Startup of the Month: 'Dropout' Brings Tech to the Sneaker Hype Business
Dropout's algorithm helps sneakerheads discover resale values.
Highly-coveted sneakers have evolved from serving purely as social currency to now existing as an alternative asset class. Many sneakerheads also look forward to selling their acquisitions for a healthy profit. Holy grail sneakers like the Nike Air Yeezy 1, which debuted with a suggested retail value of $215, now go for thousands online — a Nike Air Yeezy 1 prototype recently sold for $1.8 million USD.
The global sneaker resale market is poised to reach $30 billion by 2030 according to market analysis by Cowen Equity Research — that's up from $6 billion in 2019. With the resale market posting numbers like these, one startup has seized the opportunity to not only create a platform that helps hypebeasts across the globe cop pairs of Dior x Air Jordan 1s and Nike Air Max Hybrids, but Milan-based startup Dropout has also developed a tool called the HypeAnalyzer — a data-driven pricing index that allows resellers to see the market trends for sneakers and apparel.
Fashion League talked with Kola Tytler, medical doctor and co-founder of Dropout, in order to gain insight into the sneaker resale business and how his startup plans to have an impact on the sneaker hype business.
Location: Milan, Italy
Special Sauce: HypeAnalyzer—data-driven sneaker & apparel resale software
Investors: Equity Crowdfunding, including 2 Italian VC funds, and over 150 retail investors
FASHION LEAGUE: Can you introduce yourself and your company, and why you started working in the sneaker resale business?
DROPOUT: Hi all, I am Kola Tytler, a 27-year old medical doctor, and I am the founder and director of Dropout, operating a retail store in Milan and a busy eCommerce website. I split my time working in the NHS in London, Zoom calls, and trips to Milan, Paris, and Los Angeles.
I grew up in Latina, a town near Rome, Italy, and spent a considerable amount of time in and around basketball courts and skate-parks, where the influence of American streetwear culture was significant and there was great admiration for the NYC, Chicago, and LA. I bought my first pair of Jordans in 2013, and the purchase led me into a deep process of learning the ins and outs of the underground sneaker resale market. Then in 2015, I taught myself how to code and wrote a sneaker bot. Within the same period, I met Yiannis (who had launched YEEZY Mafia) and Stefano Zeppieri (my right-hand man).
FASHION LEAGUE: How does your HypeAnalyzer algorithm help consumers or does the algorithm primarily benefit resellers? DROPOUT: HypeAnalyzer makes it easy for both customers and resellers to glance information about which sneaker and apparel items are in demand and what price they are going for. Eventually, a lot of Dropout's customers turn into occasional resellers, so it is nice for them to have an idea of where the value of their collection stands.
FASHION LEAGUE: What are the advantages of having a brick-and-mortar store in today’s digital-dominant global economy? DROPOUT: Primarily, a physical venue allows people to attach an experience to the sneakers they purchase, something that is ever so dear to sneakerheads like me who have often traveled all over the world simply to purchase a pair of sneakers. Another important aspect, especially coming out of the pandemic, is that brick-and-mortar venues provide spaces for individuals to actually meet, exchange ideas and serve as references for industries. With dropout in particular, since me and my business partners are well established within the European sneakers and streetwear scenes, individuals know who are the faces behind the business, which brings dropout "Closer" to them as a brand.
FASHION LEAGUE: Can you describe your authentication process? What assurances do you provide consumers who buy sneakers from Dropout? DROPOUT: The authentication of a sneaker is actually a complicated process that starts well before sneakers are purchased or sold within our doors. It involves staying up-to-date with the latest batches of fakes, keeping informed on suspicious shipments and bulk deals entering the continent, vetting sellers and consignors, and ensuring that bad apples are eradicated at the first strike, unfortunately, there are no second chances for fake sellers. The authentication of the sneakers then involves checking and comparing a number of sneakers to ensure consistency in shape, colors, smells, stitching, packaging, labeling, etc. If we are not sure of a product's authenticity, we don't buy it, take in consignment or sell it. We can't take risks.
Products sold by Dropout are tagged with numbered plastic tags (imagine the infamous Off-White tags) and of course, those bought in-store are accompanied by an itemized fiscal receipt, which provides the legal assurances any retail store has to comply with (selling counterfeit is illegal, at least in Italy).
FASHION LEAGUE: What values do you think are important when running a successful startup? DROPOUT: Motivation is the most important thing really. We are all different and so are our values, however, traits such as grit, kindness, and open-mindedness are likely to help a project succeed.
FASHION LEAGUE: What are some of Dropout's upcoming projects? DROPOUT: Dropout was initially opened without external funding and without external strategy advisors. Towards the end of 2021, we completed our first funding round, raising €750k via equity crowdfunding in 6 days. The round saw the participation of 2 VC funds and 130 retail investors (two-thirds of which are under 35 years of age!). We’ll open a new retail location in Milan as well as several temporary stores throughout Italy, improve eCommerce and further develop HypeAnalyzer. The new permanent store will be located in a premium area of the Italian fashion capital.
FASHION LEAGUE: Any advice for our readers who may be looking to launch their big idea?
DROPOUT: The first step of translating the abstract (idea) into something tangible (a product or service) is to move away from the idea itself and start focusing on execution. There is a galaxy of distance between thought and action, theory and practice, ideas and execution. From my experience, the best way to practically go about creating something is to think about the journey needed to achieve the realization of the idea, break it down into smaller, manageable steps and critically question what problem may arise during each. It is definitely worth discussing this with others and starts thinking early about what team will be required. It is very rare that an idea can be turned into something without a team.