The following is excerpted from “Big Little Breakthroughs: How Small, Everyday Innovations Drive Oversized Results” by Josh Linkner, courtesy of Post Hill Press.
When you think of the most influential leaders in the $366 billion global footwear industry, you probably imagine luxe designers such as Christian Louboutin, Jimmy Choo, or Louis Vuitton. Or maybe you conjure up images of athletes like Michael Jordan or celebrities like Kayne West. But I’m pretty sure that Greg Schwartz didn’t make your top 100 list.
Reminiscent of Baloo, the tall and lovable bear featured in Disney’s Jungle Book movie, you’re more likely to imagine Greg as a tax lawyer than a shoe icon. Greg doesn’t sport $2,500 Yeezy sneakers; he’s the guy wearing loose-fitting khakis and decade-old brown loafers. But just five years after cofounding StockX, he’s one of the most important leaders in the field.
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Just like Apeel Sciences, StockX has achieved “unicorn” status as a company valued at over $1 billion. With more than one thousand employees, StockX has over $1 billion in annual revenue and serves customers in two hundred countries around the world. This young Detroit-based tech company competes head-to-head with industry giants such as Foot Locker, eBay, and Amazon… and wins.
“StockX is an e-commerce platform, a global marketplace that connects buyers and sellers,” Greg explains as we sat down to catch up on his remarkable success. Greg and his wife, Nikki, are dear friends of ours, so I’ve had a front-row seat to his incredible ascent. Since I first invested in his prior company back in 2011, we’ve shared meals and wine, successes and frustrations. “At our core, we call ourselves a stock market of things. We launched with sneakers, which is still our largest category, but today we also offer apparel, collectables, watches, and handbags.”
Since he was a kid, Greg loved building things. He built an electric car in high school, which was far more appealing to him than his coursework. Back in the early days of the internet, he daydreamed about starting a tech company. He got his first taste when he designed a very early mobile app called Mobile Checkbook. Long before iPhones hit the scene, Greg built software that ended up on thousands of clunky Nextel flip phones around the world. This was a passion project on the side of his corporate gig, feeling more like play than work. It wasn’t a massive commercial success, but it gave him an early sense of what was possible.
After spending a few years in New York’s corporate scene, Greg couldn’t wait to get back to building things. He returned to his hometown of Detroit, eager to launch a tech company. I met Greg in the spring of 2011 when he approached me to invest in his new idea. For context, I had just founded Detroit Venture Partners a year earlier with the goal of helping passionate entrepreneurs launch and scale their businesses while making a positive impact on the city of Detroit. From the time I started the fund in 2010 until I left at the end of 2014, we evaluated more than three thousand entrepreneurial pitches. While many presentations piqued my interest, Greg’s was one of the most memorable.
Greg’s initial idea at the time wasn’t all that great, but Greg himself was as impressive as they come. Articulate, bright, and humble, he had a drive to win that transcended his calm demeanor. Captivated with him but not his idea, I shared honest feedback and invited him to join me for an extended whiteboard session where we could explore ways to improve his proposal. After graciously accepting the offer, we spent several hours together reworking the idea, and I could tell that Greg was special. He was open-minded, coachable, smart, and driven, making him an ideal entrepreneur to back. Once his idea was refined and improved, my partners and I made the investment, and his company, UpTo, was off to the races.
UpTo sought to become the social network that looks forward in time. If Facebook was memorializing what you’ve already done and Twitter was centered on what you were currently doing, UpTo would allow you to interact with friends about what you were going to do in the future. Wouldn’t it be cool to know what your friends are “up to” next weekend? And for companies, how incredible would it be to target ads to people based on their intent? If a person shared their plans to go house hunting next weekend, what a perfect time to deliver ads for mortgages, furniture, and moving services.
UpTo launched with great fanfare, quickly becoming a centerpiece of the Detroit tech scene. Unfortunately, user growth was slow and the business ended up as a highly publicized fizzle. “It was really hard,” Greg shares. “It was hard because there were employees at this company, there were investors that bet on us. There was a lot of pressure to deliver and we missed the mark. At the same time, you can’t feel bad about that forever. I had to learn from the experience and move on. I said to myself that the one thing that I could do for family, for colleagues, for the people that bet on me, and frankly for the city of Detroit, was to get back after it and deliver a huge outcome. I just wanted one more crack at it.”
One Friday evening as UpTo was winding down and Greg was contemplating his uncertain future, my former partner at Detroit Venture Partners pulled Greg aside. Dan Gilbert, the billionaire owner of the NBA’s Cleveland Cavaliers and founder of Rocket Mortgage (previously Quicken Loans), shared a rough idea for a new company and asked Greg to run it. Before either man made it home for dinner that night, StockX was born.
Saying that the idea for a shoe-trading e-commerce site was half-baked would be an insult to things that are actually half-baked. A better analogy would be that the oven wasn’t turned on, the ingredients hadn’t yet been purchased, and an inexperienced baker had a craving for a molasses cookie. It was up to Greg to figure it all out. He had to start before he was ready.
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Over the years, Greg and I have often discussed how initial ideas are often overrated. We both agreed that while initial ideas can be directionally important, they are not the panacea that most people think. The majority of value, in fact, is created as the idea evolves. One idea leads to another idea that morphs into something altogether different. Conceptual ideas only come to life through hundreds of Big Little Breakthroughs, which can only be discovered once you’re in hot pursuit.
“You have to go through that process, iterate, and bring it to market even if it’s half broken,” Greg explains. “The only way an idea becomes valuable is by tweaking it, putting it in front of people, and getting critical feedback. You take one step and then figure out the next. Unfortunately, too many people have great ideas but then just sit on them instead of getting started.”
As Greg got started on StockX, he had far more questions than answers. Key to their ability to win against eBay was the concept of authenticating each pair of sneakers. Since you’re buying shoes directly from an individual instead of a company, how do you know if that $1,900 pair of Jordan 10 Retro SoleFly is legit or a fake? As a direct buyer-seller marketplace, StockX had to eliminate the risk of fraud in order to keep the transactions flowing.
“We had to figure out how we’d sit in the middle of each transaction, which was going to double our shipping costs for every sale. Unlike eBay, we also incur warehousing and inspection costs. Most people we talked to early on told us we were crazy. That it would be nuts to touch every product. That we were doomed out of the gate.”
Greg continues, “So, we started with a lot of critics, and yet we had this belief that we could fight through it. And if we could scale the model, costs would come down. But it started with a lot of unanswered questions and unsolved problems. Instead of trying to tackle them all at once, we just kept putting one foot in front of the other.” Each small win built on the next, as StockX’s compounding innovation interest continued to fortify their foundation.
Once Greg got the website launched, he had the classic chicken-and-egg problem of any marketplace: delighting “customer zero.” Buyers only show up when there’s a wide selection of stuff to buy, but sellers only come when there are plenty of buyers. Greg had to figure out how to make a market, ensuring that no one felt like they were visiting an empty store. To bust the deadlock, Greg would manually place bids on any shoe that was offered for sale by a user on the platform. Even if he had to buy the shoes himself and resell them later, he did what was needed to create a fluid marketplace. These days with thousands of transactions a day, the marketplace is alive with activity. But to reach that point, Greg had to get it started before things were fully ready.
The seemingly glamorous joyride of building a startup is far messier than most people think. “Early on, we didn’t have any sense of the challenges around running a supply chain,” Greg reminisces. “I remember how we botched Black Friday back in 2017. We had tens of thousands of items coming through in a short period of time, but we only had a handful of authenticators. Boxes were just piling up, and we simply didn’t have the capacity to deliver on our customer promise. We came out of it realizing that it was a step backwards, but it created an opportunity for us to learn and fix it going forward.”
Recently the company expanded to support customers preferring Chinese over English. Due to the complex nature of the language and its specialized characters, the task seemed daunting. Naturally, Greg and his team started before they were ready. “We could have waited two years to have every bell and whistle, but we decided it was more important to launch quickly and delight our customers in China,” Greg explains. The team got started fast and figured it out along the way, launching a simplified Chinese language version while meeting their intimidating deadline.
If you could put StockX under a microscope, you’d see that the company is a compilation of setbacks and solutions, pivots and adjustments. A thousand interconnected Big Little Breakthroughs. From day one, Greg and his team started before they were ready, preferring to iterate in the real world instead of waiting until everything was perfect on the drawing board. As they continue to expand into new product categories and geographies, the StockX crew will chase down each opportunity with the speed of the athletes they equip with the latest sneakers. You don’t create a billion-dollar company in less than five years, while battling the biggest competitors in the world, by taking your time.
Whether you’re growing a global tech company in Detroit, fighting for women’s empowerment in Sudan, reinventing the baby bottle in Israel, or sending your son’s Buzz Lightyear into outer space, starting before you’re ready is an obsession that leads to mouthwatering outcomes. And once we get started, it is a series of Big Little Breakthroughs that will guide us through the uncharted waters of opportunity.
“Big Little Breakthroughs: How Small, Everyday Innovations Drive Oversized Results” is available now and can be purchased via StartupNation.com.