Quote · My First Million
We found an app that lets you buy anything for $0
Where this was said
Nat Turner's crazy new business
At 44:20 · chapter starts 39:09
Shaan sets up PSA by explaining the concept of 'credence goods' — products like medical care or collectible cards where even the buyer can't fully evaluate quality after the fact, creating structural demand for a trusted third party [1] — Shaan Puri "PSA controls 70% of the collectibles grading market and has $400M in backlogged orders. The genius is the business model: you own nothing, …" 40:35 . Before PSA, a seller would claim their Sammy Sosa rookie card was in mint condition, the buyer would say it looked fair, and the transaction would be murky and low-trust. PSA solved that by becoming the universally accepted arbiter of authenticity and condition, which is why sellers seek PSA grades (a PSA 10 commands a massive price premium), which is why buyers only buy PSA-graded cards, which is why sellers only send cards to PSA — a self-reinforcing loop. The business controls roughly 70% of its market, holds approximately 14 million cards in its grading queue worth around $400 million in pending revenue at ~$30 average per card, and operates a vault storing a billion dollars' worth of cards as a secondary revenue stream. Nat Turner, who sold Flatiron Health to Roche for ~$2 billion in 2018, bought Collectors Universe (PSA's parent) with the goal of modernizing it with technology to eliminate the multi-year backlog and eventually re-list it publicly. Shaan compares the business to a hybrid of Moody's (rating an asset class) and Fort Knox (storing the assets), and argues the analogy extends to Deloitte and Ernst & Young — attestation businesses that became multi-billion-dollar empires simply by being the trusted third party that signs off on transactions.
PSA controls 70% of the collectibles grading market and has $400M in backlogged orders. The genius is the business model: you own nothing, take no inventory risk, and simply become the trusted third party for every transaction in an entire industry. Once you're the standard, the network effect is unbreakable.
PSA had approximately 14 million cards in its grading queue, representing roughly $400 million in pending revenue at ~$30 average cost per card.
PSA controls approximately 70% of the collectibles grading market, making it the dominant trust authority for card and collectible authentication.
Nat Turner sold Flatiron Health to Roche for approximately $2 billion in 2018 before acquiring PSA's parent company Collectors Universe.
PSA charges between $20 on the low end and over $1,000 on the high end to grade a single collectible card, with an average of roughly $30.
The PSA model — trusted third-party grading of credence goods — could work anywhere there's an opaque market with aligned incentives and a big enough economy. Youth sports combines, Ivy League graduate scoring, vintage handbags: Shaan Puri and Sam Parr brainstorm where the next attestation empire could be built.
