GOAT: Building A $10 Billion Business

Friends,

Less than a decade ago, the sneaker industry and secondary market were seen as a subculture, a small group of enthusiasts and collectors that hung out on the dark corners of the internet.

But in the years since, it has transformed into a $30 billion market driven by superior technology, increased transparency, and even artificial intelligence.

GOAT Group, the parent company of an online marketplace for sneakerheads, is leading the charge, announcing a $195 million raise yesterday that values the business at $3.7 billion — up from $1.75 billion last September.

The financing round was led by Park West Asset Management, T Rowe Price Associates, Franklin Templeton, Adage Capital Management, and Ulysses Management.

Powered by the tailwind of a cult-like following, GOAT has become one of the top online marketplaces for sneaker and apparel evangelists, otherwise known as sneakerheads.

Here’s how it works: Sellers post their items on the platform — ranging from $25 to more than $500,000 — GOAT then facilitates the transaction between buyers & sellers (think eBay) and verifies the authenticity of sneakers through proprietary AI technology.

GOAT charges customers a commission of 9.5% on each sale in exchange for a safe, frictionless transaction. That’s meaningfully lower than competitors like eBay (~13%), allowing them to also charge fees for ancillary services like refurbishing and cleaning used shoes.

For example, in the past, you might spend hours in online chat rooms hoping to secure a rare pair of Air Jordan 1’s, only to find out that they are fake after sending someone $2,000 on Venmo. With GOAT, that doesn’t happen.

The result? As the market has exploded — worth $2 billion in North America today & expected to be worth $30 billion globally by 2030 — so has GOAT’s business.

GOAT has done more than $2 billion in gross merchandise value (GMV) — the total value of goods sold — over the last 12 months and now delivers to more than 30 million customers across 170 countries.

Now, they’ll use an additional $195 million in funding to expand their apparel and accessories businesses in countries like China, Japan, and Singapore.

But here’s my take: While GOAT’s sales & user data are certainly impressive, they're also quietly building up an impregnable moat for the future.

Step one was creating incredible value. By authenticating shoes, democratizing insurance, increasing access globally, providing price transparency, and more, they’ve built up a customer base of more than 30 million.

Step two is expanding the business. GOAT has opened 10-plus local distribution centers in Europe and Asia, expanded into clothing & accessories, and is working with more than 350 premium retailers like Gucci, Balenciaga, and Alexander McQueen to sell products directly through retail.

But most importantly, GOAT has used its strong cross-side network effects to scale its multi-national operation further.

Not only does GOAT’s business model discourage disintermediation — the ability to authenticate & offer insurance isn’t possible offline — but as their user base continues to grow, the combination of more sellers posting inventory and additional buyers being drawn in creates a strong network effect.

In total, GOAT’s unique marketplace enables them to inventory over 1 million SKUs at any point, remotely.

The next step? Continuing to leverage customer data from its mobile application to predetermine preferences, make recommendations, and further develop the ability to allow shoppers to virtually try on shoes using augmented reality in the mobile app.

But then again, an IPO might come first :)

I hope each of you has a great weekend. Talk to everyone on Monday.

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