Pokémon has taken over the arena of trading cards.
While Pokémon became famous in 1996 for a video game, its related trading card games (TCG) are taking on a life of their own at Santa Ana-based Collectors Holdings Inc.
The trading cards are now the company’s number one category of items being graded, rising from 20% of submissions to 34%.
“It’s cool that we’re dealing with these collectible items,” Collectors General Manager Elizabeth Gruene told the Business Journal.
“They’re special to people, just as much as someone’s favorite athlete or someone’s favorite sports card from their childhood.”
The business of grading collectibles has become far more lucrative in recent years for Collectors, which was taken private in an $853 million deal in 2021, and a year later its value soared to an estimated $4.3 billion. Collectors grades around 1.2 million cards per month companywide, charging anywhere from $14.99 to $499 or more each.
Sales have grown from around $40 million about five years ago to more than $300 million in 2021. While company officials declined to disclose recent revenue figures, there are signs it’s still in a growth mode.
Its Santa Ana offices have increased from 60,000 square feet in 2019 to nearly 287,000 square feet at the Pacific Center office complex with operations split between two facilities at East St. Andrew Place.
Its employee count in the last four years has tripled to 1,800, including 1,200 in Orange County, and is still hiring. After having opened offices in Tokyo and New Jersey in the past couple of years, it has added submission centers in Canada and Shanghai with plans to open more locations in 2025.
Collectors hired executives with deep technology experience from companies like Microsoft and Amazon.
“We had permission to invest, so we invested a lot in people, in technology and facilities,” said Ryan Hoge, president of the key unit called Professional Sports Authenticator, widely known as PSA.
“We’re just kind of emerging from a huge wave of that investment, and I think our customers are starting to experience it and see what the difference is. And hopefully, the investors are feeling that same way.”
Hiring Tech Talent
Collectors began in 1986 grading coins and in 1991, it added the PSA unit to grade sports trading cards, memorabilia and signatures.
The company went public in 1999 and spent much of the next decade with a $30 million market cap.
Its value slowly crept up until 2021, when a group that included basketball star Kevin Durant and New York Mets owner Stephen Cohen took the company private for $853 million.
Since then, Hoge and Gruene have been two key hires.
Hoge was a product manager at a tech firm that Microsoft acquired, and he then spent 16 years working on the founding team of OneDrive, scaling the Office 365 business to more than 400 million monthly active users and leading the product team responsible for the user experience in Windows 11.
“We are extremely excited to add someone of Ryan’s caliber to our team,” Collectors Universe Executive Chairman Nat Turner, who led the 2021 buyout, said at the time of the hiring.
“His background and expertise in technology will help bring our entire organization to even greater heights.”
Hoge himself has been a sports card collector since he was eight years old. He submitted his first cards to PSA for grading back in 1999, including a 1989 Upper Deck Ken Griffey Jr. and a 1986 Donruss Jose Canseco.
Hoge was originally hired as a chief product officer; a year later, he was promoted to president of PSA.
In 2022, Hoge hired Gruene, who was head of product management for Amazon Canada. Last September, she was promoted to general manager of Collectors; simultaneously, she is heading up a pop culture division that began about a year ago.
While the classic sports cards in mint condition continue to represent the strength of the company, the new pop culture unit is focused on Pokémon and similar trading card games. An estimated 8 billion trading cards are printed for these games annually. The unit is also grading collectibles like Funko Pop! vinyl figures and video games.
“It’s a new business unit that we created as we wanted to have a center of gravity around everything that is pop culture, because we know that the customers are different,” Hoge said.
“A lot of my role and my team and the things we’re working on are all brand-new within the last year, and it’s exciting to build the playbook for pop culture,” Gruene added.
Team Assemble
An uptick in trading cards and collections began in 2018 and then exploded during the pandemic, according to Hoge.
“There’s a nostalgia angle in what we do,” Hoge said, pointing to the current generation of adults who had grown up playing Pokémon.
“Plus [they now have] disposable income, whether it was getting back into it or investing or building up their collection,” Gruene added.
With the percentage of Pokémon cards increasing in overall volume of card submissions, the company started hiring dedicated Pokémon experts. The market for fakes could be widespread — China in 2021 seized 7.6 tons of fake Pokémon cards.
“We were quickly learning that we needed to build up expertise so we could grade these things, could accurately find counterfeits or fakes and properly evaluate these items,” Gruene said of the influx of Pokémon cards.
“I think that’s really what’s led to our success is the team that we’ve assembled,” Hoge said.
The company also plans to be more accessible to its customers by hosting drop-off events at conventions, shows, local card shops and more, Gruene added. It’s a companywide effort to try and take away the pain point of physically mailing items in. It is also working on a mobile app to make submitting easier.
“We’ve built up such capacity and scaled our processes [and] technology that it’s much more accessible and approachable to new collectors,” Hoge said.
“That’s going to continue to be a focus for us, reaching the customers in the markets where they are having localized experiences [in] their language and currency to make it easier because we’re still dealing in physical products,” Hoge said, pointing to World Cup soccer stickers in Europe or basketball cards in China.
Collectors has also acquired organizations to accelerate its grading services in different categories, such as physical media with video games grader Wata, and to grow beyond TCGs.
“I think we’re still in the early days of where this is going,” Hoge said.
