that. How do you think about when to listen to your users versus when to listen to intuition and gut? And build what you and the team think is right?

• 10:11Speaker 02

  You know, you brought up this question of like, how come hiring PMs is so hard? This is part of the root of it. You need to have exceptionally good taste and judgment to make those decisions. There isn't a scientific formula for it. And so I think the best that you can do is deeply understand your users and be incredibly empathetic to them. And also deeply understand the business. Things do trade off against the business. If you have people with sound judgment, you kind of unleash them to make those decisions and they can make them. If they're really good judgment, most of those decisions will be good. 10% of them might be bad, but we live in a world of two-way doors. So you can walk those back and you can learn from them. And then over time, you're basically just tuning your judgment. You know, we're pretty lucky because Built a product for us and I do think that is like a hack to the system.

• 10:53Harry Stebbings?

  You mentioned the great, you know, the judgment that people have and 90% of the time or so being right or being good at least. A question that I have that you mentioned earlier, which is really interesting is you put all engineers through a product interview. That's quite rare. Can you help me understand? What does that interview process look like? What questions do you ask? What are the signals that great engineers produce to suggest they have product now?

• 11:19Speaker 02

  Yeah, we honestly just give them like a product design interview question, pretty similar to what like a PM would get. It can take a couple of different forms. Probably the most common one is like, walk me through the whatnot app. Here's an example. Tell me how you would redesign the feed to make it better for users. And literally come up with product solutions and then maybe even talk a little bit about the implementation details. And the signals you're looking for there, one, it's funny how this one always falls off, but someone who's actually like used the whatnot app significantly, if someone's going to be able to make sound product decisions, they need to have the initiative to actually use the app, be excited about it and be into it. You'd be surprised at the number of people who can hardly speak to the product. You know, I think a lot of people come into the interview process like, oh, there's this unicorn company. It's growing really fast.

• 12:02Speaker 02

  I want to be on the rocket ship. And so they look at it from that perspective, but if you're going to work on something, you have to be really into it. So I think that's number one. You know, number two is just like extreme user empathy. So like they can articulate some of the problems that users on the platform have, then be able to devise a solution to those problems. Then the third actually, I think, is a comfort taking real ownership. Because we're in a world where we basically don't have PMs. There's so many decisions and bits of ownership that engineering is required to take control of. We don't have Jira, no one writes tickets, there's no set processes, no one hands you anything. So I think it's a real excitement about the products, a real empathy for users and a real desire to take ownership. And if you have those components in like an engineer or engineering manager, it's a really, really powerful combination.

• 12:47Harry Stebbings?

  How do you create a culture where by engineers and team members feel that ownership? And they're excited by it to go big and to think ambitiously, but also aren't scared of ramifications if it goes. is wrong.

• 13:00Speaker 02

  Yeah, it's, you know, it's a really tough one. I don't think we've nailed it entirely. One of the the more interesting observations that I've had in building this company is the level of risk aversion. When you're coming from, let's just say, a big tech company to whatnot, you kind of have to like, one of the biggest things that I see people having to do is they have to like shift their whole judgment model a little bit. When you're building a product at Facebook, for instance, you write up the product spec and there might even be like a section in there about like key risks. And you're gonna go have to like de-risk a bunch of those things. You probably spend the vast majority of your time actually like de-risking things. Whereas like the optimal way to do things, particularly at our stage, is to like invert that. What is the thing with the highest upside? As long as there are no existential risks, don't worry about them. Most of the risks that you enumerate are never real.

• 13:45Speaker 02

  And so instead, you kind of have to just push something out there and understand what the real risks are. My co-founder is a little bit better at this than me. I'm a little bit like more risk averse. But it's amazing the number of things that we've pushed out and we thought would be higher risk. Something else would pop up and it just never does. I think there's a couple of layers to how you solve the risk-taking. And again, I don't think we're perfect because it's it's a very deep rooted human bias to avoid risk. I think one is talk about it a lot, take on risk, I talk, you know, I can give that story. That's to me was when I switched from Facebook to whatnot, one of the hardest things that I had to unlearn. We interview on it. We want to see people have taken on big projects. We want to see people who are comfortable owning things. And I think, you know, everyone on whatnot gets interviewed on our principles. It's probably it's the single most important thing to interview on. I think we reward big upside.

• 14:29Speaker 02

  We actually don't explicitly reward failure because I also don't think you want to reward failure. We make sure that failure is not punished, right? It's fine to fail. And in fact, you know, the narrative is like, you're gonna have to fail before you do some big things. We don't want to fail. You should never want to fail. You should want to win. You should want to, you know, do the best you can. One of our principles is, you know, we make bets. The live shopping component of whatnot was a bet. We didn't know if it was going to work. Those are some of the things that we do to try and like shift the human bias to avoid risk versus actively take risk.

• 14:57Harry Stebbings?

  Grant, the best CEOs are the best resource allocators, is a statement often said. You said there about making bets. How do you think about the bets that you want to take versus the ones that you don't?

• 15:08Speaker 02

  I think that's probably true for a lot of founders, like. Like to build new things. That's the joy. The joy is in building new things, which is in the new bets and bringing something from zero to one. I have a document with all the bets that I want to make at whatnot and it's very, very, very, very. Because you can very easily go in one direction or the other. I kind of think about 10 to 20% of resource should be on new and exciting things. I actually believe one of the bigger failure points for startups, they do not take enough. Again, it comes back to say did not actually take enough. Like you can basically fall on both sides of the spectrum, which are failure points. You can either take too much risk or not enough risk. If you look at like the really, really big and great technology companies, Amazon, Google, Facebook, Apple, et cetera. One of the common denominators is they continue to reinvent themselves and build new and exciting products.

• 15:52Speaker 02

  And the later you do that in the life cycle of your company, the greater the uphill battle and the inertia and the culture somewhere else. You know, as I said earlier, it's very hard to like get people to want to take risks. If we didn't have that as a core part of our culture from day one and we got to a thousand people, it would be infinitely harder. The flip is you take too many, you can't focus, which means you can't improve your core product and potentially you die from competition. Which is why I think you basically just have to get to like a mathematical rule. So no more than 20% of resource on new and exciting bets. You know, when I did my annual plan this year, we put a couple of bets down, we'll resource those as pretty small teams. Most things in software, you don't need more than six people to actually make happen. Live shopping on whatnot was built by my co-founder in six weeks by himself. And so I think that's a piece of it as well.

• 16:35Harry Stebbings?

  And when we think about, you know, culture in particular, so many of your investors said it's something you've absolutely nailed.

• 16:40Speaker 02

  I can tell you what's been hard at whatnot. A couple of the things that we've probably messed up. You know, we are a remote company. It's hard to spread culture in a remote world. You can't sit next to someone, see what they're doing, have, you know, as deep conversations, build as much trust. This is going to be a challenge for the new wave of companies that are like probably remote first like us. I think what we've done to combat that, there's a lot of our culture is just like written or in video. Everyone who goes to the company and onboarding reads it, it's emphasized everywhere. It's just a constant team meetings and as a function of me talking about it all the time and the team talks about it all the time. So it's kind of like the culture is how you hire, how you reward people. And then in the unfortunate cases, when people, it doesn't. Work out, it's typically like the reason you part ways with someone. So which is very kind of Amazon like and how they approach it.

• 17:25Speaker 02

  And so it's woven into anything. In terms of what we've messed up in culture, when we first started scaling the company, we had not like well articulated our culture. The thing was growing a hundred percent month over month. Everything was on fire. You know, we just started hiring people based on referrals and you know, there's a good chunk of folks in that kind of timeframe. Because we didn't interview and explicitly vet on our principles, that weren't a great fit. People who are not a great fit at the company cause a disproportionate amount of harm to the culture and the team. You know, whenever I tell people like, if ever people are getting to like the scaling stage, like they've got it working. They think they got product market fit and they're about to hire 20, 30, 40, 50, however many people. My first bit of advice is like really well articulate your principles and make sure you interview everyone on them. Cause probably the biggest thing you're going to fail on interviewing.

• 18:09Speaker 02

  And what you'll get wrong is because it won't be a cultural fit. People won't be aligned to the, the way that you're working. And so I think we messed that one up.

• 18:16Harry Stebbings?

  Was that very challenging because I see this quite a lot with companies that I invest in where the common that happens. But they mess it up and then suddenly they've got a load of people that actually they need to move on and move into different roles. And then the culture is kind of further impacted and it's further. How did you deal with that sudden wave that you then have to move?

• 18:33Speaker 02

  Luckily for us, it was never a huge wave of people. I give my co-founder a lot of credit here. He's always had a lot of the way we hired our team was through referrals, both me and him, probably more of his referrals than my referrals. If I'm being honest, he had very good judgment in people. And so despite us not interviewing explicitly on the principles, we kind of intuitively found ourselves bringing on people who are well aligned. And so what ended up happening was that a small number of people who weren't aligned. The impact of that ended up being smaller. I can also say I hate having to let people go. I like deeply care about everyone in the team. I think it's terrible when it has to happen. We try and do it really humanely. I'm a little bit me versus my co-founder, I'm kind of the softer one. Yeah, I am, you know, we don't like doing it.

• 19:16Speaker 02

  But what I can say is after everyone that we have done, the teams actually improved quite drastically. And it's kind of surprising and kind of jarring. What we've tried to do, like one of our principles is transparency. We just try and be really transparent about how those things work. So it's not a black box. To people, which is to say, we obviously don't comment on an individual person's situation, but we comment on how we handle these things. Like if someone's underperforming or it's not a fit, we always try and work with them. If at the end of not being able to work with them, we handle things humanely, we give people good severance, we help them find a job that may be a better fit for them. Just because you're not performing or you don't love whatnot doesn't mean you're not really good at your craft or skill. Like this is a very specific environment. And so you may be better off somewhere else. And so I think as a function of that, the team rebounded always stronger thus far.

• 19:58Harry Stebbings?

  Was there anywhere else where it broke? So that was one. Was there anywhere else where it was like, ah, Logan?

• 20:02Speaker 02

  You know, the move fast principle is a double edged sword, as it was at Facebook as well, which is why they went from move fast and break things to like move fast and build things on stable infrastructure. You know, I think in February of this year, our app went down every day, literally every single day. Everything we do fast, but that we can't substitute quality, setting that minimum bar, that B plus student. And so that's one thing that I think we didn't push on enough on in the early days. And definitely one caused issues in some of the business metrics at various points in time. And also burned the team out quite a bit. Team was dealing with sev after sev after sev, or like app going down after app going down after app going down. There was, you know, like our DevOps team in particular, they weathered an incredible storm this year.

• 20:44Speaker 02

  It's a testament to how great of a team they are, but we definitely put them a bit through the wringer as a result of that. And, and we've had to like push much more on quality, both because it's good for our users, but also for the sanity of our team.

• 20:54Harry Stebbings?

  I do want to ask you, you mentioned Facebook there on the build fast and unstable infrastructure. When we chatted before, you said, most people are not building great consumer products today. It was an interesting statement. So I do want to spend a little bit of time on that. Why do you think that is? What is it that Fang maybe teaches us that's wrong?

• 21:11Speaker 02

  I'll step back, like, and be a little bit explicit about what I mean there. When you look at the broader like VC market right now, almost everything's in B two B. There are very few consumer companies that are growing very fast with material businesses and material metrics.

• 21:25Speaker 02

  I think the kind of meme around it is like the air has been sucked out of consumer a little bit by the FAANG companies. And I just think that there's probably an element of truth there, but I think there's a lot more to it. Again, relates to this point of not being able to hire PMs. Building great consumer companies is not a mathematical equation. It's like when I go and look around like all of the materials about how do I build product? How do I think about this? There's so much stuff on retention and cohorts and metrics and this and that. And that is just like not how you build consumer products. It comes from deep empathy of users, an ability to devise good solutions. The metrics come after that. Once you build something great that people love, then you can start to look at the metrics, make sure the businesses, you know, you can scale the business, find issues and diagnose

• 22:10Speaker 02

  issues in the product later on, but the metrics are a second order phenomenon. I think in the past year, there's probably been like three really interesting consumer companies. It's been Clubhouse, OpenSea and us. Two out of three founders, OpenSea founder and Clubhouse founder all came from Pinterest. And a huge chunk of our team is actually now from Pinterest. And what I've observed talking with people from Pinterest is they can make much more grounded, like user-driven decisions. Let me think about the product and how it solves problems. So I'll give you an example. Brought on this guy, Jeff Chang, he's running our growth team. At most FAANG companies, the growth team is heavily oriented towards A/B testing and metrics. Our growth team is just building things and doesn't test anything and ships it fast. And that's because it's the right way to do it at our stage.

• 22:52Speaker 02

  And there's few people who understand that can go user-first, be really oriented on speed and problem solving.

• 22:59Harry Stebbings?

  You said there about kind of build things fast, ship it. How do you prevent chasms from happening or being created between engineering, trying to build stable infrastructure, beautiful code, and then Jeff and the growth team building fast and shipping? How do you prevent that chasm with two kind of different mindsets?

• 23:17Speaker 02

  I think, again, it comes back to what I said earlier. It's we build quality stuff fast. And so there's no excuse to build anything that isn't of quality with a couple of exceptions. So if we were building like a new zero to one product and completely new business line, we're happy to like spaghetti coat it, validate that there's like users love it. But anything in the core product that growth is working on, it's built to scale. You can build things to scale in a lot of cases, particularly now, given our size, working on quality and making sure it scales. You've got some level of testing in there actually just enables us to move faster because we're spending less time on problems.

• 23:52Harry Stebbings?

  Is that why you don't A B test? And how do you think about A B testing today? Cause we're so predicated around this methodology.

• 23:59Speaker 02

  I think it just slows you down, encourages incremental thinking. I'll dive into both those. In terms of slowing you down, what ends up happening? All right, you're gonna build this thing. You then have to implement the A B test. You have to think about the testing. You have to let it sit in the market for two weeks. Then at the end of it, you have to get into a room with people, review the metrics, decide if it solved the problem and it's really good and then go. And so I think about shipping product is just an expected value equation. And so A B testing is largely useless if you have high confidence the thing is going to solve user problem. By way of example, we just shipped a new browse experience on whatnot. It allows people to like go down on like subcategories. Like I'm interested in seeing V H S shows where I can buy V H S. Like V H S is a big category and whatnot. And they can go down and see all the shows that have V H Ss and D V Ds.

• 24:44Speaker 02

  We just, we rolled it out two days ago. We didn't A B test. It was a huge, huge change. If we have ninety five percent confidence that that is going to be a step change improvement for the entire business. If what I'm trying to do is maximize the percentage gain in G M V for our business. If you were to like, look at equation where you like slowly A B tested everything and got high confidence versus an equation where you can say, all right, I think with this one, I got ninety five percent confidence. I have ninety percent confidence with this one. And I can like ship ten things versus the five things with A B testing. Your expected value equation, the first one is much higher. That's just how I think about it. And then the other thing, there's no inherent reason why this has to happen, but it's certainly what I observed at Facebook is as soon as you start A B testing everything, you get into this world where everything.

• 25:27Speaker 02

  You do has to be quantifiable in a short period of time. And as things become quantifiable in a short period of time, you end up pushing more towards like sure things and then linking that to your performance at the company. And so in like very, very quick order, what you get is incredible incrementality versus like really focusing on deep user problems. Snap was a company that kind of successfully did this. As it got to scale, they did start to like implement A B testing. And there'll be certain areas where we will A B test, like our feed, for instance. I think when you start to do personalized discovery, it's very hard to intuit how people are going to understand that. Cause there's like millions of variants of personalization. You need to use A B testing as a tool in your toolset and it's, you shouldn't use it for everything. It's not an appropriate tool for everything that you're doing.

• 26:11Harry Stebbings?

  I'm intrigued. You said about kind of a North Star metric for you being the percentage gain of G M V. How did you come to the decision that that would be a North Star metric? Can you expand on what it actually is percentage gain of G M V? And why you think it's so important?

• 26:24Speaker 02

  We don't explicitly have a single North Star metric. The metric that we look at the most is G M V. It stands for gross merchandise value, which is the value of all of the products sold on what? What we'll say is there is no perfect North Star metric, which is partly why I'm slightly averse to even saying we have a North Star metric. There are always other things that you have to look at and understand. But if we were to have one metric and probably the one that we look at the most is G M V. It's because the best encapsulation of value across the whole business. If we have higher G M V, our sellers are making more money. They're building bigger businesses, which is the biggest value add for them. The more in G M V, the more people are purchasing on whatnot, which is a huge indicator that they're getting value from the experience and the platform. Our business model is such that we take a percentage of all transactions. If we make those things happen, our business gets stronger.

• 27:09Speaker 02

  And so it's just like a really nice alignment of incentives. Now, it's not perfect, you know, you get to some weird situations where would you rather have a hundred people buy a $10 item? Or one person buy a $1,000 item? And it's very clear you'd probably want the latter, which is why I say like probably no good North Star ever. You do have to look at other parts of the experience. Some things are softer, like trust is really important to us. That's not really a thing you can quantify.

• 27:30Harry Stebbings?

  For me, the one that would stand out would be percentage of repeat sellers. How many sellers repeat? Cause if they repeat, they are happy, they've transact. They've had good experiences, they've had transactions and then that automatically insinuates buy side demand. And so that for me would be like the North Star and then you don't have that transaction value trouble. You shoot me down for that one.

• 27:49Speaker 02

  Yeah, I mean, one, it's an obvious one that we do track quite significantly. You know, as we're thinking through whether we have product market fit in the early days, seller retention and buyer retention. Probably the two most important metrics for us to like gain high confidence on that. You could really clearly see in the numbers that people love the experience. One of the problems with that is it's probably just like a lagging indicator of the value of the platform. People will leave once there are problems and you want to like isolate the problems earlier on. You know, one of the big things for us is like trust and we have to have like really trusted sellers on. So people feel confident in their purchases. Let's just say we accidentally went on a bunch of sellers who provide a really bad experience. Could be from bad shipping to not poor packaging to lying about the items and the quality that they have. You'll get all of those people on, you'll have a bunch of our buyers have a really poor experience.

• 28:34Speaker 02

  They will then start to leave, their retention will fall. Only once the retention falls and sellers stop making less money in each show, the seller retention will fall. Well, you know, you have to like, take like a really holistic picture. You do have your top line metrics, then you have like a lot of your health metrics and your input metrics into it. You know, at the end of the day, you have to think about the entire user experience. What makes a great user experience from the buy side and the sell side? And make sure you're looking at pretty actively all of those things. You can isolate any problems that arise as early as possible.

• 29:01Harry Stebbings?

  Hey, do you have to ask, what was the more challenging one, the buy side or the sell side?

• 29:05Speaker 02

  There's probably not a huge difference if I'm being honest. And I think it probably depends on the business. Certainly for our business, our business is very, very seller oriented. And so we do spend a lot more of our time on the supply side. When we do switch over to the buy side, we are able to do pretty amazing things that like move the needle. You know, we shipped a feature a couple of months ago. I thought was cool, was kind of fun. We shipped it and it had like, it increased our viewership on every stream by like 30%. I was kind of shocked, but that is part of the reason why like if you have a group of smart people, put them build stuff and do it fast. As long as it's oriented on user problems, they'll surprise you.

• 29:37Harry Stebbings?

  What's the hardest thing about being a first time founder? Moving to you personally in leadership in yourself, what's the hardest thing?

• 29:44Speaker 02

  I think my greatest weakness probably Developing a team and dealing with some of like the hard situations that pop up. I think, as I said earlier, of founding team, I'm the softy. And so when we get to things that are like really hard decisions, like, hey, this person's underperforming. I'm the one that's gonna like, let's give it some time. Let's like work with the person. Then, as you scale your company, what starts to happen is you start to bring in a lot of people who actually have much more experience than you. At lots and lots of different things. And sometimes even they have performance issues or be stuck on a problem. I find mentoring and upleveling them to be difficult. And so if I were to like sum it up, it's the the scale of kind of people management, dealing with people issues and those things.

• 30:25Speaker 02

  And I actually think it's in part largely because I just want everyone to succeed, but it won't happen. And so there's just hard problems and hard decisions and hard conversations you have to have. And I think that's candidly my greatest weakness.

• 30:37Harry Stebbings?

  Do you have a coach or a mentor? And if so, what have you learned from them?

• 30:41Speaker 02

  Yeah, I do have a management coach and I do have a couple of people who mentor me. You know, my management coach, his name is Matt Moschare.

• 30:47Harry Stebbings?

  I interviewed him.

• 30:48Speaker 02

  Absolutely amazing. I was very lucky to start working with him last year. You know, when you come across these hard problems, like all the people problems that you run into, they're not like the business problems where you can work back from first principles. People are really like complicated. When you start to run those conflicts and getting like organizations to work well together, it's really hard to like fall back on first principles in a lot of instances. And so you need other systems and things and toolset. And so the thing that I love about Matt, he's got a really great framework for how to deal with a lot of the problems that will pop up as a founder. And there'll be tons. When I look back on the past year and the set of problems that have popped up that have shocked and surprised me, I still can't comprehend. And so having someone like Matt where I, you know, he coaches so many amazing founders who have through so many amazing companies. He just has a really good toolset to solve problems.

• 31:32Harry Stebbings?

  Can you give me an example of a framework, just so I get a taste of it?

• 31:35Speaker 02

  One of the things, our executive team, most of the people who report directly into me is like very new. So we've hired four executives in the past six months. It's challenging sometimes to get people to work really well together, share information in the right way. Talking with Matt about this, like, how do we get our team to gel? How do we get our team to like build trust? He's like, oh, let me help you out with that. And he's like, I will do three executive coaching sessions with your whole team. We'll go through issues, we'll go through feedback. He's got a really good feedback framework. And then he'll like, he'll kick it off with me where I'll be like, all right, you can go and roast Grant on all of the bad things he's doing. Give him like the toughest feedback you can give him. I'll sit there and listen to it and most of the time it's accurate. And so I'll acknowledge it and that's fine. It allows me to improve. And I think doing that builds a higher trust environment and we can do that amongst everyone and we can improve.

• 32:19Speaker 02

  Versus never been in a situation at the scale of company with this level of executive and people who have far greater experience than myself. I'm not sure I would have the confidence to do some of those things. Being able to go, hey, Matt, here's a problem I have, which typically tends to be organizational or people because those are just the hardest problems to work back from because people are complicated. He's got a good framework that's been tried and tested in other scenarios that have worked.

• 32:42Harry Stebbings?

  Final one for the quick fire. Do you ever doubt yourself and have insecurity? You are, you know, as we said, first time founder. For me, many things that I do, I'm like, fuck, I don't know if I can do this.

• 32:51Speaker 02

  I have moments of very high anxiety when it's unclear exactly what will happen. I'm a little bit further along in my career. I'm thirty three. You know, I've been working in tech for like ten, twelve years. I think it'd be really tough to be a young founder who just hasn't been through the wringer a little bit. I've been through the wringer a little bit. I've seen some things. I've had ups and downs. There's fewer things that baze me. Success is breed confidence. You know, we've been really fortunate. In, you know, less than two and a half years, we've built a really, really large business. We are one of the biggest marketplaces per period of time. We're the fastest growing marketplace ever. That does give us a high level of confidence. When I'm overly confident or overly underconfident, I always try and like switch the equation around and try and rethink it. Am I being too confident? Do I have it right? What could go wrong? And in some of those cases, you can fall back on advisors, whether it's Matt, you know, other folks that, you know, help.

• 33:36Harry Stebbings?

  What I find amazing is the speed of transition between the two. You know, in the morning you'll be like, yes, killing it. We are amazing. This is just, this is so great. And then the evening you're like, oh my God, I don't know what's going on. And it's.

• 33:48Speaker 02

  Ups and downs are real.

• 33:49Harry Stebbings?

  Yeah. And fast between the two. I do want to move though to my favorite Graham, which is a quick fire. So I say a short statement and then you give me your immediate thoughts. Does that sound okay?

• 33:57Speaker 02

  Sounds great.

• 33:58Harry Stebbings?

  So what's the favorite book and why?

• 33:59Speaker 02

  The foundations trilogy. I love sci fi books because I think it just helps me think differently. I think it's just a really interesting way to like change my mind and help me look in a different. It's like when I read books, I read books to like, give me a different perspective on things and stress test my thinking and view of the world.

• 34:14Harry Stebbings?

  Founder's angel investing.

• 34:16Speaker 02

  Don't do it, never. I think there are founders I know who do it, and some of them have like reasonably good logical reasons for why they do it. I think if you're a founder, it's incredibly important that you fully optimize the success of your company. You know, we have a hundred and twenty, thirty people working for us now. We have, you know, investors who have put a lot of money in, to some extent, bet a lot of their career on us. And I think any ounce of effort outside of that, that you direct to another thing, to not focus fully on the success of the company is just not correct. I don't think that I could look my company squarely in the face if I wasn't putting everything into it. And I find it would just be a distraction.

• 34:52Harry Stebbings?

  So I totally agree. And I say this too, and I get people say, I learn from the investments that I make. I make angel investments and I see things that work, I see things that don't work, and I can bring them back to my company. How would you respond to that?

• 35:04Speaker 02

  Again, I think there are like reasonably logical things you can construct there. I think there's just very slippery slopes. If you don't set like a really hard guardrail, you can find yourself going down and down that rabbit hole. If you do one investment, then you do three, then you start to do five and ten, and there's no way you're getting value from ten investments. It's very hard to actually understand the inner workings of a company unless you're actually really in it. And then if you're trying to learn, there are better avenues for learning. Go get advisors. Go find someone in an industry that actually matters versus, and who's the best at what they do. Most startups will not be the best at what they do. I just think there's better avenues to solve that problem.

• 35:39Harry Stebbings?

  You can have a billboard anywhere. Where would you have it? And what would it say on it, Gron?

• 35:43Speaker 02

  I'm not a super flashy person, so I would never have a billboard anywhere. I like to keep my head down and do the work. I think if I were to have like one message, you know, people come and ask me for advice, it's just like, do the hard work, keep your head down, remain focused. So it would be something along those lines, but would probably be very averse to having a billboard, because I think it's not my style or personality.

• 36:02Harry Stebbings?

  What did you believe that you've changed your mind on recently?

• 36:05Speaker 02

  Probably one of the things, I don't know if it's total mind change, but the thing that I'm having to like adjust to is as we like scale the company, we really have to like empower everyone to solve problems. And I'm that type of person. When I see a problem, I just like run at it and I've had to like slowly like I see a problem, I let it burn for a little bit. So we can get the team focused in on that problem and actually solve it on their own. I know that is correct, but I haven't been able to avoid the urge in a lot of instances. That's one where I've probably now taken a more extreme view where my initial view would have been like, but it's a really big problem, fix it. Now my view is like, okay, but if I do that again, the team's never going to solve it and we're going to have 10 more big problems. And so I guess my view on like letting problems simmer so we get the organizational muscle to have people solve those problems.

• 36:50Speaker 02

  And I would probably give credit to our VP of Engineering, Ludo, for pushing me and changing my opinion on that.

• 36:56Harry Stebbings?

  Final one for you. It's a tough one. Next 10 years for you and for whatnot. If we do this in 2032, where are you then?

• 37:03Speaker 02

  We're the biggest social commerce marketplace in the Western world. We've had the biggest IPO ever.

• 37:07Harry Stebbings?

  Grant, this has been so much fun to do. As I said, I had so many great things from so many before this. So thank you so much and I can't wait for 2032.

• 37:15Speaker 02

  Thank you so much for having me. I really appreciate it, Harry.

• 37:18Harry Stebbings?

  I so enjoyed that discussion with Grant and really loved the bit on A B testing in particular. Huge thanks to Grant for giving out the time today to be on the show. If you'd like to see more from us, you can on 20vc.com. But before we leave you today. From websites and online stores to marketing tools and analytics, Squarespace is the all in one platform to build a beautiful online presence and run your business. Now, there are three things for me that really stood out about why I love Squarespace. First, mobile optimized websites. All websites are optimized for mobile with Squarespace, so content automatically adjusts. So your site looks great no matter what device it's on. Pretty awesome. Second, email campaigns. Squarespace makes it super easy to grow and engage your audience with Squarespace email campaigns. Say what? No other provider needed? That is so great.

• 38:03Harry Stebbings?

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• 38:46Harry Stebbings?

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• 39:28Harry Stebbings?

  And I'm also super excited about their new product, Angel List Stack, which is purpose built for founders. With Angel List Stack, you can create a fundraising ready startup in just a few clicks. Angel List handles your company's incorporation, banking, cap table and fundraising processes all in a single place. This allows founders to focus on building. If you're a founder, you can launch your company at stack.angellist.com/20vc. Whether you're a founder or a funder, you're in great hands with Angel List. As always, I so appreciate all your support and I can't wait to bring you an incredible episode on Monday with Luciana at Sequoia.