“Not really,” Lu told him. He was traumatized.
“Honestly,” Bettinelli said, “at your stage right now, it’s better to be
hated than unknown. It means the community cares.”
Lu marvels that, looking back, Bettinelli’s words could not have been
truer. “Even though people had a horrible experience,” he says, “they
started to understand our value proposition, like, Oh, I get why I would
use a service like this.” (He apologized to everyone.)
Now the scene had a safer, customized, digital way to resell sneakers.
What would come next?MEANWHILE, across the country in New York City, another pair of
founders had entered the sneaker game and were anxiously managing a
business with no customers.
John McPheters and Jed Stiller, like the GOAT founders, had also
come from the tech startup world. They’d created an analytic tool
called Swarm Mobile, which helped companies connect with custom-
ers in stores. When they sold it to Groupon in 2014, they first explored
a new venture in diamonds—but then started thinking about the
sneaker aftermarket.
McPheters had worked at Flight Club for 10 years, and both he and
Stiller saw an opportunity to improve on it. Flight Club still catered to
insiders—the people with deep roots in the sneaker scene. GOAT was
focusing on making the broader world of reselling safer for the masses.
McPheters and Stiller decided to aim for a different market: the high-
end customers, who would actually wear the sneakers and flaunt them
like diamonds.
They imagined a sneaker store for a new era, turning the consignment
model into a mega global, luxury brand. “As entrepreneurs,” McPheters
says, “you can make a decision to go out of your comfort zone and cre-
ate something in an area you know nothing about. Or you can say, ‘Hey,
I know this market, and I’m going to make a play.’ ” And so they chose
sneakers over carats. “We knew there was a void to be filled,” says Stiller.
“It was pretty obvious to us.”
The founders felt strongly that a physical presence was key to anchor-
ing a trusted brand. “Back then, people didn’t understand: Is it a new
product? Is it resale? Is it used?” says Stiller. “So to be able to find us was
important.” In October 2015, they simultaneously launched an online
marketplace and an Apple-esque, boldly spacious store called Stadium
Goods in Manhattan’s SoHo neighborhood. People would bring their
unworn shoes to the back entrance to be authenticated and priced, while
shoppers would enter through the front door. Stadium Goods would take
20 percent of the sale (the same as Flight Club). But their location didn’t
have much foot traffic in 2015; there were days with zero sales.
So they worked their connections, turning the store into a story. They
knew the host of Complex TV’s Sneaker Shopping show, which follows
a celebrity buying shoes, and got them to shoot at Stadium Goods a
couple times a month. That jump-started a virtuous cycle. Viewers saw
Chris Rock, Whoopi Goldberg, Billie Eilish, and 21 Savage score shoes
in Stadium Goods. The attention brought more customers, who brought
more attention. Traffic on their website picked up. With its retail pres-
ence established, Stadium Goods started selling on other sites, too—
entering into Alibaba’s Tmall, a kind of Amazon for China.
By this point, Flight Club, GOAT, and Stadium Goods had captured
the three natural layers of the marketplace—the hard-core fans, the
everyday reseller, and the high-end flaunter. What could come next?
The answer would involve solving a problem that all these customers
faced: They had no real idea what a shoe was worth.JOSH LUBER HAS long been a sneakerhead, but he was always bothered
by the resale prices. They could be arbitrary—there was just no agree-
ment on how valuable any one sneaker was. So in 2012, while he worked
at IBM in New York, he built Campless. It was a sort of Kelley BlueBook for preowned sneakers, which used messy eBay data and any other
numbers he could grab. From there, he says, the thought process was
like dominoes: “If you knew the value of one pair of sneakers, you could
look at someone’s whole sneaker collection the way you look at a stock
portfolio. And the logic was, well, if I understood asset pricing and port-
folios, then perhaps I could create an actual stock market for sneakers.”
Word of his idea traveled, and soon it reached the very wealthy ears
of Dan Gilbert, founder of Quicken Loans and owner of the Cleveland
Cavaliers. Gilbert had been watching his kids buy and sell shoes, and
had also gotten to wondering about how to track their prices. So in 2015,
he invited Luber to a Cavs game, shared what he was thinking, and even-
tually acquired Campless. Then the two of them, plus a third cofounder,
Greg Schwartz, began to work on a new company, called StockX.
Even though funding wasn’t an issue, they decided to raise outside
money. Luber had learned a valuable lesson after doing a friends-and-
family raise for an earlier venture that failed. “Man, when I have to call up
my grandfather or my best friend’s father and tell them, ‘Your money’s not
coming back,’ that’s a tough thing,” he says. “It makes you appreciate that
this is not Monopoly money, and not to be crazy about how you spend.”
In one way, StockX is similar to GOAT: It also serves as a market-
place, processes sales, authenticates shoes, and takes a 9.5 percent
commission. But its differentiation comes in data. For every shoe in a
specific color and size, a user can see not only the bids and asks but all
the sales ever made, the average price and whether it’s going up and
down, and how many pairs have sold. That gives people insight into the
value of whatever they’re buying or selling.
Today, StockX’s massive authentication center in Detroit looks like
a marketplace of fishmongers gutting shoe boxes with their X-Acto
knives (slice, slice, slice), then holding up the entrails—pristine Jordans,
Yeezys, Instapump Furys—to begin inspection. This is just one of the
company’s four authentication centers, soon to be five. Revenue has
more than doubled in the past year, with gross product sales topping
$100 million a month. Counting some 800 employees, the company has
raised $160 million and is valued at more than $1 billion.
The whole sneaker resale market has exploded —as average people
now use both StockX and GOAT to enormous effect. They’re custom-
ers like Vernon “Sizzle” Simms, who once bought a pair of new Yeezy
Boost 750s in a mall for $350. He clicked a few pictures of the sneak-
ers, uploaded them onto GOAT, and by the time he got down to his car,
he’d sold them for $1,500. Profitwise, it was a $1,100 escalator ride, and
it “kick-started my brain,” he says. He quit his $80,000-a-year music
and D.J. career to resell sneakers full-time, first on GOAT and now on
StockX, where he says he’s on track to make $1 million in sales, about 20
to 35 percent of it profit. “I had no idea people would pay this much for
sneakers,” he says, shaking his head over a pair of Nike MAG Back to the
Future sneakers on sale for $60,000. “It’s crazy. It’s ridiculous. But don’t
get me wrong. I’ll go and buy it if I know I can sell it for $70K.”THE AFTERMARKET SNEAKER industry may seem new and crazy, but
it’s following a well-worn pattern. First there’s consumer attention.
Then startups rise up to solve those consumers’ needs. And now the
industry enters its more mature phase: mergers and acquisitions.
Stadium Goods was acquired for $250 million by FarFetch, the46 / ENTREPRENEUR.COM / September 2019
“ I had no idea people
would pay this
much money for
sneakers. It’s crazy.
It’s ridiculous.”