Gerome Sapp On How His 'Rares' Sneaker App Is Helping To Preserve The Culture
Sneaker culture has always been popular, but with the advent of social media, it has taken on a new life. From resellers overpricing sneakers to malfunctioning apps to raffles that never seem to go our way, the digitalization of the footwear industry has been dark. However, thanks to, former Notre Dame football standout and Baltimore Ravens safety, Gerome Sapp's Rares app (launched in 2020), not only can you own stock in collectible sneakers, you can learn about the market via a relatable asset. The app has garnered praise from the likes of Forbes, CNBC, Yahoo!, and countless others. EDITION spoke to Gerome Sapp about Rares securing millions of dollars in funding, financial literacy, the importance of inclusion, and more.
Why was it important for you to start Rares?
I'm reminded of my why every day, and that's to provide expanded access and opportunity to cultural relics that have transcended beyond the culture into investment-grade assets.
Does this stem from where and how you grew up?
I grew up in the 5th Ward of Houston, TX, and I knew firsthand what a lack of access and opportunity was. I grew up with no running water or electricity sometimes. My father was in prison for being a drug dealer; my mom raised my siblings and I on her own, so I grew up without a lot in an underserved community. I'm not unique in that, but I identified early on that I could grow up to help solve the issues plaguing our community.
That's admirable! Was there a plan in place from the beginning?
I didn't know what company I would start or if it would even be a company, but I knew I had what it took to be the change my community needed. So when the opportunity came to start Rares, it felt like an affirmation and was a no-brainer because it combined my experience in finance with my passion for sneakers.
This goes back to what you said about underserved communities because our community is, generally, excluded from things we've created.
Without question! Our community created sneaker culture, along with the wealth, but somehow we're left out of the secondary value of sneakers. Rares is a platform that will essentially re-gentrify sneaker culture and allow us to come back in to participate in a way that will generate relative wealth with an asset class that we're familiar with. Corporate America has taken advantage of the secondary appreciation of sneakers for decades, and Rares provides the platform so that we don't continue missing out.
The stereotype around former NFL players is that you all spent your career earnings frivolously. Was being mindful of your finances a purpose-driven thing, or did you fall into it as your football career was nearing the end?
I was always a financial guy. My grandfather was a finance professor at the University of Houston, and he would always teach me about financing and such. Also, as I mentioned earlier, my father was a dope boy, so I would go visit him in prison, and he never talked about drugs; he discussed the economy, how money works, and supply and demand. My dad never tried to get me in the drug game because it was the last thing he ever wanted for me, but he understood the drug game and the money game of big corporations were similar if you take away the legalities of it all.
The irony of this is that the government and big corporations are why drugs exist in this country.
I stress this! My father never mentioned drugs, and I never knew about drugs; I knew it as economics. And I always found it amazing on his part to take a terrible situation and instill financial literacy in me to the best of his abilities. The high school I attended, Lamar High School in Houston, TX, was a business magnet school, so I was already taking econ, micro-econ, accounting, and finance classes as a high school student. Also, I was a finance major at the University of Notre Dame, and during the summer months, I would work at Merrill Lynch back in Houston. During the off-season of my NFL career, I got my MBA at Harvard Business School in a program that focused on derivative finance and derivatives in entrepreneurial studies. I've always had this intrinsic passion and desire for financial models and economics, so if you combine that with my love for sneakers, I know I'm doing my life's work with Rares.
You seem to teach as you learn; did you ever educate your NFL teammates on the importance of financial literacy?
When I got drafted, I would teach the rookies money management! We had certain days where we had people come in and discuss real estate and other ways to invest our money, but the Ravens knew I was a finance guy, so they allowed me to teach other players because who better than someone that's actively living it to share financial information? I would hold classes after training camp about different ways to preserve income.
How was that received by your teammates?
They knew I was going through the same tax issues they were experiencing, and they knew I was dealing with the same pressure from family members because I was the one who made it. Having to say yes or no to family members is hard because, psychologically, you owe them everything, but we want to build our own families, so we have to protect that concept.
There's something to be said about how you talk to people instead of at them or over them. Where does that stem from?
My upbringing because I've talked to inmates and Warren Buffett, and I was taught to treat everyone the same whether they consider themselves kings or commonfolk. That's why I made it a priority to have the educational videos on Rares meet people where they are because this is a gateway investment platform that will allow everyone to move on to bigger things. A lot of who I am is predicated on who I grew up around, and that happened to be criminals.
Gangsters are the greatest gentlemen and life teachers.
Absolutely! I know what it feels like to sleep on the floor, and be homeless, and I know what it feels like to have a suite at The Ritz-Carlton. I can relate to anyone from any corner of the world because I've experienced the entire spectrum. There's a very thin line between being on and not being on, and the sooner you start disrespecting one or the other, things will flip quick!
Sneakers and sports don't exist without each other. Were you one of those players that had a sneaker collection everybody would marvel at?
To be quite honest, I wasn't [laughs]. My sneaker collection was relatively modest because I stick to what I love. I'm a Jordan 1 and Nike Air Max guy, and I would get a few Jordan 4's because that's my favorite sneaker! I knew what I wanted and bought what I wanted, but I do respect the full gamut of all sneaker silhouettes.
You somewhat answered this question, but what is your personal sneaker grail?
The Jordan 11 Concords, that patent leather! In fact, I was wearing a pair at Harvard when a gentleman stepped on them! [laughs] I remember looking down and thinking, "Well, he didn't step on the laces!" And shame on me for wearing something so special to me, but it made me think that there had to be a better way to derive value out of sneakers than to physically own them. That's the genesis of Rares because I thought about turning these sneakers into a stock or something that acted like a stock, and allowing people to invest in shares, so you never have to physically own them to make money off of them.
It's funny how one moment and/or epiphany can change your life.
I can take that a step further. The day my dad was going to jail, he bought me a pair of Jordan 4s, and that's where my insatiable passion for sneakers started. It's almost like I try to relive that moment of happiness, but now doing it so that multiple people can innovatively experience that happiness.
Say I love sneakers but don't understand investing. What is the benefit of me signing up for Rares?
I'd be remiss if I didn't say this; Rares is an investment platform that allows you to invest in an alternative asset class that historically has made money. I had to lead with that because a lot of sneakerheads question why would they invest in sneakers versus buying a pair? And that's the wrong way of looking at it. Rares is a way to diversify your investment portfolio, and it just so happens that sneakers are the asset class we're guiding you to invest in.
Is there a difference between what Rares offers and NFTs?
Indeed there is. The first step is going through the KYC process (the process of verifying the identity of customers) because we're regulated by the SEC (Securities and Exchange Commission), which is the same governing body as the stock market, so there's a series of question they ask you before you can use our service. Once you go through that process, we've made it easy by showing you the sneaker, giving information about the history of the sneaker, and you can just click invest to buy virtual shares in that sneaker. We'll tell you how much each share is worth, and the goal for all is that these shoes appreciate so that they're worth more than the price you invested in at the time we liquidate them.
Would you mind giving an example?
Certainly! If you invest in a sneaker at $20,000, we're hoping to settle that sneaker at $30,000 to $40,000 later down the line. You'll be paid the delta (the deviation resulting from the difference in rate levels between the otherwise applicable rate schedule and the result of any reasonable arrangement approved by the commission) that you're owed at that point.
Like with anything else in life, investing comes with a risk. Why would sneakers be any different?
According to Forbes, sneakers are one of the fastest-growing alternative asset classes in the world. Sneakers have outperformed gold, the S&P 500, and many other traditional securities in terms of their rates of historical appreciation. With Rares, we created the first SEC-regulated stock market for investing in collectible sneakers.
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What would you consider a collectible sneaker?
I'm talking about sneakers that have a value of $10,000 and higher. And what we do is take all of our sneakers and get them securitized by the SEC, and they split them into shares.
That's amazing! Rares can redefine financial literacy in our community. Was that a goal?
Definitely! The goal is to allow the cultures and communities that put the sneaker industry on the map from a popularity and value standpoint to view sneakers as an appreciation asset class instead of a liability.
Everybody talks about the glamorous side of entrepreneurship, but I'm sure there were some obstacles in your way, especially as a Black man, before you launched Rares. Is there any one hurdle that sticks out to you?
Four years ago, on what was my last day ever pitching Rares to venture capitalists in Silicon Valley. I had been turned down in three other meetings that day, and before I hopped on a plane to head home, I researched VCs that invest in sneakers. I found one who self-donned himself as a sneakerhead, so I stopped by his office for a cold meeting, and his receptionist let me in and offered me coffee, but when he (the receptionist) realized I didn't have a scheduled meeting, they threatened to call the police on me. My Blackness unintentionally makes others uncomfortable, and that's one of the worst feelings in the world because I meant nothing but well, and people are afraid of me for reasons that are out of my control.
That's terrible. How did you respond to that?
I explained that I wasn't there to hurt him or anybody else; I was only here to pitch the VC on my vision, and I have two kids at home who are waiting to hear about my day, and you're threatening to call the police on me, which is basically gambling with my life. I have two boys at home who can't afford to have their father's life gambled on! It was pouring rain, and I asked if I could wait in the office until my uber came, and he said no, so I zipped my hoodie up, put it over my head, and left. I ended up walking in the rain, eventually finding a coffee shop, and sat there drenched thinking about how this shouldn't be this hard. I realized I was talking to the wrong people, and I remember calling my wife frustrated because this concept was too good to be wasted on people who didn't get it. That day, I made up my mind that I would save my own money for two years, and if it was God's will that it would come together in that time, then it would happen.
Betting on yourself is never a gamble.
Lo and behold, two years later, I had enough money saved up--then the pandemic hit, and the world was shut down. I refused to let that deter me and asked myself if I don't do it now, when will it get done? Rares started at the beginning of the pandemic in 2020, and we launched a year later in 2021. From the money I saved up, we built a prototype that got the attention of Techstars, which is a tech startup accelerator. We ended up raising a million dollars on the program, graduating as their NO. 1 company, then raised four million dollars after, and now we're in the seed extension round now.
You turned possible trauma into triumph, and that speaks to your resiliency.
Sometimes, as Black people, we need those moments that bring us back to reality so we can realize what our worth is, and we don't have to accept whatever racism and bigotry they try to push on us.
What's one piece of advice you'd give to anyone who wanted to undertake a startup?
Dreams are the thing that makes life bearable. No more talking! Do it!