In Silicon Valley parlance, a “unicorn” is defined as a company with a valuation of $1 billion or more. Think Uber, Tinder, Eventbrite. But there is another industry that has been estimated to be a billion-dollar business that you don’t read about much in the tech press: sneaker reselling.

Buying limited edition sneakers and then selling them again on the secondary market has grown exponentially in recent years. What first gained traction on eBay and has now expanded into more specialized and sophisticated outlets, including sneaker conventions, online retailers, and brick-and-mortar stores.

For many sneakerheads, the reseller is the bane of their existence because they’re middlemen snatching up all the pairs as soon as they release and then flipping them almost instantly—at a significant markup—to another buyer, who lacked the wherewithal or commitment to buy a pair at retail. The fact that these resellers have no intention of actually putting the coveted shoes on their feet somehow makes them seems “less pure” in the minds of critics.

Resellers counter that they simply supply a demand, and use their ingenuity and dedication to obtain a rare commodity that they can then sell at whatever price the market will bear. You could go and pan for gold, but instead you go to a jewelry store and pay a premium for that convenience. What makes sneaker reselling any different?

The latest player in the sneaker reselling space is Stadium Goods, which launched its store in New York City’s trendy SoHo neighborhood and its e-commerce platform last month. Stadium Goods is a consignment store that caters to both buyers and sellers. Buyers are treated to two long walls stocked floor to ceiling with the most collectible kicks. And it isn’t just whatever new Air Jordan came out last Saturday. It’s the Air Force 1 that the graffiti artist Stash collaborated with Nike on in 2006. It’s the shelltoes that Adidas made to commemorate Run DMC DJ Jam Master Jay. The most expensive pair are Undefeated x Air Jordan IVs, which are housed in Stadium Goods’ Trophy Case and sell for $24,500.

Sellers are able to set up an appointment to drop off their kicks just like they would at an Apple Genius Bar. The staff at Stadium Goods authenticates all the merchandise to prevent counterfeit shoes and works with sellers to help them set a price based on market trends and a seller’s needs. Sellers are paid out within days of their shoes selling to a buyer and take home 80% of the price, with Stadium Goods keeping the remaining 20%.

From left: Founders Jed Stiller, Yu-Ming Wu, and John McPheters (via Stadium Goods)

From left: Founders Jed Stiller, Yu-Ming Wu, and John McPheters (via Stadium Goods)

Stadium Goods didn’t invent this concept. For years, Flight Club has dominated the sneaker consignment landscape. But the founders of Stadium Goods, Jed Stiller and John McPheters, think they can offer a superior level of customer service that will set them apart in the industry. Stiller’s background is in nightlife, having owned and operated clubs such as Greenhouse and CV Lounge. McPheters actually worked at Flight Club for 10 years, serving as vice president of business development, and brings that knowledge of sneakers and e-commerce to Stadium Goods. The team is rounded out by chief marketing officer Yu-Ming Wu, who created as well as Sneaker Con, which bills itself as “The greatest sneaker show on earth.”

I met up with McPheters, Stiller, and Wu one recent morning at Stadium Goods before the store opened for the day. During the course of the interview, a half dozen people knocked on the door to see if it was open, a good sign. We talked about the launch of the brand, the founders’ favorite sneakers, and the reason why resellers aren’t the devil.

What made you want to open Stadium Goods?
McPheters: We realized that there was a void in the marketplace. You had very premium retail that didn’t have the selection that customers were seeking. Then you had places that had that selection but didn’t have the premium consumer experience. Our goal was to create a marketplace that catered equally to buyers and sellers and make it convenient, happy, and welcoming.

What were you doing before this?
McPheters: Jed and I have been partners for a minute. We’ve done a couple things in the venture capital space. We were involved in a company [analytics company Swarm Mobile] that sold to Groupon at the end of last year.

Stiller: I owned and operated clubs for 10 years and got into a VC with John and transitioned into this [Stadium Goods] pretty quickly.

Wu: I was doing Sneaker News and Sneaker Con, which is more kids doing [reselling] on the low end scale. When these two came to me with the idea of doing something like this, I said I’ve thought about this but didn’t have the right partners to bring it to fruition. I told them I needed to be part of this.

Where does the name come from?
McPheters: We were looking for something that could capture the sports heritage that a lot of these athletic footwear brands call from. That’s where “Stadium” came from. And we wanted to create something that also had the connotations of a marketplace.

Wu: Also the size. A stadium holds a lot of people, and you can see these [sneakers] almost as people in the stands.

How many shoes do you guys have right now?
McPheters: 12,000, maybe a little more. We also sell apparel. We started out with Supreme because it’s the most sought after streetwear brand. It’s the first of many brands that we want to add.

via stadium goods

via stadium goods

Are most people who sell shoes with you small or large collectors?
McPheters: To launch a business like this you need those large enterprise guys that do huge volume just to fill the wall and make sure there’s enough styles. Then you’ve got the guys that have one pair for sale. That’s when you start getting a lot of really rare collectibles.

Stiller: The floodgates open. We have mothers and grandmothers coming in with products.

What do you see being the biggest difference between Stadium Goods and Flight Club?
McPheters: In my mind it’s the service level that we’re trying to provide and how we present the product. Sneakers are a mass thing now. For a long time, as people were getting into sneakers, it would feel very niche and not very welcoming. We’re trying to embrace everybody that’s looking for sneakers. There’s no “too cool for school” [attitude]. It’s all about customer service. Customers know exactly what they want, how they want to be treated, and what they don’t want.

How do you make sure you aren’t selling any fakes?
McPheters: Our guys go through the actual product and check all the in’s and out’s and details to make sure something is authentic.

Wu: We have insiders giving us little details on how to look out for things as well. One of the other things that we’re possibly going to do is, as we see some of these fakes, we’ll buy them to have reference points. At Sneaker Con we’ll put two shoes together and ask “Can you pick out which is the fake?” A lot of times, people can’t make it out. What’s helping us here is we relieve the stress of paying $600 for a pair of shoes because you know that someone has already made steps [to authenticate].

How big is the sneaker reselling market?
McPheters: People have quoted it as a billion dollar industry. I think it’s actually a lot bigger than that. I think that takes into account the majority of the domestic sales that happen in the U.S., but it hasn’t really covered a lot of that international resale flipping. Time will tell as we grow.

How do you see reselling changing in the future?
McPheters: International is huge. The borders are coming down and it’s getting a lot easier to transact in other countries. The other big thing that’s changing is the breadth of the brands and silhouettes that people are interested in, whether that’s a Yeezy that pops up or a Ronnie Fieg Asics that kids are clamoring for. For a long time it was centered around a specific handful of shoes that everyone wanted. Now it’s a lot broader.

Wu: I believe this is the golden era of sneaker collecting, not 2003 or the ‘90s. This is the greatest range of product that we are seeing and there’s so many people who are so into it. And so many people are having kids who are becoming sneakerheads at this level [points to racks of children’s sneakers] and will continue to become sneakerheads [as they grow up].

via stadium goods

via stadium goods

Are you concerned that this may be a bubble?
McPheters: Before we got into this business I sat down with my mom and was like I’m about to put a lot of eggs into this sneaker bucket. She said you’ve been into sneakers since you were 9 years old. I’m 36 now. That’s a long time. It’s not going anywhere. I don’t think it’s a bubble because it’s something people need. They need to wear sneakers.

How do you respond to people who criticize resellers?
McPheters: In my mind it exists because the consumer wants to see all this product in one place and they want to buy things that traditional retail doesn’t give them. If you pick a style of Jordan on the wall here, you can’t go in a [traditional] store and buy that. You can’t go online and buy that from traditional retail. What resale does is create a lot of that excitement around the product. It contextualizes the story of different pieces like seeing a Jordan I next to a Jordan II next to a Jordan III. Every now and then somebody will write something that blames the resale market for screwing everything up, and I just don’t see it the same way.

What is your favorite sneaker and how many pairs do you have total?
McPheters: Everyone asks that question and I always answer it differently. I don’t have a set favorite, but I’m obsessed with these classic Air Jordan IIIs I’m wearing now. Now that I have a newborn baby and a wife at home, [my collection] is a lot smaller than it used to be. For me to be able to put a new pair in, a pair has to come out. I would say I’ve probably got 20 pairs at home for personal use.

Stiller: I would say Nike Air Max 95 for me. I’ve got like 9 pairs. I’m a simple guy and ‘95 was a good year for me.

Wu: I’d probably say the Nike Air Max 1 Atmos Safari. The second one is the Kaws Air Max 90. My collection has gone up and down but I think it’s probably around 900 pairs. It was around 1,600. I just started buying again because I cleared out some stuff so I have some room.

Justin Tejada is a writer and editor based in New York City. Follow him on Twitter at @just_tejada.