Online Shopping Redefined | COO of Poshmark, John McDonald (Podcast 90)

Be a much, much better listener, much more adaptable, much more flexible. Get to a point where you can lead, but lead in a way where you're listening and you're adapting and you're taking into account everybody around you. It takes a lot more than smarts to get ahead in the world. Big part of that is listening, being considerate and respectful.

John McDonald is the chief Operating Officer at Poshmark, a leading social commerce platform for the next generation of retailers and shoppers, where he manages product data and analytics and the marketplace operations and is responsible for marketplace GMV growth and profitability. John draws from a deep expertise in community and marketplace management. He developed at 8 years at eBay in category management, trust and safety and seller experience roles as well as four years at Ning where he led support and sales and then as general manager of the business. Earlier in his career, John focused on consumer marketing and product development at Procter and Gamble, Monsanto, the Monitor company and Ebite. John has an MBA from Harvard Business School and a BS from the University of California at Berkeley. So John, welcome to the second of grand podcast.

Happy to be here.

Every time I see Harvard, I just start getting all nervous. I remember the first business book I ever read was what they don't teach you at Harvard Business School. Can you walk us through a little bit about what you pulled from that experience that you still use today?

The best thing I got out of Harvard and I think a lot of business schools practice it now, is this very fast, several times a day case study method where you would be constantly exposed into kind of almost context switching into, you know, different aspects of different companies and what situations they were in. And frankly that's kind of what almost every day is. I think that really sets you up well to be able to make judgments on a, on a very fast basis in different business situations. So that's probably the biggest takeaway.

Tell us a little bit about Poshmark. So we know exactly kind of what the brand is and what you're doing. And it's weird cause I actually saw a post about it just yesterday.

Poshmark is the leading social commerce platform for fashion. Kind of. What does that mean? I think first you need to just step back a little bit. If you think about maybe the last 20, 30, 40 years in retail we really went from kind of that small shop on Main street to large big box retailers. And then really with the advent of E commerce, this phenomenal revolution in convenience and price and selection that's happened. You think about Amazon? I shop Amazon probably On a weekly basis. It's just fabulous in terms of the selection you can get, in terms of pricing, the convenience, the delivery options. What's kind of gotten lost in all that is the human element. And in particular, when you think about fashion, the human element of that is so important. It's that personal recommendation, the personal sizing, the personal just affirmation that you are selecting style and looking good. So really what Poshmark has done is, and I think a big part of our success is to bring that personal human interaction back into shopping. And so what does that mean? Poshmark at its core is a consumer to consumer. So we have now over 7 million sellers that have listed well over 75 million listings and they sell to a community of about 50 million users. So very large, very broad. We just expanded in Canada, but primarily US based. The actual marketplace itself, we started off mobile only, an iPhone app, and then gradually added web and Android to that. But what that led it to be, really the focus all along on the actual kind of marketplace side of this is to make it as simple as possible for buyers and sellers. So we've innovated in shipping, tracking, taxes, even disputes that you have in a peer to peer platform. We've made that just very simple, all within the app, just all encompassing. And the idea is we want to make the mechanics of buying and selling so easy that it allows our buyers and sellers to focus on the social side of the experience. And so similar to social media, you know, if you're on Pinterest or you're on Instagram, on Poshmark, you follow people, we call them closets. You know, it's, you follow people in their closets that you love, you engage with those people and you share content. You know, just very similar to any other social platform really. On Poshmark though, you're sharing content that is really forms the fabric of, you know, the commerce interaction. So for a seller, you succeed by, you know, expressing your style, building a following, getting a lot of people on Poshmark to follow you. You're curating your items as well as other people's items to those followers, creating just this fabulous shopping experience. And in the process, as we say, when you lead with love, you lead with styling, the sales going to follow. So just to give you a sense of what this means in terms of metrics, Currently well over 30 million listings are curated or shared with others every day. We have kind of Snapchat or Facebook like engagement metrics. So users visit seven to eight times a day and spend about 25 minutes a day in the appointment. So it's an intense social experience. Through that social experience, you're both buying and selling. It's very integrated, you know, integrated social and commerce that just leads this very intensely personal interaction.

Is it kind of a, I mean in real layman's terms, is it kind of a mashup of Instagram, Pinterest and ebay?

Yeah, we sometimes hear it as kind of that. That way, but absolutely, you've got the marketplace. But then this, this very different way of discovering fashion through people, through what other people are kind of suggesting to you, what other people that you admire their style have in their closet. So there's very strong elements of Instagram in this. You know, Instagram has become a, you know, very strong kind of center of social media for fashion.

Somebody on my team mentioned somebody were in the news that you're expanding into home goods now as well. Is that true or accurate there?

Yeah, so. So one of our, you know, really exciting things we did this last year is we have something called, we called it posh markets. So one of our challenges is when you have an app, it's such limited space. And so as you add bring in different types of people. So as we brought, we were primarily a women's fashion marketplace and then we brought men into it. How do you allow people to have a little bit more segregated experiences? And so we created this concept. It's almost like an app within an app. And so we have a men's poshmarket. It also allowed us to do now is to start to branch out into areas that are very analogous. Home furnishings has a strong fashion element. And so it allowed us to this summer to add home furnishings and it's been very successful. Now one of the interesting things is we often take the lead from our poshers, as we call them. And there were a lot of home goods already being sold on the site. So what we did is we formalized that and made it a fantastic experience to buy and sell.

And one of my kids, strangely enough, buys and sells high end shoes, like thousand dollars shoes and flips them and wears them for two or three months and sells them for 200 bucks more than he paid for them. Is that something that's happening on your. And how do you guys make your money?

Yes, we actually have a kicks posh market, very big trend in fashion right now. Getting to your question of how we make money. So we have a very simple fee structure. So we basically take 20% commission on every sale that happens on the pile. You know, Included in that is, you know, is everything for the seller. It's payment, shipping, it's customer service. All of that's handled by us. And it makes that experience incredibly easy. And then a very simple fee structure. We don't, there's no nickel and diming, nothing kind have that extra fees outside of that.

So you've been there for over five years now, so I'm sure you've seen some huge growth in the business. Can you walk us through what it was like in the early days and what was it that attracted you into Poshmark in the early days?

When I start with the latter question, it was kind of interesting. I was at a SaaS platform for building communities and was looking around and at the time, this was back in 2012, 2013, I think my perception was is that innovation on E commerce had kind of finished. And I know that sounds kind of negative, but you know, really Amazon had won. And so I wasn't actually even looking for a role in E commerce. I was looking more on the social side of things. And I met our, you know, had a friend refer me into Manish Chandra, our CEO. I gotta be honest, we met for I think three hours and you know, and then I came back about a week later and had another three hour meeting with him and I was sold. And I think what really kind of sold me on it was part of it is I was at ebay for about eight years and I kind of felt if I had left ebay and written what would be the perfect kind of social marketplace when I left on the back of a napkin, it would have been exactly what Manish had built. And so I was sold. When I joined, it was probably about 35 people, orders of magnitude smaller in sales. I think what hasn't changed, I think is our vision for the business and kind of the very kind of strong framework or model for the business. But I think certainly our sophistication in particular, I think on the analytics side, your understanding of how growth happens, how people interact. I feel almost every year we make some big breakthrough in how we understand how things operate and that ends up changing, whether it's our advertising strategy or maybe some of the key features that we build or just how we run the business, probably that more than anything is really just starting to build a deeper and deeper, more sophisticated understanding of the business.

How about the team itself? Has that really scaled or have you been able to stay lean over the years?

We stay pretty lean. We're about 10 times that size now, a little bit over 400 people as a business team, very lean. As an engineering team, quite lean. And I think that allows us to be very focused, have a lot of common knowledge of what everybody is doing. So I think we're still at that size where it feels like we can be very nimble and very focused.

So that's where the biggest part of the growth has had to have come then in terms of the complexity of the business for you, it just wasn't as complex or was was it complex than just smaller when you got there?

When I first joined, it was very much kind of single thread. You might say we have a feature initiative and that was what everybody was working on. When you have over 400 people, you're clearly executing on multiple large initiatives right now. We expanded into Canada at the same time. We were adding a major category and there were a number of other facets for business that we were working on at the same time. So managing from an engineering, from a business, finance, marketing side across multiple major initiatives definitely takes a bit more juggling.

Now I'm Canadian as well, so I kind of appreciate the fact that you came into Canada, but I also at the same time kind of understand why, like, why would you bother with Canada when it's smaller than California?

I think it was a natural place for us to take a first step internationally. Similar payment systems, similar shipping. We already had some brand awareness in Canada. Similar time zones, you know, in terms of just infrastructure, you don't, you know, you don't have a big geographical distance to get any kind of latency in your back end. There's just a lot of reasons why it was a great first. And I think for us it was. We built a lot of confidence on our ability to expand internationally.

I remember when I was building a company years ago called 1-800-GOT junk and we were opening up in Australia and it was our first test market after doing Canada in the U.S. and we kind of felt like if we failed in Australia, nobody would know. But you guys are big enough that you can't fail. So have there been any struggles in starting up in Canada and what do you think you've learned from that experience?

It's gone better than we expected. Some stumbles, more from a growth perspective. Probably the areas that we are learning from are probably some more of the. More the basic operational aspects, banking, certainly going into a different tax regime, dealing with a different postal carrier, its own idiosyncrasies. So probably we expected on the more on the advertising and the product side we'd have more issues and that's gone very smoothly. It's probably more the pure operational, the local operational aspects. Maybe we didn't account or kind of foresee as much.

I think your timing on coming into Canada is great because Canada is finally starting to catch up with the us. Like you mentioned, buying on Amazon and a weekly basis. I've been saying for a number of years now, if you can't get it on Amazon, it's not worth having. But in Canada, we hadn't really caught up to that yet. I live in two cities, I go back and forth between Scottsdale and Vancouver, Canada, and in Vancouver I might order off Amazon once a week. But in the US it seems like it's daily, but we're catching up. So I think your timing is really good in Canada. What's your leadership team look like and how do you interact with the leadership team?

From a leadership team perspective, we're mostly still functional. We have a CTO, an SVP of engineering, and then several technical VPs that report up to them. We have a CFO and a VP of Finance, recently added a GC. We have a CMO with two VPs under on the marketing side. And then we just started to get a little bit matrixed as we start to expand both internationally and category wise. We have a SVP of new markets and then starting to work on the international structure. So I think in terms of interaction, a major part of my role is really around the planning side and supporting the team in terms of how we prioritize, both kind of near term and now looking a little bit longer term, how we both prioritize and then resource, both on the people side, but the engineering and development side as well, to support, have a roadmap and support the executives in executing. And then I directly manage several pieces of the business as well. So I have both. My CEO role is both facilitating and planning, but also directly managing product analytics and then what we call marketplace operations and Canada as well.

I want to get into some of your meeting rhythms that you have and how you kind of stay on the same page. But I'm also really curious on the politics side is what have you had to do to avoid company politics or prevent the silos from occurring. Going from 40 employees to 400 in five years is pretty rapid growth. How have you guys had to navigate through that?

I think it starts from a values perspective, who you hire and making sure everybody kind of shares the same set of values. And I think foremost among them is kind of respect for each other. And I know that sounds kind of Trite, but CEO and our founding team, the three co founders, all of them have, I think, a very strong kind of shared set of values. And I think one of the things that I. I've learned with Poshmark that I don't think I ever really recognized as much in the other startups and larger companies I've been with is how much the CEO and the founding team, how much their values reflect on the whole company. On the whole company. I really think that the fact that we have avoided politics has a lot to do with that. And foremost among them, it's respect for each other. It's not as if we don't have conflicts, but I think underlying it is respect. I think another one is we've had a fairly clear shared vision of where the business is going that might get more contentious in the future, but so far the path, you know, the six years I've been here, it's been fairly clear where we're heading. Then probably say the third thing is so far we've had primarily a functionally based organization. And I think one of the things we're really trying to think through is as we have to bring in some type of matrixing as we start to have now these separate lines of business. How do we do that and not bring in politics? I recognize it's something I'm very happy we've been able to avoid, but it's something I think we really have to actively work towards.

Talk to us about the shared vision first, because that's normally where I kind of start off. If we don't know where we're going, anywhere it'll take us there. How did you all stay on the same page with that shared vision? What systems or tools did you use to be able to do that?

I keep on coming back to our CEO. I think it's been a successful vision of the business and what Poshmark is all about. And I can't say it's actually even formalized, but I think, you know, it's been something that's been articulated verbally for and very consistently the past six years, but we've stuck with it. But I, yeah, I'm not sure I can articulate more than I think we, as new employees come on board. We have quite a strong orientation program. I would say the vast majority of employees are also participants in the platform. Particularly even our support side, our community team are, are very active buyers and sellers. So I think the ability to participate in the product that you build and manage, I think another aspect of it is we have an extremely active community. And so we, we throw events around the country. We call them Posh party lives. About twice a month in different cities. Every year we have a get together. We just had it about two weeks ago in Phoenix, which is was called. Is called Posh Fest, where we. This last one, we brought in about 1500 of our very active poshers to come in and basically learn from each other, connect with each other. By having all these events and kind of real world interactions with our community, I think it really gives you a very direct connection with what Poshmark is. So it's not a place where we have written down the 10 laws of Poshmark, but I think it's through a lot of osmosis and participating in the community that I think people have a really strong connection to who our customers are, who our postures are.

I wrote a book years ago called Vivid Vision. It's just a way to articulate the whole company vision. I was curious whether you were in that same direction, but it sounds like it's more on the indoctrination and the culture and the fact that so many of your employees are also users that it's just so clear on what you're building because everyone's a part of it, which is amazing. On the core value side, so many companies just kind of have them articulated and they're on the wall, but no one really lives them and breathes them. It sounds like from the C level down, it's just been a core part of the business. So how do you live them? And do you recruit based on those core values? Do you fire people if they're breaking the core values? You know, what do you do to make sure those core values are so strong in the company?

It's all above pretty simple. I'll just. We have four core values. Put people first, grow together, spread the love and embrace our weirdness. So really very simple values. And the interesting thing, I think that makes our values really work is they're not only the values of our employees, but also the values of our community. So, you know, for instance, when our CEO gave his State of the Union address at our posh fest, that we had basically went through our values and in the presentation. And it really permeates throughout the community that it's all about, you know, putting people first. Everybody in the community, it's about growing together. It's a hugely supportive community. I would say uncompetitive, you know, and this idea that, you know, you spread the love so you lead with love. You're helping others and out of that, you're going to grow. And then lastly, you know, with fashion, embracing your weirdness, that's your style and that's your weirdness. And so what do we do with this? So yes, we do actively have within our interview panels, as we hire people, we have someone focusing on the values in different ways. You know, asking and probing for these type of values. And I would say anytime I've kind of gone astray, I've made a couple of mistakes over the years. You always regret it. I would probably say in the first six to nine months, really working with them, getting someone who might have some rough edges with these values and working with them, I have let go a couple of people that didn't fit with the values. So absolutely. I think everything you said, we use to make sure that these are prevalent and as well as part of our performance reviews. So our annual review process, we also call them out.

I've always had some pretty clear rules on core values and you've nailed all of them. One is you stick to four or five core values. You did that. Another one is keep them to short, easy to understand phrases that need no explanation and not single words. You did that. Third is to never try to make it into an acronym because then it's like, is it about the acronym or the core values? And then just live them from the top down. And you guys do that as well. So I think that more than anything or is a huge part of why your growth is what it is is because people are operating that way all the time. It's become part of your DNA.

Yeah, I think the part that I really felt very good as we started to do as because we're bringing in so many new people. We've had kind of a rotation where an executive will have lunch with a new cohort of employees. This was a couple of months ago. I sat down, I was having lunch and I had them feed back to me kind of their first week or two. And was it as expected? And what's fascinating was how strongly some of the values came back. They were finding that resonant just in their first week in the company. And so it makes you feel really good about the future of the company.

I've got a couple of advanced questions. We are actually starting to take questions from some of our listeners in advance of me doing the interviews. So I've got some questions of people that knew you were going to be on the podcast. First one was how does Poshmark platform assist the smallest sellers from being cannibalized by the largest sellers.

One of the terms we use for Poshmark is that it democratizes retail. That's a big phrase. But I like it because when I described earlier how poshmark works, really the way you succeed on poshmark is by getting others to follow you. And then as you're following on Poshmark increases your ability then to market, you know, to share and curate items to that group. That's it. What is involved with that? Well, you have to be an active participant on the platform. You've got to be following other people, sharing their items, liking their items, connecting them to other postures. And when you altruistically are doing that, they're going to naturally do that to you. And so it's pretty crazy what it, you know, you're passing it forward almost in the community. But what's kind of democratic about that is any high schooler, college student, you know, housewife, entrepreneur, retail owner, they start from the same spot. It's basically their ability to connect with other people and have them follow, you know, them. And what we've had is these phenomenal success stories of people with just a passion and a certain style could be kind of crazy. And they've been phenomenally successful on the platform. But because we don't have anything in the platform that, you know, you pay your way into, really it's all about your ability to connect with others. And, you know, it's very democratic, very egalitarian. So for a small seller, we do have a program called posh Ambassadors, which is exactly what the name suggests we have. Over time, we've. We've built this program where people, they're expected to reach out and help other poshers on the platform. And even that, the hurdle of number of sales is very low. The main way you earn into this program and become a posh ambassador is the amount of social activity on the platform, how many shares you've done, how many times you've helped other sellers get exposed. There's a certain threshold. So even, even in our kind of program, which gives you a little bit extra exposure, it's not about number of sales. It's about the amount of sharing you do assisting small sellers. The whole design of the system is meant to make it very egalitarian and very equal playing field.

Is your model meant for the person selling, you know, five items a year or 50 items a year, or 500 items a year? Like, what's the. Is there a magic number target that you try to think about?

Well, it's Interesting, because we don't. So to answer your question, no. We have put a lot of focus into making it as simple as possible. So anybody could start and get selling and succeeding. But our largest sellers, I think we share this number or upwards of 500,000, a million a year on the platform. Over time, you're building a following. People love your style and love what you offer. Some of these sellers are creating their own brand on Poshmark.

That leads into. The second question that I was asked in advance as well is how does Poshmark keep the larger people from leaving to start their own platform? Guessing that it's just because the community and the tribe is so strong that they don't want to leave.

You have this amazing asset. So the answer is some of our largest sellers have gone off and started their own brick and mortars, you know, boutiques in their towns. A number of them sell as well, you know, on other platforms or through their own website. But once you built up a following of, you know, several hundred thousand followers on Poshmark or even.

Why leave?

Exactly. Why leave?

You'd almost liken it to. They've built a lot of retail traffic to that store. Why would they leave that location? Right.

Absolutely.

Maybe I have a place I can sell my plaid pants then that I've been wearing in the preppy world forever. Probably not. Probably not. Some other questions related to your org chart and thinking about moving from this functional based org chart to more of a matrix. How do you start to think about that and when do you need to start thinking about that as an organization? I was talking to a client recently and they had about 120 people and they were trying to go there. Is that too early or what tells you that you need to move to a matrix or bring in some of that?

I think what really struck us is the need, and it's been about a year to two years that we've really had this need, has really been around category expansion and specifically bringing men on the platform. I think without a dedicated team or focus across functions, not just one person advocating for men on the platform, it's difficult to see growth in that category faster than the overall platform. What we found is you, you get success, but it's basically maintaining a percent of your overall sales. To get that kind of acceleration, you need focus and not just within, you know, for instance, Tracy sun is our SVP of new markets. She certainly can have someone who's focused on, you know, or even a whole team focused on men. But unless we are identifying dedicated resources within Our growth team, our advertising team, within our product team, even within our community development team and integrating those activities across in a very focused and kind of clear, cohesive way against men. We couldn't get acceleration in the men's business. And so that's where we've had success with it. And I think it's a great example of kind of at that point, I think where you disparate pieces or segments of the business, I think it almost becomes necessary. Women's fashion in the US is such a large percentage of our business. It's monolithic.

Sure. For sure.

And so you really. That I think to start getting some of these emerging pieces of the business accelerating. It's an area we had to.

That's interesting. I was in one of the original Lululemon locations. We're from Vancouver, where Lulu started. And to walk into one of their locations now where they have an entire side of. Well, it's really two stores. One store is all women, one store is all men. But for the first 15 or so years it was almost exclusively women with maybe like four pairs of guys shorts. But they did start to focus on that and brought in that demographic. Curious on what you've done with your design and marketing side. Have you. Because most of your customers have been women. Have you stayed female designers and women copywriters and women UX people. Have you gone that route just believing that they're so different and think different to actually hire based on that as well?

Just started to do. We've been successful at accelerating the men's business without it taking a similar formula and applying it on men. But I think the feeling is to continue going down that route, we had to find, you know, especially in the product marketing side, merchandising side, we really had to find people who could bring a kind of a unique men's voice. It's not. Not going too crazy. Far from our Poshmark, you know, female voice. But. But how do we layer a male voice on. On merchandising as well as kind of our PR story as well. So had some success recently with that. For instance, we recently did a piece on NFL, an NBA in terms of pro sports fashion. And you know, as a way to, you know, to reach out and make fashion on Poshmark relevant to men outside finding that way of connecting. But I. But I do think it takes hiring specifically for that.

Was I correct then that your current marketing team had been on the female. On your copywriting design UX side, were.

You mostly recently we've hired in to build that Capability.

I read about something like that years ago, like 20 years ago in some book called Trends where they just kind of gave that nudge. I was like, oh, my God, it makes so much sense. Like, how could you ever have guys writing anything marketing or thinking? Because we just, we're just different. Especially when it's a female fashion brand or started that way.

We've also done bringing in and working with some celebrities. So we do occasionally do a celebrity closet where we'll. They'll donate the proceeds to a charity. And we've done a couple of sports figures recently with that, with, you know, male sports figures. And that's. That's worked out well too.

Thinking about your growth just in terms of a leader. So you've been with the company for five and a half years. How have you had to grow as a leader over the years?

The biggest change for me has been probably twofold. One is in terms of people management. I think in terms of this has probably been the largest team and in particular, kind of a disparate set of teams that I've managed. And I think learning how to manage managers and managers of people. I'm always amazed by people who have fabulous eq. I would give myself average grades in that regards, but it's really forced me to really listen, I think a lot more, really try and slow myself down on reacting too quickly. Just be much more thoughtful in terms of people and people structure, people organizational structure and how that influences people. So probably say that that's one. The second one is, is more just directly figuring out what COO means, which is really. It's kind of interesting and separating myself from wanting to dive in and drive things in the business. And how do I become more of a enabler and a facilitator more and more? And I got to be honest, that's. That's tough for me. But I'm gradually learning how to do it, be more of a resource for the other execs rather than my impulse is just to dive in and grab it.

Did you ever come across the article that Harvard wrote or the Harvard Business review wrote about 15 years ago called the misunderstood role of the COO?

No. No, I haven't.

Great. Really?

Really?

Really? I'll send it to you afterwards. It's a fantastic piece. And they identified seven distinct types of chief operating officers. And it's just. That's one of the reasons why you're confused is there they play very, very different world, different roles. And I even started an organization about three years ago called the COO alliance just as a way to try to bring CEOs together to network and learn from each other and share with each other. Because we tend to go to all these entrepreneur events, but we don't really fit in. We have a different mindset. Final question. If I wanted to think back to maybe you're graduating Harvard, or you were just finishing off your undergrad and you were kind of finishing off the University of California or UC Berkeley. If you were to give yourself some advice as like a 22 year old advice that today you know to be true, but you wish you'd known at 22, what advice would you go back and give yourself back then?

Probably one of the things I've learned most, you know, through, especially through my 20s and 30s and maybe even early 40s, was to bite your tongue, listen, be a much, much better listener, much more adaptable, much more flexible. You know, you come out of college, you come, you know, at youth. I had a couple pretty hard stumbles in my career, I think to get to a point where you can lead, but lead in a way where you're listening and you're adapting and you're taking into account everybody around you. It took me a while to save in decades to get to the point where I achieved that. So I think, you know, thinking about myself when I was graduating from college, I think it takes a lot more than smarts to get ahead in the world. Big part of that is listening, being considerate and respectful.

I think that's where the wisdom component starts to kick in. Right? We just, you just need some years and decades under our belts before that part kicks in. John, thank you very much for sharing with us on the Second in Command podcast. I really, really appreciate it. John McDonald, the chief operating officer at Poshmark, thanks for being with us.

A's hire A's and B's hire C's. I mean, this is about ego. Blatantly about ego. The only way I'm the best at my job is if I have the best people at what they do working for me, because collectively we're a whole. That's much greater than the sum of the parts. I mean, if I hire people that are only less skilled than I am, then I'm shortchanging the company.