Melbourne-based online art retailer RedBubble is close
to becoming cash-flow positive, according to the start-up's
co-founder Martin Hosking.
RedBubble's founders Martin Hosking, Paul Vanzella and Peter Styles (Credit: RedBubble)
"RedBubble is doing very well in the current economic
climate," Hosking said in a recent interview with bootstrappr. The
entrepreneur, currently RedBubble's executive chairman and
chairman of Melbourne software firm Aconex, is a veteran of the
dotcom environment courtesy of co-founding Looksmart in 1996.
RedBubble was founded in April 2006 by Hosking, along with
fellow entrepreneurs Peter Styles (the company's managing
director) and Paul Vanzella. Initially funded by the founders,
the start-up has since raised a little over $4 million from angel
investors in Australia and overseas.
"The original impetus was to bring print on demand technology
to Australia. But this idea rapidly bored us," said Hosking. "We
became interested in why none of us were engaged with the
mainstream social networks, and asked what would work for us. The
answer was a site that allowed us to share, produce and share our
art."
RedBubble currently has about 10 people working for the company,
with over 110,000 artists using the site to market their work and
more. The site pulls in "well over" a million page impressions
per day — from 60,000 visitors — which Hosking said made it the
third-largest art-related site in the world, and the biggest in
Australia.
These numbers would also make RedBubble one of the largest
internet sites of any kind in Australia. The site charges artists a
base fee for site visitors to buy (in many formats) their artworks,
but artists can set the final price. Unlike many other internet
start-ups, RedBubble doesn't make any money from advertising
revenue.
I think there's an element of integrity about what we do, which the artists appreciate
RedBubble's Martin Hosking
According to Hosking, this e-commerce model (which he witnessed
succeed in the first dotcom boom), along with RedBubble's focus
on aligning its own interests with those of the artists which use
the site, is behind its success.
"We only make money when the artists make money," he said.
"And we communicate that forthrightly. I think there's an element
of integrity about what we do, which the artists appreciate ...
it's very much come out of the passion of myself and Paul Vanzella
and Peter Styles. It reflects our passion and our view of the
world."
"Often you'll see these websites where they're building it
for somebody else. That's a dangerous thing, because you get it
wrong, but also, it questions the person: whether they really are
going to understand it ... why are they doing it?"
Hosking said that in a sense using RedBubble is like going down to
your local market because of the community feel. "Yes, you're
purchasing things ... but what you're actually doing is connecting
with people, and you may go home with a spare part for your motor,
or a piece of jewellery, but what you've really done is connect
with people in a quite interesting way," he said.
In the short term, Hosking said RedBubble might look to raise
additional money to keep the business funded, with some to come
from Australian investors and some to come from overseas. Longer
term, the start-up's focus will continue to be on building its own
operations as an enduring company, rather than launching other
sites or even exiting the business through an acquisition.
"I've had the experience of building a company and selling it
off," said Hosking. "That wasn't particularly satisfying, to be
honest." He added liquidity to shareholders was much more likely
to come through a stock exchange listing than other avenues.
For more comments from Hosking on the broader Australian
environment for start-ups, see our article this week.
Commentary
Hosking's right: RedBubble does have a good model,
and like news websites where they align with the interests of their readers,
RedBubble is doing a good job aligning with its artist members. The
founders of the site have a strong rationale for why they will
succeed, and are taking advantage of both the growing trend towards
sites that integrate social networking features, and a rising tide
of internet retailing in general.
It's clear from the user feedback on the site that its members
love the service it's providing.
Of course, in any business there are risks. Buying art is
clearly an activity that will suffer if the world (and Australian)
economy heads dramatically further south. In addition, RedBubble
will need to carefully shepherd its technical architecture through
its ongoing growth period so that it will scale for the next level
of its business; a notoriously tricky proposition (can anyone say
"Twitter"?).
With these caveats, we have no hesitation in awarding RedBubble
a boom rating.
