- StockX raised $275 million in December that values the sneaker marketplace at $2.8 billion.
- Sources tell Insider that a public offering could happen as early as this year.
- Cofounder Greg Schwartz describes the journey from zero to profits helped by billionaire Dan Gilbert.
- Visit the Business section of Insider for more stories.
On a Friday evening in March, 2015, StockX cofounder and chief operating officer Greg Schwartz was faced with a life-altering decision. Stay in Detroit to build a new startup with billionaire investor Dan Gilbert. Or, sell his company and move to San Francisco.
At the time, Schwartz was the co-founder of UpTo Inc., a social networking app that was funded by Gilbert’s Detroit Venture Partners. After a few years of trying to scale the business, Schwartz was ready to call it quits when Gilbert called him to meet in person.
When he arrived on the tenth floor of Gilbert’s office in downtown Detroit, the billionaire investor and owner of the Cleveland Cavaliers said, “Don’t move to California. Let’s start a company together,” as Schwartz recalls the conversation.
“He started talking in this meeting about the idea of leveraging stock market mechanics to build a more powerful e-commerce model,” Schwartz tells Insider. “And, of course, we started talking about sneakers. And over a two-hour conversation, as I was asking him a million questions, we started putting together this idea that would become StockX.”
Shortly after that conversation, StockX, an online marketplace for sneakers and other streetwear, officially launched in Detroit, with just six employees, including Gilbert and Schwartz.
Their first task was to find a die-hard sneakerhead to join their startup because neither knew much about the world of sneaker trading and collectibles.
They found Josh Luber, a Philadelphia-based founder of a site that published data on the sneaker industry. They called him up with an invite he couldn’t refuse: attend a Cavs game in Cleveland with them.
Schwartz joked that, after the game, they “kidnapped” Luber by bringing him back to Detroit with them. “He wore the same clothes for three days while we worked out all the logistics,” said Schwartz and by the time he changed his clothes, Luber had agreed to become the company’s founding CEO.
In June 2019, StockX appointed former eBay, StubHub, and NYSE executive Scott Cutler as CEO and Luber departed StockX in September to launch another startup that is still in stealth.
Today, the company employees 1,000 and counts hundreds of millions of users in more than 200 countries and is eyeing its path to an IPO.
The once underground sneaker culture has grown in recent years as Gen Z and Millennials flocked into collecting rare shoes, propelling the growth of marketplaces like StockX. Some 70% of StockX users are under the age of 35, with the majority of users under the age of 25, according to the company.
StockX has its fair share of competitors, including GOAT Group, another sneaker exchange that closed a $100 million funding round in September at a $1.75 billion valuation.
As a venture-backed unicorn, StockX last raised $275 million in a funding round led by Tiger Global Management in December that values the fast-growing platform at $2.8 billion. StockX used the money raised to expand its product category as well as enter new markets like Hong Kong and Toronto.
Besides sneakers, StockX also buys and sells streetwear apparel, accessories, and electronics. A Louis Vuitton Supreme trunk once sold for $70,001, the highest price ever fetched on the resale marketplace. To make money, StockX charges a 3% payment processing fee and a seller transaction fee that starts at 9.5% but can be lowered depending on how active you are on the platform.
“Sneakers to us are like what books were to Amazon,” said Schwartz. “It was always about much more than just sneakers.”
Investors seemed convinced. The investment firm Cowen published a two-part report in 2020 lauding sneakers and streetwear as a lucrative alternative asset class. The market is already north of $2 billion in North America and projected to reach $30 billion globally by 2030, according to Cowen’s latest report.
So far, the pandemic has only accelerated the sneaker resale market. The company became profitable for the first time in the third quarter of 2020 and saw a revenue increase of 75% year-over-year. And in the fourth quarter, at the peak of Covid-19 as a second wave of the virus was spreading across the globe, StockX surpassed $3.8 billion in total gross merchandise value.
After raising $490 million in total funding from big named investors including GV, Battery, and DST Global, Schwartz said the company has plenty of cash on hand and is not actively fundraising at the moment.
As for IPO plans, sources close to the company tell Insider a public offering could happen as early as this year but Schwartz sidestepped direct comment on that.
“There are a lot of options for companies like ours and we’re going to do what’s right for the business when the time is right,” he said. “An IPO is clearly one of those options.”
There are other signs that it’s doing the groundwork for an IPO. In recent months, StockX has been ramping up its C-suite, adding John Kaelle as CFO, Deena Bahri as CMO, Terra Carmichael as CCO and Vishnu Patankar as CTO. The company also just posted a job description for a “SEC Reporting Manager,” a very specific type of role that indicates a company is preparing paperwork for the regulatory filings necessary for a soon-to-be publicly traded company.
Reflecting back, Schwartz said he never dreamed of becoming a sneakerhead or getting involved with a company that has the ability to sell a pair of Nike Dunks for as much as $51,950.
At the meeting with Gilbert five years ago, he wore a pair of brown loafers, the only shoes he owned at the time. Today, he is sporting a pair of Travis Scott Nike Jordan 1s that are worth as much as$1,029 on StockX. “I’ve come a long way from the brown loafers,” he said.
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