How do you get from a fifth-grade coin collection to a $2 billion collectibles giant? Heritage Auctions C.E.O. and co-founder Steve Ivy made a business out of a childhood obsession. He’d been dealing in rare coins when he partnered with James Halperin—another coin-dealing college dropout, who also happened to collect comics—in 1982. Their business grew through the 1990s with the advent of the web, and the timing was fortuitous: As fine art grew more valuable and contemporary began to soar, Christie’s and Sotheby’s ultimately exited furniture, antiques, rugs, and other categories to concentrate on secondary sales in luxury items. In the process, they ceded much of the collectibles market to Heritage.

Heritage’s sales have been accelerating at a rapid clip lately—the house broke the billion-dollar barrier only a few years ago, and doubled that last year. It’s now in the process of expanding its Dallas warehouse to 270,000 square feet. I spoke to Steve recently about the early days of Heritage; its innovations, from its early website to pre-bidding; and much more. As always, this interview has been edited for clarity and length.

Your annual numbers just came out, and for the first time you’ve broken $2 billion in sales. It wasn’t long ago—maybe five or six years—that you first hit $1 billion in sales. Things are moving fast for Heritage, and now, very significantly, you’re third place behind Sotheby’s and Christie’s. What’s the context to all of that?

Our actual auction sales, as opposed to the private treaty sales, were about $1.1 billion, spread over 50 different categories—some very small, some quite large. That’s the part of our business we’re most excited about. We started out in the other categories [comics and comic art, memorabilia, sports, and fine art] 20-plus years ago, and had no advantage over anybody else. Obviously that wasn’t true of numismatics, but it was true of everything else.

The website is a key part of what you built, and you also introduced innovations that others are now trying to emulate: pre-bidding, using under-bidders, and being able to circle back to buyers far more efficiently. I think the other houses are still operating in much more old-fashioned ways.

There’s an interesting dichotomy in our categories: We have shopper categories and collectible categories. The shopper categories are for people who want to collect handbags or jewelry, for example, and are just looking around and aren’t going to read a whole bunch of instructions on how to get really robust information. Whereas a collector is highly motivated. They read instructions, they learn how to work on our website, and they stay once they get there because we have a lot of information that these other houses don’t provide. We get close to 100,000 unique visitors to our website every day, and they stay on it for twice as long as the other competitive websites.

One of the other things you’ve done—which was unique to coins when you originally did it—is drive the rise of grading agencies so that these objects can be assessed for quality and condition, and also authenticated and preserved.

That’s been huge because it’s brought in a whole new group of people and allowed them to justify spending a lot more money on a product. We’ve lowered the friction, which has not only brought in a bunch more people, but it’s driven the price and value up. We give out a huge amount of third-party information because that makes people feel more confident. And we try to make it efficient for people so they’re not wasting their time.

Can you speak to the two different grading services that got their start with you guys? Your volume allowed the graders to grow by working with you, and your investment gave them the opportunity to grade so many of these objects, which also helped your business.

PCGS [Professional Coin Grading Service] has now evolved into PSA [Professional Sports Authenticator]. And there’s NGC [Numismatic Guaranty Company]. We were early users of both of those services. We used our market power, if you will, and owned a part of PCGS, which we sold in the early ’90s. Then we turned around and bought NGC, and that company was recently sold to Blackstone.

PSA has since exploded into a huge business. The sports collectible business seems to be growing in lockstep with their ability to grade things.

Yeah, the numbers are just crazy. Sports cards, in particular, continue to go through the roof. They were doing 2 million cards a month for a while. I think it’s down a little bit, but, as you know, the business sold for $800 million, and now they’ve had some secondary sales that value the company at $4 billion.

Sports cards are a considerable business and growing, right?

Absolutely. Comics and comic art, sports cards and sports memorabilia, and now entertainment—they collectively do more than numismatics, and they’re probably growing at an even faster rate.

Generally, logistics are hidden in the entire art and auction business—but in your case, it’s one of the competitive advantages.

It’s huge. We sell 500,000 units a year, and I think Sotheby’s and Christie’s do about a tenth of that. Obviously their average value is much higher, but we can afford to sell $200 items in quantity. We’re essentially a factory in that regard. We’re actually adding robotics to the equation, too.

I do think collectibles are on an upward trend, and that’ll continue. They don’t have the sort of natural inhibitors that fine art has. But I will say, in fine art, we’re having tremendous success in multiples. They lend themselves to the same kind of aspects that help coins. Grading will probably come into play at some point with those.

I want to thank Curtis Rowser for his help editing this interview and Maya Tribbitt for her help with the Subdial data. Wall Power runs smoothly on their able efforts.

That’s all for today. Let’s speak again on Friday.

M