Forget suits discussing stocks over steak at swanky spots on Wall Street. These days, enterprising young investors can be found sharing release-day tips, estimated resale values and screenshots of their successful flips in sneaker-focused forums on Discord.
Technically a type of alternative asset, sneakers are blowing up right now. A report from Cowen Equity Research estimates the $6 billion sneaker and streetwear reselling industry could potentially reach $30 billion by 2030. And while some resellers ship large quantities of shoes (and other collectibles), a notable portion of this growth comes from individual entrepreneurs swapping tricks and tools online in what they call “cook groups.”
Although these communities operate across multiple social media platforms, Discord has become one of the most popular destinations for sneakerheads who want to make money from home.
Michael Schneider, the CEO and founder of Secret Sauce, a prominent Discord-based cook group, saw the potential for reselling early on. You could even say he was born into it: “My father was a reseller,” he tells Money, flipping everything from Power Rangers toys to Legos to sports memorabilia to action figures.
As he grew up, Schneider looked to trends in self employment through the gig economy and saw something missing. The industry, he says, was focused mostly on hourly wages rather than allowing workers to create their own way of working. He predicted people would gravitate to more entrepreneurial opportunities if given the option.
So in 2020 he founded Secret Sauce, a cook group for entrepreneurs that provides resources and education for those entering the sneaker and streetwear resale space. From the start, he wanted to do it differently: While many cook groups exist, they can often be intimidating for those new to the scene. Users sometimes find themselves confused about the installation of bots, the technology retailers use during limited-quantity product releases, and judging what makes one sneaker more valuable than the others.
“With many of the groups that we saw, there wasn't a system for help. There wasn't a way you could ask questions if you were new,” Schneider explains.
To combat this steep learning curve, Secret Sauce onboards new entrepreneurs with tutorial videos, hosts chat rooms for help and guides users through the process of identifying opportunities to purchase high-value sneakers at retail price.
For $60 a month, participants get access to the Secret Sauce Discord and suite of proprietary tools, including bots and browser extensions that speed up the online checkout process. This is crucial because, when dealing with a limited-quantity release, fractions of a second spent typing out a delivery address can be the difference between snagging a coveted sneaker or seeing yet another out-of-stock message.
In the Discord, members post evaluations of which upcoming drops will be valued high on the resale market, links to boutique retailers that could be easier to purchase items from and URLs for item pages before they’re publicized. Using this insider intelligence, members purchase sneakers and collectibles which they then can resell on eBay, StockX or other marketplaces.. The ones who repeat the process frequently enough earn a profit that rivals a traditional full-time job.
Two years after its launch, Secret Sauce has multiple real-world events under its belt and counts its users in the thousands. And while the community continues to grow, Schneider says his favorite indicators of success are the testimonials.
“We've seen people take their whole family to Disneyland multiple times. One member was finally able to give back to their mom, their sister, their relatives, all because they were making the extra income,” he says. “It's those stories that impacted me the most. You've got somebody who's got the drive, they’ve got the hustle, they just needed the help.”