James Halperin started buying and selling coins when he was 15 years old. One of his current partners, Greg Rohan, got a jump on him and started at the tender age of 8, selling pennies to his classmates in school.
Now the two of them, along with five partners and a staff of nearly 400, operate Heritage Auction Galleries, a collectibles auctioneer headquartered in Dallas.
Heritage Auction's services are in high demand these days. After the markets collapsed in 2008, wealthy investors turned to tangible assets such as valuable collectibles to help them get through the financial crisis, as well as to bring stability to their portfolios.
Heritage Auctions started modestly, with Halperin and Steve Ivy buying and selling collectible coins in the 1960s. They merged their businesses in 1982 and the next year dealt between $75 million and $100 million in coins with fewer than 100 employees. Rohan joined the firm in 1987.
"Then the Internet changed everything," says Rohan, president and now co-owner of Heritage Auctions. "We put $2 million into building our Web site, HA.com, to make it a resource for collectors. It is free but you have to be a member to access it. Now we have a mailing list of more than 1 million people, with 500,000 of them in 181 countries being members of our online community. We cover most of the world."
By the late 1990s, Heritage was the largest coin auction firm in existence, but Halperin kept pushing his partners to expand. "I felt that if our Web platform could make us number one in the highly competitive field of rare coins, other collectibles fields might be underserved and thus ripe for the sort of liquidity and transparency we could provide." So he put part of his personal collection of rare comic books online to see if they could tap into a profitable market for more than just coins.
"At that time, Sotheby's and Christie's had combined annual sales in comic books of $3 million to $5 million. Our first comic book auction was just under $1 million in 2001, which was respectable," says Halperin, who is now Heritage's co-chairman. "Our second, a few months later, was $2.3 million. In the first year, we did $15 million in comics auction business, so we knew we were onto something. We spun off a movie poster category and then an illustration art category and now do $50 million a year in those three categories alone."
A 1939 comic book (Figure 1) auctioned by Heritage last year that contained the first appearance of Batman recently brought $1.075 million, which at the time was the highest price any comic ever sold for at auction. Heritage also handled the sale of the original handwritten manuscript by Clement Clarke Moore of "Twas the Night Before Christmas," which sold for $280,000, as well as a rare 1913 Liberty Head nickel (Figure 2) that brought over $3.7 million earlier this year.
The auction firm now has 29 categories and is anticipating expanding to more. In addition to the offices in Dallas, there is one in Houston, and a Beverly Hills showroom was opened in February. A New York street-level location at 445 Park Avenue will open in September.
The Web site and the programming developed for Heritage Auctions is what has led to the remarkable growth, according to the partners. Halperin, an author of two futuristic novels, helped design the site using some of those futuristic ideas about the Internet.
"The excitement of being at an auction gets the juices flowing and the competition increases the bids," Rohan said. "But most people do not want to spend 20 hours on an airplane and $10,000 in expenses to come here from abroad. So they can bid online, either with proxy bids at HA.com or in real time using HA.com/live.
"We offered a wonderful Russian painting, 'Pushkin at the Water's Edge,' for sale and three people traveled from Russia to bid on it, but in the end, it was sold for $1.6 million to a man bidding from his sofa in Moscow."
After the Web site attracts people, the way to build business in a particular category is to find an expert to fairly appraise items, which then builds credibility and draws quality items to the auction, says Mark Prendergast, who as the company's director of trusts and estates, advises fiduciaries on how to appraise and liquidate their clients' tangible assets.
Heritage is now the third-largest art and collectibles auction house by sales volume in the world behind Sotheby's and Christie's. According to Compete.com (the Internet equivalent of the Nielsen ratings), HA.com gets more than twice as much traffic as Christies.com and Sothebys.com combined.
Heritage did $675 million in business last year. In addition to Rohan and Halperin, its principals include Paul Minshull, chief operating officer, and Steve Ivy, co-chairman and CEO.