Jim Halperin's Speech At The Dallas Business Club

Read The Transcript Of The Speech

Thank you everybody for coming; we're going to get started here. I hope everybody had a chance to walk around and look at some of the terrific items that are on auction. We thank our host, Heritage Auction house and Jim Halperin for having us.

So first off, let's thank them (applause). I understand others have done venues here and I understand we're particularly lucky to have it full of beautiful items; that's maybe not always the case here. We appreciate the opportunity to be here and thank Juli Branson for putting this on. Juli heads up our Dallas Business Club monthly events committee. My name is Cameron Marcum I'm the president of the Dallas Business Club this year, and thank you for coming.

Our speaker tonight, Mr. Jim Halperin, started his first business at the ripe old age of 16; he and I had a chance to speak ahead of time and we found out we're both northeastern guys and we had this common connection; he's from Mass I'm from Vermont and it turns out he had relationship with our past governor, Mr. Dean, Howard Dean. I thought that was interesting. For any of you Democrats...

That's the year that he was given early acceptance to Harvard College; instead of staying and graduating with an MBA at Harvard so that he could be a member of the DBC and start a business after only 3 semesters. He indicated his father is an MBA so possibly he could be an honorary member of the DBC, and after today he certainly is. Despite this brief lapse in judgment, Jim went on to become successful. In 1982 Jim joined forces with his business nemesis, arch-rival, and friend, Steve Ivy, to create Heritage Auctions. Tonight he will tell us how his team of rivals went on to build the third-largest auction house in the world.

Please welcome Mr. Jim Halperin.

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Can everybody hear me okay? Thank you Cameron, and thank you, Juli, and thanks to all of you for coming tonight. I want you to feel free to interrupt if anything isn't clear to you or if you have questions; otherwise, I'll just keep talking.

This story necessarily starts with me , since I didn't start meeting my partners until I was a teenager, so there I am. And that was probably a more natural pose for me. I had really, really great parents and I appreciate that Cameron mentioned that my dad was an MBA. He is the hero of this story and he was, and is, my number-one role model. That's my mom ; and that's my dad. He really was a prototypical member of the greatest generation.

He got accepted to Harvard from Wakefield High School; he was a lower-middle-class Jewish kid. And he was accepted to Harvard at age 15, enlisted on his 17 ^th birthday soon after Pearl Harbor, and left Harvard to join the Navy, served as the youngest line officer in the Navy on the St. Louis and then returned to Harvard on the GI bill, graduated in '46 and was a member of the Harvard Business School class of 1949, which I think a lot of you would recognize. Here are some of his classmates --- really, a legendary, probably the most famous business class of all time. But that wasn't what interested me about my dad; I just thought he was the greatest dad imaginable.

This was our house growing up until I'd say, I was in second grade. It doesn't look like much, but it was a nice place to live. That was in Natick, Massachusetts, and that's my dad with me and my first sister , one of three sisters I eventually had, and he was really a remarkable guy. He had a lot of friends. I can't even count how many people told me that he was their best friend. He just loved everybody and he adored my sister and her s and me, was always there for us, and was so much fun to be around. I can't remember him ever raising his voice; my mother was the disciplinarian of the house, the enforcer, and she was actually pretty nice, too.

But the thing that I really admired the most about him was his business, and what that represented. He used to take me with him to his office since I was, probably, well, since I can remember. Maybe since I was three years old, he would take me maybe once a month with him to work; sometimes on Saturdays, sometimes during the week. And I would sit and play with the adding machines and kind of chat with people, and over the years watched his little manufacturing company --- he had an advertising specialties business that he had started right after school --- and I watched it grow from 10 or 15 employees to a few hundred by the time I was 11 or 12.

They were always so happy to see him when he walked in the room and he knew all their names, and he knew all their stories, and I wanted to be just like he was. Someday, I wanted to be able to walk into a company and make the decisions and lead it and, you know, just kind of do what he did. He had built the life that I always wanted and I wanted to, of course, I wanted to go to Harvard and I wanted to do pretty much everything that he was doing.

Now this was us after we moved to a little bit nicer house and I was probably 8 or 9 in that picture. By this point, I had been practicing my business skills for quite a while. I would say I had had businesses since I was about 6 --- sold blueberries door to door, lemonade stands, neighborhood circuses, astronomy shows, bought and sold anything that I could think of to try to make a little bit of money and to hone my skills. By the time I was 8 or 9, I got pretty good at enlisting neighborhood kids to join my projects. I would kind of suck them into my vortex. I was very enthusiastic about any kind of enterprise.

So I continued to have lots and lots of projects all through my childhood until the day that my father betrayed me. This was 1963. I was 11, he was 37. I still remember like it happened yesterday. He woke me up at about 11:00 one night and he said "Jimmy, I wanted you to be the first to know. Today I sold the company. I sold it to Dymo Industries." This was a New York Stock Exchange conglomerate. They were his best customer. And he said "I feel really good about this. They're a wonderful company, wonderful people. They're going to take great care of the company," which I knew meant that they would take great care of his employees, "and I'm going to run it for a couple of years for them. And then I'm going to retire and that means that I'm going to have more time to spend on political causes that I care about and charities, and your mother and I are going to travel all over the world and we will take you and your sisters with us whenever you're not in school and we're going to have a really, really great life."

And I looked up at him and I'd never seen him happier or calmer or more sure of himself, and he was a very confident man all the time, but I'd never seen him look better, and I said "What do you mean, you sold my company?"

Well, that was when I knew that I had to start businesses not just for practice, but figure out how I was going to make my own way in the world, and about that time, my parents decided that now that they had quite a bit of money, they were going to send us all to private schools if we wanted to go. And so we applied to several local private schools and I was accepted at Middlesex School in Concord, and started there as a freshman, and continued my various enterprises.

At that point I was publishing comic book fanzines, and magazines, and I had a little mail-order business. I moved my bedroom into my parents' basement, so when I was home at on summers or weekends, I could get all the neighborhood kids to come over and work on whatever project I happened to have at that time, and over the next couple of years, the basement filled up with mimeograph machines, and collating machines, and Selectric typewriters and file cabinets and Pitney-Bowes equipment and lots of neighborhood kids after school, including some seniors who would drive me back and forth from Middlesex School in Concord to our house which was about 20 minutes away, and have me back by curfew.

I usually would make a little bit of money, enough to pay my employees and the expenses and have a little left over for spending money, and you know, really kind of kept doing that all the way through school. I even had a print shop in Cochituate, Massachusetts, about a mile and a half from our house that I would ride my bike to, and I had an adult running it that had been a printer, and we made business cards for local businesses and printed their circulars and things like that.

Toward the end of my junior year at Middlesex, I was elected business manager of the class, it was the only time there was ever a unanimous election of a business manager. My main job at that time was to run the snack bar, which I did in my typical gonzo fashion. I decided to give all the students credit, and tripled sales. I actually went to the math department and spent about a week programming a billing system on one of those computer terminals that had the little tapes coming out of them, and you had to get it completely perfect or you had to start over. It took me, I think, 6 afternoons, to design a billing system. I loved computers because they did exactly what they were supposed to do, and the only time they did anything wrong was if you screwed up the instructions. I did that during the end of my junior year and the beginning of my senior year.

And as a summer project, I also converted the print shop into a stamp business --- I called it Jim's Stamp & Coin Shop, figuring that I would have an extra product line that I could learn. I knew a little bit about stamps; I knew even less about coins. I convinced my uncle to let me handle his stamp collection and pay him a little more than he had been offered by another dealer, and he gave me a year to pay, so that was the seed money for starting Jim's Stamp & Coin Shop.

Here's an article that appeared in the local paper ; that's me on the right, and next to me, is a fellow by the name of Gary Walls; he was my first employee. He came into the store one day asked if I had coins, and I told him I didn't really know anything about coins, I just called it Jim's Stamp & Coin Shop because I planned to carry some and if anybody wanted to sell me any, and he said "Well, I'll teach you about coins," and he came to work for me for free for a couple of months, followed by a couple of other kids who came to work for me for free and showed me Coin World, and Numismatic News, and the Red Book, and Brown & Dunn, which is a grading guide, and kind of taught me how to value coins. And I really, really had a knack for the coins; it was pretty apparent right away.

Every time I saw a coin I remembered what it looked like. When I saw another one, I remembered whether it was better or worse than that one. If I sold something, I remembered how much I'd sold it for; I remembered how much I'd paid for it. And within just a few months, I was riding my bike down to other coin shops in the area --- there were coin shops everywhere back then. And buying from one dealer and selling to another.

That was all throughout my senior year at Middlesex. I was running this coin business in the afternoons, either getting people to drive me; or I got my driver's license pretty early on that year. That was my life at Middlesex. I also got early acceptance to Harvard right about at that time.

There's another Jim's Stamp & Coin Shop window and here's my admission form.

So, now I'm a coin dealer and I have a staff, and over a period of maybe 18 months, I've turned nothing into a $100,000 inventory and a car and no debt. At that point, I decided to start going to coin shows, anything I could drive to, pretty much, even while I was at Harvard. I was at a coin show in Boston in 1970 and all the big coin dealers were there and I got to finally meet my heroes who were running all the big ads in Coin World and they were all very friendly, and really sort of respectful, considering what a little kid I was.

My favorite was a Texan by the name of Steve Ivy. And he sat down at my table and talked to me for about 20 minutes, bought a few coins, asked me a lot of questions which I took as friendliness --- he was probably pumping me for information, too --- but, he really was very encouraging and I decided by the end of my first year at Harvard that I really wasn't nearly as interested in going to class as I was in buying and selling coins.

About halfway through the next year, I got my revenge on my father by telling him that I was taking a leave of absence. He was very understanding about it, but I could tell he was disappointed, but also very encouraging.

So I opened up a coin business in Framingham. This was the building that it was in , but we just had a quarter of one floor. I hired a secretary and a couple of other coin people and started out as a full-time coin dealer at the beginning of 1972.

1972 was a terrific, terrific time to start new coin business because precious metals were going through the roof, everybody was starting to look for alternative investments, and coins were still cheap. It was very easy to make money in the coin business, especially if you worked hard at it and had a good sense of values of coins.

Over the next two years or so, I managed to build New England Rare Coin Galleries into one of the premier new coin companies. By the beginning of 1975, I was probably almost a millionaire; I'm now 22 years old.

My father, who had since --- he had stayed with Dymo for 5 or 6 years rather than the two he promised them because they kept begging him stay, but now he was fully retired. He said, "You know, I'd love to come in and help you take your business to the next level." I jumped all over that, so my dad went and got me a management consulting firm; he went out hired a management consulting firm. And they recruited a seasoned 35-year old operations officer/manager by the name of Charlie Lidman --- really a very bright, hyperactive guy --- I tried to get a picture of him for this presentation, but he's in Italy and so he didn't have any on his laptop when I contacted in this morning, but he was really --- he filled in all the gaps for me.

My dad also suggested that maybe we would want to computerize. I remembered the computers from his place when I used to visit and they took up half this stage and they had punch cards, but by the mid-1970s, IBM had mainframe computers that were maybe only the size of this desk right here and could do I guess about a thousandth as much as my iPhone can do today, but it was more than any other coin company had.

He called up IBM and asked them what kind of terms I could get and they gave me a deal that I could afford, and we hired a programmer we sat in meetings with Charlie and my dad and the programmer for several months, and designed the storyboards and figured out exactly what we wanted the computer to do, and he programmed it, and we tested it --- we tested the hell out of it --- and at the end of about seven or eight months, we had the only computer system in the coin business, and it was a huge advantage, let me tell you.

We could find every transaction that we had ever made; we could manage the mailing list without having to remember anything. I had six or seven coin employees by that point. It made them three or four times as productive; it make me more productive. It was almost as if I was still running my coin shop because we had instant access to all the information just by pulling it up. Within a couple of years of that, I had the largest rare coin company in the world, about a $15 million coin company at that time.

And as a going-away present, of course, my dad wasn't planning on staying forever, but as a going-away present, he also said, "You know, I could call some of my friends if you think now is a good time to buy coins," --- because they were still cheap --- "and I could get them to invest in a fund. Sounded like a great idea to me. He said, "You know, you'll make a really tiny fee on anything up front, but you'll get part of the profit when you sell it at the right time, at auction."

So he raised $360,000 --- he actually sold one or two shares to Ned Johnson --- does everybody know who Ned Johnson is? People didn't know who he was back then, but he was the CEO of Fidelity Investments, which was a pretty small company back then. They were trying to bring stocks to the mainstream. They had mutual funds back then but they were really trying to make it so that you didn't have to be connected to invest in the stock market. So he bought a couple of shares, and some people bought half-shares. But he sold 24 shares. That was when we decided we were ready to move to Boston.

The other thing that I did in 1975 --- my other stroke of luck was hiring this guy. I don't know exactly when this picture was taken to probably right around then. This is my best friend, Marc Emory, and he had just graduated in 1975 from University of Pennsylvania, and was a very savvy coin collector --- not really a dealer. He applied for a job right out of school; I think I was the first person he asked. I barely knew him at the time and I hired him on the spot at a coin show and he moved to Framingham. This was before Boston, and after a year or so, we became roommates --- or housemates because I bought a house --- in Newton when we moved from Boston. He spoke at the time, I think, seven languages --- now he only speaks 10 --- and that's --- that was his girlfriend, and now his wife, Elisabeth , who lives with him in Düsseldorf Germany. He now runs all of our European operations, but at the time, he was a coin dealer like me in Boston. That's me around the day we moved into Boston. We had a great corner location at the corner of Devonshire and Water Street, right across the street from Fidelity's building; actually, I think by the time we moved there, Fidelity had 3 or 4 or buildings --- they were growing like a weed. But we had a beautiful location that really became a mecca for the Boston financial community and a lot of people were collecting coins in the late '70s. And our company just continued to grow and grow through 1979.

In 1979, we probably had 150 employees and were doing 30 or 35 million dollars, maybe more, and Sotheby's came calling. They sat me down --- or he --- I think he was the CEO or any may have been working with the CEO --- he sat me down and said, "We want to get into coins, and we want to own the best coin company, and that's you. " And he offered me a deal that was worth $22 million. And Charlie Lidman and I --- and my dad, of course, I called --- Charlie Lidman and I basically agonized over this for six months about whether to take this offer or not.

And finally, we declined. My dad thought I should sell and I was kind of on the fence, but at the last moment we declined.

And then in 1980, I felt like a genius because the company made $10 million pretax the first half of the year, including selling that coin fund at auction, the one that my dad had put together.

And keep in mind, this is early 1980, during the hostage crisis, everything is really in the toilet, except coins and precious metals. The stock market was dirt, dirt cheap; people were getting wiped out, a lot of businesses were going under, and we sold that coin fund that we had paid $348,000 for the coins for $2.3 million at auction and paid each investor about $70,000 for his $15,000 share. It saved several businesses, kept some of the partners out of bankruptcy, too. It was really just a wonderful time to sell it and a great experience. Then around the middle of 1980, the market completely collapsed. The coin market had just gotten too frothy and prices started going down by 10 or 15% a month.

Meanwhile, Charlie and I had a disagreement about whether to continue to grow the business or pull back and I wanted to continue to grow and he didn't, so he decided to retire and move to Arizona, and I went through a succession of really bad CEO choices, one right after the other, and by the middle of 1982, after having turned down 22 million dollars from Sotheby's, I owed about a million and a half dollars more than I had.

So I went from friend pretty high flying to insolvent. And that's when Steve Ivy called me --- my arch-rival again. Steve is the guy with the beard in the middle that's him in probably 1982. He said to me, "Jim my business isn't so good now, either," but obviously he was in a lot better shape than I was and he said to me, "I think that if we join forces we could do really, really well right now and I'm so sure of that that I will sell you half of my company for a note a non-recourse note. You can put your auction company and your European operations into the mix and I will buy those from you at a fair price and pay you now and you can sell the rest of the business to your employees, and the only catch is that you have to move to Dallas."

I had just met my wife, but I didn't know she was going to be my wife yet; I liked her a lot, but we had just met and my parents had moved to Florida and one of my sisters was now in Seattle, and one of them was on the verge of moving to France to get married there, so I didn't really have a whole lot holding me to Boston anymore. And so I took him up on the offer --- one of my better choices --- probably made up for a lot of my really bad choices of the prior couple of years.

So we started --- that was probably him a couple of years later --- and we started working together immediately, and everything that he predicted about the business was absolutely right. We had about 50% more overhead than either of our businesses had had prior to the merger, but we had 100% of both of our sales volume instantly and we just started making a ton of money right away. He figured out efficiencies in our European operations that allowed us to buy a lot more coins over there. He figured out how to get financing; he took care of all of the business end. And I just had to buy and sell coins.

We had a great business going almost instantaneously. Now this guy --- this is Bob Merrill --- this is a very recent picture of Bob Merrill, he looked a lot younger back then. But Bob Merrill was running our auction company --- running Steve's auction company, and when we merged --- when I merged ours into it, he ran both of them and it was really a second tier or third tier auction company. It was an afterthought to our business; we were wholesale coin dealers.

But he wanted to build it, and I wanted to build it even more. I didn't like the idea of just being a wholesale coin company. I wanted to be more like our friends in Boston at Fidelity. I wanted to sort of bring liquidity and availability to the coin business and I didn't think that we were contributing to that at all. I didn't mind buying and selling coins to help pay the bills, but I wanted us to be retailers. So we tried everything to try to get us accepted as a mainstream coin auctioneer, and it was really, really tough.

We had three really strong competitors: Bowers and Morena, Stacks, and Superior, and they got all the good collections. In fact, one of them --- their motto was "when great collections are sold, Bowers and Morena sells them," and Bob Merrill used to joke that "when great collections get sold, Heritage gets jealous.

So, finally --- I should mention that in 1984 I got married. That's Marc Emory standing next to me as my best man and my beautiful wife who is sitting right there. And here she is dancing with my dad.

Back in Dallas, Steve and I were raking it in , except for the auction business. So we got the idea that we would buy up all the coin show rights because that would really way that we could compete with the brand that these other auction houses had. A lot of people like to sell at coin shows because they feel like that way nobody has to worry about --- that way they don't have to worry about nobody showing up.

So we bid double what our competitors were used to paying for ANA auctions, which I think we paid about $75,000 when they were used to paying $35,000 and we got three or four of them in a row, which really kind of ticked off our competitors, but all's fair in that business. I think competition is a wonderful thing. And we didn't get mad when they beat us on deals --- they were usually good sports about it.

And we managed over the next two or three years to claw our way solidly into the second tier where we were probably --- at that point, we'd become the number four or five auctioneer in the country --- of coins.

This is the book I wrote on coin grading at the time because I was trying to get the field to be a little bit more, I guess, homogenous. Every dealer was grading their own coins and there was a lack of liquidity as a result of that, because you couldn't really depend on what a coin was going to look like from one dealer to another.

So I wrote a grading guide and started a grading service where people could send in their coins and get our grade on them. That was very successful for a year or so and until a huge competitor --- a much better-design competitor sprang up, called PCGS, and we supported them after they came out, and then another grading service called NGC in 1987, and we supported them, too, and eventually closed down NCI, but they used the grading standards in this book.

In 1987, we hired this guy --- we hired the one on the left; the one on the right is the one that works for us now. That's Greg Rohan and he is now the president of Heritage and he was a closing machine. He really knew how to sell our auction company. He is a very, very honest guy. He would always make sure the consignors were extremely happy with the experience, but he was a great, great closer.

He was the one who really convinced us to get on a plane and the minute we had any inkling that a big collection was going to be was up for grabs for consignment. He would be on a plane before our competitors could write a letter in response to the consignor's inquiry. He just started bringing in tons and tons of consignments, and he also helped us hire this guy to run our gold department and this guy, our esteemed general counsel , who now looks like that, and Charlie Lidman returned at that time, too. I managed to convince him to come out of retirement and moved to Dallas for a few years. Between then and the time Dave was born in 1991 we actually clawed our way into the --- I'd say, the first tier at the auction business. We were, maybe, the third-largest auctioneer at that time and continuing to grow by leaps and bounds.

In 1994, we were approached by a major retailer and they offered us a really lucrative deal to tone down our retail business and supply them with coins. After a lot of discussion and arguing and more discussion, Steve and I decided to accept the deal. And it was a pretty good deal for awhile, but it wasn't what I wanted to be doing so I went on half-time for a couple of years and I wrote two novels. Very fortunately for me, and ultimately for Heritage, this was kind of right at the beginning of the Internet.

What I did with this novel --- which took me three months to write and six months to rewrite 22 times. What I did with this novel "The Truth Machine" --- which I put a first edition in each of your bags in case you're interested. But it was a novel about a foolproof lie detector and what happens when it's unleashed on the world, a very futuristic story. The timeline is about 60 years. I put the novel on the Internet while I was getting ready to self-publish it, along with a survey that you had to fill out every five or six chapters or so.

And you could read it for free, and in two or three weeks I got 15,000 surveys. And people were telling all their friends about it and putting it up on newsgroups and NPR did a national story on it --- a very flattering story --- that this was a novel idea --- okay to use the word "novel", I hope. And eventually, Random House --- who had seen a copy of the manuscript because a coin dealer friend of mine who writes coin books for them --- had showed it to his editor and they had passed it around, and right around the day --- I think it was within the same week that the books arrived from the printer for self-publishing the book --- they called me and said we want to publish your book and we want to make it our lead fall title, and they did.

And it sold 300,000 copies and, of course, this was right at the emergence of Amazon. Like any author, and I'm sure there are several authors in this room, like any author, I was on Amazon every day see what rank it had, what comments people were making --- it got up to number 2, by the way.

I studied what Amazon was doing and, of course, I had thought a lot about what the Internet was going to look like when I wrote the book. I just really got a very, very strong vision about what an Internet site would be.

So in 1998 --- actually, we'll skip Doug , even though he's a pretty important character --- in 1998, Paul Minshull, our chief operating officer , hired Brian Shipman who is now our chief information officer , who hired Michael Weems, who is our e-commerce director , and they, along with a fellow by the name of Jay Freeman, built a website that I pretty much --- well, Paul and I, but mostly me --- designed, and we did the same kind of thing I did with the book; I gave away information that nobody was used to getting for free.

We put all of our auction records in an archive that any member could access for nothing. We put a price guide up that anybody could access for nothing. We launched a completely interactive site where you could bid and get outbid notices, and this was way before other auction houses, other than eBay. We basically did everything that I would have wanted from a website as a collector and at that point I was already collecting comic books again --- you know, trying to relive my childhood, because that's what we do at my age.

I thought about what I would want as a comic collector, and I just assumed that coin people would want the same thing. We also put my coin grading guide online and we had something called My Collection --- this was Paul Minshull's idea --- where anything that you bought you could see your purchase price and we would value it for you. We would fill in the price guide price so people even that hadn't bought coins from us would list their collections and be able to track what they were worth.

We also had a feature called My WantList --- we had this even before eBay had it, where it you could fill in keywords and get notifications every time something came into our inventory or at auction, and we had tens of thousands of people sign up for that. And by 2000, we not only had the number one coin auction company, but we were growing faster than our competitors and almost double our nearest competitor in volume. This was a business we had really just started 20 years ago and they had been in business for 80 or 100 years.

We decided that maybe we could expand into areas that we didn't know that much about; fortunately, we were approached by these guys who looked much younger 10 years ago --- but that's Len Glazer and Allen Mincho , two of the top United States currency experts in the world. They had a great currency auction company called Currency Auctions of America. It was the second-largest and they had built it over many years. They said to us, "We're going to get run out of business by Lyn Knight," who had the largest, "because he has a website and we don't, so why don't we just come to work for you and you can acquire our business as part of the deal."

Well, we instead negotiated a deal where we actually paid them some money for the business and paid them less for the upside which turned out to be better for us, but they were real happy with it. Within a year, their currency auctions were outselling Lyn by double, and they are still with us, even though they're really, really, really old.

Of course, I was even more restless when that worked, and I wanted to sell everything at auction because I figured the coin business is so competitive there's nothing that could be harder than coins to compete with, because we had been scraping our way up to the top of that business for decades and it was really, really hard.

So I suggested that maybe we could try comic books and my partners just laughed --- well, my one partner at that time laughed --- and my future partners just laughed at me and said that was ridiculous, we didn't know enough about it. And at every executive meeting for months I just kept bringing up the idea until finally I knew that they were going to throw me out of the room or I would have to offer them something, so I did. I offered to put half a million dollars' worth of comic books from my collection at auction, unreserved, if they would let me run one comic book auction.

So they couldn't turn that down; that was guaranteeing that they weren't going to lose any money at auction. So I went and I hired a local comic book collector by the name of John Petty, and we put together a pretty respectable auction of mostly my stuff, but a few other consignments. And I also got my oldest son's best friend's dad to put together a tiny movie poster consignment.

He was a very serious movie poster collector, named Grey Smith. He was looking to get out at his current line of work which was production management for major films, a really grueling job away from home for months at a time sometimes. He would often work 18 several 18-hour days in a row and was looking to get out of that, so I said, "Why don't you put together a movie poster section, and if it goes well then we'll figure out a way to divvy up the commissions and try to make a business out of it."

So he agreed to that; he put some movie posters together and we had our first sale, and to give you an idea of the comic and pop-culture market, it was owned by Christie's and Sotheby's. They were the only credible players. They would have one to two auctions a year averaging maybe a million and a half dollars per auction, and the most a comics auction had ever brought was $2.2 million, maybe in the mid '90s, and the most that the entire industry had ever done in an entire year was less than $5 million. We did $960,000 in our first auction and it was good enough that my partners said, "Okay, let's keep going."

Our second auction was four months later and it did 2.3 million. Our third auction was three months after that; we did it at a comic show --- first time that was ever done --- it brought $5 million. Stan Lee, who I had met at a charity lunch a few years before, consigned his collection to it and got lots of his friends to consign, and the sale after that, we got Nicolas Cage's collection and sold that auction for 5.2 million. We did $15 million our first calendar year in the comic auction business, just by having a really great easy-to-use website, and that was sort of the beginning of Heritage Auctions. That was when we changed our name from Heritage Coin Galleries to Heritage Auctions and moved into our tower at Maple from our little space at Highland Park Village.

These are the comic guys --- that's Grey Smith right over there, and now we have added --- we hired this guy, Warren Tucker , to start in world coins and took him four years to build us from maybe the hundredth-largest world coin auction company to the number one world coin auction company in the United States, and probably number two in the world.

It took Steve's son, Chris Ivy , well, he's a little bit of an underachiever --- it take him six years to build our sports department from somewhere in the top 30 to number one.

Here are some more of our management team and partners --- we have started taking some really great partners --- Todd Imhof is one of the best coin guys in the country, as is Ryan Carroll, and Cris Bierrenbach took over the world coin division from Warren --- or is in the process of taking it over from Warren because Warren is 75 years old. And you know we all kind of in this business we all kind of love it enough that we want to die at our desks, but we do want to work a little less and less as we age.

These are our categories now. We're thinking about adding quite a few more.

Cars is the one that I'm really hoping to add. We're looking for a great car guy now and, I'd also like to add charity auctions because I think that would give us a chance to really help worthy charities raise a lot more money. We don't have a lot of charity consignors and customers yet, but I think they could be convinced to bid on experiences like my Stan Lee lunch. In fact, I bought the two of the first three or four lunches with Warren Buffett back when they were cheap. They were $20,000 and $25,000. Now they're 100 times that.

So, that's kind of where we are now; we're attacking the categories one at a time. It's hard to compete with Christie's and Sotheby's in fine arts but we manage to go after little niches and we are now probably close to their level at illustration art and I think that we could probably compete with them very well in California art and in Texas art and several other niche categories that will, hopefully, eventually grow into bigger art categories.

But what I really like about Heritage is our philosophy. We just never do any deals --- and we never have to do any deals --- that don't benefit both parties. Every deal that we do is win-win or we don't do it and we are, like Fidelity was in the mid '70s, making collectibles accessible to people so that they can make intelligent decisions and they don't have to know anybody to get expertise. They don't have to worry about selling for too little or paying too much because we will tell them --- or help them --- research what the items are really worth, and if they overpay it because they really want it and they know they're overpaying, not because they were misled.

I love the fact that we're in a business where we're dealing with --- well, I don't like to say retail --- but we're dealing with the public --- and not just dealers --- and we're helping to build a form of wealth, kind of a new form of wealth and create wealth for a lot of people.

And it's much less cyclical --- a lot less can go wrong in this kind of business than it could back in 1980 or 1981 when I had my little implosion. In fact in this recession, we've never had a bad quarter. So I think we really built something great and I think my dad would be --- well, I know my dad is proud of me.

This is my succession plan. I think my partner may disagree with that succession plan, but I know my son doesn't. That's Mikey and, hopefully, it won't be soon.

I would welcome any questions.