From Yeezy to Supreme, Hypebeast Culture Explained | Suddenly Obsessed Marathon

hypebeast culture isn't just about wearing certain brands or buying the most expensive clothes they said i was crazy for buying a 500 000 bag crazy for buying two million dollars worth of perkins hypebeast loyalty is about representing the story behind each item it's about waiting in line for hours on the lower east side of manhattan to get the latest supreme collab a crowbar a brick can you know it can last forever those things will be in museums in 50 years it's spending thousands of dollars on stuff you don't want for the chance to buy a 500 000 purse for me to get that bag sit on the waitlist i have to buy a bunch of scarves and you know and bring coffee to my sales assistant and butter her up and demand for these products keeps growing when you get something that you really want that's really rare you feel really good and it's spawning a massive resale market there was maybe one other guy in the whole world that had the exact same idea at the exact same time and happens to be you know one of the most successful business people in the world this is suddenly obsessed these are yeezys people have camped out at shoe stores hired taskers to wait in line on their behalf and even used sneaker buying bots to nab a pair online before they sell out in seconds others spent thousands of dollars on the resale market the man behind that craze is kanye west but recently some of that excitement has turned to skepticism are yeezy's dead is yeezy resell dead is yeezy still cool certain yeezy models cost a lot less on the resale market than they used to and resale prices are a telltale side of a product's cachet especially for hypebeasts but it turns out this is all part of west's grand plan for his sneaker empire here's how west created one of the most hyped sneakers of all time and the struggles he's facing trying to build the brand into a household name when i first got into sneakers back in middle school into high school i just had this one pair of adidas superstars that i thought was the end-all be-all then i remember scrolling through my facebook timeline and this beautiful red image of a pair of kanye's red october nike sneakers popped up on my feet and that was the first time that i stopped to look at a sneaker just from a purely piece of art point of view and i just thought to myself wow i need to find a way to get those over the course of five years west and nike released the air yeezy 1 the air easy 2 and the air uz2 red octobers retailing at over 200 the shoes were released in extremely limited quantities and sold out instantaneously they now resale into thousands of dollars the success of the shoes finally put west on the map in the fashion industry for years his designs were met with ridicule a lot of fashion gatekeepers tried to hold kanye back by calling him a clothing maker or saying that he wasn't a real designer kanye west was really sort of passionate and desperate and really actually thoughtful he didn't want to just be sort of a celebrity fashion designer to break into the fashion industry west interned at fendi in 2009 where he was paid about 500 a month in 2015 west even said he went 16 million dollars in debt trying to get a clothing line off the ground but no matter what he did he still couldn't quite knock down those doors and so he took an alternative route through the sneaker world west says he was a sneaker head as a kid even though he didn't have the money to buy the shoes he loved when i was in fourth grade i was drawing jordans when my mama couldn't afford them i was drawing those jordans getting kicked out of class for drawing them wes got his start as a producer of jay-z's 2001 album the blueprint he hid it big as a hip-hop artist after releasing his own album the college dropout in 2004 then west set his sights on another passion of his fashion he even told a new york fashion week crowd in 2016 that his dream is to be the creative director of hermes while west had a difficult time getting people to buy into his clothing designs his shoes instantly clicked with fans the first pair of sneakers that really got me into sneaker collecting was that pair of red october yeezys he articulated something in those sneakers that really resonated with me without saying a word of me not knowing anything about them that sneaker was the spark that cascaded the entire rest of everything you see here over the past three plus years in yeezy's first eight years or so hype around the shoe was at its strongest yeezy started as a partnership with nike in 2009 before west switched to working with adidas in 2013. during the nike years and in the first few years of his partnership with adidas customers went to great lengths to get their hands on a pair any website you go to yeezys would probably sell out in under like five seconds i've seen people camp for yeezys in the dead cold winter i've seen people like have like their little tents or whatever or just bundled up in a lot of jackets or something caleb chen is one of many sneaker flippers cashing in on the yeezy's hype i've bought the bread v2 for about 220 and i've sold it for about 11 to 1200 but some of west's designs have been an acquired taste people have scratched their heads or recoiled at certain yeezy models that wes released with adidas like the yeezy boost 700 waverunner which came out in 2017 it drew comparisons to ugly's dad's shoes everyone across the internet was just like oh my god what is this this is disgusting is this a joke and i had all those same thoughts but thinking about the big picture i said every other time people or myself have thought that exact same thing about a sneaker kanye has put out people eventually turn around and go oh wow i was wrong i wish i jumped on those sneakers when i had the chance but designing sneakers just for height beasts wasn't good enough for west that's why he ultimately left nike for adidas in 2013. more creative freedom and to turn yeezys into a household name west told bbc radio in 2013 that he didn't want to be just another celebrity with his name attached to a sneaker people didn't love the yeezys the way they did for no reason picture this for me to do the yeezys and not have a joint venture backing deal with nike the next day would have been like if i made jesus walks and was never allowed to make an album west told ryan seacrest that he found the partner he was looking for in adidas they offered to allow me to make an entire line and give me an office and all these things i want to do just to create more the hype around yeezys fueled west's ambition except the more shoes he released the less special they became if you look at somebody like kanye west he's truly one of the most ambitious people i think that we have seen in the past few decades kanye west has called himself walt disney he's called himself steve jobs so we know that it's not just about a physical sneaker it's about when he is gone and we are talking about kanye west we don't talk about just the music we talk about what he's created what he's left us his stamp on the world west wants us yeezy's legacy to go way beyond an expensive and inaccessible shoe in fact he wants quite the opposite west spoke with ryan seacrest in 2015. this isn't about elitism this isn't about separatism this is about as many people being involved with this vision you know as possible eventually everybody who wants to get yeezys will get yeezys adidas has promised me that because there's so many kids that have wanted them that couldn't get them and i talked to the heads at adidas and they said we can make them instead of demand for yeezys being built on rarity and hype west wants everyone to be able to find and afford a pair of easies and still want them kind of like the adidas superstar which are readily available at their typical retail cost of 100 and under and it was the top selling sneaker in the united states in 2016. the superstar debuted in 1970. to this day it's still an iconic emblem of the adidas brand however the superstar's popularity is cyclical and sales have declined the last couple years now adidas is betting on kanye west and doubling down on yeezys if the goal is to scale yeezy into a multi-billion dollar brand experts say there's still a long way to go the easy brand has a fundamental impact on our overall brand position but it's still in the bigger context of us being a 25 billion dollar company you know a small part of our company there were probably a million maybe a million and a half years he sold last year in pairs in the united states and throughout the world uh adidas made 400 million pairs of shoes last year a million pairs of yeezy is really a drop in the ocean there's a reason why there are the numbers of shoes are made by adidas so for yeezy it's not because there's no factory space to build the shoes they simply are creating this artificial sense of scarcity when you think about it in that light it really tells you that the product can't be a larger story it has to be limited in what it brings in other words demand for yeezys just isn't strong enough to produce the shoe in much larger quantities nike and adidas have never revealed how many yeezys they release per drop but wes said in 2015 that there were nine thousand pairs of his first adidas shoe the yeezy boost 750. he then boasted to harper's bazaar in 2016 that he was consistently selling out 40 000 shoe drops in two minutes but adidas was also dropping yeezys less frequently back then the german sportswear company tested the extent of demand for yeezys in 2018 by restocking several popular yeezy models in much larger quantities in september 2018 came the largest yeezys drop ever there were rumors that over a million pairs of 350 v2 triple whites had hit the market in what adidas called its most democratic drop in yeezy history west tweeted about the event saying the release fulfills yeezy's democracy philosophy but suddenly the shoes were lingering on shelves and flooding the market with yeezys cost the brand some of its cachet they did sell out yes but it took a lot much longer than it had it wasn't selling out in hours the lines were lost and and and frankly the sentiment that i saw on twitter was pretty negative there was an attitude out there the easy was over yeezys tend to be dying is yeezy resale dead they not want them to be hype i remember going into a store and seeing them sitting on shelves dude this whole yeezy thing is quite possibly just like done by appealing more to the masses the yeezy brand has alienated some of its initial fan base to a certain extent i think yetis have lost some of its uh wow factor you start to think like oh man the chase isn't as there anymore because more people can get the shoe scarcity is really important because ultimately hypebeast and sneaker culture love to flex they love to have what the other person doesn't have that's all they operate in is essentially clout and bragging rights today buying and reselling certain models of yeezys is a lot less profitable than it once was resale prices on many yeezy models have plunged after a few re-releases of the same shoe or releases of the same model of shoe in a slightly different color once the resale price of a shoe reaches its original retail price it means supply has met demand it's become apparent about how many people really want yeezys and to keep people wanting yeezys analysts say it's critical to make sure supply stays behind demand the reasoning is simple when everybody can get one nobody wants one powell says yeezy's staying power will be determined by how carefully adidas manages its yeezy's inventory it's really critical that brands don't try to grow too fast here it really is takes a tremendous amount of strategic thinking and discipline to build a brand around a celebrity powell says yeezys could look to jordans as an example of how to grow a brand while maintaining its cool factor after all it took nike three decades to build its iconic jordan brand a collaboration between nike and former nba superstar michael jordan into a three billion dollar business for years the jordan business grew about 10 percent a year because that's all that nike allowed to go into the market was about 10 percent more they could have been it put in 20 or 30 or 50 percent more and probably sold them in the first year but it would have been gone after that but powell says nike made a mistake when it flooded the market with too many jordans in 2017 and 2018. and the brand has lost its cachet now can they build it back yes but it will take years in 2019 adidas has taken a step back ceo casper rorstead told investors in may there won't be any significant growth in the yeezy business in fiscal year 2019 adidas won't be repeating another massive yeezys drop in 2019. instead the shoes are being released in more limited quantities throughout the year the goal is to rebuild hype around the brand experts say it will be a long time before wes can achieve his vision a sneaker that everyone wants and thinks is really cool even if it's not that hard to get let me go establish this supreme is the best so i put supreme on my shirt it's on my chest you gotta have supreme or you will be a hater cause you know supreme and super elevated this is supreme the streetwear brand that's rapidly changing the retail industry people have broken into fights waited hours and entered lotteries just to get inside while clothing stores are shuttering all over the world supreme is expanding and the main reason is these guys better known as hypebeasts with its limited production supreme is known for creating scarcity with each release and with no paid marketing whatsoever supreme has grown from a small underground streetwear brand into a one billion dollar global phenomenon my name is joe migrane i've been a supreme collector for better part of eight years now joe sprawling supreme collection has been valued to be over 100 000 featuring dozens of skate decks and rare pieces of apparel but his favorite the accessories are always what is very interesting to me they they're always out of left field they always surprise you and there's just a very collectible and a very interesting aspect about all of them from pinball machines to nunchucks crowbars even a brick hypebeast like joe who treat supreme items like valuable artifacts are why the brand has its seemingly unshakeable reputation but its most popular item will always be the box logo t is probably the most iconic item the box logo merchandise and supreme tends to sell for four to five x what it retailed for it what's great about the supreme logo is is its simplicity it's simple it's clean it pops and in our add culture that logo breaks through instantly the fashion industry spends 500 billion dollars on advertising each year but you won't find supreme on billboards or magazines it doesn't spend money on marketing their products at all everyone wants attention everyone wants to do marketing everyone wants you know influencers wearing their product and supreme operates the exact opposite way the magic lies in their ability to take word-of-mouth marketing and turn the launches of their products into sort of micro experiential events in 1994 founder james debia opened its flagship store in soho new york city on lafayette street since then suprema's used a combination of high profile brand collaborations and incredibly small production quantities to its advantage but choking the supply wasn't necessarily a strategic decision according to jebia they didn't want to get stuck with unwanted inventory this method is core to the company's business model making every launch a press worthy event and each item a limited edition collector's piece with skyrocketing value on the retail market what did this retail for 40 50 45 maybe and then resale is probably two or three hundred for the black medium i'll never wear it the narrative is that supreme sells a t-shirt for let's say thirty dollars it sells out immediately at retail and then people are paying on the aftermarket three four five six x what they cost in the store it's kind of like uh investing in something that you know will retain its value that you know will rarely ever go below what you paid for it and then there's always a good chance that you will make more money than you spend every drop creates a sort of mania attracting a market of young resellers some collectors even self-identifying as addicts supreme yankees box logo t-shirt it was 44. highest bid is currently 470 and the cheapest anyone's willing to let it go is 617 leopard fanny pack retail was 68 and you can purchase it for 300 on stockx right now the classic black box logo hoodie this retailed for 148 and that now the cheapest on stockx is 1100 what makes for a successful brand is when that brand becomes an extension of self it becomes a personal statement for the people who are using it and in the case of supreme became a badge of cool but getting that badge of cool can be incredibly difficult which gives opportunistic resellers a chance to make a killing during drops i've been asking everyone walking out the store to sell me items sell me items no one wants to sell it's so easy to do this i just don't think enough people know this summer i made it about ten thousand dollars so it's a pretty good summer job for me like everyone wants to hold their items and wait for market to rise to sell it's almost like uh an addiction like you buy one thing and you really like it and then every week there's new supreme items it has its highs and it's lows when you get something that you really want that's really rare you feel really good but on the flip side of that is if there's something that you've kind of been waiting for all season when you don't get it it's a really sour feeling and then the problem is that the price is likely two or three or four times what supreme sold it for even this plastic bag has some resale to it you have around 10 someone would be willing to buy it off and when you can penetrate the day-to-day lifestyle of your target audience in that way that's a home run for a brand increasingly crowded storefronts launch day brawls and angry retail neighbors have led supreme to implement a lottery system with each product launch to reduce overcrowding supreme is only open to the public during their seasonal drops and they only release new merchandise on thursdays to get in you have to sign up by 11am on tuesday before the drop registry fills up insanely fast if you get in you'll get a text the day of the launch then you'll get another one telling you what time you can come and then you can possibly wait in line for you know up to three to four hours just to get inside with increasingly publicized collaborations supreme notoriety has led to both wanted and unwanted attention in 2017 jebia confirmed that half the company was sold for 500 million to the carlyle group a private equity corporation but the public doesn't seem to care yet how much is our outfit worth companies make investments in order to grow those investments and so it's likely that the plan would be to expand the brand sell more merchandise and profit further but supreme is managing to maintain its street cred you know the evidence shows that they haven't stopped being who they are everything has been done exactly the same and you know they've been fighting some big legal battles a corporation like the carla group at your disposal to help fight those battles is something that they definitely need supreme has 11 stores in total with seven located outside of the u.s international fans especially those in countries where supreme doesn't have a footprint will pay just about any price to get their hands on authentic supreme the only way they can get their hands on this genuine apparel is on the secondary there's a lot of chinese people here that have buyers overseas and they have these people here and they have lists of prices that they're willing to pay they come up they pay for it right away they pull out thousands of dollars in cash they'll pay anything the asian resale market is is definitely definitely big if you live in a country that you know you can't buy online from your only options are buying it from ebay which you might be dealing with fakes the other effect of product scarcity has been the rise in fakes biggest fake supreme store in the world but i actually looked dead as identical man like that's max that's actually crazy which in march of 2019 resulted in a highly publicized lawsuit between supreme and supreme italia a brand with an identical logo that supreme denounced as counterfeit since then supreme italia has opened doors in europe and asia and country supreme has yet to reach a lot of people who know really know about supreme against it like they would never buy this they could compare every detail from the stitching to the local part to the patent and to the label but do people really care if the box logo on their tee is official supreme merchandise when you buy streetwear you're doing it to be part of a particular community to circumvent the barriers to entry by buying a fake kind of misses the whole point it's not about owning the supreme t-shirt it's about the concept of understanding the culture and putting yourself out there i personally hate fakes i'll never wear fakes i don't want to own fakes i don't want to look at fakes i hate them the legal battle also sparked a hypocrisy debate with critics alleging that supreme plagiarized their logo whose design is nearly identical to the work of artist barbara kruger to begin with good artists copy great artist steel yeah like that's just kind of the name of the game with fashion the red futura bold is exactly like barbara kruger's artwork but it is what it is an irony that's not lost on barbara kruger supreme has continued their strong presence in the fashion industry but the future of supreme could be uncertain with private equity stakeholders involved if the brand does go mass it is you know contradictory to the way that it built its model within the limited edition releases and that stands to potentially compromise its street cred you can start to tell by what the public perception is and what people are writing on the internet and talking about but also you can tend to tell by if resale value is declining or if the number of cells are declining but supreme seems to be getting bolder with their designs keeping hyped beasts loyal to the brand supreme is very self-aware and knows exactly what they're doing and they were like yeah we're going to do a brick and everyone's going to talk about it i think they just continually push the boundary for like what's possible the reason why people want to wear supreme is because they want a piece of culture a crowbar a brick can you know it can last forever those things will be in museums in 50 years when you're carrying a bag that's worth more than people's cars and houses that symbolizes success 500 000 can get you a 3 000 square foot home in las vegas a ferrari 458 or this purse in 2019 a diamond encrusted crocodile hermes birken bag sold for yup 500 000 they said i was crazy for buying a 500 000 bag crazy for buying two million dollars with the perkins well i already got offered 680 000 for this bag 180 000 markup within six months dave wancha has joined the most exclusive purse club in the world with members like melania trump lady gaga katy perry miranda kerr jennifer lopez and floyd mayweather victoria beckham reportedly has a collection of 100 birkins worth about 2 million dollars the kardashians and jenners have walls in their closets dedicated to berkins birkenbags made by french luxury brand hermes range in price from around ten thousand dollars into the hundreds of thousands depending on the material and rarity so how did the birken bag go from a 2 000 accessory at its inception in 1984 to a 500 000 status symbol in 2019. the birkenbag named after the actress jane birkin wasn't an immediate hit but hermes used clever marketing and tightly controlled production to turn the bag into an international symbol of access and wealth by the late 90s in 2001 an appearance on sex in the city solidified the birkin's place in pop culture but even then the starting price of a new birken was about four thousand dollars today that price is about ten thousand dollars when the dust bag separates and you see the first peak of the handles and you get to see the glimpse of the color i mean there's like an electrical little beat that happens which i can't compare to anything else monica aurora collects birken bags and founded luxury fashion news site pursebop.com aurora asked that we protect her identity to maintain the anonymity of her online persona why is an heirmez unboxing one of the most viewed videos on youtube either we aspire to have that experience or we long to repeat the experience the day i purchased my first birkin i just remember smiling from ear to ear and that was even before i saw the bag and so the next step was for us to go into this i call it a secret room it's kind of camouflaged with with the mirrors on the outside from a family where you don't have people walking around with you know five or ten thousand dollar bags so i just thought wow this is like look what i've you know what i've accomplished for myself okay okay i've heard so much about this mystical birkenback i have to see one for myself i'm about to walk into this air med store and ask for a birken bag i'm nervous so apparently they're out of stock for the next year okay i guess you can't just walk into hermes and buy a birkin because you want to the company has severely limited supply to the special few it's deemed worthy of the bag and that just makes you want it more i was offered my first birkin a little after a year a year and a half i spent about ten thousand dollars at hermes before i was able to purchase my first birkin it took well over two years from the moment i walked into the boutique with my girlfriends to express my desire in the birkin and to actually receive that magical phone call where they invite you to see if you would like to purchase the one that they have available for you you have to build that relationship with the sale associate and build up a purchase history the birkin market breaks all the rules of normal commerce as we know it you can literally have twenty thousand dollars of cash you can have anything you want but that will not entitle you to the experience of owning a birkin when you walk into the store so there is this game that escalates the desire which is the unavailability part of the excitement is that chase to some the birken bag has become an aspirational object rewarding buyers with a feeling of importance and belonging the sense of exclusivity is no accident hermes ceo axel dumas told forbes in 2014 that our business is about creating desire hermes is a drug collectors are sort of like hermes junkies each birkin is handmade by a single craftsman in france experts say the craftsmanship is impeccable but at its core it's just a bag like apple hermes success lies in its ability to create an emotional connection to its products both companies create a desire for products that are truly unique and beautiful and that we not only want but we actually need in our life as in a needing beauty and meeting the emotional power that we gain by owning a brick and back the bergen bags setting new record-breaking sales aren't your everyday birkins but the very rare ones hermes has effectively gamified the experience of purchasing a birkin bag in doing so the birken bag has become a collector's item driving increased demand for the extremely rare and expensive ones that first birkin escalates the desire for the next one and as collectors transition through time you desire and aspire to be offered increasingly rare handbags for your collection experts say hermes only sells its rarest birkins and kelly's a close cousin to the birkin to its vip collectors the rarest hermes bags often sport unique designs and are made of exotic materials they also often sell for a lot more on the resale market than at hermes take the diamond encrusted himalayan birkin named for its resemblance to the snowy himalayan mountains one himalayan birkin sold for 380 thousand dollars setting a new record at auction in 2017. most top clients will come to us and say i want this bag at any cost and it's those bags that we sell for you know the record-breaking prices whereas it would have retailed for maybe half that amount if you can't find it on the primary market that's when clients come to the secondary market and are forced to pay you know a kind of record-breaking price because the value of rare birkins can increase dramatically a resale collectors see them as an investment a 2017 study found that the growth and value of the birkin outpaced gold and the s p 500 between 1984 and 2016. there are about 1 million birkin bags in existence according to one analyst estimate and experts caution that as tastes and styles change the value of those bags could plummet collectors rely on professional birkenbag hunters like jane anger of jane fines to help manage their birken bag portfolios buying and selling birkins is like playing the stock market we really know where the market is going what to buy and what not to buy what to sell what to go long on anger says her clients have included the likes of kim kardashian floyd mayweather a russian oligarch and the saudi royal family i have a client that collects ferraris he recently had me find matching birkin and kelly for the ferraris anger uses her connections with vip collectors around the world to hunt down the rarest and most expensive perkins collectors are increasingly turning toward the rarest birkins now that it's so easy to buy a birkin on the resale market the resale market for perkins has exploded it's so difficult to purchase the bag directly from hermes that resellers are offering the instant gratification some buyers crave while i was turned down at hermes i had my pickup birkin bags when visiting the carlsbad california headquarters of luxury consignment shade fashion file the company says it has about 200 to 300 birkin bags in stock at any given time and a variety of other airmess knickknacks so things that you kind of suspect people bought on their way to trying to buy a birkin it's you know it's what you do fashion file isn't the only company you can now buy a birkin bag from instantaneously investors are pouring money into luxury consignment retailers like fashion file the real real rebag and stockx when googling birkin bags i even got a hit on walmart.com the proliferation of birken bags on the resale market has collectors scrambling to find even more rare and expensive bags it's just elevated the game of the collector to wanting something even more rare we're looking to satiate a desire for something special so if everybody has it or if everybody can have it then it's not so special anymore but if you want a new birkin immediately on the secondary market instead of jumping through all the hoops with hermes be prepared to pay a premium for hermes for me to get that bag sit on the waitlist i have to buy a bunch of scarves and agendas and belts and you know and bring coffee to my sales assistant and butter her up i'll pay 1500 bucks more now it's probably cheaper than going through that entire process go to hermes buy a birkin come straight to fashion file i can guarantee you'll pay at least a thousand dollars more for that back but one of the biggest challenges on the resale market is screening for fakes and the birkin is harder to authenticate because of how good the fakes are the counterfeiters know that this is a 13 000 plus dollar bag and so they're saying we can invest a lot of money in this particular piece because we're going to get thousands of dollars out of it to see how good the fakes are i bought a counterfeit birkin on canal street in chinatown that was a lot different than going to hermes they gave it to me in this black bag then we put some experts to the test so you use dental tools to dissect the birkin to see if it's real yes i feel like a detective lauda chavez sainz examines every bag's date stamps stitching materials and hardware other authenticators even smell their bags this is an egg like a tj maxx scent something like this smells like leather how much does this bag cost on the secondary market this would be in the 15 to 20 range why would anyone pay 20 000 for a purse well it's not just a purse it's an investment it's not 20 000 spent it's 20 000 that's sitting in your closet uh okay what should i say hi i'm just browsing do you have any birken bads this is stockx a stock market for all kinds of things smells good ready to go you can buy or sell items like a pair of these jordan 5 retro trophy room sneakers this supreme box logo-headed sweatshirt an air maze birkenback and himalayan crocodile or a rolex oyster perpetual watch you can even find extremely rare pokemon cards like this charizard hollow 1999 pokemon base set in november 2018 stockx sold its most expensive item ever a 70 000 trunk from louis vuitton and supreme stockx does about 20 000 sales of merchandise a day and by june of 2019 the detroit-based company reportedly reached a 1 billion valuation here's how stockx went from a simple price guide for sneakers to a reselling empire meet josh luber this camera the co-founder of stockx i have the exact same story as every other 42 year old sneakerhead you know i grew up playing basketball when jordan played i always wanted air jordan and so i literally have sneakers from when i was probably eight before stockx luber had nothing to do with buying or selling sneakers he ran three tech startups and joined the corporate world as consultant at ibm in 2010. i almost intentionally avoided creating any businesses that had to do anything with sneakers almost out of fear of creating a business that was just an excuse to play with sneakers but while analyzing data at ibm luber realized ebay was the biggest marketplace for sneaker reselling ebay played a bigger role but also it was really more up to the consumer to find the buyer but the problem with ebay was that each reseller would list different prices for the same product if you go to ebay and you search for the shoes i'm wearing i'm wearing jordan 1 royal you'll get a thousand listings you can decide you buy from this person or that person why is this one 600 why is that one 800. luber figured that the sneaker reselling market would benefit from following the stock exchange model which means every stock listed on the exchange has one true market value that system helps alleviate uncertainty you don't buy a share of nike stock and then go home and your friend says i got that cheaper on amazon like no like there's one market price for that so in 2012 luber started a side project called campus which was essentially a shoe reselling price guide for sneaker heads luber would scrape valuable data from ebay resellers and obtain all of the information about closed auctions for all sneakers sold on the platform slowly campus started gaining reputation and people started reaching out people started emailing and saying hey you know i love sneakers i love data can i help in fact had a volunteer team of 17 people they were on the same mission to make informed decisions before buying or selling expensive sneakers on the resale market i could look at someone's whole sneaker collection and i could say what the whole sneaker collection is worth and then i could look at their sneaker collection the same way you look at a stock portfolio and just track its value over time and then the logic is well if you understood asset pricing and you understand portfolio construction then perhaps we could create an actual stock market for sneakers the only problem someone with extremely deep pockets had a very similar idea enter dan gilbert the cleveland cavaliers owner and billionaire investors sons were also buying and selling sneakers through ebay gilbert's on industry prime for disruption so he put together a team to build a sneaker stock market but it didn't take long before they discovered campus in april 2015 luber took a call from gilbert's team they wanted him to fly to cleveland on short notice to meet gilbert on his home court four days later on easter sunday luber met gilbert for a cavs game and luber or his tiffany dunks we get there we kind of make small talk before the game and then after the game we go back in this private room and that's where we realized that we were both trying to build a sneaker stock market that actually lended to them kidnapping me and taking me to detroit for the next two days luber left ibm in may 2015. one month later gilbert invested in campus for an undisclosed amount stockx was launched in february 2016. and so it was a pretty crazy serendipitous you know happening the fact that there was maybe one other guy in the whole world that had the exact same idea at the exact same time and it happens to be you know one of the most successful business people in the world stockx retained the real-time shoe pricing and analytics that made campus a crowd favorite among sneaker heads and added an online marketplace since the existence of stockx i've sold 67 thousand dollars since then i've done about 170 000 in sales here's how stockx works stockx acts like a middleman between buyers and sellers buyers place bids and sellers post asks both the buyer and the seller are completely anonymous throughout the entire transaction sellers don't have to upload photos or write product descriptions once the seller accepts an offer the seller ships the product to stockx stockx authenticates the item and releases the money to the seller then stockx ships the item to the buyer stockx charges a three percent payment processing fee and a transaction fee of up to fourteen point five percent the more someone sells on stockx the lower the transaction fee but the biggest beneficiaries of stockx may be the buyers if someone is going to spend 600 on a pair of sneakers they shouldn't have to worry about buying a fake from day one we authenticated every product at stockx and that was always going to be the case and so if you're a 15 year old kid and you're spending all your money and saving up all your money to buy a pair of yeezys you know you're never going to get a fake pair of easies massive amount of value there but it wasn't until the release of the air jordan 1 bread on september 3rd 2016 that they realized just how big the market was for a company like stockx we did about 300 sales that day and we'd only been doing about 50 or 60 a day up until that point and that's when we knew that like the model was better right it was just watching trades come off the board and watching the the spread close down to dollars at a time we're like wow like i think this is really going to work the company has raised a total of 160 million dollars from an impressive roster of outside investors from eminem and mark wahlberg to former victoria's secret model carly kloss stockx announcing their most recent series c funding round where they raised over 100 million dollars which officially values their company at 1 billion but to understand how stockx grew so rapidly in such a crowded market we need to look at the evolution of the sneaker resell industry over the past few decades we actually should go back to the 70s that's elizabeth simelhack creative director and senior curator at the bata shoe museum in locations specifically within new york city and its boroughs as sneakers began to become associated with ideas of expressing individuality through fashion consumption particularly in relation to breaking and hip-hop a new word entered the pop culture lexicon dead stock one of the things that early sneaker heads if you want to call them that began to do was to go and try to find dead stock and so dead stock are things that sit on somebody's shelves maybe in a back room somewhere that just never sold that are overstocked and it was in looking at shoe retailers who had dead stock and finding these rare shoes and then breaking them out that i think created the first steps towards wanting to have the rare and unique finds and it was around that time when some of the first big sneaker collaborations and releases happened in 1984 the first pair of nike air jordans was released in 1986 adidas partnered with the hip-hop group run dmc in 1989 reebok launched the pump sneaker for a whopping 170 dollars all of these ideas of fashion masculinity basketball hip-hop and price point come together in the mid 80s in 1995 ebay was born and it didn't take long for sneakerheads to start selling hard to find shoes on the site all of a sudden now there's a platform by which people can begin to do this exchange in earnest and dollar amounts could be assigned to sneakers while ebay created a place for consumers to buy and sell items the rise of social media put the resale market on steroids the sneaker community was almost like a dark place like it was a niche market before instagram because now you start to see everyone wear shoes the riches of the rich and you know people who are still trying to get by and make a living they're wearing the same things and i think that instagram brought all of that together apps like instagram and facebook allowed users to not only show off their collections but to buy and sell their products directly with each other hi cnbc and come take a look at the largest sneaker collection ariana dresden and dakota peters are the sisters behind a more than 6 000 pair sneaker collection they inherited nearly 5 000 pairs of sneakers from their father douglas roy peters these chicks with kicks have been selling some of their sneakers through instagram they've made more than 250 000 in sales so far instagram is so easy and you don't pay fees so there's really no reason to look elsewhere for the everyday just you know buyer of one pair or the seller of a few pairs instagram probably wouldn't be fit for them and that's where stockx and those types of companies come in because they're safeguarded and you know you're safe selling went from niche to mainstream which meant some enterprising people started making good money peddling hard to get items and when there's money involved you can count on someone gaming the system that was the hardest part about being able to deal sneakers it was like you were so scared to get a fake pair of shoes that sometimes you just stayed away from it luber says stockx addressed three things that were missing in the sneaker resale market structure transparency and most importantly authenticity in fact a robust authentication process was put in place at the company's launch the challenge was finding authenticators who were able to consistently spot fakes the higher the price of an item the better the counterfeit we couldn't go to linkedin and find sneaker authenticator that job didn't exist we had to build it we had to create that job we had to create that process so stockx bought a bunch of real and fake shoes and dissected them documented the differences and created training manuals the company even developed a proprietary technology process and established difficulty levels the balenciaga there's a lot of faces it's very hard to authenticate it so when i catch a fake i uh i get happy and i just scream fake authenticators have to go through a 90-day training program to ensure that they can review any sneaker that comes with the door i've done over 600 700 transactions selling and buying so you know my experience has been absolutely great today stockx has six authentication centers and it employs over a hundred authenticators around the world and now that the company is also selling street wear handbags watches and collectibles the authentication process has become even more critical to its ongoing success but as the reselling market keeps growing maintaining a rigorous authentication process is proving to be a challenge for all players in the resale space in november of 2019 a cnbc investigation found that the real real the world's largest online marketplace for luxury items and one of stockx competitors had used copywriters and not so-called experts to authenticate numerous items and had also sold counterfeit merchandise the company has stood by its authentication process transparency is going to be very important you see the real rail has had some trouble with that they stand behind their authentication process but it's bringing to light to consumers potential issues there so retailers really need to give consumers insight into that authentication process to you know make sure that they're comfortable with what they're getting the current overall resale market is about a 24 billion dollar industry and in 2019 the sneaker resell market alone was estimated to be worth over 2 billion dollars in the us with that much money on the line big players and traditional retailers are investing heavily in online reseller marketplaces bigger players and traditional retailers are investing in resale if you think about foot locker's investment in goat niemann marcus's investment in fashion file far-fetched purchased outright of stadium goods really they feel this is important and this is the direction they should be moving because this is where there's growth coming even ebay is trying to regain its place as a destination for sneaker resellers in december 2019 ebay announced that it would be eliminating north american selling fees on any sneaker sold at 100 or more creating a ripple throughout the industry in fact the lines between resale and retail are beginning to blur in october 2019 stockx teamed up with adidas to create three exclusive pairs of adidas campus 80s releasing a total of 999 pairs on the platform and in december 2019 ebay partnered with stadium goods to launch its own series of sneaker drops stockx owes its success to the popularity of american companies like nike and supreme but its fastest growing market is actually europe in fact almost a quarter of stockx business is happening outside of the u.s that's why it opened a 35 000 square foot authentication center in eindhoven netherlands in august 2019. stockx ceo scott cutler says that at some point the company will explore going public but luber wants to take his stock market of things concept even further retail pricing is completely antiquated there's no reason to create an arbitrary number to attach to a pair of sneakers when the jordan one travis got dropped they retail for 175 dollars but were immediately reselling for 1500 hours like that just doesn't make sense at all if you have variable pricing if you can be able to put products into the market at a true market value then that shoe maybe goes in the market at 700 or 800 or something way more than 175 but probably less than 1 fifteen hundred says the ultimate goal is for brands to release products directly on stockx moving the company from middleman to primary seller the idea would be for stockx's customers to set the true value of a product at the onset and that's really the future of stockx and to be somewhat cliche probably the future of all e-commerce which is for certain products not all products but for certain products that are supply and demand constrained to let the market set the price to literally ipo those products into existence and get rid of retail pricing for them stockx's rise isn't that hard to understand the company is simply copying the rules of the stock market and the way it understands value on to the next [Music] you

Channel: CNBC Make It

Views: 143,452

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Keywords: CNBC Make It, Make It, CNBC, How To Make It, Entrepreneurs, Starting A Small Business, Business Success, Small Businesses, Finance Tips, Career Tips, Work Hacks, Lifehacks, Money Management, Career Management, Managing Business, kayne west, kanye yeezys, complex sneakers, why is supreme so expensive, supreme shoulder bag, what is supreme brand, supreme hoodie, Hermes Himalayan Birkin, stock x, designer brands

Id: DSxkaRnEpAo

Length: 49min 54sec (2994 seconds)

Published: Sun Mar 07 2021