Growing up in the same Raleigh neighborhood, Michael Truesdale and Justin Kelly created a friendship that Truesdale says is more like brotherhood.
Now, they’re business partners. And after just a year, their tech startup SneakPeek was named part of the Fall 2023 TechStars Detroit class in October; was accepted in February to participate in the upcoming cohort of the Launch Chapel Hill accelerator; and have been selected to present at CED’s Venture Connect summit in Raleigh on March 20-21.
SneakPeek is a Chapel Hill-based startup that uses AI to authenticate sneakers in the second-hand resale market.
Truesdale and Kelly got the inspiration for SneakPeek in 2016 when Truesdale was studying abroad in China and Kelly was working there. The two visited local Chinese knockoff markets and were surprised at the volume of counterfeit sneakers.
“They weren’t great back then, but we saw the way they were being made and mass-produced,” Kelly said. “Unfortunately, we’ve come across counterfeits that we’ve purchased, and there’s just been no way to really authenticate these items in the market. And these are items where you’ll pay like $800 for just to find out that it’s fake.”
SneakPeek primarily operates on a B2B business model. Truesdale says enterprises such as eBay and StockX receive approximately 5,000 pairs of sneakers per day per location.
SneakPeek streamlines the authentication process of these sneakers for enterprises by using AI trained to detect deficiencies in and the authenticity of sneakers. The companies simply upload a series of images to SneakPeek and get instant feedback on the authenticity of the shoes. Truesdale said they eventually hope to replace the images with a video. After the authentication process, SneakPeek installs an NFC chip—it stands for “near-field communication”—in each shoe.
Anytime a sneaker that’s been through SneakPeek’s authentication process comes into an enterprise’s authentication facility, it can simply scan the NFC chip in the sneaker, meaning it doesn’t have to go back through the authentication process. Truesdale says the scanning is the same tap process used by Apple Pay.
SneakPeek generates revenue through the authentication process and through chip installations. The NFC chips are the primary differentiator between SneakPeek and its competitors.
“None of the other competitors are doing anything like that because it would basically cannibalize their existing business model,” Kelly said. “They rely solely on getting authentications; that’s how they make their money.”
Truesdale and Kelly work full-time on SneakPeek. They bootstrapped the startup for the first nine months and then won $20,000 at The Enterprise Center Most Diverse Tech Hub pitch competition in October and, more recently, a grant from the University of Pennsylvania for $5,000.
The grant and pitch competition money—along with SneakPeek’s acceptance to Launch Chapel Hill, TechStars Detroit and CED’s Venture Connect—have Truesdale and Kelly optimistic about the startup’s future and ability to generate funding.
Initial conversations with enterprises such as eBay also encouraged the two founders for their startup’s future. SneakPeek currently has three customers, all of whom are in their free trial phase.
The customers are smaller boutiques and shops, but Kelly says they have been instrumental in helping SneakPeek find bugs and areas of improvement.
This is key to the startup’s ultimate goal of scaling up to large enterprises like eBay and StockX and expanding beyond sneakers into other collectible items such as toys, trading cards and memorabilia.
The founders also plan to launch SneakPeek’s detection and portfolio features soon, which will show customers their authenticated shoes and enable them to take pictures of shoes they see to find where they can purchase them.
SneakPeek generates revenue from this through an affiliate fee, which is collected when a customer purchases a pair of shoes through a site they were directed to by SneakPeek.
The total addressable market (TAM) of resale sneakers is $114 billion, and for all collectibles it’s $458.2 billion. Truesdale and Kelly have to improve SneakPeek before they can begin to more fully address that market, though.
The two founders say fixing bugs, improving scalability capacity, raising funds and getting a pilot by the end of Q2 are their primary short-term goals before taking some of the bigger steps, such as going after larger enterprises and converting customers from their free trial stage to paying customers.
Truesdale said if there’s one thing he wants potential investors to know, it’s that “We’re scrappy, lean founders [and] we have built something pretty phenomenal in a small time window.”
