20VC Startups Fail Because They Do Not Take Enough Risk, Why AB 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

In this episode of 20vc, host Harry Stebbings interviews Grant LaFontaine, the founder and CEO of Whatnot, a rapidly expanding US marketplace that enables individuals to earn from their passions. LaFontaine, who previously worked at Facebook on the Oculus App Store and founded Kit.com, has successfully raised over $225 million for Whatnot from prominent investors including Capital G and Andreessen Horowitz. He discusses the early challenges of pivoting from a full-service Craigslist model to a collectibles marketplace and the importance of a culture that empowers engineers to drive product decisions with minimal management layers. LaFontaine also shares insights on the balance between speed and quality, the pitfalls of over-reliance on A/B testing, and the significance of deep user empathy over data-driven strategies in building consumer products. The conversation touches on the complexities of managing a growing team and the value of having a coach to navigate organizational challenges.

• Grant LaFontaine is the founder and CEO of Whatnot, a rapidly growing US marketplace.
• Whatnot is designed to enable people to earn a living from their passions.
• Grant has successfully raised over $225 million from investors including Capital G, Andreessen Horowitz (A16Z), Y Combinator (YC), Scribble Ventures, and Wonder Ventures.
• Before Whatnot, Grant was a product manager (PM) at Facebook for the Oculus App Store and founded Kit.com, which was acquired by Patreon.
• Acknowledgments to Lada from Capital G, Elizabeth from Scribble, Dustin from Wonder, and Anu from YC for their contributions to the interview.

"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, Whatnot, the fastest growing marketplace in the US."

This quote introduces Grant LaFontaine and highlights the significant growth and success of his company, Whatnot.

• Squarespace is praised for its mobile optimization, email campaigns, and SEO tools.
• Mozart Data offers a modern data stack for startups, allowing for quick setup and delayed hiring of data engineers.
• AngelList is highlighted for simplifying fund management and introducing Angellist Stack for founders.

"Squarespace is the all in one platform to build a beautiful online presence and run your business."

This quote emphasizes Squarespace's role in providing an all-in-one solution for building and managing an online business presence.

• Whatnot's initial concept was to be an improved full-service Craigslist.
• Grant quickly realized the original business model was not financially viable and pivoted to a collectibles marketplace.
• The pivot caused anxiety due to uncertainty but was motivated by the knowledge that many successful companies undergo significant changes from their starting point.

"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."

This quote details the original idea for Whatnot and the early realization that led to a significant pivot in the business model.

• Grant's time at Google and Facebook influenced Whatnot's company culture and approach to success.
• He adopted a principles-based approach to culture, borrowing elements from Google, Facebook, and Amazon.
• Whatnot's culture is a blend of the best aspects of these companies, with an emphasis on empowering engineers and focusing on user problems.

"Whatnot is not what it is today without me working at those places."

This quote acknowledges the impact of Grant's experiences at Google and Facebook on the development and success of Whatnot.

• Whatnot has a high engineer-to-product manager ratio, emphasizing the role of engineers in driving the company.
• Engineers are empowered to make product decisions, which speeds up the development process.
• The company ensures engineers are capable of making sound product decisions through a product interview process.

"So today we have about 50 engineers in the team, and we have one product manager."

This quote illustrates the company's unique structure, with a strong emphasis on engineering.

• Whatnot faces challenges in hiring product managers due to the focus on strategy and numbers at large tech companies.
• Grant values a deep understanding of users and believes in making decisions based on user empathy rather than extensive data.
• He plans to build an exceptional PM team with a high engineer-to-PM ratio to maintain speed and quality in decision-making.

"The biggest pool of pms today are coming from the Fang companies, Facebook, Google, et cetera. And they tend to be strategy and numbers focused."

This quote explains the difficulty in hiring product managers who align with Whatnot's user-focused approach.

• Speed is a core principle at Whatnot, with a focus on moving "uncomfortably fast."
• Execution should always be fast, but planning may vary based on the reversibility of decisions (one-way doors vs. two-way doors).
• Most software decisions are two-way doors, allowing for rapid execution and learning, with mechanisms in place to avoid major mistakes.
• For one-way doors (e.g., hiring, culture), more thoughtful planning is necessary, but the overall goal is to maintain speed wherever possible.

"No matter what you're doing, you should always seek to do it fast."

This quote captures the company's ethos of prioritizing speed in execution to learn quickly and adapt.

• The challenge of product management is knowing when to rely on user feedback and when to trust intuition.
• Good taste and judgment are crucial for making these decisions.
• Understanding users and the business allows for high-quality decision-making without relying heavily on data.

"You need to have exceptionally good taste in judgment to make those decisions."

This quote underscores the importance of judgment in product development, balancing user feedback with intuition.## Sound Judgment in Decision-Making

• Empowering individuals with sound judgment to make decisions can yield mostly positive outcomes.
• A small percentage of decisions might be incorrect, but they can be reversed in a "world of two-way doors."
• Learning from mistakes is crucial for fine-tuning judgment.
• Building a product for oneself can be considered a shortcut to success.

"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."

This quote emphasizes the importance of trusting individuals with good judgment to make decisions, accepting that some may be wrong but can be corrected, and the value of learning from these experiences.

• Engineers undergo a product design interview, similar to what a product manager would experience.
• Candidates are asked to demonstrate their understanding and vision for the product, such as redesigning a feature.
• Key signals of a good candidate include product usage, user empathy, and a willingness to take ownership.
• The absence of traditional project management tools like Jira indicates a culture of autonomy and ownership.

"Yeah, we honestly just give them like a product design interview question, pretty similar to what a PM would get."

This quote describes the interview process for engineers, which involves assessing their product design skills and their ability to contribute to the product's development.

• Encouraging a culture where team members feel ownership and are not afraid of taking risks is challenging.
• Transitioning from risk-averse environments to startups requires a shift in judgment models.
• The focus should be on potential high-upside opportunities, not overly concerning oneself with de-risking.
• Interviewing for risk-taking ability, rewarding upside, and not punishing failure are strategies to promote this culture.

"It's a really tough one. I don't think we've nailed it entirely."

This quote acknowledges the difficulty in creating a culture where risk-taking is embraced and indicates that while the company strives for it, the process is ongoing and not yet perfected.

• CEOs as resource allocators must decide which bets to take.
• Founders often enjoy building new things, and a portion of resources should be dedicated to this.
• Balancing risk-taking with focus on the core product is crucial to avoid failure from either extreme.
• A rule of thumb is to allocate no more than 20% of resources to new and exciting bets.

"I think this is probably true for a lot of founders. We like to build new things."

This quote reflects the founder's mindset of enjoying the process of creating new products and the need to allocate resources to foster innovation while maintaining focus on existing operations.

• Spreading culture in a remote company is difficult due to the lack of in-person interactions.
• Culture at Whatnot is emphasized through written materials, videos, and constant discussion.
• Early hiring without clear cultural principles led to some misaligned team members.
• The importance of articulating company principles and vetting new hires based on them is stressed.

"We are a remote company. It's hard to spread culture in a remote world."

This quote highlights the inherent challenges in cultivating a strong company culture when operating remotely and the strategies Whatnot employs to overcome these obstacles.

• A small number of misaligned team members can have a significant negative impact.
• The company strives to handle departures humanely, with transparency and support for those leaving.
• Maintaining a principle of transparency helps the team understand and rebound from personnel changes.

"We try and do it really humanely."

This quote speaks to the company's approach to letting go of team members who are not a good fit, emphasizing the importance of treating people with respect and transparency during these difficult transitions.

• The principle of moving fast can be beneficial but also has its downsides.
• The need to balance speed with stability and infrastructure is recognized.
• The company faced an issue when the app went down, likely related to moving too fast without adequate stability measures.

"The move fast principle is a double edged sword."

This quote acknowledges the risks associated with the principle of moving fast, suggesting that while it can drive progress, it can also lead to issues if not managed carefully.## Importance of Quality and Team Burnout

• Emphasizing the need for maintaining a balance between speed and quality in operations.
• Early neglect of quality led to issues with business metrics and team exhaustion.
• The DevOps team experienced significant stress due to repeated service outages.
• Recognizing the importance of quality for user satisfaction and team health.

"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."

The quote highlights the speaker's realization that despite the need for speed in operations, quality cannot be compromised. They liken it to maintaining a B+ standard as a minimum requirement.

• Consumer companies are struggling to grow with substantial businesses and metrics.
• The dominance of large tech companies (FANG) is believed to have impacted the consumer sector.
• Building great consumer products requires deep empathy for users, not just a focus on metrics.
• Metrics should follow the creation of a product that users love, not precede it.
• Pinterest's influence on decision-making due to its user-driven approach.
• The growth team at the speaker's company prioritizes building and shipping quickly without extensive A/B testing.

"Building great consumer companies is not a mathematical equation."

This quote emphasizes that the creation of successful consumer products is more an art than a science, requiring a deep understanding of user needs rather than reliance solely on data and metrics.

• Quality is non-negotiable, except for experimental zero to one products.
• Core products are built to scale with a focus on quality to avoid future issues.
• A/B testing can slow down the development process and encourage incremental improvements.
• The speaker's company avoids A/B testing when confident about a product's potential to solve user problems.

"We build quality stuff fast, and so there's no excuse to build anything that isn't of quality."

This quote reinforces the company's commitment to quality in product development, even when working quickly. It sets a standard that quality is a prerequisite, not an afterthought.

• A/B testing is viewed as a hindrance to quick product evolution and encourages small, incremental changes.
• The speaker prefers to ship products quickly when there is high confidence in their ability to address user problems.
• A/B testing is reserved for complex features like personalized discovery where multiple variants exist.

"A B testing is largely useless if you have high confidence the thing is going to solve user problems."

The quote explains the speaker's stance on A/B testing, suggesting it's unnecessary when the team is confident in the product's value to users, thereby allowing for faster deployment.

• GMV is the primary metric considered by the speaker's company, though not an official North Star metric.
• GMV represents the total value of goods sold and aligns seller and buyer interests with the company's revenue.
• Other metrics are also important, such as trust, which cannot be quantified easily.
• The speaker acknowledges that no single metric can perfectly encapsulate the health of a business.

"The metric that we look at the most is GMV."

This quote identifies GMV as the key metric for evaluating the performance of the company's marketplace, highlighting its significance in measuring the overall health and growth of the business.

• Seller and buyer retention are critical metrics for assessing product-market fit.
• Retention rates are lagging indicators and may not reveal issues until after they have impacted the user experience.
• Trust in sellers is crucial for buyer confidence and platform integrity.
• A holistic view of user experience is necessary to identify and address problems early.

"Seller retention and buyer retention, probably the two most important metrics for us to gain high confidence on that."

The quote underscores the importance of monitoring seller and buyer retention rates as indicators of the platform's value and user satisfaction.

• Developing a team and handling difficult situations are challenging aspects of leadership for the speaker.
• As a self-described "softie," the speaker finds it hard to make tough decisions about underperforming team members.
• The growth of the company brings in experienced individuals, creating a learning curve for the founder.

"I think my greatest weakness probably developing a team and dealing with some of the hard situations that pop up."

This quote is a self-reflection by the speaker on the personal challenges faced in leadership, particularly in team development and decision-making.## People Management Challenges

• Challenges in managing and upscaling employees are a significant part of leadership.
• The difficulty lies in the unpredictability of individual success and the necessity of tough conversations.
• Acknowledges the emotional aspect of wanting everyone to succeed but facing the reality that it's not always possible.

"And so if I were to sum it up, it's the scale of kind of people management dealing with people issues and those things."

This quote summarizes the speaker's view on the complexities of people management, highlighting that dealing with personnel issues is a significant challenge in leadership roles.

• Grant LaFontaine has a management coach, Matt Moshari, and a few mentors.
• Mentors provide systems and tools to handle complex people problems that don't easily break down into first principles.
• Matt Moshari's framework helps navigate the unexpected challenges that arise in a founder's journey.

"I do have a management coach, and I do have a couple people who mentor, know my management coach. His name is Matt Moshari."

This quote introduces Matt Moshari as Grant LaFontaine's management coach, emphasizing the importance of having guidance in dealing with management and people issues.

• Grant LaFontaine's executive team is new, with four executives hired in six months.
• Matt Moshari provided executive coaching sessions to foster trust and improve team dynamics.
• The feedback framework allows for open criticism and personal improvement, contributing to a high trust environment.

"He's got a really good feedback framework. And then he'll kick it off with me where it'd be like, all right, you can go and roast grant on all the bad things he's doing, give him the toughest feedback you can give him."

This quote explains the feedback framework provided by Matt Moshari, which encourages open and honest feedback to facilitate personal and team growth.

• Grant LaFontaine experiences anxiety and self-doubt, but his past experiences in tech help him maintain confidence.
• The company's rapid growth and success contribute to a strong confidence level.
• Grant LaFontaine seeks advice from advisors like Matt Moshari to balance his confidence levels and decision-making.

"I have moments of very high anxiety when it's unclear exactly what will happen."

This quote reflects the speaker's candid admission of experiencing anxiety and doubt as a founder, which is a common emotional challenge in leadership.

• The emotional landscape of a founder fluctuates rapidly between confidence and doubt.
• The speaker acknowledges the real and swift changes in emotional states throughout the entrepreneurial journey.

"And it's ups and downs are real."

This quote succinctly captures the reality of the emotional rollercoaster that founders often experience, with rapid shifts between highs and lows.

• Grant LaFontaine reads Sci-Fi books like the Foundation Trilogy for a change in perspective and to challenge his thinking.
• He values reading as a tool for gaining new insights and stress-testing his worldview.

"I love Sci-Fi books because I think it just helps me think differently."

This quote highlights the speaker's appreciation for literature as a means to broaden his thinking and gain new perspectives, particularly through the genre of science fiction.

• Grant LaFontaine advises against founders engaging in angel investing.
• He emphasizes the importance of dedicating all efforts to the success of one's company.
• Believes that diverting attention to other investments can be a distraction and a disservice to the company and its stakeholders.

"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."

This quote emphasizes the speaker's firm belief that a founder's primary responsibility is to their own company and that engaging in angel investing could compromise that commitment.

• As the company scales, Grant LaFontaine believes in empowering employees to address and solve problems independently.
• He has learned to resist the urge to immediately fix problems, allowing the team to develop problem-solving skills.
• Credits his vp of engineering, Ludo, for influencing his change in approach to problem-solving within the organization.

"I've had to slowly, 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."

This quote reveals the speaker's evolving management strategy, which involves deliberately allowing problems to persist temporarily to strengthen the team's ability to resolve issues without immediate intervention.

• Grant LaFontaine envisions that in ten years, his company will be the largest social commerce marketplace in the western world and will have had the biggest IPO ever.

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

This quote represents the speaker's ambitious goal for the company's future, aiming for significant growth and a landmark initial public offering.

• Squarespace is praised for its mobile optimization, email campaigns, and SEO tools.
• Mozart Data is recommended for setting up a data stack quickly, without the need for engineering resources.
• AngelList is recognized for simplifying fund management and providing a platform for founders to incorporate and fundraise.

"Squarespace is the all-in-one platform to build a beautiful online presence and run your business."

This quote underscores the endorsement of Squarespace as a comprehensive solution for creating and managing an online business presence.