In a live Q&A, Casey Winters answers a founder’s question about how marketplaces can grow by expanding into new product categories rather than new geographies. He uses two concrete examples: Whatnot, a livestream collectibles marketplace, and Thumbtack, a local‑services platform. For Whatnot, Winters explains that the company succeeded by deeply understanding the core attributes of its initial category (Funko Pops) – high‑frequency buying, strong collector communities, and a blend of entertainment, community, and commerce – and then deliberately selecting new categories (Pokémon cards, sport cards, sneakers, handbags) that shared those attributes, allowing the product and go‑to‑market (GTM) engine to stay largely unchanged. For Thumbtack, he highlights a different playbook: leveraging a massive SEO advantage to rank landing pages for dozens of service categories simultaneously, manually routing incoming leads to professionals, and then iteratively automating supply, conversion, and demand processes. He notes that while Thumbtack’s approach worked for a mature business, the SEO‑first opportunity is unlikely to exist for new entrants in 2024. Throughout, Winters points out common mistakes – expanding into categories without matching core attributes, under‑estimating the need for supply automation, and assuming the same tactics will work across disparate markets.
Chapters
Thanks for being here, Casey, and thanks for organizing, Mike. We actually traded notes on Twitter about the Substack beehive thing with your recent article with Dan. So I love the demand aggregation stuff you've done. I'm the founder of a company called Leland, a coaching marketplace. We think a lot about category expansion. So you just barely alluded to this and would love to talk a little bit about, or just hear your thoughts on what companies that pursue category expansion, not geo expansion. So like the Thumbtacks or whatnot. I guess Thumbtack has kind of Both. What have they done uniquely well in category expansion to pull that off? And any common mistakes that you see?
Sure. So for those of you who are less familiar, Whatnot is a collectibles marketplace powered through livestream sellers. So basically all the transactions today are through a seller livestreaming a bunch of their products, like let's say vinyl, and then, you know, triggering a bid process and then people bidding and buying that. So I think what allowed Whatnot to be successful where some of their early competitors failed is they had a very good understanding of the core attributes of their first category, which was Funko Pops, which probably half of you don't even know what that is, but it's like a weird kind of doll of, you know, of like Marvel characters and other famous IP. So they understood that category really well because they were collectors themselves. They understood why it worked with their product. And then they used those attributes to map other categories that looked as similar as possible so that the product and go-to-market strategy could essentially be the same to unlocking the next category, which I think was Pokémon cards. I think it was next and then sport cards and then sneakers and women's handbags. They're in a lot of stuff now. So they basically were like, hey, high-frequency collectibles buying and selling through existing communities on social media with a combo of entertainment, community, and commerce. They would probably phrase that way better than I just did, but you get a sense of like, there's a lot of attributes there that they understand how they interplay because they were deep in the space already. And they're basically looking for things that look as close to that as possible that they could expand into. And therefore they didn't have to change the product that much for it to work. They didn't have to change the go-to-market strategy that much for it to work. They could just kind of do what they'd already done again. So that's like the Whatnot example. The Thumbtack example is different. So Thumbtack had such a big edge on customer acquisition. That they were like, the only, the work we need to do to unlock demand in one category, which is SEO work, is fundamentally the same amount of work whether we're in one category or 100. We're just creating a bunch of landing pages, we're getting them to rank number one on Google. So they kind of launched all of them at once. And one of the reasons they were able to do that is if people came in and filed a lead, They would just kind of manually email those leads to, you know, professional suppliers and then use that as an excuse to onboard them onto Thumbtack permanently. So, and then they would, and then from there they were able to optimize the conversion rate on a category by category level. They did it, built a big market development team that optimized all those conversion flows. But early on it was like, we know how to rank high on Google for everything, local services. We're just going to go get those rankings before other people figure it out. And then we'll gradually automate the rest of the business, like supply, conversion rate, demand, all that kind of stuff. And you're probably not going to find that opportunity in 2024, but they're a little bit older business.
