A Billion Dollar Sneaker Collection: The Josh Luber Interview

Josh Luber never thought a childhood obsession would become his life’s work. After a string of minor endeavors, he soon found himself in conversation with one of the world’s most successful businessmen, building a company now valued at $1 billion.

A few minutes before speaking to Josh Luber, I’m boxing up a pair of Grateful Dead x Nike SB sneakers. I place the provided slip inside the sneaker box, attach the provided shipping label, and place them by the front door to drop off at UPS later in the day. The pair sold in the middle of the night for $1,100no negotiation and no back and forth with a potential buyer on questions of authenticity. Speaking to Luber, the co-founder of online marketplace StockX, this is all by design.

That’s because StockX functions the way a stock market does. There are bids and asks. There’s a ticker. Some of the most successful sellers have diversified portfolios. The major difference is that buyers are selling sneakers and streetwear instead of stocks and bonds. If his long-term vision for StockX comes true even that difference will begin to blur and sneakers will be traded the way oil is now.

A collector by nature, Luber’s interest in sneakers started in the mid ‘80s when Nike launched the Air Jordan 1. Like most kids his age, Air Jordans were all he wanted. Like most kids his age, his mom wouldn’t buy them for him. A few years before his interest in sneakers would go on to change the course of his life, he’d already launched his first business, selling Bubblicious gum to fellow sixth graders at a markup. For American men of a certain demographic, that was the hustle growing up. Recalling his first venture in 2020, Luber uses terms like “ROI” and “inventory” to discuss the grind at work in the hallways of his elementary school, the language of a young entrepreneur.

Gum was prohibited on school grounds, however, and it was only a matter of time before his first business went bust. Those lessons of supply and demandespecially when supply is artificially low like they are in sneakers and streetwearproved invaluable and guided his intuition for subsequent businesses.

Foundation

Luber’s interest in sneakers never faded but took a backseat as he pursued an MBA and a law degree at Emory University. From there, he started a few companiesTech Experts, a company he describes as “Geek Squad before Geek Squad” and Servinity, “online scheduling for restaurant staff” pre-iPhone eraand found himself employed as an IBM consultant not long after the 2008 market crash. It was around that time Luber started toying with the idea of compiling sneaker resell data.

By 2012, Luber’s latest side hustle, Campless, was born. The idea was simple: take data from eBay’s marketplace to create the sneaker industry’s most reliable price guide. It was the culmination of Luber’s career and personal interests up to that point: running his own company, technology, and sneakers.

Within three years, Luber had enough data compiled to start shopping around the Kelly Blue Book of kicks. He had conversations with a who’s who of industry veterans: executives at Nike, eBay, Foot Locker, Complex, Flight Club. No one was biting and it seemed Campless was destined to live out its days as a reference tool, a footnote mentioned by publications in their whitepapers.

Serendipity

The story, as it turns out, unfolded more like this: just ahead of Easter 2015 he got a call from two guys, one of whom was Greg Schwartz. Schwartz told Luber he’d been working with Dan Gilbert, the co-founder of Quicken Loans, the largest mortgage loaning company in the United States, and more famously, the owner of the Cleveland Cavaliers. 

Schwartz invited him out to Cleveland to watch a Cavs game with Gilbert and after the game the three found themselves in the owner’s room, talking shop. Luber pulled out a piece of paper describing his business idea like he had countless times before, laying out the vision in three main points: 1. Use Campless as a price guide. 2. Create sneaker portfolios to track value over time and, if you could make those two points work, 3. Launch a stock market for sneakers.

Schwartz and Gilbert stared at Luber, practically speechless. Schwartz then pulled out his piece of paper outlining almost word for word the exact same plan. Gilbert, who to this day wouldn’t be caught dead in a pair of sneakers, backed the idea off the strength of his own son’s interest in rare kicks and was on board as an angel investor and the initial funder.

“The one other person with the exact same idea happens to be one of the most successful businessmen in America.”

“The craziest part of this story is that the one other person with the exact same idea happens to be one of the most successful businessmen in America.” Gilbert and Schwartz got to work, putting together a business plan based on Luber’s data goldmine. The two soon realized that if they’re going to build a stock market for sneakers they would need…a sneaker guy.

The Holy StockX Trinity was born.

The Model

From day one, the three knew exactly what they were trying to build. More importantly, they understood that the real value was in the model. “The reason StockX has been so successful is because it’s about this unique model, which is the mechanism that creates transparency into supply and demand so there can be a true market price for the product. However, it only works for products that are supply and demand driven.”

On one end of the spectrum are one-of-a-kind items that make their way to auction houses like Christie’s and eBay. On the other end are products with a near infinite supply, comprising the majority of inventory at retail behemoths like Amazon and Walmart. The three understood that more products than not gravitate toward either end of the spectrum but they also understood there are enough products in the world that fit right in the middle, products that are perfect for the StockX model. Best of all they had the most efficient marketplace in history to serve as a model. “At every step of StockX, we didn’t make any of this up. All we’re doing is copying how the stock market works at every stage.”

The next step was to actually create the marketplace and build a technology product that enabled these transactions. Questions about how much and to what degree to emulate the stock market came up at every turn. Ultimately the three reasoned that any kid that wants to buy a pair of Yeezys isn’t going to let terms like “bid” and “ask” stop them.

It was all coming together and by February 2016 StockX was live. Plans for growth were already in motion. “We knew from the day we launched that we should have streetwear but we didn’t add it for about a year and a half. We knew any product sold on StockX would have to be authenticated so we needed to understand how to scale sneaker authentication first.”

By October 2017, the first Supreme pieces were listed on StockX, one of three strategies to increase revenue. “StockX the business grows in three ways: sell the same product to more people, add other product categories, and release products directly into our marketplace.”

“In 2020, there is no one-size-fits-all. You have to be a collection of local companies. It’s all consumer-driven.”

The first, international expansion, was an obvious starting point but easier said than done. “In 2020, there is no one-size-fits-all. You have to be a collection of local companies. It’s all consumer-driven. You need to work on a local level with local currency, local customer service, local marketing.”

Now operating in 197 countries and territories, it’s fair to say the first method has been a success. In fact, if Luber has it his way, StockX will be operating in every country with the exception of, maybe, North Korea. The second, adding new product categories, has been more like a marathon than a race. In May 2017, the company added luxury goods to its digital marketplace, listing the world’s most desired products such as Rolex timepieces and Louis Vuitton handbags.

The company’s newest product category, trading cards, is one Luber is convinced is made for StockX. “Historically we’ve taken consumer goods and bent the angle to fit the stock market model, to make them feel and act like commodities—but trading cards already are commodities.”

The third strategy, releasing products directly into its own marketplace, is such a game changer that not only is it in the process of transforming StockX’s business, it has the potential to disrupt the idea of retail price as we know it, or at least within the $130 billion dollar sneaker industry.

IPO

StockX launched its first IPO (Initial Product Offering) in 2019. The idea, like all of StockX’s ideas, was simple and, naturally, based on the stock market: team up with a sneaker brand to release a new product directly onto StockX, letting the market set the price through a blind dutch auction.

The first IPO, a pair of red and black slides designed by celebrity jeweler Ben Baller, received over 10,000 bids on 800 pairs, selling for $181 and $260, respectively. The company’s second IPO, three pairs of sneakers designed by adidas’ MakerLab, achieved similar results, coming in just shy of 10,000 bids.

Roughly 11,000 people participated in the company’s latest IPO in May 2020, a limited release of New Balance x No Vacancy Inn sneakers, achieving a clearing price of $425. “96% of people got it for less than what their bid was. With the IPO model, we enable people to have fair access to this product at a higher price point but that’s fine because it’s the true market value.”

And that’s just the warm up. Game day looks more like this: StockX releases a pair of sneakers through an IPO. The winner receives an email asking them if they’d like to take possession of the shoe or resell them. If the winner decides to resell, the shoes never leave the warehouse. Maybe the next person doesn’t take possession either, sitting on them in anticipation of higher demand. “This is commodities trading. You are literally daytrading that shoe.”

Don’t be surprised to see StockX roll out fraction ownership of products, indices, shorts, and futures. “Every financial product that exists in the stock market you can create for these consumer goods that we’re treating as assets.”

From CEO to Co-Founder

Five years into the StockX journey, Luber is more optimistic than ever. An in-house forecasting team can predict with reasonable accuracy how many shoes will sell on a given day and for how much. Temporary physical locations in New York, Los Angeles, and London bring the StockX brand and experience to the real world. Millions of monthly visitors—more than Foot Locker and Finish Line combined—buying and selling tens of thousands of products means there’s little chance for a competitor to come along and steal their model. The biggest difference for him? Seeing the company’s trajectory from a new perspective. 

In June 2019, Luber handed the reins of CEO over to Scott Cutler upon raising Series C, a $110 million round of venture capital funding led by DST Global, General Atlantic, and GGV Capital, with previous investments from household names like Mark Wahlberg and Eminem, and Drake, resulting in a $1 billion valuation.

The move couldn’t have come at a more perfect time. “None of us thought that so much of my job and my life was going to be traveling the world, talking about StockX. That was a very organic thing that was a function of the unique nature of the StockX model and how revolutionary it was.”

Working with Cutler was just as organic. Serving as Executive Vice President on the New York Stock Exchange before becoming President of StubHub and later Senior Vice President, Americas, of eBay, Cutler’s resumé was custom-built for the needs of StockX. Better yet, he’d become one of the company’s closest advisors, first reaching out to Luber in 2016 over LinkedIn.

The two saw eye to eye on just about everything, including the role of the marketplace in 2020. “The customer doesn’t care where they get the product from. Today StubHub is the official resale market of Major League Baseball. All you care about is you want to go to this event, sit in this seat, and this is what you’ll pay. Nothing else matters.”

Before StockX, the most employees any of Luber’s companies had was 12. Today, StockX employs about 800 people across the globe. A self-described startup guy, Luber realizes there are others more suited for taking a company from a $1 billion valuation to a $10 billion valuation, setting it up for a different kind of IPO.

The New Hustle

Now locked down like the rest of us, Luber’s busy touring schedule has all but come to a halt. He’s not fussed by industry events being put on hold but it’s clear he misses his favorite speaking venue: schools. “I get invited because some teacher or professor was using StockX to teach students about supply and demand, entrepreneurship, economics, the stock market. It’s way easier to learn about the stock market through sneakers if you’re a 14-year-old kid.”

The first time Luber met internet sensation Gary Vaynerchuk at a cramped New York lunch counter, Vaynerchuk asked him, “baseball cards or candy?”, each representing a path towards entrepreneurship for their generation. 20 years from now when Luber is sitting down for a meal with a hungry business visionary he’ll ask: “apps or sneaker reselling?”

On September 10, 2020, Luber announced his exit from StockX, five years after co-founding the company. He plans to launch another early-stage business in “stealth mode.”