Do Not Adjust Your Focus
Do Not Adjust Your Focus
Josh Luber, StockX Co-Founder, on entrepreneurialism and reinventing the retail model
Stuart Lambert, founding partner at Blurred meets Josh Luber, Co-Founder of StockX, the world's first “stock market of things”. StockX is an online marketplace, initially focused on sneakers, which connects buyers and sellers using the same method as the world's stock markets. Launched in 2016, StockX is now a unicorn, valued at more than $1 billion, providing a disruptive model for the future of retail, being labelled by Quartz a "stock market for physical things that could change how capitalism works."
Josh's TED talk has been watched more than 2 million times.
He is a self-confessed data geek, an entrepreneur who has created a billion dollar company, and someone who is passionate about reinventing the way we shop and invest.
This episode was recorded earlier in 2019.
Welcome. This is a first edition of our podcast. I'm here with Josh Luber, founder and CEO of Stock X, the world's first stock market for things. Josh, can you explain stock X in a sentence or two?
Josh Luber:Stock X is, we call it a stock market of things. Which in and of itself, that phrase means absolutely nothing to anybody. It's actually more confusing than it is anything else. But here's the thing, we are a consumer goods marketplace. So think eBay, right? All we do is bring together buyers and sellers to buyers, sell a consumer good. And we start with sneakers and we also sell watches and handbags and streetwear. But the manner by how we bring together buyers and sellers is the exact same way that the world stock markets work. And there's a lot of nuance to that. And there's a lot of data and there's a lot of underneath the hood, and we can talk about all of it, but at its core, it's about the concept. True market price, right? You go buy a share of Nike stock on the New York stock exchange. You feel confident that the price for that is fair because you know, that's product of tens of thousands of people all negotiating at the same place at the same time to surface that market price for Nike stock. And that's what we're doing for consumer goods. We're creating concepts of true market price. And then after that it's literally about just buying and selling sneakers, right? But all everything else under the hood, that's all different. And that's all genuinely, for lack of a less cliche way of saying it, truly, truly revolutionary that you get does not exist anywhere except the actual stock market. And so that's what we're trying to do.
Stuart Lambert:I get that. So I saw one headline about StockX that called it a stock market for physical things that, and this was the interesting bit,"could change how capitalism works". To me that is, like you say, revolutionary and I wanted to start with that idea of disruption. We live in a world where the lines are blurring between industries. So a fundamental question is, is StockX a retail company? A technology company, a stock market or portfolio investment vehicle, I guess it's probably all of those things. And that's where you spotted an opportunity.
Josh Luber:Yeah. It certainly is all those things. Fundamentally we're a technology company. We're not an advertising business or a marketing company. The core business is that of a marketplace. For people to buy and sell consumer goods. And immediately when we say stock market in any context, immediately people think about investments. And there's some of that and we'll sort of come back to that. But for now just like forget about that, just just recognize that all the stock market really does is it brings together someone who wants to sell a share of stock with someone who wants to buy a share of stock. It just so happens that the asset that they're buying and selling happens to be something that we use for investments. What we want to do is focus on the method of connecting buyers and sellers. And that's the stock market. Now we get to the bigger idea and you can build on top of that and we're now sort of fast forwarding to the end where people can literally buy and sell sneakers without ever taking possession of them. The same way that you might buy yourself oil futures. You're literally buying that asset. If you were buying and selling oil futures, those barrels of oil really do sit at a warehouse somewhere. Right now you're not, you don't need to have possession of them, right? No one sends them to you and then you send them to someone else. You're trading digital ownership of that back and forth. And that's literally where this. And so it's a very complimentary headline there to say that StockX is changing the face of, of capitalism, but it's certainly changing the face of both e-commerce and an ultimately invest in,
Stuart Lambert:Well that's what I wanted to ask next. So this is a radically new paradigm for portfolio investing, almost. Cause I could buy shares in Nike today, but if Nike goes bankrupt, my Jordans are still valuable, even if my Nike shares are now worthless. And that sounds to me like a hugely disruptive concept
Josh Luber:That actually that, that's great. I've actually never used that. I'm gonna use that. I'm totally using that one. We make it as easy to buy a pair of Nikes as it is to buy a share of Nike. So sneakers are inherently, as a commodity, as an asset, less volatile than most traditional commodities that we think of. Right? But it's not about investing per se, right? We actually have a function on StockX, which is called portfolios. And you could look at your sneaker collection the same way that you would look at a stock portfolio and see value tracking over time. But the reality of interacting with sneakers is such that there's not a whole lot of volatility within same markets. Because there's still a lot of different channels that you can buy yourself. Sneakers, most of the money to be made in the secondary market for sneakers is someone who buys it at retail, who's fortunate enough to be able to buy a pair of shoes at retail, let's say a pair of Adidas right? And then can turn around and immediately sell them on the secondary market for profit. That's where most of the arbitrage is, right? If you're buying it on StockX, you're probably not also selling it on StockX, at least not in the short term. There's not enough short term volatility, but maybe over time you hold it for a couple of years then maybe
Stuart Lambert:What's the response been from brands themselves? Cause they can surely see that the old rules about how they retail their products are breaking down here, right?
Josh Luber:This is, this is awesome because it ties in with the bigger idea. Before StockX, I had a company that was called Campless, and Campless was a sneaker guide, right? We were scraping eBay and we were creating a data company. We had a price guide of what sneakers were actually worth. We had a blog that was kind of like Freakonomics for sneakers, doing this sort of analytics around the secondary market that no one had really been doing. And so at the time and, and we started getting some traction around 2013 however, I got in touch with anyone at the sneaker brands and at the time really Nike was the entire secondary market at the time. Nike including Jordan brand, which Nike owns made of about 96% of the secondary market. So it was all Nike. This is before Yeezy, before Adidas started to really get into this part of the business. So before I got in touch with anyone at Nike, the first conversation was,"Ooh, this is really cool data. We should totally try to find a way to work together". And in the second conversation was,"Oh, you know what, this is the resell market. Like maybe I better talk to my boss." And the third conversation was total silence. No returning emails, no returning phone calls, just like, and it's fine. I totally understand. This is 33 years dating back to 1985 and the first Air Jordans of Nike having a very wilful blindness policy towards the secondary market. Everything they do creates it. Everything they know how to very strategically benefit from the creation of the secondary market. But any public PR questions in Nike about the secondary markers? No, no, no, no. That's not us. We're not a part of that. We're not, don't have nothing to do with that. And there's a lot of good reasons why anytime you've ever heard anything around violence and sneakers and riots are people killing each other for sneakers. 1991 Sports Illustrated cover:"Your sneakers are your life". A pair of Jordan fives and a gun- all a function of this. But slowly, 33 years, you've slowly gotten the point where the secondary market has become legitimized. Brands have done a lot to make it safer for people to buy it. And you know, and then you have companies like StockX that come in and authenticate the sneakers, right? Create a standardized e-commerce experience, have a real business model behind it. It's no longer just a back alley type of industry. And each one of the these times that we've slowly started to legitimize the market to brand have slowly, slowly coming around to work with us, which is a really long way of answering that they're still not there. And, look, brands are collection of people. There are some people at the big brands that are still super, super old school and still are, no, no, no, we shouldn't even be talking to you. And then there's people at the far other end of that gamut that are like, absolutely, we need to be working together. We need to be doing stuff together. And then there's everyone in between. Right? And so for us, literally the purpose of StockX from day one was to bring the primary and secondary markets together. What a stock market is. The stock market is the single market that blurs the line between what is primary and what is secondary. The concept of true market price belies retail price or MSRP. Right? And IPO happens a Facebook stock in the New York stock exchange and then that same market continues to trade it.
Stuart Lambert:So talk about, yea, cause you're talking, you talk a lot about letting brands- so the companies we're talking about, Nike, Adidas- literally IPO products. IPO a pair of new sneakers. Can you talk about that, cause that sounds again like an incredible blurring of the lines between concepts.
Josh Luber:Well that's right. And that's, that's literally the perfect segue there. Cause that's exactly what happens, right? For us today we're a better secondary market. But as we can work with brands and become an alternate retail channel. And the way we do that is by literally IPOing products. The best example of in a consumer good context of primary and secondary markets working together is ticketing and sports ticketing. So if you think 10, 15 years ago, teams and leagues were trying to shut down ticketing websites and music class. All that. And today, StubHub is the official resell marketplace of major league baseball. But not only that, Stubhub has primary ticket deals with the Sixers and the Yankees and a few other teams. Right? So this is the IPO, right? They don't call it an IPO, but it they are releasing the retail product. StubHub is selling the retail product and that way if you want to resell any, you're already on StubHub. Right? It's a single market that brings together primary and secondary. And so for us, the bigger ideas to do these IPOs and we've done some of them. So in January of last year, Nike, you rereleased LeBron James first shoe. This was LeBron James, first retro. And I know that, that it's funny, like there's like probably no place in the world that cares less about LeBron James and like right here, but that's okay. We know who he is and it was a really big deal in the sneaker world. The fact that this shoe was coming back and Nike sold it on StockX first before any other retail channel. This is before nike.com before Footlocker and we created a sneaker box that was made out of wood from the Cavaliers championship court. The Cavs cut up the court and we created a sneaker box and then included with the box an actual Cavs championship ring in the box. But this is the real ring that like if you worked in like marketing for the Cavs and so we had this package and it was the shoes, the box, the ring. There were 46 of these, but it was a true IPO and they sold for an average of$6,000 a piece. We gave half the money to charity, but this was on the homepage of the New York times and the results of the homepage. New York times was not the ringer of the box, but it was a really big deal about Nike going direct to the secondary market.
Stuart Lambert:OK so that is radical disruption and I guess you know, it doesn't come out of nowhere. It's responding to consumers' demand for new ways of doing things. And that is a neat segue into what I wanted to kind of dig into a bit next, which is really the theme of entrepreneurial-ism and you as, you know, founder of a rapidly scaling business. Can you talk a bit about entrepreneurial-ism as a concept of them? And I'm interested not just in how you made that bold step into starting a disruptive business. You know, the kind of the jeopardy of that, but also thinking of the context we're in today where, economies in the US, the UK, are changing so, so fast that there is going to be a real need for more people to have their own ideas, to launch their own businesses, to bring new stuff to the, to the table. Right?
Josh Luber:Our premise, or I guess my sort of sort of personal philosophy for the longest time has been that ideas are worthless, right? It's really about, execution. I've started to run three other startups before this. None of them had anything to do with sneakers, almost intentionally. So, I mean, I've collected sneakers all my life, so I almost like intentionally separated business and pleasure. But I don't think that it's an accident that the one that has been most successful is when I finally did. And you get to that because you have to love the process. It's all about like the process and like that's like this is just a blast because you get to do this, like StockX may very well be the greatest chance that I have in my life to become wealthy. And that's okay. And it's okay to say that, but like the fun part is now it's doing it and building it and stuff like that. And you know, the best part about being involved in a hyper growth startup is that we have 530 people today and it's like a Daisy Rowe startup. I mean, it literally feels like when there were like five of us sitting outside of Dan's office and just, you know, the world was an oyster and there was an infinite number of things to do. But that's also why they are only bottleneck today in every part of the business is people.
Stuart Lambert:We'll come onto people. Still with the entrepreneurs, I've got an almost pathological fascination with another American entrepreneur, Elon Musk. That's a guy who literally lives Tesla, right? So he sleeps in the office. He works, I don't know, 60 hour days or something, somehow! Do you empathize with that obsession, that mentality? Do you have to be a bit crazy to do what you're doing?
Josh Luber:Did they tell you that I sleep in the office? I have a couch next to my desk. I take a nap every day. Cause what happens is slowly you stay, if you love the process, you stay up five minutes later, every night and then all of a sudden you're going to bed at 4:30 in the morning. I'm married and I have two kids, my daughter's six and my son is three. So I try to get when I am in town and that's the hard part is I travel a lot. But when I am in town I try to get home and put them to bed and then I wake up and then it's like the second part of my day. So from like 10:00 PM to 2:00 AM like that is the best time of day to work because there's no emails, no phone calls, wife and kids are asleep. You can actually like work and then, then you get into the five minutes later, five minutes later and all of a sudden, like last night particularly cause time-zones- h ere last night I went to bed at 4:30 and so then I have a power nap during the day at the office. And you just find ways to like s teal s leep in between and doing it because like it's the like the process, it's t he best and like the opportunity to do this sort of stuff is amazing. There is an obsession t hat we joke and my, so I've two cofounders, one is Dan Gilbert who's the owner of the Cleveland Cavaliers and the, t here's a guy named Greg Schwartz who's our COO and third go founder and Greg and I basically go a round the company and, you know, we joke and this is not at all a negative, cause I love my wife and kids but once it gets to the weekend and I am like, crap, I can't wait to get back to work on Monday. There's so much to like did do...
Stuart Lambert:That kind of mentality, that mindset. I mean that's surely fundamental to the culture at StockX and I wonder, we'll talk a little bit about culture. How do you go about creating a sense of culture at a start up business? How do you foster it?
Josh Luber:Yeah, I mean we have 530 people and I would easily hire another a thousand tomorrow if we could find the right people. There's a lot of roles that are still open that I'm desperate to have someone in there, but I'd still rather have no one than the wrong people. And that's, that's a really key part of it. I think it was somewhere around employee number 50 or 60, that I stopped interviewing every single person before they were hired, which was, I still kind of feel guilty about that. And it was in engineering right. Eventually turn it over to the CTO and trust that they can can carry the culture into an engineering culture because each team then is really different. You know, an engineering culture is way different than say, like the marketing team, you know, which is way different than we have an operations and authentication team that's essentially like a warehouse or it is a warehouse was for warehouses. So you have different cultures in it. And so what's important is that the leaders that you have in place get the, the larger culture and can adapt it to their parts of it and still have that same, you know, feel.
Stuart Lambert:So it's a fluid. It's a fluid thing.
Josh Luber:But it starts with like being vigilant in hiring of who you're going to hire, and, and particularly of those leaders, which, which we have been and Greg and I have been, it's also about getting rid of anyone that... You make mistakes. And there's been three, in two and a half years, at the mid to senior level leadership that were clear mistakes, from a culture standpoint. The people were very smart and very talented but just were not our culture. And you could feel that divide. And it was one of those things that when we finally did let those people go, it was addition by subtraction. And like, that's how you know, like inherently you can feel it, even though all of a sudden you have one less very qualified, very capable person in a business that desperately needs people.
Stuart Lambert:You're hinting at that kind of hierarchy of priorities there. What's most important that the qualifications experience or is it or is it genuinely the values?
Josh Luber:Who do you want in the trenches with you? And for us, it's, it's not about like nine to five. What happens when Kanye calls and says we're going to release a Yeezy on StockX, you know, tomorrow and everyone's at the office for the next 36 hours straight, getting it done. Who do you want there at three in the morning with you and look over and do that? Right? Who do you want to celebrate with? That's as important as anything.
Stuart Lambert:I guess the big challenge will be, as you say, scaling. You say you'd hire another thousand people if you could, but it gets harder to find people that,
Josh Luber:yeah. Yeah. And to, to your point and what you're looking at here, like I talk about internally all the time. Like I want to hire founders, I wanna hire like other startup founders. In fact I've been starting to look and and within my network and startup network at different places because I ended up, all I was looking for in between every startup was man I would love to go work for like a successful entrepreneur in a fat, in a high growth successful startup and like work with like the the founding team and like that doesn't exist. Like everybody wants that but Holy crap. Like I am like literally like trying to find that and I have this like unbelievably perfect job for any like, like amazing founder. But it's hard to find those people at the right time cause you have to find them in between startups. So like I've been asking all my VC friends and our VC investors was like, do you have any great founders within your network that are like in between startups or stuff like that. And I'm like, I just want more startup people. How would you spot, cause I assume
Speaker 2:you know, someone who's obviously got an entrepreneurial spirit themselves, you encourage that within the culture of stock X. How, how'd you, um, how'd you spot a new Josh Luber among your own workforce?
Josh Luber:Um, I think the hardest thing is it's to try to get those people to, to understand it themselves. I think that, you know, there's some young people at the company that I think are really phenomenal, but, um, everybody is so, and this isn't a bad thing, but like they're, they're so focused on like sort of smart, like young smart people today are so focused on like smart, longterm planning of their careers, of their future upset or thinking about things like, well, if I take this job, then where can it lead to? And all that, you know? And I'm just like, just, just like in the war, like in the best way possible. Like just shut up and like bust your ass. I'm like the bet that the best things that happened there, like if you're worried about like your title, if you're worried about all this stuff. And I get why, like I girl, it's not like I'm not like immune to it, but like there's nothing that that comes up better than like the people that just like put their head down and like actually, you know, go in and do work. And you can tell the difference though. Uh, like once someone's there and working, right, it's the people that, you know, this when you, when you need something done or where you want to do something, it's people that like, if I've asked this person, am I going to like, feel like I'm like bothering them or guilty or they like somehow make as to the people that are like, yeah, I know I can count on that person. You know, and you can't, um, you can't always spot that right away in an interview. That's hard. But the best experience that I've found is when you have someone that has been worked in a startup or a small business, do you want to do that?
Speaker 2:So you're not, I'm not a San Fran business. You're a Detroit business. And in this country we associate Detroit with you know, cars and that kind of heavy industry. What, uh, what has Detroit imprinted on stock X is DNA.
Josh Luber:So my business partners, Dan Gilbert, um, you know, the business he's most known for is as being the owner of the Cleveland Cavaliers, but his primary business were where he made his money initially is in Quicken loans. And Quicken is the largest mortgage lender in the United States. And Dan grew up in Detroit. And what happened was about six, seven years ago, Detroit was at the lowest point. It was in bankruptcy. The city was deserted and Dan overnight moved in like mu moved every one of his businesses in downtown Detroit, started buying a buildings for pennies on a dollar and basically single-handedly rebuilt the city. And so for us, you know, we don't work on Detroit stuff per se, but that's Dan's mission in life, right? Like he's made his money and he still runs 130 companies and he's actually extraordinary. But his mission and the mission of the larger mission of the whole family of companies is around the rebuilding of the city of Detroit. And so for us to sit there and be a part of that even, you know, just because we exist in Detroit and our headquarters is there is, um, as extraordinary a big agenda going on part of your journey and what's most important and what ties in with, with actually your, um, your interest here is Detroit is a startup city. And if you're a startup person, like, and now you get to live and be part of a startup city, it's extraordinary. And I don't know if there's another city in the world that is like that where you have you basically rebuilding of a major city from scratch.
Speaker 2:I'm reminded of another brilliant entrepreneur, Jeff[inaudible] who said, um, failure isn't optional. It's not optional. If you want to be inventive, right? You, you're gonna, you're gonna make mistakes. How do you deal with failure?
Josh Luber:You know, it's funny, I never have any like failure quotes that I use often, but that's a really good one. And then, yeah, I mean, failure is, is, um, it's not only part of the process, it's like a huge part of the process. I, I don't have any decisions I have to make a day, you know, a day or whatever, but like, man, if I can just get a couple of them right.
Speaker 2:I think through, there's a few just kind of personal questions here. Um, your three top bits of business advice.
Josh Luber:So, uh, I get asked this in, in some form a lot. And uh, it's funny because, um, that there's two that are, that dominate and it is, um, they sound like the most generic basic things, but they couldn't be more important. So one is just do something, right, which is that so many people sit around and just, you know, like, ah, I wish I could do this or I wish I could like, just do something. Even it's the most smallest, my most, my new thing that you don't necessarily where know where it's gonna happen or what it's going to do. Like you have to be moving, doing something, move forward. And if you're passionate about the process, right, that's, it should be an easy thing. Take a step. Yeah. Like literally, you know, people ask me all the time like, Oh, you know, how did you ever build a$1 billion company? I was like, I didn't like I built whatever. The next thing was. Like it's one foot in front of the other. Right. And um, and then the other thing is, is talk to everybody. Talk to everybody and anybody about everything. Don't ever think someone's gonna like steal your idea. Don't ever show up with like an NDA to talk to someone. Like, first of all, if you have some great idea, I already said earlier, I think ideas are worthless and executions the only thing that matters. But like if you have think you have some great idea and you're going to go talk to someone and they're that talented and great, they could steal your idea and go do it, but they're not doing anything. They're just sitting around and have all this time in the world, they can go. No one's going to be able to be as passionate and dedicate all, it's about execution. So you should talk to everybody about everything because all you're going to do is get more feedback and iteration and people would help with and find people and introductions and all that. And a lot of people like don't do that if you're like, Oh I need to keep this private. Those are the things and it's like simple, right? Like just do something and talk to everybody.
Speaker 2:Yeah. Talk to them on that. I mean it's kind of counter to that cause I think when you have a great idea, your natural instinct is right.
Josh Luber:Protect it, protect it. Everybody has other people are going to have some version of that idea. Right? By the way, stock X, we didn't make this up like the stock market has been the most efficient form of commerce for hundreds of years. And all we did was pointed from these commodity stocks and bonds and oil and gas to these, to sneakers and watches and handbags, right? No.
Speaker 2:All, I've got a last question for you. This is a bit of a funny one. We've got a, we have this a thing here on a, on the good old BBC called desert Island discs where guests get to say which songs they take with them, uh, on a desert Island and I wanna I wanted to do something similar but updated and cause I'm a total Saifai geek and I'm so excited about the idea of one day human beings on Mars or the moon. I had this idea of, okay, I'm going to call it a moon base bag or something. You got one bag, right? It's a Louis Vuitton bought on stock X, obviously a, what are you packing it? You got a one way ticket, you're going to go and live on the moon or Mars. You're not coming back. What do you take with you?
Josh Luber:I mean, like the amount of just work that I can do on my phone. Yeah. Like forget about the, it was like whatever, social and all that, but like I can run entire business like on my phone and all this, and it's like unbelievable to do that because how can I start like the next company or do their whatever that tool is at that time. However that is. Like today, it's a phone, but it's something they'd be able to, to do that. That's gonna be the past time of like creating new civilization. You're going to create some sort of business on. Yeah. It's an extension of ourselves. Really good to meet you. That's great. Great to talk to you. Thanks for having me. This is awesome.
Speaker 4:Jeez.