Tactic
Pick a marketplace wedge by charting eBay category sales over time
To choose a starting category, Whatnot's founders used Terapeak to plot sales over time for every eBay collectibles category. All of them were booming, and more Funko Pops sold than comic books, so they started with Funkos (Pokémon was the runner-up).
“There was a tool, I think it was called Terapeak, and We went across every single collectibles category and plotted the sales in collectibles through time and how it was growing. And in every one of these categories, it was like going gangbusters. So there was clearly a broader trend happening in the market. And when you looked at it then, there were more Funkos being sold on eBay than comic books, which is one of the reasons we ended up choosing comics, or sorry, Funkos over, you know, say comics or a bunch of the other categories.”
Steal thisPull historical sales by category from the incumbent marketplace and launch in the fastest-growing, highest-volume niche it serves badly.
Framework
Start in a tiny market, win it, then expand
Investors balked at a 'Funko Pop company' as too small even while Whatnot was growing 100% month over month. Grant LaFontaine argues that almost every great consumer company began in a niche, because a four-person team cannot create real value in a mass market.
“But the reality is when you dissect history, All of those companies started in an incredibly small area, and almost every great company starts in an incredibly niche or small area and then takes that and catapults it forward. Because if you're a 4-person company like we were in the early days, you can't compete in a mass market. It's almost impossible to drive a ton of consumer value in a mass market. So instead, what you have to do is you have to compete in a small market, build a really great user experience for a smaller subset of people, and then expand it.”
Steal thisChoose a market small enough that your tiny team can build the best experience in it, then expand from that beachhead.
Tactic
Weekly grail giveaway where every referral earns another raffle ticket
Whatnot's early buyer growth came from Funko YouTubers plus a weekly giveaway of a $500 to $1,000 'grail' Funko. Entering required sharing, and each signup through your link or code earned an extra ticket. That let Whatnot effectively take over Funko subreddits and Facebook groups.
“And what we would do is once a week we'd give away like a $500, $1,000 Funko Pop. And in order to be able to enter, you would have to share it. And we sort of built these mechanics where you could sort of have unlimited sharing. So someone could sign up with your referral link, Someone could sign up with your code. You could share it on Twitter, you could share it on Instagram. And each time someone used your link or your code, they would get an extra ticket in the raffle.”
Steal thisGive away the most coveted item in your niche every week and award an extra entry for each referral signup, with no cap on sharing.