A simple question----Could it work??

keets

Could it work, could a small group of say, four or five persons, start a grading service by focusing on a very small segment of the hobby?? Perhaps one series?? Start out on a small scale and do it right and tight to ANA standards of grading in a timely fashion for a reasonable price?? Not some fly-by-night outfit that tries to flood the market, but a small group that approaches the project with the cynical mindset of this forum?? Start small and humble, then grow??

Well, could it work................

Al H.

PTVETTER

I see not reason why it can't work.

tsacch

I agree it could work, but the investment would be big $$$ to do it first class. You could do it right, but wont put a dent on the market for several years. With no worries about profit it could be done easier....if trying to stay in the profitable ranges....i think more difficult.

Start with Susan B Anthonies...tons of em and maybe it will spur interest in that series.

hoardmonster

Yes, but I think they would need a decent amount of money behind them. Because the first thing that pops into my mind is name recognition, which doesn't come cheap.

hoardmonster

tsacch beat me to the punch.

Steve27

I doubt it, right now there is a market for NGC, PCGS, and ANACS coins with all others considered to be sub-par. It seems every time there is a new start-up coin grading service, they loosen grading standards in order to get business. Tough standards and no name recognition don't appear to sell. So unless you would be willing to take losses for several years, just to build a reputation, it won't work.

keets

a simple strategy-----let the major services determine the market entry point. the spring of 2003 would have been a good point to enter with the FB designation on Roosevelts and currently there seems to be building anticipation with the change in nickel design. the advent of the State Quarter program would have been another good point of entry.

the objective would be to be ready for a well considered entry, advertise heavily in CW according to show schedules and offer a strictly graded product with no hype at selected dealer tables, dealers who sell what your slabbing. if knowledgeable collectors see the coins that they collect in properly "inserted" holders, don't you think they'd pay a fair price or at least be curious?? after a few purchases and successful crosses, it would be a simple matter of maintaining course with regard to strict ANA standards in a narrow field. then build..........slowly.

al h.

291fifth

It wouldn't work because what dealers (and collectors) want is "their" grade, not the correct grade. This is why so many well intentioned start-ups have failed. When the sleazy on-line auction seller approaches the struggling grading service with an offer to submit hundreds or thousands of coins if the service can "work with them" and the service does so the game is over.

hoardmonster

I feel dirty just from reading 291fifth's post. That really is sleazy. I didn't know that's how it worked, but what I've seen go on, makes more sense now.

MrEureka

The beautiful thing about PCGS is that all coins in all series from all countries are (theoretically) graded to the same standard. If there were dozens of services specializing in various series, you would need to learn how each grades its own series. I don't find that an attractive proposition.

BTW, the Original Hobo Nickel Society has their own grading and authentication service. They concept of grading is very different from PCGS's, but they can get away with it because PCGS bodybags all Hobo nickels for "altered surfaces".

Shamika

Keets,

I think it would work if the graders involved were numismatist of note. On the other hand if they were just a couple of schmoes, it would fail regardless of how well the coins were graded.

I also think 291fifth's post has a ring of truth regarding a coin getting the "dealers" grade as opposed to the correct grade.

LovethoseIndians

Like any other business, marketing of the product and quality would be deciding factors...as well as price per slab.

mrearlygold

Didn't Bill Fivaz do something like this geared to Hobo Nickels? What happend with those? Anybody here involved in them?

Rgrds
TP

CaptainRon

Doesn't Mr. Snow do this with flyinging eagles and IHC's allready

JohnZ

I was just about to say, that the graders would have to be noted authorities in their specialities, like Rick Snow and IHC's.

mgoodm3

You could probably do something like Rick Snow and his "photoseal" system. Authenticate and confirm the grade and maybe add die varieties and attributions that PCGS doesn't.

RR

Hi Keets:

Yes, I think it could work, especially considering the backlog of the main three now.
A key question is how to penetrate the market to capture some market share.
You mentioned starting with a specific segment. Many businesses start that way initially.
For example, going after "moderns" at a discounted rate, like $5.00 per coin.

RR

mrearlygold

BTW, the Original Hobo Nickel Society has their own grading and authentication service. They concept of grading is very different from PCGS's, but they can get away with it because PCGS bodybags all Hobo nickels for "altered surfaces". >>




Oops I missed your post Andy.

Rgrds
TP

keets

interesting responses, but keep in mind that my suggestion would naturally incorporate individuals who know their particular "entry segment" and have a smattering of ethics and no illusions about challenging the current major services. i'm puzzled by why it seems to be the mindset of so many that it's necessary to grade the entire realm of coinage and have lofty profit goals in mind. we certainly have business men/women amongst the forum populace, isn't it more sound to start small with some type of growth plan than to run things trying to get as big as possible as quick as possible?? those mistakes would seem to have been made already, including 291's scenario of selling out. also, i think what the average collector wants is fairness above all else.

so, re-reading my original post, do you think a business plan could be set forth in this area and be successful??

al h.

Bikingnut

I think it could work, but it would take a while to overcome the big grading services like PCGS and NGC. I think it would also take a while to gain a good reputation as well. The first thing people will think of when they see a new service is that it's going to be no different than NTC or ACG.

LanLord

Okay, instead of looking at it and wondering "if"

Let's move past that and say, "we're going to do it".

Do you have your segment of the industry staked out?

Do you know who would be on your short list of potential graders?

How much money are you willing to put into this to get it over the initial hump.

What are the issues you need to overcome as a new grading service and what are your solutions to those issues?

Perhaps if you look at it in a real life business situation it will answer your questions about if, and maybe make

you consider how. And who knows, maybe there is a budding business here.

kranky

A system that piggybacks on existing slabs is what I think would work - like Rick Snow does with the "Eagle Eye" seal.

In that sense, I agree with your comment "focusing on a very small segment of the hobby" but disagree that it needs to be another grading service. Clearly, many collectors like having an expert third-party opinion attached to their coins. For grading, I think there are enough players. But on the fringes, there may be opportunity.

FSB, FH, FB, etc. do not mean full strike; it only means fully struck in the one specific area. An overall "Full Strike" designation would probably be attractive. That's something that can be added to an existing slab. A similar thing could be done for varieties.

BillJones

Given the experiences of several other companies, which tried to break into the top tier of the coin grading market, I’d say you are facing long odds. ICG made the best attempt to horn in on the PCGS – NGC hegemony and date has pretty much failed. They had considerable resources, a couple of well-known names in the business and an idea and procedure for avoiding conflict of interest. And yet they have not succeeded. Why?

For a number of reasons.

First, a couple of major dealers, who had a financial interest in keeping the grading market just as it is, planted seeds though a whispering campaign that ICG coins were almost uniformly overgraded. Several medium sized dealers that to defend the company, but they did not have the clout and eventually knuckled under to the pressure. As a result ICG coins never got the market share that they are hoped. This was despite the fact that they issued some very well graded coins at the very beginning.

Second, after ICG failed to crack the top 2 or 3, they let their grading standards slip, which cost them dearly. Of late I have seen an improvement in their work on “classic coins,” but a long dark period preceded that.

Third it took ICG a long time to get on the Blue Sheet. As it is today they are getting second rate recognition because prices for their products are updated only once a month under the “Independent Grading Service” newsletter insertion.

Fourth, a grading service has to give its customers a reason to submit coins to it. PCGS and NGC offer market leadership. ANACS is willing to grade any coin that is genuine and not body bag damaged pieces. ANACS has also gained a positive image in the eyes of some collectors for their expertise and accuracy for grading and attributing classic coins.

Many of the other grading services have nothing to add but a limited amount of credibility with the less experienced, less discriminating elements of the market. Some companies specialize in marketing the illusion of turning sow’s ears in silk purses despite the fact that they are still sow’s ears. They supply coins for some Ebay transactions and provide “slippery dealers” with inventory to sell.

For these reasons breaking into the market shared by PCGS and NGC has proven to be difficult.

RR

I would define the segment differently than a few of the other suggestions.
Looking at grading in terms of production, for that's what it is, units of productions, the main three are backlogged three months each. That's 9 months of widgets. Pure production backlog.
That's one reason I initially said that going after a segment like "moderns," as a nitch example, may be a reasonable alternative.
Frankly, I think moderns would be a good start. Charge a low price, high volume... think of all those state quarters. (g)
I would suspect there's a lot of folks that might send in state quarters and those Kennedys handed down in the family if they didn't have to pay $12-15.
I think the cheapest is ANACS's current special at $7.00 for moderns, which is not that bad compared to other regular rates.
But again, I'm thinking market penetration, taking a piece of market share, and finding that nitch.
Sales pitch? You don't have to wait 90 days, which is absurd.

RR

keets

hey Jim

it seems like the "snow seal" is more of a dealer tool than anything else and that's why that model doesn't fit with the type of thing on my mind. and please, don't consider that i have any allusions of doing this!!! the primary impediment that i see is joining the needed 4-5 persons in a close geographic area, the same city or town. all that aside it would seem a sound proposition that could be accomplished in the same way as many other small businesses are started-----a group working their current jobs and starting the "side business" with everyone pooling resources and time.

i don't tend to view it in the negative fashion that many apparently do with thoughts that it can't work and the money needed would be huge. why?? and why thought's of catching the other services?? getting back to the "snow seal" and his approach, he could probably care less what other services do and could probably launch himself independently and hold his own in that narrow segment regardless of what PCGS et. al. do and what their volume is.

if i consider a series i know well, Jefferson Nickels, it would be easy enough to start there. i figure the biggest initial cost, getting started with would be inventory to holder for the initial start-up slabs to get out into the market. next in cost would be advertising. what else is really needed that would cost money and be prohibitive. the shells themselves would be relatively cheap and sealing equipment can't cost that much. after that it's the workspace and a lot of "sweat equity" to get things going.

am i that far off the mark?? play devils advocate with me!!

al h.

keets

Given the experiences of several other companies, which tried to break into the top tier of the coin grading market

hey Bill

not to single you out, you just phrased it better than the others, but..........................this isn't even remotely close to what i've suggested. i've repeated several times about a well thought out plan to start slow and have no quick plans of overtaking anyone. how can my refernce to singling out a specific area to focus on cause a response to suggest my idea is to compete with the major services??

IMHO that is exactly the reason why they have generally failed, trying to step in and compete realistically with an established company right out of the gate in any area of business is only asking to fail. shouldn't that serve the next newcomer with a model of what not to do??

al h.

BillJones

<< <i>Frankly, I think moderns would be a good start. >>



I think that moderns would be an awful place to start.

Currently PCGS pretty well has the modern market locked up. Cracking that would be next to impossible because a lot of modern collectors want to be on the Registry. Since only PCGS products are allowed, their MS-70 “new kid on the block” slabs would have no place to go.

Second, beyond the few pieces in the top grades, most moderns are low priced items that usually not worth slabbing. Basically it’s a no win situation. If there are lots of high grade coins the prices come down and they are not worth slabbing. If there are few high grade coins, those elite pieces are worth slabbing, but the rest is marginal or not worth the effort.

No if you are going to segment a part of market, you have to do it in a classic series with lots of die varieties. The big boys don’t have a big foothold in markets like early copper and early silver. If you could penetrate that market you might have a viable business. Your POP report could amount to something if you REALLY got a big market share, and you would have a well-healed pool of advanced collectors who could make your business if they came to know and trust you.

But here’s the rub. A lot of those guys are very knowledgeable and fiercely independent. Getting some of them to follow you would be like herding cats.

keets

hey Bill

good point about the early attribution segment. assuming something like that could be done, i wonder if the coins would stay in the upstart's holders or be cracked and sent somewhere else??

having two cats myself, i find they don't at all appreciate my herding efforts!!

al h.

longtimecollector

Seems to me that if a profitable business along these lines could be done, it would need to start with an established organization whose members control substantial market share....... EAC comes to mind along with the LSCC and the John Reich boys...........

Edited to add......... Variety attribution is a big plus, especially amongst collectors who couldnt give a rats patoot about a registry !

keets

who would they market to, themselves??

al h.

NoGvmnt

Hmmmmm, maybe if you had a schtick. Say, along the lines of an unusually pleasing to the eye slab. Like maybe a rainbow colored slab for rainbow colored coins (or would that just be considered a little gay?)(not that there's anything wrong with that).

But seriously, I think all standards being equal to the major three, an attractive slab (plastic) would be an interesting "must have" for most if not all collectors to have at least one.

Jim

Conder101

<< <i>BTW, the Original Hobo Nickel Society has their own grading and authentication service. >>


I believe the OHNS has discontinued their service.

WaterSport

I hate to burst all these ego bubbles out there about grading services but.....

While at the FUN show I sat in on Bob Campbells talk about grading. I walked away with ONE piece of electrifying information. Now for those who do not who Bob Campbell is, or should I say was, he was the former ANA president. He has worked for a few grading companies. And you know what he said...NONE OF THE SERVICES USE ANY LOOP WHILE GRADING EXCEPT FOR MAYBE ONE DOALLR GOLD!!!!!

So, I would suggest you start a company with standards and one that GAURENTEES a loop to grade and you might be on to something more consistent that the poor state of affairs we have now.

WS

Russ

<< <i>NONE OF THE SERVICES USE ANY LOOP WHILE GRADING EXCEPT FOR MAYBE ONE DOALLR GOLD!!!! >>



OH NO! REALLY? ARE YOU SURE THAT'S EXACTLY WHAT HE SAID? MY GOD! THAT'S TERRIBLE! NONE OF US HERE HAD ANY IDEA THAT MOST GRADING IS DONE WITHOUT A LOOP! THANK YOU SO MUCH FOR BLESSING US WITH THAT INSIDE INFO!

Russ, NCNE

DHeath

Doesn't ANACS use a stereoscope? They do at all the shows.


BTW - Al, Perhaps there are several ways to do just as you suggest. Maybe the service doesn't have to be cheaper. Just quicker, smaller, and more consistent, within a very narrow segment, with an attractive slab. If the coins are 100% OK for the grade, it wouldn't take but a few shows to attract some attention.

adamgold

Keets-
Instead of trying to compete with the big graders, I would like my collection of graded coins to be looked at for a fee to determine if they could upgrade.

keets

hey you guys, stop trying to start another loop thread!!!

al h.

Coinosaurus

I think this could work in a niche market. For example, if the EAC put their imprimatur on an early copper grading service, AND the people running it were well regarded as early copper experts, I think the market would jump all over it.

I have to admit, when SEGS came out a long time ago, I thought this might happen in seated coinage. I was dead wrong, but I still think it could work with the right people in the right niche area.

Conder101

EAC had a grading service for early copper briefly. It lasted about six months. One of their photocertificates is pictured in my book. A couple of the top copper people are used as consultants by a couple of the existing services.

I think your best niche market would be the attribution idea. Currently only ANACS and SEGS really do anything in this area, and they are underused. PCGS & NGC do a little but I have seen so many mis-attributions, even of head types, in their slabs that I will not trust attributions in their slabs without personal confirmation.

One thing you might want to consider for an attribution service though would be the use of quality photocertificates rather than slabs. Most variety people aren't that interested in slabs and prefer to keep their collections in albums or envelopes. A photocertificate that will allow definite identification would possible be more acceptable to these people. Of course if they can actually trust the attributions they may be willing to switch to slab storage. It's hard to say, we tend to be old fashioned traditionalists who like to keep the old envelopes of previous owners with their handwritten notes with the coin.

pmh1nic

I think the start up cost, a major portion being the advertising to make a dent in getting the name recognition to attract business away from the majors, and the time it would take to get enough submissions to recoup that money and begin to realize a profit require that this venture not be seen as a income producing for a number of years. Those highly recognized experts on the serious are also not going to come cheap. If you're going to use their names in promoting this venture they are probably going to want to be compensate for that before coin #1 is graded.

This is a tough one Keets .

bushmaster8

MMGS....Mad Marty's Grading Service...all coins are graded not only to the same standard, but all receive the same grade: AU58!

BTW- Keets, is that Two Mules for Sister Sara?