Starting a Grading Company

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Posted By: steve k 

Any business people or want-to-be business people in this forum? It is said that "necessity is the mother of invention." With all the problems and complaints about PSA and other grading companies...can you imagine a grading company owned and operated by members of this forum? Who wouldn't use it at a reasonable, competitive price? Any thoughts or ideas about this? There are probably plenty of reasons why it couldn't be done, but it would be most interesting to hear the reasons how it could be done to everyone's benefit and profit. And NO - I have no interest in running it or being the caretaker - that would be the job for a known, trusted member of this forum. Besides, I already run my own company as well as other things that I stay busy with. But I definitely would invest in and take the time to contribute. If not having the desire to participate in and own a piece of a business, or fearing competition from PSA, GAI or others, then you need not read the rest of this thread.

Basic rough idea - The cards would be sent to one location. The person at the location would authenticate them. Then scan the card and list the details about it in reference to creases, indentations, etc., which a scan may not pickup, then e-mail the scans and details to a number of members who are experts in grading. I consider myself an expert on 50's and 60's cards - we would have to trust each other on their own evaluation of being an expert. The members would e-mail back their opinions of the grade and the average would be the grade. Maybe the few very high or low grades for the card would be thrown out for calculating the average. I am not familiar with thermoplastic molding processes for encapsulation but plastic molding companies are not hard to find. There would be no payroll expense. A corporation would be formed, the stockholders would share in the grading process work, startup and operating expenses - then the profits would be distributed as voted on. The whole basic idea is that we would design our own system of grading and work hard to strictly abide by our set rules. Word would spread rapidly about our company and then we would be the grading company that people would use to get top dollar for their cards on ebay. Be prepared to work or the business will not succeed - you may receive fifty or many more scans per day and the work not only has to get done, but must be done accurately. We could work on some sort of shift arrangement so the grading doesn't become a daily drudgery. If this idea is not worth pursuing or the obstacles are too great then so be it and we can all, myself included, just keep going on complaining about the grading companies.

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Posted By: barrysloate

I don't know how viable this really is, but I've thought about it myself, and I've been grading baseball cards for 22 years, so I'll listen to what others have to say. But it's as much about market share as it is about grading cards. How do you compete with a PSA or SGC, etc.? It won't be easy, unless we can find an angle that is missing from the other companies.

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Posted By: T206Collector

...a grading service that has the card graded by PSA, SGC and/or GAI and then encapsulates the card with the paper insert of each, while giving the card a "cumulative score" or average based on the three numbers?

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Posted By: hankron

I think an interesting service would be an authentication service for esoteric material-- unique proofs, photos, prints, premiums, etc. The authenticating company would apply a hologram to the back or encapsulate it. The ownership would be registered and transferable (when sold, owner John Jones would switch the ownership to Bill Smith). This means that stolen scans or questions of ownership would be of no issue, as its current owner is listed.

I also think that the authenticating company would have people send scans of the items before shipping it out. There's no need to receive an obvious reprint of a T206 Wagner, as it wastes the graders and the owners time.

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Posted By: Judge Dred

Grading is very subjective and that's probably why an average of three grades would be necessary. Personally, I have very strict ground rules when I assign a grade to a card and I've seen others that would call my VG an EX+. In many cases it's really mind boggling to see such differences. Maybe I'm a tough grader or maybe the others are correct and I'm wrong - I doubt this). I'm a fairly diplomatic type but this isn't politics, this is a hobby (and would be business)and the subject is card grading - how do you tell someone that they don't know how to properly grade a card.

Something else to consider. This bull board may have quite a few readers but this obviously matters little because most of us probably have the same opinion about the grading services but we still use them:

SGC - Best holders (they used to be consistent and accurate but anymore they are like PSA or the rest - there's less consistency and more stupefying grades coming out of the factory).

PSA - You want to sell something for top dollar then have it encapsulated in a PSA holder - they are (and have been) unpredictable in their grading standards.

SCD (now defunct) - I liked them because they were accurate (for the most part) with the vintage stuff. If given the choice of an SGC, PSA or SCD 4 (VGEX) card of the same issue and player, I'd take the SCD4 card.

BVG (now defunct) - nice job but gone under (I think).

GAI - Trying to make a run for the money but I still think the jury is out on them because I see cards graded by them that (although authentic) look like they may have some alteration to the card.

SCD (a respected name) gave up on this so unless someone can come up with a reason why they think they could do better then it would be a tough sell.

What would you call this company? AAA (just kidding). This company could cater to the wealthy - it could be a niche market. Overall, the marketing for such a venture would be enough to kill it in the concept stage. I don't see anything wrong with the idea but there's a lot more to this than meets the eye. I think the idea of large hi-res scans is a great idea, it would allow virtual grading of the cards. Something that has always boggled my mind is that a grading service charges $7+ a card for grading and encapsulation. Just how much time is spent on the actual grading process. I would hope that a company like this would not turn into a company like the others mentioned before (a compnay that looks only at the bottom line and not the responsibility of providing the services offered).

Hats off to the idea - best of luck to those that try.

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Posted By: Gary B.

While I don't have the money for it at this very instance, I may at some point in the nearish future have a bit of money to invest into such a venture if someone(s) actually decide to go for this idea, but natrually I'd need to know a LOT more info first. God knows there are so many experts in the field in this forum that the know-how is here in abundance if pooled correctly.

I don't know if this has been said directly, but maybe this grading company could be limited to cards pre-1970, or even pre-1950, but the point being to make it a more high-end grading company (not in cost to the clients, but in terms of respect) for vintage cards only. That is, unless you think you'd actually enjoy grading Alex Rodiriguez and Ichiro Suzuki rookie cards all day long.

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Posted By: Andrew

A noble idea for sure. I would guestimate that the founders of SGC, PSA, GAI (in order of preference)had a similar vision, especially since some are also collectors. However, unforseen circumstances usually arise when transforming from a small scale idea to a full fledged business. That is, many (BUT NOT ALL) of the mishaps by the Big 3 are sure to repeat by any company entering this industry. Also, the mishaps as a percentage of volume is probably low.

As some posters have indicated, this industry needs to be segmented. An entry that only grades a niche, e.g., pre WWII, would be welcomed.

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Posted By: honus3415

What is needed is a SECURE encapsulation Authentication Service that would stake there financial reputation on answering the questions - Is what's encapuslated 100% authentic - YES or NO. Then include as a bonus the statistics regarding the item such as size (multiple places), thickness and so on .....

Grading companies are for 1989 Griffey Jr. rookies and all the other "10's" still waiting to be un"pack"ed. Leave the bickering of a "grade" to the people it matters to, the children. It's just like in sports, there's the BEST and there's the REST. You gotta WIN or you LOSE. There's one winner, a few almost winners and a million losers. As long as there are grades, there will be those poor souls drowning in the greed this competition brings.

The problem with today's grading companies is too much of their resources are being consumed grading cards of the last 50 years. They attempt to appease the appetites of those looking for that elusive "gem-mint-in-your-face-10-100-1000". True vintage items aren't receiving the attention they deserve. Vintage cards require much greater analysis, and possibly more resources than are financially practical, especially when you see what people will do to a piece of paper in their greed for the almighty dollar.

We need a company that lets everyone know one thing....Is it completely GENUINE without any additional physical matter?

A nice secure holder would be nice too.

What!! A choice of holders?

We can fight among ourselves quite nicely without the grading companies adding their 2 cents worth.

and thus ends MY 2 cents....never give me a penny for what I'm thinking.

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Posted By: barrysloate

If you had a grading service that only accepted vintage cards- and you would have to set some realistic cut-off as to what vintage would mean- you would have a lot more time to accurately grade them properly. How much time is consumed by grading services handling the endless stream of modern cards sent in to them. The idea of starting a new grading service however is easier to discuss in concept than it would be to actually get off the ground. And the competition already is quite fierce.

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Posted By: steve katz

Great response and terrific ideas! I expected something like this from this forum but this was even better than expected. What prompted me to do this was Dan's lawsuit with PSA in another thread. PSA's behavior was absolutely despicable. In almost any other reputable business, they would have promptly given Dan his money along with a sincere, humble apology.

I've been kicking this idea around all day thinking about your responses and other things. It would take a lot of work but not a terribly large sum of money because again, except for maybe having to hire a secretary or two to coordinate the billing, paperwork, etc., we would all be chipping in to do the hard labor of properly grading the cards.

I agree that our service should be strictly for vintage cards pre-1970. I think there will be a lot of people using us and also breaking open their current holders to get into our holders.

Some quick math...
About 250 working days per year. If we were to get 100 cards per day x $30 per card that is $750,000 per year. A group of 20 members would only have to grade an average of 5 cards per day. $750,000 divided by 20 members is $37,500 each before expenses. And what if we did 200 cards per day? Or 300? Would you grade 15 cards per day to maybe earn over $100,000 per year. Don't worry that customers would be concerned about the money you are making - they are only concerned about whether or not they are getting $30 worth of value for that holder. They will get $30 worth of value and more!

As was pointed out, the key is to have a niche - there are a ton of high end pre-1970 cards out there that are itching for the right holder from respected graders, not the type of graders that are now at other grading companies. We would "send out" in the beginning to get the cards encapsulated before investing in our own equipment. Thermoplastics are inexpensive - if the cost was more than $5 per card I would be shocked and probably the cost is more like $2 per card. Our holder would be so that it would be impossible to open it without easily spotting that it had been torn open. Again, the beauty is that the startup and operating costs aren't that much considering the profits that can be made. I could ramble on for many pages about this idea. Any further thoughts, please post them. If not contact me anytime at the listed e-mail. Again, I can greatly help in setting things up and with other things such as marketing, but the members must find and choose someone trustworthy to be President and CEO of the corporation. You guys know each other from shows, buying and selling, etc. PS: Running a company isn't easy - you have to really want to do it to succeed. So unless we can find a President and CEO who is not afraid of and enjoys hard work - then it's no sense bothering. We would each have one share but maybe we could entice someone to run the company by having 21 shares and giving that person an extra share. No hurry - if not today and you feel like e-mailing me later or 6 months from now, that's fine. Maybe when PSA and the others finally aggravate us enough, then we'll do it.

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Posted By: David Vargha

BVG was a joke. Their chrome refractor graders were unable to do a decent job on pre-1960 cards.

DavidVargha@hotmail.com

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Posted By: honus3415

Why not the best of all worlds?

I envision our cardboard entering into a totally sterile enviroment, the item is untouched by human hands. Initially scanned into a public database and assigned a serial number, forever linking it, in it's present form, to the data obtained in this process. A computer then records the weight and measurements of the card from thousands of direction (after all how hard can it be for a computer?) and analyzes the percentage of surface area present. Reporting the amount of missing area from flaws (corners, sides and holes). Borders are measured. The surface planes are then analyzed for variations (creases, holes, indentations......). A light analysis on the item is preformed and compared to know specimens for possible forgeries and alterations. The card is then vacuum slabbed and a microchip is embedded in the corner with all this information. This embedded chip is pressure sensative so any attempt to open the slab would release the data and invalidate the slabbing. You would also receive a personalized label upon which we could give our own numeric value to this item if we so desired. (It probably wouldn't take long before we knew which labels represented hobbyists and which represented materialists.)

This computerized process would take out the subjectivity of the human eye and whatever else might be affecting the numeric values in todays slabbing processes. So instead of 20 super-graders at cost of $750,000 per year, you have one robotic database super-computer running around the clock for hundreds of thousands less. I heard HAL was out of a job but then I heard he also collects T206's.

What!! You don't like to send your cards in? It's mobile and makes it's way around the county and like the blimp show up at every major event.

Best of all it would be only $5 a card and with one day turnarounds, two if really busy.

I can dream, can't I?

Really, All I ask for is encapsulation and a few unadulturated FACTS, not someone's opinion. Because as we all know, "opinions" are like noses, everybody has one......or something like that.

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Posted By: Hal Lewis

Believe me ... I hear it all the time.

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Posted By: Jon Canfield

I would be happy if a grading company offered a description of why the card received the grade it did. Even a simple check sheet may due... example: it could have 100 different flaws listed, a check is put next to each one that detacts from the card's grade.

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Posted By: jay behrens

I would think the grading companies actualy have a worksheet or note sheet that they use for each card. Is it asking too much to get a copy of it with each card? I am sure it would go a long way to explaining why a card got low grade if it has a microscopic flaw that you can't easily see.

JAy