Ep. 90 - Creating A Unique eCommerce Experience With Poshmark COO, John McDonald

Ep. 90 - Creating A Unique eCommerce Experience With Poshmark COO, John McDonald

Poshmark, the largest social marketplace for fashion, is setting the bar higher in how people buy and sell fashion. John McDonald, the COO of Poshmark, joins Cameron Herold to share how they’ve become the leading social commerce platform for the next generation of retailers and shoppers. John manages product, data and analytics, and marketplace operations and is responsible for marketplace GMV growth and profitability. In this episode, John talks about how Poshmark is able to navigate through its rapid online growth. He also introduces the concept of Posh Ambassadors and describes how they’re assisting smaller sellers from being consumed by larger sellers. Don’t miss this opportunity to discover how you can create a fabulous shopping and eCommerce experience!

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 deep expertise in community and marketplace management. He developed at eight 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 & Gamble, Monsanto, the Monitor Company, and Evite. John has an MBA from Harvard Business School and a BS from the University of California, Berkeley. John, welcome to the Second In Command podcast.

I’m happy to be here.

Every time I see Harvard, I start getting all nervous. I remember the first business book I ever read was What They Don’t Teach You at Harvard Business School. You don’t even get to go there, you earned that spot. I couldn’t spell Harvard when I was in college. Can you walk us through a little bit about what you pulled from that experience that you still use?

Probably the best thing I got out of Harvard, which a lot of business schools practice is this fast, several times a day, case study method where you would be constantly exposed to almost context switching and different aspects of different companies and what situations they ran. Frankly, that’s what almost every day is. It’s context switching 7 or 8 times a day and different kinds of challenges to the business. That sets you up well to be able to make judgments on a fast basis in different business situations.

Tell us a little bit about Poshmark so we know exactly what the brand is and what you’re doing.

Poshmark is the leading social commerce platform for fashion. What does that mean? First, you step back a little bit. If you think about the past years in retail, we went from a small shop on Main Street to large big-box retailers and then with the advent of eCommerce. This phenomenal revolution, convenience, price, and selection happened. I shop on Amazon probably on a weekly basis. It’s fabulous in terms of the selection, pricing, convenience, and delivery options. What’s gotten lost in all that is the human element.

In particular, when you think about fashion, the human element of that is important. It’s that personal recommendation, size, and affirmation that you are selecting a style and looking good. What Poshmark has done, and a big part of our success is to bring that personal human interaction back into shopping. What does that mean? Poshmark, at its core, is a consumer-to-consumer marketplace. We have over seven million sellers that have listed over 75 million listings and they sell to a community of about 50 million users. It’s large and broad. We expanded in Canada, but primarily US-based.

The actual marketplace itself started mobile-only with an iPhone app and then gradually added web and Android to that. What led it to be the focus all along and the whole marketplace side of this is to make it as simple as possible for buyers and sellers. We’ve innovated in shipping, tracking taxes, and even disputes that you have in a peer-to-peer platform. We’ve made that simple all within the app. The idea is we want to make the mechanics of buying and selling easy that it allows our buyers and sellers to focus on the social side of the experience.

It’s similar to social media if you’re on Pinterest or Instagram. On Poshmark, we call them closets. You follow people in their closets that you love. You engage with those people, and you share content with them. It’s similar to any other social platform. On Poshmark, you’re sharing content that forms the fabric of the commerce interaction. For a seller, you succeed by expressing your style, building a following, getting a lot of people on Poshmark to follow you and then you’re curating your items as well as other people’s items to those followers. You’re creating this fabulous shopping experience. In the process, as we say, “When you lead with love and you lead with styling, the sales are going to follow.” To give you a sense of what this means in terms of metrics, over 30 million listings are curated or shared with others every day. We have Snapchat or Facebook-like engagement metrics. Users visit 7 to 8 times a day and spend about 25 minutes a day in the app. It’s a social experience and through that social experience, you’re both buying and selling. It’s integrated social and commerce that leads us intensely personal interaction.

In real layman’s terms, is that mash-up of Instagram, Pinterest and eBay?

Yes, we sometimes hear it that way. You’ve got the marketplace but then it’s a different way of discovering fashion through what other people are suggesting to you, and what other people that you admire their style have in their closet. There are strong elements of Instagram. Instagram has become a strong center of social media for fashion.

You guys have made the news or somebody on my team mentioned that you’re expanding into home goods as well. Is that true?

Yes. One of our exciting things is we have something called PoshMarkets. One of our challenges is when you have an app, it’s limited space as you add and bring in different types of people. We are primarily a women’s fashion marketplace and then we brought men into it. We thought, “How do you allow people to have a little bit more segregated experiences?” We created this concept that’s almost like an app within an app. We have Men’s PoshMarket. It also allowed us to start to branch out into areas that are analogous. Home furnishings have a strong fashion element to it. It allowed us to add home furnishings to the summer and it’s been successful. 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. What we did is we formalized that and made it a fantastic experience to buy and sell home goods on the site.

SIC 90 | Poshmark
Poshmark: When you have over 40 people, you’re executing on multiple large initiatives.

 

I love that you guys started on mobile and have expanded the web from there. One of my kids, strangely enough, buys and sells high-end, thousand dollar shoes. He flips them, wears them for 2 or 3 months and sells them for $200 more than he paid for them. Is that something that’s happening on your site? How do you guys make your money?

We have a Kicks PoshMarket. Sneakers are a big trend in fashion. We have a simple fee structure on how we make money. We take a 20% commission on every sale that happens on the platform and included in that is everything. For the seller, it’s the payment, shipping, customer service, and all that are handled by us. It makes that experience incredibly easy at a simple fee structure. There are no nickel-and-diming and extra fees outside of that.

Let’s get into the nuts and bolts of the business. You’ve been there for several years and 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? What was it that attracted you to Poshmark in the early days?

When I started, it was interesting. I was at a SaaS platform for building communities and I was looking around. Back in 2012 to 2013, my perception of innovation in eCommerce is finished. I know that sounds negative but Amazon had one. I wasn’t even looking for a role in eCommerce. I was looking more on the social side of things. A friend referred me to Manish Chandra, our CEO, and we met for three hours. I came back about a week later and had another three-hour meeting with them and I was sold. A part of what sold me was I was at eBay for about eight years. I felt that if I’d left eBay and written what would be the perfect social marketplace that I left on the back of a napkin, it would have been exactly what Manish should build.

When I joined, it was probably about 35 people and orders of magnitude smaller in sales. What has changed? What hasn’t changed is our vision for the business and the strong framework or model for the business. Certainly, our sophistication in particular on the analytic side, our understanding of how growth happens, the marketplace, and how people interact. I feel almost every year, we make some big breakthroughs in how we understand things operate. That ends up changing, whether it’s our advertising strategy, maybe some of the key features that we build or how we run the business. More than anything, it’s starting to build a deeper and more sophisticated understanding of the business.

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

We stay lean. We’re about ten times that size. I don’t even know if we share that number but upwards of a little bit over 400 people. As a business team and engineering team, we’re lean and that allows us to be focused and have a lot of common knowledge of what everybody is doing. We’re still at that size where it feels like we can be nimble and focused.

Roughly how many employees were there when you came in, about 40?

Yes, from about 35 to 40.

That’s where the biggest part of the growth has come then in terms of the complexity of the business for you. Was it complex and smaller when you got there?

When I first joined, it was a single thread. We have a featured initiative and that was what everybody was working on. When you have over 40 people, you’re clearly executing on multiple large initiatives. We expanded into Canada and at the same time, we were adding a major category. There were a number of other facets for businesses that we were working on at the same time. Managing from engineering, business, finance, and marketing side across multiple major initiatives definitely takes a bit more juggling.

I’m Canadian as well so I appreciate the fact that you came to Canada. At the same time, I wonder why would you bother with Canada when it’s smaller than California?

It was a natural place for us to take the first step internationally. We had similar payment systems and shipping. We already had some brand awareness in Canada and similar time zones. In terms of infrastructure, you don’t have a big geographical distance to get any latency in your back end. There are a lot of reasons why it was a great first step. We built a lot of confidence in your ability to expand internationally from it.

I remember when I was building a company years ago called 1-800-GOT-JUNK? and we were opening up in Australia. It was our first test market after doing Canada and the US. We felt like if we failed in Australia, nobody would know. You guys are big enough that you can’t fail. Have there been any struggles in starting up in Canada and what do you think you’ve learned from that experience?

SIC 90 | Poshmark
Poshmark: Without a dedicated team or focus across functions, it’s difficult to see growth in that category faster than the overall platform.

 

I would probably flip it the other way. It’s gone better than we expected. We expected some stumbles more from a growth perspective. Probably the areas that maybe we are learning from are more of basic operational aspects like banking. Certainly going into a different tax regime, dealing with a different postal carrier and its own idiosyncrasies. Probably we expected more on the advertising and the product side that we’d have more issues and that’s gone smoothly. It’s more the pure operational and the local operational aspects that maybe we didn’t account or foresee as much.

Your timing on coming into Canada is great because Canada is finally starting to catch up with the US like buying on Amazon on a weekly basis. I’ve been saying for a number of years, “If you can’t get it on Amazon, it’s not worth having.” In Canada, we hadn’t caught up with that yet. I live in two cities. I go back and forth between Scottsdale and Vancouver, Canada. In Vancouver, I might order on Amazon once a week, but in the US, it seems like it’s daily. What does 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 and SVP of Engineering and then several technical BPS that report up to them. We have a CFO and VP of finance. We have added a GC and we have a CMO with two VPS under on the marketing side. We started to get a little bit of a matrix. As we start to expand both internationally and category wise, we have SVP of New Markets and then starting to work on the international structure. On analytics and the operation side, we have a couple of VP there.

In terms of interaction, a major part of my role is around the planning side and supporting the team in terms of how we prioritize both near term and looking a little bit longer-term how we both prioritize and resource the people side and the engineering and development side as well. We have a roadmap and support the executives in executing. I directly manage several pieces of business as well. My COO role is both facilitating and planning but also directly managing product analytics and then will be called marketplace operations in Canada as well.

You guys got a huge scope to oversee. I want to get into some of the meeting rhythms that you have and how you guys stay on the same page. I’m also curious about the politics side. 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 rapid growth. How have you guys had to navigate through that?

We’ve been fortunate. It starts from a values perspective, who you hire and making sure everybody shares the same set of values. Foremost among them is respect for each other. I know that sounds trite but our CEO and founding team, the three cofounders have a strong shared set of values. One of the things that I’ve learned with Poshmark is how much the values of the CEO and the founding team reflect on the whole company. I don’t think I ever recognized that as much as the other startups and larger companies I’ve been with. The fact that we have avoided politics, it has a lot to do with that set of values. It’s not that we don’t have conflicts but underlying it is respect.

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 to the years I’ve been here has been fairly clear where we’re heading. Probably the third thing is we’ve had primarily a functionally based organization. One of the things we’re trying to think through is we have to bring in some matrix thing. We start to have these separate lines of business on how we do that and not bring in politics. I recognize it’s something I’m happy with that we’ve been able to avoid, but it’s something we have to actively work towards.

Talk to us about the shared vision first because that’s normally where I start off. If we don’t know where we’re going, any road will 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. It’s been a successful vision of the business and what Poshmark is all about. I can’t say it’s even formalized but it’s something that’s been articulated verbally and consistently over the years. We’ve stuck with it. I’m not sure I can articulate more but as new employees come on board, we have quite a strong orientation program. The vast majority of employees are also participants in the platform. Particularly even our support side of our community team are active buyers and sellers. It’s the ability to participate in the product that you build and manage as well.

Another aspect of it is we have an extremely active community. We throw events around the country and we call them Posh Party LIVE about twice a month in different cities. Every year, we have a get-together. We had it one time in Phoenix and it’s called PoshFest where we brought in about 1,500 of our active Poshers to come in and learn from each other and connect with each other. By having all these events and real-world interactions with our community, it gives you a direct connection with what Poshmark is. It’s not a place where we have written down the ten laws of Poshmark but it’s through a lot of osmosis and participating in the community that people have a strong connection to who our customers are and where Poshers are.

I wrote a book called Vivid Vision. It’s 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. The fact that many of your employees are also users that it’s clear on what you’re building because everyone’s a part of it, which is amazing. On the core value side, many companies just have them articulated in there on the wall but no one lives and breathes them. It sounds like from the C-level down, it’s been a core part of the business. How do you live them? Do you recruit based on those core values? Do you fire people if they’re breaking the core values? What do you do to make sure that those core values are strong in the company?

It’s all the above. We have four core values, which are put people first, grow together, spread the love, and embrace our weirdness. Those are simple values. The interesting thing that makes our values work is they’re not only the values of our employees but also the values of our community. For instance, when our CEO gave his State of the Union Address at this PoshFest that we had, he went through our values in the presentation and it permeates throughout the community that it’s all about putting people first. Everybody in the community is about growing together. It’s a hugely supportive community and uncompetitive.

This idea that you spread the love, you lead with love and you’re helping others, and out of that, you’re going to grow. Lastly, with fashion, embracing your weirdness resonates quite a bit because it’s about your preppy. You were telling me you’re stuck in which decade it is with preppy but that’s your style and that’s your weirdness. What do we do with this? As we hire people, we actively have within our interview panels focusing on the values in different ways and asking and probing for these types of values. Anytime I’ve gone astray, I’ve made a couple of mistakes over the years and you always regret it. In the first 6 to 9 months working with them, getting someone who might have some rough edges with these values and working with them, I have let go of a couple of people that didn’t fit with the values. Everything you said, we use to make sure that these are prevalent. It’s part of our performance reviews. In our annual review process, we also call them out as part of that.

I’ve always had some clear rules on core values and you’ve nailed all of them. One is you stick to 4 or 5 core values and you did that. Another one is keeping this short and easy to understand phrases that need no explanation and not single words, and you did that. The third is to never try to make it into an acronym because then it’s about the acronym and not the core values, and you nailed that. Live them from the top down and you guys do that as well. More than anything, that is a huge part of why your growth is what it is. Because people are operating that way all the time, it’s become part of your DNA.

SIC 90 | Poshmark
What They Don’t Teach You at Harvard Business School

The part that I felt good as we’ve started to do it is because we’re bringing in many new people. We’ve had a rotation where an executive will have lunch with a new cohort of employees. One time, I sat down and I was having lunch. I had them feedback to me on their first week or two and it was as expected. What was fascinating was how strongly some of the values came back. They were finding that resonance just in the first week in the company so it makes you feel good about the future of the company.

I’ve got some questions from people that knew you were going to be on the show. The first one was how does the Poshmark platform assist the smallest sellers from being cannibalized by the largest sellers?

One of the terms we use for Poshmark is it democratizes retail. That’s a big phrase but I like it because the way you succeed on Poshmark is by getting others to follow you. As you’re following on Poshmark increases, your ability to market to share and curate items to that group increases. That is the extent. What is involved with that? You have to be an active participant on the platform. You’ve got to be following other people, sharing their items, liking their items, and connecting them to other Poshers. When you altruistically do that, they’re going to naturally do that to you. It’s crazy that you’re passing it forward almost in the community.

What’s democratic about that is any high school or college student, housewife, entrepreneur, and the retail owner starts from the same spot. It’s their ability to connect with other people and follow them. We’ve had these phenomenal success stories of people with passion and a certain style. It can be crazy. They’ve been phenomenally successful on the platform. Because we don’t have anything in the platform that you pay your way into or a large retailer or brand or seller, it’s all about your ability to connect with others. It’s democratic and egalitarian.

For a small seller, we do have a program called Posh Ambassadors, which is exactly what the name suggests. Over time, we’ve built this program where people are expected to reach out and help other Poshers on a platform. Even the hurdle of a number of sales is low. The main way you earn into this program and become a Posh Ambassador is the amount of social activity you have on the platform, how many shares you’ve done, and how many times you’ve helped other sellers get exposed. There’s a certain threshold. Even on our program, which gives you a little bit of extra exposure, it’s not about the number of sales. It’s about the amount of sharing you do. To answer your question, it’s assisting small sellers. The whole design of the system is meant to make it an egalitarian and equal playing field.

Is your model meant for the person selling 5, 50 or 500 items a year? Is there a magic number target that you try to think about?

It’s interesting because we don’t. We put a lot of focus on making it as simple as possible. Anybody could start selling and succeed. Our largest sellers are upwards of $500,000 to $1 million a year on the platform and we share these numbers. Over time, you’re building a following and people love your style and love what you offer. Some of these sellers are creating their own brands on Poshmark and quite successful at it.

How does Poshmark keep the larger people from leaving to start their own platform? I’m guessing that it’s because the community in the tribe is strong that they don’t want to leave.

You have this amazing asset. Some of our largest sellers have gone off and started their own brick and mortar and boutiques in their towns. A number of them sell as well on other platforms or through their own website. Once you’ve built up a following of several hundred thousand followers on Poshmark or eBay, that’s a phenomenal asset. Why leave?

You’d almost like that they’ve built a lot of retail traffic to that store, why would they leave that location. Maybe I have a place where I can sell the plaid pants that I’ve been wearing in the preppy world forever. Some other questions are related to your organization, 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? When do you need to start thinking about that as an organization? I was talking to a client one time. They had about 120 people and they were trying to go there. Is that too early? What tells you that you need to move to a matrix or bring in some of that?

What has struck us is the need and we’ve had this need around category expansion, specifically bringing men on the platform. 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’ve found is you get success, but it’s maintaining a percent of your overall sales. To get that acceleration, you need focus. For instance, Tracy Sun is our SVP of New Markets. She certainly can have someone or even a whole team focused on men.

Unless we are identifying dedicated resources within our growth team or our advertising team within our product team, even within our community development team. Integrating those activities across in a focused and clear cohesive way against men couldn’t get acceleration of the men’s business. That’s where we’ve had success with it and it’s a great example. At that point where you have disparate pieces or segments of the business, it almost becomes necessary. Women’s fashion in the US is such a large percentage of our business. It’s monolithic. To start getting some of these emerging pieces of the business accelerating, it’s nearing we had to.

I was in one of the original Lululemon locations. Vancouver is where Lulu started and I walked into one of their locations where they have two stores. One store is all women and one store is all men, but for the first fifteen or so years, it was almost exclusively women with maybe four pairs of guys shorts. They did start to focus on that and broaden that demographic. I’m curious about what you’ve done with your design and marketing side because most of your customers have been women. Have you stayed with female designers, women copywriters and women UX people? Have you gone that route believing that they’re different and think differently to hire based on that as well?

We’ve been successful accelerating the men’s business without it by taking a similar formula and applying it to men. The feeling is to continue going down that route. Especially on the product marketing side and merchandising side, we had to find people who could bring a unique men’s voice. It’s not going too crazy far from our Poshmark female voice but how do we layer a male voice on merchandising as well as our PR story? We’ve had some success with that. For instance, we did a piece on the NFL and NBA in terms of pro sports fashion as a way to reach out and make fashion on Poshmark relevant to men outside. We find a way of connecting but it takes hiring specifically for that.

SIC 90 | Poshmark
Vivid Vision: A Remarkable Tool For Aligning Your Business Around a Shared Vision of the Future

Am I correct that your marketing team had a female on your copywriting design UX side?

Yes. We’ve hired in to build that capability.

I read about something like that years ago in some book called Trends where they gave that nudge and I was like, “It makes so much sense. How could you ever have guys writing or thinking about anything marketing?” We are different, especially when it’s a female fashion brand or started that way.

We’ve also done spring in and working with some celebrities. We occasionally do a celebrity closet where we’ll donate the proceeds to a charity. We’ve done a couple of sports figures and with male sports figures and that’s worked out well too.

I’m thinking about your growth in terms of a leader. You’ve been with the company for several years, how have you had to grow as a leader over the years?

The biggest change for me has probably been twofold. One is in terms of people management. This has probably been the largest team and in particular, a disparate set of teams that I’ve managed. Learning how to manage some managers of people, it’s forced me and I’m always amazed by people who have fabulous EQ. I would give myself an average grade in that regard. It’s forced me to listen a lot more, try and slow myself down on reacting too quickly and be more thoughtful in terms of people and people structure, people’s organizational structure, and how that influences people. I’d probably say that that’s one. The second one is more directly figuring out what COO means. It’s interesting in separating myself from wanting to dive in and drive things in the business and how I become more of an enabler and a facilitator. I’ve got to be honest, that’s tough for me. I’m gradually learning how to be more of a resource for the other execs rather than my initial impulse to dive in and grab it. That’s been another area I’ve had to grow and I still need to keep growing up.

Did you ever come across the article that the Harvard Business Review wrote years ago called The Misunderstood Role of the COO?

No, I haven’t.

It’s a fantastic piece. They identified seven distinct types of Chief Operating Officers. That’s one of the reasons why you’re confused. They play different worlds and different roles. I even started an organization called the COO Alliance as a way to try to bring COOs together to network and learn and share with each other because we tend to go to all these entrepreneur events, but we don’t fit in. We have a different mindset. I wanted you to think back when you’re graduating from Harvard or you were finishing off your undergrad and you were finishing off at the University of California, Berkeley. If you were to give yourself some advice as a 22-year-old that you know to be true, but you wish you’d known at 22, what advice would you go and give yourself back then?

Probably one of the things I’ve learned most, especially through my 20s and 30s, and maybe even early 40s was to bite your tongue, listen, be a better listener, more adaptable and more flexible. When you came out of college at youth, I had a couple of hard stumbles in my career. To get to a point where you can lead but lead in a way where you’re listening, adapting and taking new accounts everybody around you, it took me a while, even decades to get to the point where I achieved that. Thinking about myself when I was graduating from college, it takes a lot more than smarts to get ahead in the world and a big part of that is listening to people, being considerate, and respectful people.

That’s where the wisdom component starts to kick in. We need some years and decades under our belts before that part kicks in. We ran out of time.

There are probably fortunate people out there that don’t bang their heads. I banged my head a couple of times badly but you learn from it.

John, thank you much for sharing with us on the show. I appreciate it. John McDonald, the Chief Operating Officer at Poshmark. Thanks for being with us.

Thank you, Cameron.

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About John McDonald

SIC 90 | PoshmarkPoshmark is a leading social commerce platform for the next generation of retailers and shoppers, where John manages product, data and analytics, and marketplace operations and is responsible for marketplace GMV growth and profitability. 

John draws from deep expertise in community and marketplace management he developed in eight years at eBay in category management, trust and safety, and seller experience roles. As well as four years at Ning, where he lead 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 & Gamble, Monsanto, the Monitor Company, and Evite. 

John has an M.B.A. from Harvard Business School and a BS from the University of California, Berkeley.

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