Unlocking Value: Ludex Transforms Trading Card Valuation with Brian Ludden

0:00The premise is trading card business too big to ignore and you need to know more about it. It's not the corner store anymore. It's growing up. Every collector's a sports fan, but not every sports fan's a collector. This is Right About Now with Ryan Alford, a Radcast Network production. We are the number one business show on the planet with over 1 million downloads a month. Taking the BS out of business for over six years and over 400 episodes. You ready to start snapping necks and cashing checks? Well, it starts right about now. Hey, what's up, guys? I'm excited. I get to do my show. We make our own rules here anyway, but we talk business, we talk marketing, we talk current events, and things that you need to know as a small business owner, as an investor, people trying to get ahead.

0:57It's been interesting the last few months with my kids, trying to teach them through business through the lens of trading cards. And that's why I am really excited because, you know, it is the number one app opened on Ryan Offer's phone in the last three months. And I've got the founder, Brian Ludden from LudX. What's up, Brian? Brian, thank you so much for having me. I'm excited to launch off the Collectibles trading card podcast with you guys. And thanks for downloading the app and using it. Yeah, man. It's fun. It's been a blast getting back into it. Grew up doing trading cards. And, you know, I was always a little mini entrepreneur.

1:38It was definitely a little side hustle for me as a kid growing up. And, you know, like most kids, you get into other things. I don't know, girls and cars or whatever, college. And you got the old trading cards in the closet or whatever. So it's been on the shelf for a while. And my kids, you know, mine are 14, 13, 12, and 9, you know, four boys. And they've been late to the game. You know, I always thought they'd get into it. I was almost somewhat glad they didn't economically. But I was sort of just waiting in the wings that I hadn't. If they didn't get into it, I wasn't going to get back into it.

2:13And they picked it up. And again, going down that rabbit hole early, Ludox hit the radar for, all right, how are we going to keep up? How much is our cards worth? You know, when you open a PAX, having the best app for the scanner of the card, that's what Ludox does. You guys will go check it out. If you're listening in your trading cards, you know Ludex. But if you don't, you got to know how much those cards are worth when you open them. And that's what Ludex does. I mean, talk a little bit, Brian. Let's set the table for everyone about your kind of journey into the business and what got you going with Ludex.

2:49Yeah. Well, it was like any journey. It's a winding road. I was a derivatives trader for 25 years down at the exchanges in Chicago. ago. My company got acquired in 2017. I had a three-year, I had to work with that company. I was not a great employee. I did not win employee of the month, that's for sure. But during that time, during COVID, kind of like similar to your stuff, I had cards sitting here and we have a place in the city. And my son and I were here, my 14-year-old son now. And I'm like, hey, let's check out these cards. They're getting more valuable and blah, blah, blah. And I was looking at it and I couldn't figure out what these cards were, what they They were worth any comps, anything.

3:30And then I bought a new pack of cards and the new ones with all the variations, shiny and shimmer. So I'm like, this is ridiculous. This industry, there's got to be something out there. And I look for like 30 days. I'm like, holy crap, this industry is massive and it has not had a tech revolution yet. And so I said, I'm going to go out and do it. And I raised$5.3 million in 45 days from all the traders on the floor. And we were on our way. I love it. I love it. But you're so right. Like I remember growing up, get this, Brian. I don't know if we're the same age. Probably I might be a little older than you.

4:06You're younger. Okay. A little younger. All right. You look good. So growing up, you'd have to go find the book, you know, the Beckett or whatever it is. Like think about what we had to do, man. The same thing with like music, you know, the MP3 player, but like, God, I think about what I had to do to find out what something was worth and trying to do trades and like, how did we trade as kids? It's not knowing what that stuff's worth. You're right, dude. That's what I did. I had a Beckett magazine I bought. I was like, this is ridiculous. Yeah. Scanning through page 800. How accurate can it be?

4:44Trading shows every day and no comps. And you know, also, Ryan, I'm new to this industry. It's mind-blowing how difficult this industry is to learn, to transact, to trade, to buy. Like it is, it's really hard. There's friction on every single level. And it's still a$30 billion industry and growing, you know, cager of eight, you know, so it's, I mean, it's massive. So think about when technology comes into this worldwide, globally, how big this can get. No kidding. Oh my God. Hey, and right about now is going to help spread the word, baby. You know, we're going to get it out there. Oh, talking with Brian Ludden.

5:24He is the CEO and founder of LudX. And look, it's one of the challenges we're just talking about. OK, Grady, not Grady, but getting the value of your card so you know when you're trading, you're making deals like either with friends or to sell them on eBay or something like that. LudX, you open the app, you scan it. How hard has it been with all the variations? Because you talked about it. And oh, my God, that's been the biggest awakening for me is how many of these SSPs and inserts and shiny and shimmer. And like talk about the technology of the scan to value, you know, is that as hard as it seems?

5:59It was harder. It was it was much harder. It took us like 12. It took us a year to get base cards and Pokemon of Magic above 90 percent accuracy. We're like, we got this thing. We're crushing it. And it took us two and a half years and probably$8 million to be able to get parallels in the upper 80s, low 90s because of all the variations and how people take pictures. And you have to train out like blurs and light. And so it was insanely difficult. But there was a time when I was like, good, I'm glad this hurts. I'm glad this is difficult because there's our moat, right? And we grinded, we grinded and grinded and just stayed afloat for long enough to, you know, to de-risk it and really get to where we needed to, to, to make this a scalable business.

6:45Yeah. I mean, it's not perfect, but it's the best and it's good. I mean, it's great. It's so much faster and more efficient than looking it up. Yeah. And so like and I love the brand, you know, I love the look of the brand. It feels like what a modern trading card company should be. That's awesome. That's the best compliment I could give you as a brand guy. That's a high compliment. Thank you. But you know what? You asked another part of that question. The most difficult thing that we've had is pricing. There's a change in these big corporations. You could go and get their data. You could scrape around the world and get whatever you wanted.

7:24But after these, like the Chad GPT's of the world, which become the greatest scrapers of all time, of information. These companies are now starting to be like, hey, we're going to put this data behind a wall. And if you want it, you either have to pay us or tell us why you want your value prop. So the comps are really hard because if you think about it, there's a comp happening at the card show. There's one happening with your boys at school. There's one happening on eBay. There's no central clearinghouse that says this card is worth$1.50. So that pricing has been really difficult. But we are working on our own pricing algorithm coming from the options world where I I priced all the options.

8:00It's going to be cool, but it's probably about six to nine months from now, but it's going to be at least consistent is what we're looking for. There's still a lot of variation. That was one thing I was the biggest surprise of coming back. I was like, okay, surely tech's gotten better. We got Linux in the house. But then the variation of pricing from one of the, and it's like, are we just summarizing eBay? It's what it seems like, Because it's the biggest marketplace, right, for online or what we call trackable sales. Yeah. Yeah. I don't have any problem with eBay. I just don't like them taking 13 % of every sale.

8:37I mean, I know they got to make money. I get it. No, it hurts, man. You sell a$100 card and you're like, you walk away like$78. You're like, what the? You know? Yeah, I know. And eBay is a great partner to work with. But I mean, they do control it. I mean, I'm ballparking that there are three,$3 billion GMV on trading cards and no one's even close second. Yeah. That's their number one thing sold. What's that? Is it their number one product on the entire platform? Got to be right. It's right behind auto parts. That makes sense. It's crazy. The volume, we put stuff up there. You get eyeballs. I mean, any marketplaces, you know, you got it.

9:13You need attention to drive up the value. Yeah. I mean, you hit it. Like if a marketplace is going to work, you need three pillars. You need trust, you need volume, you need velocity. And so if you have those things, you have a chance to succeed. But most people don't think about that. The other thing that's super important is a funnel. How are you getting people into your marketplace? Are you going to have to steal them from eBay, which is a high CAC and expensive and difficult? Or like a Lodex, we have the tool that gets people in. And when you're in the ecosystem, do you want to go grade a card?

9:45Do you want to go look at a live stream? Do you want to sell your card on eBay? that's what we want to be we want to be the nucleus the hub and scope model and just get broker get a dime per listing you know get referrals from psa and just really help our users experience the industry a broader sense what starts with that slick interface and scanning the cards quickly as accurate as any platform or more i'd say then the only one we use consistently and literally getting that value. That's where it starts. It's like, okay, what do I have here? You know, and that's what Linux kind of is the gateway to that, the starting point.

10:25So it makes a ton of sense that you then lead them, you know, to these other channels or aggregate them yourself. I know a smart businessman when I see him. But again, it starts with that because this is what happens. I pulled a gold Georgetown, a downtown Josh Allen out of a$15 Donruss pack two months ago. and I knew it was good. I mean, we'd been back in it just long enough, 1 of 10. It was in Asheville, North Carolina, shopping with friends, and they thought I was nuts buying a trading card. I did not have my kids with me. That's how deep it's gone, Brian. But anyway, I knew I had something, and I knew even Ludox necessarily wasn't going to be the source for a 1 of 10, and it was a new series.

11:07However, what the biggest thing is when you open those cards is, what do I have? That's the question. because you know you got something good you know my kids know but they're like they don't know how good and ludics is kind of the the gateway to knowing what you have yeah it's it's uh knowing what you have and know what it's worth those are the two pillars that you know we kind of go off of and you know it's technology so it's it's never done it's never completed but yeah i mean really that's what we want to be we don't want to be an authority in anything what we want to be is we We want to be an information tool to help people enjoy this industry and this hobby.

11:46And you're a great story about this because you have four boys. They're active. I'm sure they're in sports. But you guys can bond over this. And there's a business to be made. And you guys can buy and sell. And you can go to shows. You come to Nashville in Chicago at the end of July. You could be our guest there with your boys. We run the VIP lounge. Oh, that's awesome. It's awesome. But anyways, this industry is about that. And that's what Ludox wants to be. information tool, help people out and enjoy the industry. Ecom and eBay certainly enabled this 10, 15. It's been around. With these tools like Ludex and digital and all this stuff, I mean, we've moved from just the corner store, like everybody can have a store and kind of like the whole revolution of this industry is like playing out in digital form and social media and all of this, you know, trading cards is the perfect realization of all of this proliferation of technology.

12:43Yeah. Is what it's come to me. Yeah. You're right. I mean, the industry, like I said, even eBay, how big eBay got, I don't know if you list cards on eBay, I'm sure we, but how painful that process is. And they still do 3 billion in GMV. Imagine like when Lodex puts a card on eBay, we could put it on in 30 seconds. It takes me three minutes to put it on eBay's way. So what that does is that's going to increase people's enjoyment, right? Like you have information, you can make money on it, go do it. And there's a lot of different people coming in this industry. I mean, the way I look at this industry is it was on pause since the mid nineties.

13:21Everyone was good in their spot. Then people started to get into it. Cards started going up and then you start seeing celebrities get into it then you start seeing big companies multinational companies like a fanatics buying and acquiring and then you have massive massive shows on massive levels and now you're seeing venture capital get in you're seeing sports teams we have a sports team that invested in us recently and you'll get the press release come out in like 30 days but like those like everyone's interested in this because sports fans love to collect every collector there's a sports fan, but not every sports fan's a collector.

13:57So if you get them where they're at, you have all these sports fans. My collection hopes he turns into the greatest player of all time. No one has more Caleb Williams and is a private collector than probably the Alford family. I mean, yeah. And you look at that and you're investing in someone you like, right? Yes. Like, yeah. Even if you're collecting, you still like the guy, but then there's opportunities to make money on that also so mike my son every like sport he'll be like okay i'm buying these signed rookie cards for you know these five players undervalued maybe if they pop out they go and when they go ryan you've seen prices i mean um jaden daniel's card was trading for a hundred dollars like a prism whatever base or whatever yeah yeah they it's like or whatever it's like 10 10x that right now yeah yeah it's crazy it's funny how because it's the power of media and obviously playing well one of the greatest rookies i've seen play ever and then making the run in the playoffs it like it compounded it like his run and then the card values went with it i'm with brian from luddix for our audience that are going okay brian's talking i've been talking about trading cards on the show for a few weeks now building up to this.

15:15They know it's big. How big is this industry? And how much headroom is there? Well, I guess we could back into it. There's no number out there really, but if you can back into it a little bit. So Lodex has been basically 18 months to 24 months we've been out there and we have 2.5 million downloads, which by itself is a big number. But when you're talking about the penetration of how many people know about Luddix in the industry, it's small. It's like nothing. So I think there's a hundred million Americans that collect. I think about half of them men, when I say collect, I mean, like have, understand that there's an industry and you can buy and sell.

15:58You did it at some point in your life. But when you go global and you start talking about Pokemon, Pokemon by itself is going to produce 15 billion cards this year. Billion. Oh, my God. And they're up 100 % in the last 12 months. Oh, God. Go to a Walmart and try to find a Pokemon pack. Yeah. No, there's fights. A grown man will tackle your son to get to a Pokemon. I'd like to see it. I'll take that one, Brian. But no, yeah, you're right, though. You're right. But no, it's huge. I mean, I would speculate that it that it easily is in the 200 million range globally, easy. I know that's not directly in your line, but obviously I haven't quite got my head around how all that works.

16:47The distribution of hobby to retail to all that, you know, for like local stores versus online versus, you know, local collector. I could explain it to you, but I think you'll be just as confused. I mean, there's so many levels of this thing. It's like if the mafia was working with the KGB, with the FBI, it's like a card is produced. We know they get printed. They get printed, they go directly into a box. That box goes to a distributor, to a wholesaler. The wholesaler sells it to the local card shops or breakers. And then no one else knows. No one knows where those cards go after that. But we get to follow it.

17:30So when there's a new release, we'll see the scans and we know who has what cards and where they live and how many were bought. Did you buy and sell any? But the the layers to get product is insane. It's it's it's inefficient. How does one go about getting into that? Like, I mean, because it's it's like just how many volume buy enough. Yeah, I mean, it's what you know or how much money you have. I mean, who you know or how much money you have. Both, yeah. I mean, you know, Fanatics controls the baseball, the Tops, and then you have Panini for another year or so with basketball and football. Yeah, what's going to happen with that?

18:11Licensing change. I mean, Tops has somehow still sold football cards with not having it. Yeah, I mean, and those cards, people just don't love non-licensed stuff. No, it's like it goes to show you the power of braiding and logos. It's like something just feels missing. Yeah. I mean, you get a Caleb Williams unlicensed and you're like, it looks like he's in street clothes and he signed it. And it's like, whatever, it's worth like a fifth of what Panini would be. But I think this industry, I think Panini and Fanatics, I think they should have done the deal. And the stories I heard, it just, they couldn't figure it out.

18:46And I think that's hurt the industry. I think if they would have partnered earlier, this industry would be even bigger. The two behemoths are in the ring fighting. And honestly, if I was Panini, if you really want to screw Fanatics, you run these printers 24-7 and just put as many cards in the history of the world out there. And be like, here you go, Fanatics. And then Fanatics needs to have a war chest to just buy that stuff off the shelf and burn it. That's interesting. flood the market with just too much product, which it almost seems like there is sometimes with the variations. Like, God, how many silver, neon, green, pink, purple, red, like I get it.

19:29When's the saturation point on that? It's insane. I mean, our parallel database is our most valuable piece of data that we have. And it's in the hundreds of thousands of different variations. And every set that come out of four or five more or different insert, you know, We just have to keep training and training. But, yeah, I mean, there might be 30 Caleb Williams variations on Prism, maybe 40. I don't even know. It's crazy. Hard to keep up with. I mean, that's why you've got to have Lodex. You know, all roads lead back to Lodex. That's what I'm hoping, my man. I mean, how big is e-com amongst all this?

20:09I'm going to separate because I know it's part of it, but like eBay. You've got eBay, and it's a behemoth. But direct-to-consumer in this business, is it significant? No. I mean, Topps tries to do it, but I'm not envious of their position, Fanatics. They're trying to do so much, and it's so big, and they want to do it so fast to get an IPO. But it's not working. It's much larger than that. I think Ruben's understanding that as he gets into it. This industry is much larger than one player. Yeah. But I think the important thing about that is that when you get to a point with these cards and tops and going to direct the consumer, they don't have enough product because they got to stop the supply chain at some point.

20:52So once they fulfill like their distributor, wholesaler, local card shops, they don't have that much inventory to sell on their own site. So they would have to reel that all back in, which I think they will, and then go direct to consumer. And then that's where it gets. I think that's what they need to do. We could sell that in Luddix and get it out to our people, but they just don't have a lot of product at the end of the day after they fulfill stuff. First thing I was thinking is like, and you have to build the trust factor and all that. But I mean, I have an EBA account that is from 2001 with 100 % perfect feedback.

21:22That's awesome. We were primed and ready. That thing's been on the shelf. I hadn't done this much, but we've got the branding, all that stuff. I have the best packaging of any non-actual shop in America. We own BreakingRad.com. Oh, that's cool. All my company, Radical, the Radcast, all my stuff is under the Radical Holding Company. So BreakingRad fit right in. Yeah, that's awesome. Got that. But I'm like, can we open Shopify and sell cards? I mean, I know people are the trust factor, but I think there's something there. Will people buy graded cards or raw cards off of e-com? Yeah, I mean, there's options.

22:01The biggest market that people don't know about are these Facebook groups. And those groups that have 50 ,000 baseball guys will have their own community that they trade amongst themselves. A lot of people don't want to pay the fees at eBay. So they create these little cohorts all over the place. When you start doing break stuff, we're doing singles and stuff to start. But you got to have product to get the real breaks going. That's the hardest thing, isn't it? I think singles are the way it's going to go because the cards, they call it wax. The boxes of cards are getting so expensive. And the return on investment is like, it's not great.

22:41So what you're seeing now is a lot of these live streamers are just getting, they're just saying, hey, we're doing singles. 20 seconds, boom. 20 seconds, boom. And you just turn over inventory. Usually graded cards, but the singles will never die. I mean, there's legacy. There's, I think, 1.5 billion cards that have been printed in the, you know, in the whatever, since baseball started in 1880. Oh, wow. Like, I'm sorry, trillion. Did I say billion? Trillion. Oh, God, trillion. Holy moly. Yeah. That's a lot of paper. So there's a lot of singles out there. Oh, geez, Louise. I think I had a billion myself as a kid in boxes somewhere and most are worth just the cardboard they're printed on my whole collection was that I'm like oh man look at all this stuff it's worth like three bucks I grew up in the wrong years man I had 87 to like 93 terrible years the best thing you had was like upper deck when the Griffey came out but even that's like a$50 card now you know like whatever i mean there's some stuff of grades you know it's worth more than that but it's it wasn't the best uh era yeah no it was terrible that's when they figured out like i guess they started taking off they started making you know too many of every card that what it was essentially supply and demand that's it you know bringing it back to the business that's the interesting part of this is that the fine line of how much supply versus demand to keep value up right yeah i mean if you look at it that's a really tough thing to figure out if you're especially if you're not direct to consumer so you don't know who's buying them or where they go like yeah it's really hard to like a fanatics were raised at like a call 10 billion somewhere around there and the 3x to 4x the industry but you you can't 3 and 4x industry by producing three or four times more inventory and supply because you can also crush that.

24:46So they have to figure out a way. Fanatics has to figure out a way and partner with a company like BloodX is where you can get more people onto it, make it more accessible, make more buyers, make more eyeballs. That's where they need to start at ground zero and say, where are these collectors at? Let's find them and let's grow them. And then we'll be able to start producing more product or monetize them other ways. Smart. That's what they need to do. If we're going to brace the digital and the exposure and the tech and all that, let's go all in, right? Talk to me about how does Lodex make money?

25:18What's on the roadmap that you could talk about? Let's dive into Lodex just a little bit more here as we finish things out. Yeah, so right now, Lodex, we're making most of our money on subscription revenue. Subscription revenue is a tough business. It's not going to be our main way that we add value to our investors. That's going to be this B2B platform we got coming out, which I can show you. So you put 300 cards on eBay in an hour through Luddix web version. That should be out in a month. We have some data. We have some interesting points. So Fanatics was doing a Kobe Bryant night singles. So one of their live streamers on Fanatics Live was Kobe Bryant.

25:55And I called him. I said, do you know I can get you every single person in Luddix that has over 100 Kobe Bryant cards and you can market to them about your show tonight? And they're like, really? And it was like$28 ,610, something like that. And so we did an email campaign for fanatics to send out to our people and say, listen, we know you like Kobe and check this out. So there's a lot of ways to make money on that data play, user insights. And then, you know, who knows if we're going to get into e-commerce, live breaks. You know, here's the thing I know about business. When companies try to do too much and they go horizontal, it's much harder to lift something horizontally than stick to your core, go like this, make sure the root's good, and then grow it out.

26:41And so we're right here at this stage of just about to start branching out this way. But it took us a while. We want to be patient with it. But I think it's putting us in a good position, strong position, you know, head into the future. Yeah. Well, I'm going to do, I'll sub for you. Because look, here's what Lodex does. I'm just going to tell you how the workflow goes for the Rad Collective, breakingrad.com. We open the packs. We scan them with LUTX. It keeps up our entire collection because, again, you scan the card. It's good to know your value, but you need to be totaling this thing, and you need to categorize it.

27:16So literally, you go in there by player, by team, by brand, and it keeps up everything that you have, and it categorizes it, and it tells you what the value is based on, and it's ever-changing based on the market data. It's going to be proprietary here soon, it sounds like, from Brian. But you keep up with your collection. You know the value. And we're about to be able to listen. That's a praying point already. If we could solve that, the 100 in an hour or whatever, have 20 minutes to eBay, that's the hardest part. It's insane. There's technology that we built that's super impressive, but people don't know it's impressive because it looks easy, like identification.

27:55we talked about pulling pricing is difficult but this piece of technology is it's going to be revolutionized the the industry and when i did my study on this to figure out what people were needed in this industry it was ways to monetize i mean if you think about it ebay the average card is about 20 to 25 dollars right no one's putting a four dollar card on ebay because it takes four minutes, right? But if you could put$34 cards on or a hundred or 200 an hour, you mail it, you can make yourself a dollar. So what Lodex is going to be able to do is just massively dump volume on marketplaces. And it's going to bring down what cards are valuable.