Buy Low-Tops, Sell High-Tops: StockX Sneaker Exchange Is Worth $1B | Hacker News Reader

Buy Low-Tops, Sell High-Tops: StockX Sneaker Exchange Is Worth $1B

nytimes.com

70 pointsNN8864 comments

I wonder if most people buying sneakers as "art collectibles" realize that the shoes suffer inevitable disintegration and crumbling called polyurethane hydrolysis[0][1].

I just learned of this phenomenon last month. I had some brand new unworn shoes that I had meant to donate to a children's home but I forgot about them in a closet for 5 years. When I finally dug them out, the soles were disintegrated. A complete waste of $150.

Unless you store the shoes in a special climate controlled jar, it really seems the only use for buying is to actually wear them before the ticking time bomb makes them worthless.

[0] https://www.google.com/search?q=shoes+polyurethane+hydrolysi...

[1] some Nike Air Jordan examples (open in new tab to not break the Back button): https://solecollector.com/news/2016/10/worst-sneaker-blow-ou...

Wow. I buy shoes but I've never seen this (I buy to wear). Why is it that a shoe which I wear and have had for multiple years doesn't look anything like that? Is it only certain shoes, based on material?

To prevent hydrolysis (literally breaking apart with water) you just need to keep the environment humidity-free.

An airtight plastic box and a bed of salt should do the trick.

No need for a bed of salt, just use a dessicant packet.

Same thing.

But a kg of table salt, some time in the oven for extra dryness and a free Tyvek envelope makes a massive $1 dessicant packet.

Modest research suggests that Epsom salts (MgSO4) or some forms of ice-melter (CaCl2) would be better options.

In my cursory research, desiccant pack may not actually be a foolproof solution. E.g. in the link[0] of opinions from shoe collectors, do a Ctrl+F search for "silica" and note that the last 2 people say it can harm the shoes.

(I'm not saying they're right because it's not easy to tell who is making scientifically valid claims.)

[0] open in new tab to avoid breaking the Back button: https://solecollector.com/news/2015/05/how-to-store-sneakers

yeah id say the vast majority of sneakerheads are very aware.

ive seen hundreds of crumbled sole jordan pics over the years on forums, facebook groups, etc.

Ah so that's why my old cheap 'snow' shoes (cheapy foam gives better grip than rubber in snow and ice) disintegrated going to the shop and back last winter.

Maybe Satoshi should have built in such a feature into bitcoin (you don’t use it you lose it). That would have been a much more interesting dynamic (maybe) insofar as the original concept of P2P cash which morphed into digital gold/store of value (ie no incentive to spend, create a market/economy).

Because bitcoin is inherently anonymous, it'd be very difficult (impossible?) to prevent someone from making a new address and just bouncing the coins around. It's an interesting idea, though.

I thought about that, and it’s just spit balling something off the cuff, but address to address self-spending may have positive impacts on the network vis-a-vis additional transaction fees for miners.

I think that's fine, because then you know that at least the wallets still exist. I wonder how many bitcoins are forever gone from the early days when they were literally cheaper than dirt. I know I had some and failed to backup the wallet properly.

There's several million £s worth in a landfill site in England somewhere

The built in mechanism for this incentive is inflation, but bitcoin is deflationary as you observe.

This is the demurrage dynamic in freicoin (now tradecraft - https://github.com/tradecraftio/tradecraft) from bitcoin core developers Mark Friedenbach and Jorge Timon.

It would be interesting to see a histogram of the number of days since each bitcoin was last transacted.

Should be easy enough for someone who has all the data, but I don't want to download hundreds of gigabytes just to plot a chart...

Its a perfect feature. It reduces supply and creates incredible rarity amongst ones that were treated poorly. Its why a ton of war time artists are worth so much more than their peers who were prolific slightly after. Shit gets destroyed, those that dont become things of legend.

It's also a large reason baseball cards from the 50s and 60s are MUCH more valuable than the following gens.

meh, i think the timescale doesn't work out for this to be the case for sneakers.

the only sorts of sneakers i can think of that are sought after where a huge portion of them have disintegrating soles are like 1985 original Jordan 1s and to a much lesser extent some of the original pairs of the next few models (2s, 3s, 4s)

there is definitely big importance placed on condition in the collector community, but for the vast majority of it comes down to whether the shoe was worn at all, not whether it's literally crumbling into pieces from age.

now that the market for this stuff is so huge, maybe another 10-15 years down the line you'll be spot on though.

Shoes were never engineered to be collectables. After a couple years the glue fails and your "investment" is worthless. I had a friend who was really into this and he had a huge collection. Needless to say he was pretty pissed when he opened the boxes and found his shoes falling apart.

I mean he doesn't sound like much of a collector if he didn't know how to protect the shoes. Sealing them airtight helps and so does removing water as discussed in other comments. Almost everything that people collect needs some amount of protection.

We're not talking decades so I don't think he was being unreasonable. Most people would expect a product that has been kept in a box in climate controlled conditions to, you know, not fall apart after a couple years. Get off your high horse.

Yeah they don’t fall apart after a couple of years. After 20 though those earlier plaits weren’t made to the same standard with the same material. Get off your ignorant horse?

I think another interesting market to come out of this is an easy place to find second-hand trustworthy unused shoes at prices lower than retail.

Take for instance these Nike Gyakusou Zoom Pegasus 35 ($200) https://www.nike.com/t/gyakusou-zoom-pegasus-35-turbo-mens-s...

On StockX you could purchase them for 120$ https://stockx.com/nike-zoom-pegasus-35-turbo-gyakusou-fir?c...

I definitely do not think this was the intended use of StockX but I feel like this is an unique value proposition for bargain hunters.

Collectibles are a tough market because you can't predict what will continue to be valuable in the future (i.e. art, sculpture, watches) vs what is ephemeral (i.e. Pogs, Yu-Gi-Oh cards).

I genuinely don't know: were people trading sneakers in the 80s? Or is this a recent (read: temporary) phenomenon?

From the article: > The fervor for sneakers has been fueled by “sneakerheads” and others who regard the shoes as investment assets.

Like beanie babies, perhaps? Or is there anything driving the value here other than potentially future value? (Not that different from stocks, some may argue, but..)

Edit: Based on votes this strung a cord on some people..

I would predict toys become collectible roughly 20-30 years after their heyday. Ie when the kids have grown up and want to relive their childhood.

So that would make pogs due imminently.

Mistakes (on coins and stamps) is a reliable indicator, actually my dad has a blue thunderbird 2. Most tvs were black and white, so they didn't know what the colour was, or didn't think it mattered.

Then you have the famous flops. That ET Atari cart is probably quite valuable, same for the Sinclair C1.

The Atari ET cart is an oddity: it was a huge flop, but vast amounts of carts were produced before that was apparent, so you can still get a good one for under $20.

The Air Jordans 1 (1985) were the beginning of collectible sneaker movement. It probably wasn't until sites like eBay became popular that the market really opened up.

This is not true. The original AJ1s did not sell well and were often discounted. They were cheap and used by skateboarders because of that. The Virgil AJ1s have the red plastic tag attached to them as a reference to that era (the red plastic tag is how retailers would denote a "sale" item).

I never could find them on sale and never could afford them. If they didn't sell well, why were there so many "knock offs" available (which I did have, and did wear on my skateboard) at k-mart and the like with no logo and the black "swoosh" more of a hockey-stick shape".

I've definitely heard both sides of this, so I'm not sure. A lot of the history of the release has been retconned by Nike to improve its legacy

I think it actually goes both ways. They might have been initially incredibly popular and subsequently Nike flooded the market with the sneaker to the point that it ended up on clearance shelves (https://solecollector.com/news/2017/04/air-jordan-1-og-sales...). The article also mentions that Nike targeted ~3-4 million pairs of the sneaker, which is relatively high for a hyped sneaker. For a modern comparison, this article (https://thesolesupplier.co.uk/news/heres-stock-numbers-off-w...) claims only ~48k pairs of last year's hyped Off-White x Nike Blazer Mid ‘Black’ sneaker were released.

Personally, sneakerheads were a thing in the late 90s, and the "fad" started for me in the 2000s with the rise of web 1.0. I remember the Nike "Tiffany" SB Dunks, which dropped in 2005, being the most talked about sneaker back then and still retails for $1,000+ on StockX.

It's really cool to see a unicorn come out of Detroit. The area isn't known for tech, despite having the largest concentration of engineers in the country. Hopefully, more startups like StockX and Duo Security will shine light on the area as a tech hub.

I enjoyed this podcast with the founder of stockx a few years ago:

https://www.econtalk.org/josh-luber-on-sneakers-sneakerheads...

Really good podcast, you thanks for recommending

I'm not a sneaker head, but love a good deal. I bought a pair of Adidas for 80$ less then retail from stockx and they are my favorite pair of shoes! Overall I was a pretty happy customer, I hope they can maintain quality.

Got a tour of their office in the Compuware building a while back while interviewing for a position at Quicken. Pretty cool place, but probably a brutally chaotic environment to actually program or get shit done.

Why?

Well, it's just like every other googamabooksoft company with open floor plans, brightly painted walls, demos of all the crap Dan Gilbert is doing all over the rest of Detroit like new football helmets on display to prevent injury, candy machines everywhere, mock buildings, etc...

Not to mention you are in the same building with other properties like Quicken and Bedrock.

Fun for a visitor, obnoxious for an employee.

I applied for a web dev position there after a very enthusiastic recommendation of me from a bootcamp cohort colleague. When I interacted with their recruiters, they were very polite.

I was given a few days to complete a take-home challenge, and went above-and-beyond to include persistence and real-time functionality. Weeks would go by, and when I would inquire about the status of my application, I would be told nobody got a chance to look at my code/application. I don't blame the recruiters, but it does seem like your suspicion about the place being "brutally chaotic" is spot-on. My colleague left after a few short months to work as a freelancer.

I interviewed for a backend position there, and they got back to me with an onsite request within hours after submitting the take-home. Such a disparity in interview experiences can happen often in large high-growth companies like this one. It might have helped in my case that the team I was interviewing for was small.

Those take-home tests are bullshit. You put all that work in it for free, and they can't be bothered to follow up. Maddening.

They'd be fine if employers paid for the time. Then they waste your resource as their expense. Right now they have no incentive at all to treat applicants resource with any respect. So you get this, which is utter and total contempt. Failing to look at it is actually fraud or theft. The deal they strike is you do this unpaid work to help us hire you. If they don't look at it they have broken that deal and should face consequences.

And I’m over here searching old emails for names and sizes of shoes I’ve already bought so I can buy them again, to avoid having to shop for shoes.

Beware. I've done this recently. I purchased a previous pair of Merrills from their own website. I recently re-purchased the same model, color, and size only to find that they are uncomfortably tighter now. I'm not sure if they've changed the process in some way or there's just that much variation between shoes of the same sort.

I think this is down to manufacturer quality control. I bought the same model from Florsheim over 10+ years and they were indistinguishable. Got lucky on that one I suppose.

Yes, I’ve experienced a lot of products with cuts in quality and volume in the past few years as input costs and labor costs are rising. Not saying Merrill is reducing quality, but things are in flux.

Seems like a whole lot of selling high.

1B valuation for a clearinghouse marketplace for sneakers. Jeeze...

Is this our generation's cabbage patch kids and beanie babies hype enabled with a little less friction due to technology? Because if it walks like a duck, and quacks like a duck...

This clearinghouse better be vacuuming up a ton of nickels to eventually give investors a return on their investment.

So what's to stop shoe manufacturers basically flooding the market with collectibles, or china, or wherever catching on and producing fakes of the originals.

This doesn't seem to have the traits you'd want from an investment.

Nike tried flooding the market with Jordans, and they quickly lost their desirability on the streets. Nike has said they plan to keep the shoes in limited supplies to prevent this from happening again.

Nothing, This is currently quite a common thing with factories in china producing these on mass. Check out the subreddit repsneakers the fakes(Replicas as they call them) even come with StockX tags for reselling online as authentic.

Hey remember 1999?

>The hobby took off and this year, he expects to move 10,000 pairs of shoes. His anticipated take is a 25 percent profit from over $1 million in sales.

$250K profit, $1M in sales, $1B valuation. Lol. Can't wait until this useless company fails miserably. Obsession with thousand dollar "streetwear" and "sneakers" is beyond pathetic. Usually you'll find the people most interested in this dogshit are the people who can afford it the least. Obsession with consumption-based "hobbies" like this is the mark of a cookie cutter.

You realize this is talking about one of the sellers on the platform right? Not the platform itself.

Looks like GMV is actually ~1.2B/year and even at a conservative 10% profit margin, they're pulling in at least $120M/year.

"The company said its revenue more than doubled in the last year, with gross product sales topping $100 million a month. It has expanded into streetwear and luxury goods like handbags and has more than 800 employees."

The transaction fees on sneaker sales (by far their largest segment) are between 8% and 9.5% depending on seller volume. Since StockX authenticates every shoe, that eats up a bit of that fee. The point of your comment mostly still stands, but I wanted to mention some real numbers.

https://help.stockx.com/articles/478556-what-are-stockx-sell...

Hey, they could pivot to selling something else. After all, eBay was started to sell to collectors of ~~Beanie Babies~~ ~~Pez Dispensers~~ broken laser pointers.

The first two numbers are for one dude using the platform to trade.

Would you mind reviewing the site guidelines and sticking to the rules when posting here? Hacker News is trying to be a bit different from the internet default, and your comment broke at least these two:

"Don't be snarky."

"Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something."

https://news.ycombinator.com/newsguidelines.html

[bad comment retracted]

"Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that.""

https://news.ycombinator.com/newsguidelines.html

The next paragraph....

"The main website enabling Mr. Wilkins’ now full-time business? StockX, a site that treats coveted consumer goods like sneakers as tradable commodities."

The website is enabling Mr. Wilkins, among many others to sell shoes.

Later on in the article... "[StockX] gross product sales topping $100 million a month"

Reply on news.ycombinator.com