Exclusive: StockX Execs Talk International Expansion and Possibilities of Going Public
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Although it’s only been 24 hours, StockX looks much different today than ever before.
The $110 million in a Series C funding announced yesterday from DST Global, General Atlantic and GGV Capital pushed its value to $1 billion, and the “stock market of things” has a new CEO in former eBay and StubHub exec Scott Cutler. Moving forward, the firm will use the funds to, among other things, bolster its international presence (specifically Europe and Asia).
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With a day to let the big news settle in, StockX co-founder Josh Luber (now a member of its executive leadership team and the board of directors) and Cutler spoke with FN about European and Asian expansion, new categories and if going public is a possibility.
Footwear News: Josh, how will your responsibilities and role change now that you’re no longer CEO?
Josh Luber: “To be frank, not that much. My day to day will stay pretty similar. My focus for the last couple years has really been on three things. One is a lot of public speaking. [I’ll be] talking to not only the press, but any time we have the opportunity to talk in front of large groups of people about StockX and what a “stock market of things” is, I’ll still continue to do that. I also have been spending a lot of time talking to brands and trying to explain how the theory of StockX is to converge retail and resale into one marketplace and to work with brands to release product directly to StockX. I’ll still continue to do a lot of that. And then we all recruit and are involved in building out the team and I’ll still be involved in that.”
“A third founder along with Dan Gilbert and myself is Greg Schwartz, our COO, and he and I used to joke that Greg ran the real business and was at the office every day. So Scott and Greg will figure out how to share duties and manage the team. There’s just so much to do and so much opportunity for all of us here that it’s exciting to have Scott here to take us to that next level.”
Scott, what was so appealing about StockX that lured you away from eBay?
Scott Cutler: “When Josh and Greg and Dan started the company, [they] talked about the “stock market of things” and creating a stock-trading market based on the model of the New York Stock Exchange, citing the example of the growth of StubHub as a marketplace and building on what they saw as growth at eBay. I was CEO of StubHub at the time, I shot an email to Josh on that day and said, “I’m the CEO of StubHub, spent nine years at the NYSE, I totally get what you see in terms of opportunity in the model. How can I help?” That’s how it started three years ago and we’ve stayed in touch. For me personally, it’s a unique connection to everything that I’ve done over my career the last couple of decades. And the company has grown rapidly so it’s a great time for me to join.”
How do you plan to steer the company moving forward?
SC: “We brought on a great set of investors. We’re planning to use that capital to expand the business internationally. We have a very aggressive plan to expand our reach internationally. We’re going to expand the categories that we ‘re going to go after. And as we think about delivering this experience and expanding this model around the world, we see a tremendous opportunity to make those types of investments to scale the business. My role is to continue to deliver on the vision that was started by a great set of founders and scale the business globally.”
How will the funding impact your presence in Europe and Asia?
SC: “This is a marketplace [where] we have the opportunity to attract consumers, buyers from markets around the world. That means we have to be able to have languages, local support, currency, payments, processes and systems. From sellers, we have to have inventory that we can collect and ship around the world; that involves technology and people to be able to do that. It will take investments in all those things to do that. But at the core, we’re a technology company. We have to market to consumers, we have to build great technology and it takes people and resources to do that. We expect to deploy that capital to fund the growth of the business.”
StockX sees a future in brick-and-mortar amid a slate of retail closures across the U.S. Why put more money behind this? How does StockX’s online model translate to physical stores?
SC: “We’re different. We’re not a retailer; we’re a marketplace and a technology company, a consumer internet company where people come to our site to deliver. If you look at what we’re experimenting with in New York, we launched on Lafayette [Street] our resale footprint, but it’s different from most retailers. We have more interaction with sellers coming in and dropping off inventory that they’ve sold on the platform, we’re authenticating it and shipping it directly out from that location to buyers around the world. It’s more a drop-off than a typical retail experience and so it’s largely just to facilitate that interaction.”
What does it mean for StockX to hit unicorn status, and how could this impact other sneaker resale competitors?
JL: “It’s humbling to be in that category. It still feels like Day 0 regardless of what the numbers say. The opportunity in front of us is really the interesting part of this. We’re just starting to scratch the surface on how big and powerful this model can be to not only the resale customers but also the retail customers. Sneakers have had big growth in the last couple of years, so there are other sneaker marketplaces and business that have grown around that. But for us, we’re converging resale and retail, which is the distinction between us and the other players here. We don’t look at the $6 billion resale industry but the $100 billion retail industry, so that’s why it feels like we’re three guys in a garage and not a billion-dollar unicorn company.”
When did you know StockX would be such a big deal and hit this $1 billion valuation mark? What were the tipping points?
JL: “With any marketplace model, inherently you have marketplace effects that kick in as both sides, the buy and the sell side, create liquidity. {In] the stock market, you have additional marketplace effects that happen — the more liquidity, the more efficient the stock market becomes. The first time we said this is going to work was June 2016. We launched in February, and for those first five or six months we were doing 20, 30, 40, 50 sales a day. But the power of the model didn’t become obvious until the first really big sneaker drop after we launched, the Air Jordan 1 ‘Bred’ and how quickly we were seeing sales. We did 300 sales that day. That day there was more liquidity going into the market, so our marketplace just inherently handled that better than others. That was the moment were like, “Whoa.” That first release was an “I think we figured this out’ [moment].”
What other categories will StockX expand into and when will the expansion into new categories happen?
JL: “Today, there’s four categories: sneakers, streetwear, watches, handbags. We are slowly adding a fifth category, collectibles, not only being designer toys like Kaws and Bearbrick, but we’ll start to add vintage toys like He-Man and G.I. Joe and Star Wars. We’ll probably also add trading cards within collectibles. For the time being, we’ll probably stay at five categories. There are a lot of subcategories that become important under there. The best example of this is streetwear, where we have about six big brands — Supreme, Bape, Kith, Fear of God, Palace, [Off-White] — but there’s a lot more that we can add. There’s massive growth within the categories we have by adding more product and building out those product catalogs.”
Are there any plans to go public?
SC: “It’s not on our immediate radar. We’ve got a lot to execute to grow. We have bold ambitions as a company to become a global marketplace leader. We’ve got huge market opportunities in front of us, and I think if we execute well, that type of option will hopefully be available to us in the future.”
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