Amazon may have a monopoly on physical goods sold online. But what about digital?
Games and software are available on Steam. Shopify supports some forms of digital goods, such as artwork and gig services. But co-founders Steven Schwartz, Cameron Zoub and Jack Sharkey see room for competition.
Schwartz, Zoub, and Sharkey are oops, a marketplace for people to sell digital goods. Products for sale and resale include everything from sportsbook picks and food, travel and credit card deals, to tips to “up your social game.”
“Whop is a comprehensive online platform designed to connect sellers and buyers in the digital economy,” Schwartz said in an email interview with TechCrunch. “Its mission is to centralize all products on the Internet and provide a one-stop solution for anyone who wants to participate in the digital economy. “
Zoub and Schwartz met in a Facebook group when they were 13 years old over a mutual interest in limited-edition sneakers. Together, they launched the first “sneaker bot” — software that grabs shoes before they sell out — and used the profits to lead the creation of more online selling software.
After working with software developer Sharkey to create a product for small businesses, Zoub and Schwartz created a pop-up marketplace where people could buy software for free and sell their own. But the liar got past it.
“That’s garbage,” Schwartz said bluntly. “People have to post on forums, they’re often scammed, middlemen are needed, and the pricing for the software isn’t clear.”
So Schwartz, Zoub, and Sharkey set out to develop an improved version of the marketplace, the Whop.
“We’re creating a new economy that gives people new things to sell,” Schwartz said. “We see ourselves as competing with social media, where people have traditionally sold their software and suffered from an incredibly suboptimal experience.”
Given the myriad marketplaces for goods and services, one might wonder what sets Whop apart from its fun name. (The authors did.) Schwartz claims that Whop is different because of its sales experience and product discovery engine.
Sellers on Whop get a dashboard that includes promotions and customer relationship management tools, as well as business insights. For buyers, there are recommendation algorithms, visualizations for discovering new products, and portals for managing purchases.
Sound like a fit for the course? Maybe. But Whop is going after a different audience than the typical market: influencers and content creators.
“People sold sponsorship or ad space on traditional social channels, but now they can use Whop to offer their audience a real, living product from which they can generate a recurring, steady revenue stream,” Schwartz said. “If someone has 1 million followers, they think it’s better to keep posting content, but in reality, someone with 20,000 followers and a real product is actually making more money than them. “
Is the last statement true? Maybe.What Do The trend seems to be that buyers are more likely to buy products recommended to them by influencers they trust.According to one source49% of consumers rely on recommendations from influencers, and 40% say they are likely to buy something after seeing it on Twitter, YouTube or Instagram.
From my cursory browsing, many of Whop’s listings seem to revolve around sports betting, cryptocurrencies, and general wealth growth strategies. There must be no problem with this. But I wonder if all this has staying power — and how well it regulates.
As with all marketplaces, there is a risk of bad actors manipulating the platform to drive sales of scam products – whether through fake reviews or questionable SEO practices. Whop says it needs to take steps to mitigate the problem, but it’s hard to know how extensive those steps will be, especially given Whop’s small team (20 people).
But investors see potential in what Whop is doing. The company announced today that it has raised $17 million in Series A funding, with participation from Insight Partners, The Chainsmokers, Peter Thiel, and others. The lot valued the startup at more than $100 million — a healthy valuation for a marketplace of about 1 million customers and 3,000 sellers that has done $100 million in transactions to date.
“We have a lot of runways,” Schwartz said. “The pandemic and the tech slowdown have been unbelievable for us; the slowdown in VC funding in particular has led to a lot of small, cash-focused products that our products are backing.”