The Hidden Opportunity For A $1.75B Shoe Marketplace

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Friends,

GOAT, a sneaker certification and resale marketplace, announced a $100M funding round yesterday, which will be used to expand existing footwear, apparel, and accessory lines.

The round was led by D1 Capital Partners, and values the company at $1.75 billion. GOAT’s new valuation is a significant jump from their previous $550M valuation just a year ago, when Foot Locker invested $100M.

Even better, research firm Cowen released a report this summer estimating that the luxury sneaker market is worth more than $2 billion in North America and could be worth $30 billion worldwide by 2030.

But what if, in addition to reshaping the entire secondary market for sneakers, GOAT also had the opportunity to turn shoes into a legitimate alternative asset?

Let’s discuss…

(Image / GOAT)

When it comes to sneakers being an acceptable alternative asset investment, similar to sports trading cards, the number one knock is the markets lack of an established and universal grading system.

GOAT has a clear and distinct ability to fix this.

Why?

They’re already doing it - they just need to expand on it.

As part of their current process to certify the authenticity and cleanliness of shoes on their platform, GOAT has professional grading experts reviewing the shoes through a “GOAT Clean Process.” They assess the condition of the item inside and out, scoring each part and ultimately assigning a grade that communicates the overall condition of such item.

The problem?

Their process isn’t detailed enough.

For example, this is their current grading scale:

(Image / GOAT)

If GOAT wants to legitimize sneakers as an alternative asset, they need to develop a more detailed and unique grading system. It shouldn’t be that hard - they already have experts reviewing every shoe, they just need to create a uniform process that’s more similar to what PSA, Beckett, and SGC have established for the trading card market.

Sure, there are other dynamics to be considered - like increased data analytics around supply and demand, valuation metrics, and more. But those are secondary in nature to a universal grading scale, and most likely would be shaken out by competing secondary exchanges like Rally Rd, Otis, and the recently launched ALT.

Maybe GOAT wants to be in the business of grading shoes, or maybe they don’t, but the point is that they have a significant opportunity to make themselves the gold standard - which ultimately drives more consumers to the overall secondary shoe market, and more specifically, their platform.

Only time will tell if they make the jump or not, but don’t be surprised if they do.

Have a great weekend everyone, we’ll talk Monday.

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Extra Credit

If you’re interested in learning more about the founders of GOAT, Eddy Lu and Daishin Sugano, check out my thread below. It’s only a 2-3 minute read and details their story of multiple startup failures, which eventually leads to a massive success.

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