| Jumping into thePit | |
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Finding out what thePit.com is and how it works was easy, but it was obvious from both my email and our forum that we needed more information. As with any exciting new development in our hobby there are always questions so the best idea is to get all the answers before we develop any opinions. I read through all of your emails and a couple good forum posts and then I went right to the source, thePit.com CEO Marc Lore.
About: Your site has been one of the most popular discussions on our site for the past month so I appreciate you taking the time to talk to me. Could you start off by giving a little introduction to how thePit.com works?
Marc Lore: I think of thePit as a kind of cross between E*Trade and Ebay, a brokerage and an online auction. It's easy to use as you sign up for an account, check out our quote board and decide if there is a player you would like to buy or sell. We are the only ones who can list players on out exchange so you choose just from our board. Hit sell (or buy) and enter in the quantity you want to trade. This creates a pending order. Our market makers then execute that order and send you the settlement instructions so you can send in your cards (or receive them if it was a buy).
About: The initial quote board has a pretty limited number of players and is missing some hot players (Eddie George and Joe Thornton come to mind), while including some questionable ones (Kris Benson and Eric Chavez for example). Why is this?
Lore: There is really no rationale for why that was done. We are still in the process of acquiring the cards to make a market. We will be adding some names in the next week including Ricky Williams and Tim Couch. As we are able to acquire enough cards of a player we will add them to the board.
About: I noticed that all of the cards on the board are graded by PSA. Why no Beckett or SGC?
Lore: We explored
those options, but we felt the most important factors were depth and
liquidity. By looking at the population reports for each grading service
we saw that PSA was grading many more cards
then the others and this would be
important in maintaining a market. This could change in the future.
[Editor's Note: thePit.com announced an 18 month exclusive deal with
PSA/Collector's Universe later in the day so any changes won't be for at least a
year and a half.]
About: I started looking at the prices on thePit last week and they seem to be way off from recent ending auction prices on Ebay. How would you explain that?
Lore: So you see some opportunities for arbitrage? We hope that people do buy on Ebay and sell on thePit. If that happens then the prices on thePit will start to drop as our market makers analyze the activity and adjust the prices appropriately. We feel our issues are more efficiently priced at current levels and eventually the gap will close between thePit and the auction sites.
About: One difference with Ebay is that I was able to see exactly how many of a certain card had sold, will we be seeing trade volumes on the cards at thePit?
Lore: Definitely. We just need to reach a critical mass before we start giving out those numbers. As with any new market it will take time for the volumes to go up and giving out the numbers too soon won't help trading.
About: I can understand that, but I read a quote that said trading was brisk. Can you give us any numbers?
Lore: I can tell you that yesterday (10/16/00) about 525 cards changed hands.
About: Wow. That was more then I expected. Does that mean that if I had the money I could put in an order for 50 Vince Carters (trading currently for $1055) or 200 Pat Burrells (at $46)?
Lore: You could, but you might not get them all. We have two types of trades, all or none orders and not all or none orders. If you were to put in a buy for 50 Carters as all or none you would likely not get any, but if it was not all or none you might get 10 at which time the market maker would log your transaction and increase the price. You could then try to get all or a portion of your remaining 40 cards at the new price.
About: How many people have been trading on thePit for its first week?
Lore: I can tell you that we've had over 1000 people sign up for accounts to date. I don't have exact numbers in front of me, but something like 40% of those have actually completed at least one trade.
About: That sounds good, but will that be enough volume to dictate a market that changes on a minute by minute basis?
Lore: Definitely. On NFL Sunday people were buying Kurt Warner and Marshall Faulk as the game was going on. The prices were moving up. We look forward to a day when we have 500,000 traders and 50,000 cards changing hands each day. By sticking with one card per player we've created liquidity in the athlete, not just the card. People are buying and selling that player. We hope to expand our trading days from 5 to 6 and eventually 7 to allow traders to be active at anytime a player is in action.
About: It certainly sounds like you have a good game plan. What else do you see for the future?
Lore: We want to move into other collectible commodities including coins and stamps, but our plan is to use 2001 to get the sportscard market going and make the business profitable. If all goes well we could be looking to go public in the next two years barring any mergers or buyouts from a bigger company.
About: The idea of a buyout wouldn't be with Collector's Universe in mind, would it?
Lore: No. We don't want to do anything that might look improper. It is very important that this business is conducted in a way that can't be questioned by the hobby. I look more toward a big site like Yahoo! as a potential buyer down the line.
About: Thank
you very much again for your time as well as your straight forward
answers. I wish you good luck with thePit.com.
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