A common story: Artsy. Part 1
ARTinvestment.RU   13 августа 2020

In the new section AI talks about the history, the successes and failures of companies in the art market

20 July this year the guest online-студии ArtTactic became the Executive Director of the Artsy Mike Steib, during the conversation, who told about the portal in a pandemic and about their own vision for the development of the art market in the coming years. At the same time Mike's invitation coincided with the intention of AI to launch a new section devoted to the history of art-компаний in detail. In the end, the first material it was decided to dedicate to Artsy, the most frequently mentioned online-платформе in conversations about art and technology.

here is the first part of our work: chronology of the company since inception until 2020 with a few comments. As sources we used only publicly available information – the official statement of the founders, interviews, third party research and publications in the media.

2007

• Student at Princeton University Carter Cleveland can't find online the perfect pattern for your Dorm room. Desperate, he decides to create "a place where every user in the world can discover new art".

2008

• Cleveland receives start-up funding ideas through hackathons (competitions start-UPS), friends and family. The money it creates basic computer code to recognize the similarities between art and makes recommendations to users based on their tastes.

2009

• called Startup Artsy raises $160 million in venture funding and is registered under the domain name Art.sy in the blast zone of the Syrian Arab Republic.

2010

• Artsy takes part in the hackathon at TechCrunch Disrupt (new-Йорк) awarded Yahoo! Rookie Award.
• project is included in the Forbes magazine list of "Companies that you need to know in 2011".
• Carter Cleveland met with Wendi Murdoch, the widow of tycoon Rupert Murdoch, the art collector and venture capitalist.
• Wendy talks about the idea of Artsy Larry Gagosian, Brand Glimcher (Pace Gallery) and the William Akvavella (Acquavella Galleries), making them the first investors of the project (according to our information, each of the three initially invested about half a million US dollars AI).
• President and COO Artsy assigned Sebastian Cwilich that goes into a project with the positions of commercial Director of Christie's.
• Artsy officially holds the first investment round (A): involved a $1.25 million round led by Josh Kushner of Thrive Capital (the brother of Jared Kushner, son-in-law of Donald trump's AI). Among the investors in the round also spotted Larry Gagosian.
• Artsy announces the imminent opening in the spring of 2011.

note AI: by 2010, Sebastian Cwilich already had solid management experience. He developed the business-план the London gallery Haunch of Venison, which later joined the auction house Christie's. Prior to this, Zwilich received an honorary award of the INFORMS Edelman Prize for his work on network optimization AT&T save Telecom companies hundreds of millions of dollars. Simply put, he had a reputation as a specialist in the creation of profitable and sustainable business.

2011

• the project Launch is delayed foran indefinite period of time.
• the Artsy gives the presentation of the project at the Foundation Beyeler during Art Basel in Switzerland.
• starts to work in the home page where you are prompted to enter your name, email address and to expect an invitation. It brings an element of intrigue, the database is updated with Artsy hundreds of thousands of contacts.
• Former chief curator of the new-йоркского Museum of modern art (MoMA) John Elderfilda became Advisor to Artsy, "helping the web-сайту in matters of history of art and inspiring other museums to make part of their collections available for display on Artsy".
• the Company Artsy creates the position of editorial Director, which was occupied by the Marina Kashdan.
• there is a second investment round (B): from raised $18.5 million the most part again gives Joshua Kushner. And again among investors round noticed Larry Gagosian.

2012

• development work Begins on the Art Genome Project – the power of search and classification system of art, the underlying Artsy, which helps collectors to find works based on existing tastes.
• Official opening of the platform to the public in October (the users during the year went VIP-приглашения received simultaneous access to all, AI).
• On the platform there are 20 thousand images from 275 galleries and 50 museums as well as a selection of works of the fair, Design Miami.
• Carter Cleveland, Artsy sees the future in "the creation of your own virtual collections on the basis of available on the Internet of images" (note: while no-либо sales – AI).

2013

• the Aggravation of the Syrian conflict disables Art.sy 36 hours and restore on another domain Artsy.net.
• the Strategy of "user generated content" is replaced by "the editorial approach" – now the site visitors can see collections of selected attracted by the professional curators. The same applies to professionally written texts and reviews (previously, the texts could also be added user-Artsy – AI).
• Artsy becomes a partner of the fair of art of the old masters of the Armory Show, in parallel, presenting selected works on its platform.
• the decision to earn on sales by third parties. the First monetization model: no subscription fees for galleries, 15% Commission on sales up to $10 thousand and 10% of sales over $10 million
• as sellers on Artsy recorded the first 130 galleries.
• Visitors Artsy save in your favorites, or ask the galleries for more information about the art objects in the amount of $1.4 billion (the request is not meant to make a sale, the data on successful transactions remained unsolved – AI).
• Artsy opening a free database of the results of public auctions providing statistics on 300 international auction houses (as noted in the press-релизе, it contained "hundreds of thousands of results". For comparison, the base ArtPrice for the period numbered about 25 million auction results – AI).
• Despite working as a trading platform-посредника, Carter Cleveland insisted in the media that the mission of Artsy at the-прежнему is "the search for logical relationships between art of different styles and eras to create a user's own Internet-коллекций".

2014

• Artsy changes itsbusiness-модель, making it more attractive to galleries: the portal refuses commissions from sales of art, leaving only a paid subscription for the right to place on the platform.
• New subscription plan for the galleries is from $375 to $1400 per month.
• the Galleries are allowed to hide information about prices and to fully take control of the negotiation after a buyer has expressed interest – not reporting to Artsy about committed transactions (remember this turning point – AI).
• Artsy declares plans to "use its client base to search for collectors who wish to sell art." According to the portal, for this service the auction house will pay Artsy an additional fee.
• Art Basel, Frieze and the Armory Show and other fairs 34 use the Artsy for the announcement and demonstration of selected works (from art-ярмарок for virtual location no charge was levied – AI).
• Internet-пользователи go on the button "request additional information from the gallery" near the objects of art amounting to $5.5 billion (data on transactions are not published again, but now the real figures are not known even Artsy – contact with the galleries ends at the button – AI).
• the third investment round (S): raised $25.9 million, the round was led by investment Fund Catterton (the same year merged with the Capital L and became part of LVMH, and Francois Pinault – AI). Investing in this round, Larry Gagosian, are not reported.
• Getting new money, the Artsy increases the staff to 90 employees.

2015

• Composition editors Artsy is increased from three to eight people.
• Artsy is the first sponsored content – a series of short films about the Venice Biennale in partnership with the Bank UBS.
• Carter Cleveland announces 500 thousand unique visitors per month Artsy (in the same year the web-сайт Sotheby's was attended by 118 thousand visitors per month. However, these findings were officially confirmed in the annual report of the auction house – AI).

2016

• Artsy creates a platform for carrying out online-аукционов and becomes a partner of the leading world and regional auction houses, including Christie's, Sotheby's, Phillips and Heritage Auctions is giving you the opportunity to bet as an aggregator of public auction.
• A 41 online-аукцион, most – successful in terms of implementation of lots.
• Staff increases to 140 employees.
• Artsy reports about 550 thousand visitors in a month, with audience on average spends on the platform an average of about two and a half minutes. The number of subscribers in Instagram Artsy – 600 thousand
• In the official press-релизе Artsy called "technological platform, which will help to expand online-влияние galleries".
• Carter Cleveland calls his project "art-версией Amazon: unified web-сайтом where you can put all works of art in the world, freely to buy and sell them."
• Sebastian Cwilich in an interview said that "Artsy close to entering the operating profit... but there is still one investment round to expand influence in Asia".

2017

• Artsy takes on new-йоркский startup ArtAdvisor – the development of artificial intelligence for the assessment of art and market forecasting for novice and experienced collectors.
•The portal holds 190 online-аукционов, the growth of trading activity compared to the same period last year more than 900%.
• By the aggregator Artsy on live auctions partners have applied to about one third of the lots of which acquired more than 8% of the lots.
• Artsy declares that "cooperates with 1800 commercial galleries in 90 countries allowing <галереям> monthly total to Transact $20 million Number of unique visitors has increased to 2 million, and monthly sales doubled compared with the year 2016" (recall that the commissions from sales galleries, Artsy has ceased to be relevant in 2014, so this message was addressed to new customers from the number of galleries, including advertisers, for whom it is important the number of unique visitors AI).
• Official press@Artsy ndashрелиз calls "the world's Leading platform for searching and collecting of art."
• investment is the fourth round (D): raised $50 million from 56 investors headed Avenir Growth Capital. In a round, also participated, Thrive Capital, Shumway Capital, Larry Gagosian, the family members of the Rockefellers and the Akvavella, Daria Zhukova and Wendi Murdoch. For the first time among investors noticed the owners of the technology companies and rich Barton (Expedia, Glassdoor, Zillow) and Bob Pittman (co-founder of MTV, CEO of iHeartMedia).
• assessment Pitchbook, with a combined investment of $101 million, market capitalization Artsy is $275 million dollars (he Artsy refused to comment on the figure AI).
• Sebastian Cwilich said Artsy "uses new investment to develop the direction of auctions, which today are the most promising part of the platform".

note AI: the last statement of Zwilich – facto recognition of the fact that a percentage of sales was a more significant source of income than a monthly subscription. On the other hand, focusing on the auctions also meant that the company was not going to return to the commissions with galleries in the foreseeable future.

2018

• Reduced the average cost of the subscription plans – now the galleries pay from $425 to $1,000.
• Artsy launched on the WeChat platform in China, "to help artists to reach a wider audience".
• Tested a pilot scheme of sales, where collectors purchase art through the app Artsy in the physical spaces of the galleries with a credit card without filling out the account-фактуры.

2019

• Artsy has more than 200 employees on three continents.
• the site includes more than 1 million contractors and more than 100 thousand artists.
• For 40% of art objects in the galleries on Artsy prices initially specified
• the portal covers 3 thousand galleries, museums, and 800 funds and 60 international art-ярмарок.
• Attracts 2.5 million unique visitors monthly.
• Staff-квартира in new-Йорке with offices in London, Berlin and Shanghai.
• Has 954 thousand followers on Instagram.

thus:

• Daniel Dubrovkin, technical Director, leaving his post.
• Sebastian Cwilich, President and chief operating officer, announces resignation after 9 years of operation (as it later turns out – to the post of adviser on technology of the Empire of Gagosian – AI).
• the New Executive Director of Artsy, Mike Steib, traditionallysuch cases, said that the company "will retain the best and will offer new ways of development".

will Take the liberty to answer the question, what can be saved and what should be improved. From the above timeline, we see two characteristics to have a significant impact on the development of Artsy. In-первых, the duality of the mission of the project. Don't forget that Artsy was originally conceived as a commercial project, and the need for monetization has emerged with the emergence of the first institutional investors (Troika gallery Gagosian-Глимчер-Аквавелла, which gave the startup money, do not take into account: their interest was balanced between the desire to keep abreast of technology in art and reluctance to spoil relations with the widow of Murdoch, one of its top-клиентов – AI). Therefore, in interviews at techno-энтузиаст Carter Cleveland often spoke of the creation of an ecosystem of art, and the business-стратег Sebastian Cwilich – the search for new markets and expanding audiences. Both the first person Artsy reminisced about the commercial component of the project only in one case – when it was time for new rounds of investment and prospective investors need to show a good press.

the Second feature that can be extracted from the history of Artsy – a wide variety of products covered under a single brand. The basic precept of any startup reads: bringing a single product to perfection, and then proceed to the next. Before you find your own business-модель in the form of "online-рынка galleries", Artsy has created lots of other promising areas, but then lays them aside and continued to develop. How these parallel ideas contributed to the development of the main product or prevent him – we can only guess. With the online-продажами main problem collector 2010-х – centralized payment and shipping tied to a single seller – is not resolved. Meanwhile Artsy through their platform began to develop a service for remote participation in the global auctions. It brought the money in the momentum and became another important part of the monetization of the project. Remained however one of the main issues in this direction – online-видеотрансляция auctions for participants, allowing them real-time to respond to the picture, not just numbers.

Artsy did not stop at addressing this problem and has begun to develop the analytical program assessment of the prospects of buying art. The question is: how do potential customers platform, faced with two outstanding problems with the purchase of works, must want to use an application that allows you to rate this purchase? Whether they will reach all the way to the purchase subject to the outstanding issues? This issue remained unresolved in 2019, and 2020 mitigated the overall picture, to equalize the chances of most medium to large players in the struggle for a new buyer. In fact, the crisis plays Artsy on hand – especially in the eyes of investors, to which you can while waving a sign that says COVID-19.

Artsy has been among the pioneers of ArtTech (among others Saatchi Online, Artspace, etc AI), but the surprise quickly received major support from influential figures in art-рынка, I realized that we must become the best. This had a huge psychologicalpressure. Hence, perhaps, the roots of decisions about what to Artsy should be a mixed bag. But, as mentioned earlier, it is impossible to keep all areas at the same level, if they develop in parallel, not one after the other. And the statistics says that if the main vector of the company has a conditional 5 star rating, and six other less important areas – only 3, the assessment the entire company will be based on average. And this figure, unfortunately, will not be equal even 4 stars.

the second part of the article we fantasize, it might have been the history of the company on the-другому, compare models and Artsy Amazon, describe the dividend received from Larry Gagosian investment in Artsy and analyse the statements of the new Executive Director of the company Mike Styba about the development plans in the post-кризисный period.

Denys Belkevych, AI