How would one start a grading company?
EagleEyeKid
Posts: 4,496 ✭✭
Okay guys. Please be kind and don't bash me too hard.
This not a thread like the last guy who tried to pimp off his product from his college dorm with his 1 - 4 grading scale.
In my drunken state yesterday (got drunk with my dept. since it was our last day at work); I was daydreaming and the discussion of 3rd party grading came up in our discussion. Here we are....5 guys who look under a microscope; stare at blood samples, dust, gun powder residue, fibers, and things that can't be seen with the naked eye. 2 of us collect sportscards. 1 deals with modern, and the other collects vintage. What would it take ($ wise) and how could we get our foot in the door? I'm still hung over this afternoon, but I can dream right? Any thoughts?
This not a thread like the last guy who tried to pimp off his product from his college dorm with his 1 - 4 grading scale.
In my drunken state yesterday (got drunk with my dept. since it was our last day at work); I was daydreaming and the discussion of 3rd party grading came up in our discussion. Here we are....5 guys who look under a microscope; stare at blood samples, dust, gun powder residue, fibers, and things that can't be seen with the naked eye. 2 of us collect sportscards. 1 deals with modern, and the other collects vintage. What would it take ($ wise) and how could we get our foot in the door? I'm still hung over this afternoon, but I can dream right? Any thoughts?
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Comments
I think you can find the ad at beckett.com, I'm not sure if we're supposed to link there from here.
I agree with Jim - if this is even a mildly serious debate.
I mean that's how Mike Baker did it - he worked for PSA for years and then went into a "deal" that created GAI - oversimplied summary.
The problem would be that you would be trying to be a "niche" operation similar to a micro-brewery.
With a big difference - a guy may like the microbrew over Bud - and that's OK. It's a consumable e.g.
But, grading is a service where the end result is viewed as an asset and potentially will be used for sale.
And everyone knows that PSA, Beckett, GAI and SCG cards sell best/well on ebay.
That leaves you with a "niche" identity?
So we have Gem, Pro, Grademycards, Capitol, Bear'snuts etc. And we know where the "niche" is going here?
Plus, you're asking people to send you their valuables and be responsible for them? If not trimmed or recolored - why send it to you?
Wow - I'm thinking tough road to hoe?
mike
<< <i>I agree Mike. See what alcohol does to you? >>
<< <i>Okay guys. Please be kind and don't bash me too hard.
This not a thread like the last guy who tried to pimp off his product from his college dorm with his 1 - 4 grading scale.
In my drunken state yesterday (got drunk with my dept. since it was our last day at work); I was daydreaming and the discussion of 3rd party grading came up in our discussion. Here we are....5 guys who look under a microscope; stare at blood samples, dust, gun powder residue, fibers, and things that can't be seen with the naked eye. 2 of us collect sportscards. 1 deals with modern, and the other collects vintage. What would it take ($ wise) and how could we get our foot in the door? I'm still hung over this afternoon, but I can dream right? Any thoughts? >>
Forget about it ..... chaz
<< <i>I'm still hung over this afternoon, but I can dream right? Any thoughts? >>
Never stop dreaming Bryan.
For if you do? You die.
mike
You can do like CSA did and buy a bunch of PSA 6's ( high end of course) and make them 7's and 8's in your holders to get that cash flow started.
Cataloging all those pesky, unlisted 1963 Topps football color variations Updated 2/13/05
<< <i>I agree Mike. See what alcohol does to you? >>
Good thing you weren't doing crack.
You might have woke up this morning and discovered that you mortgaged your house.
I agree with the dream stuff. You have to keep exploring your interests and options.
I tried the modern flip bit for a while, but didn't have the time to devote to sorting cases and cases of cards. The return was not what I wanted either. It did though increase my card inventory by 10s of thousands (hah!).
Found my niche in buying negatives and slides of sports figures. Have about 400 now and will get back to selling prints soon. Some are worth a pretty penny, others not but some real fans don't mind paying $5-10 for an 8 x 10 of their favorite player.
If it doesn't pan out I have several thousand invested in some very good shots of great baseball and football players. As the owner of the image this fits right in with my collecting desires. Although my real intention is to make a little dough to finance a Registry set or two...or three, etc.
FYI - I fell into this when I was unemployed also. Keep dreaming.
Keith
<< <i>many have tried.. the odds are against you to say the least. I'd think of something else, frankly... that's my opinion.. the leaders are too well established, failure would be imminent. >>
I agree completely for card grading. Unless you have some great idea for other products, then the card grading game is pretty well covered e.g. GAI, SGC, BGS/BVG/BCCG and PSA. I actually do not see GAI making it in the long run despite some of the biggest names and innovators in the hobby running their company.
For a pure theroretical approach - You would have to provide service above and beyond PSA at a competitive price.
PSA's biggest flaw is inconsistency and playing favorites. Some things can't be lied about. They are objective. Thus, if you provided guidelines that meant something, you'd be on the right track. If each card came with a precise centering measurement from top to bottom and side to side, you'd be giving an additional service. This would take about thirty seconds more per card or less. If you provided a computer print out of flaws by zone, you would eliminate all these "Huh" grades when a perfectly strong card gets the obligatory PSA 6. Since each set is different, establishing appropriate guidelines for specific sets would also separate your company.
Much like any start-up, you'd need deep pockets and the willingness to steal a top grader at one of the existing companies and pay him handsomely. You are going to lose money for the first few years so you have to be prepared for the long road ahead.
However, if you consistently provide consistent grading, better customer service and a willingness to treat the five card submitter like a five thousand card submitter, you can grow the company. PSA is the lesser of all evils. Currently, they are miles ahead of any competition. GAI and SGC didn't stay true to their business plans. Mike Baker is a nice guy, but he's pretty much a "tell you what you want to hear guy without delivering". Rochi has no interpersonal skills. There business practices are unscrupulous. They track down PSA major clients and woo them with higher grades. SGC is all over the place. They don't do qualifiers so you don't know what you're getting. Plus, their basic grading is a mystery. Sometimes they are dead on, while other times you have no idea what they're thinking.
The toughest obstacle is the PSA Registry. I don't have any idea how to combat that feature. It basically guaranteed PSA's place at the top for years. Card collectors are competitive and small grade average gains can mean a lot of money. PSA cards sell for a huge premium at auction and on ebay. They are careful with authentification which is a very important aspect of this whole picture. Nobody wants to buy a trimmed card or a retouched card. PSA doesn't fudge around in this area. They've made buying raw a scary proposition. If cards go for bigger dollars in PSA holders, why would someone with raw cards not spring for 15 bucks to quintuple their selling price. Anyone with raw cards is automatically suspicious.
Other areas where improvement might do some good is with a better designed slab. A more intricate grading system using 1/100s of a point (A card could get a 6.89 which means a lot because a PSA 5.9 sits in the same holder as the theoretical company's 6.89 holder).
You might want to offer free grading on registry sets denoted with a secondary sticker so people can choose to go with your grades, card evaluation and objective numbers.
The bottom line is hardwork. Are you willing to spend money and work twice as hard as PSA. I might sound like a Pollyanna, but PSA is not invincible and the grading business is still in its infancy. Things can change. It's just a mammoth undertaking.
Good luck,
JLC
"I have one word for you, Ben... Spastics. Got it? Good. Enough said."
You are going to lose money for the first few years so you have to be prepared for the long road ahead.
i agree with most of what you said and those are some truly excellent ideas in card grading.. however these are people that just lost their jobs and are not in a strong financial position (i assume) and don't have the deep pockets needed to do it "right"... that is why i advised against it. I am definitely not a naysayer and if i sounded like such, i apologize. If you do it, i wish you all the success in the world..
I was only trying to be realistic in regards to their particular circumstances.
Re: start up costs. I don't know what the sealer sells for, but I imagine you're looking at 25K or so for the mold, and then extra on top of that to have the halves of the slabs actually produced. Someone said 100K would be a good start price, and that 'feels' right although I have no idea if it really is. But a huge cost that could be overlooked would the rather unorthodox marketing costs that I think you'd have to be prepared to pay. For instance, if you wanted to break into the vintage market I think you'd almost have to buy some higher end PSA cards, crack 'em, and put 'em in your holders and sell them (without the shilling). You'd really take it in the shorts doing this for a while, but once a few guys realized that your slabs do, in fact, 'cross over'-- and it would only take a few guys to catch on to this-- then you'd see a big increase in the prices for your vintage slabs. I know that if I happened to discover that an off-brand grading company actually did a good job of grading I'd be ALL OVER their slabs on Ebay, up to the point where there's no profit in buying them, cracking them and sending the cards to PSA. If TWO guys figured this out then suddenly your slabs will start looking very attractive.
But I think it could be done. I really do. You'd have to pour a ton of effort into it, but in the end I think you could make it happen. Like another poster said, consistency would be huge part of the equation. I keep hearing premature reports of GAI"s demise, but they've hung on this long, and a big part of that IMO is that they're definitely one of the more consistent graders out there.
Is the first step in looking at a business venture - to "define the business" with respect to a mission statement and then - to draw up a "business plan?"
mike
You can always buy PSA from CU...then move the office from expensive Orange County to somewhere in the midwest, make a couple of marketing tricks..and bam ...you got yourself a grading CO.
Groucho Marx
1) What type of sealer and cost is involved? Any company names?
2) Is there a known source for slabs or are we talking start from scratch with a plastics company?
You would need to go to an injection molder for your plastics. This can be very expensive. The design by the engineer will cost you 2-3K alone. Then they will need to build two molds...each costing upwards to around 2500-4000 each. After that, the plastics are cheap if you are buying large amounts at a time.
Not at all a cheap proposition.