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From Berlin, Bringing Art Auctions Online: Auctionata CEO Alexander Zacke (Part 7)

Sramana: You also get a lot of auction traffic from India. What do Indian’s buy?

Alexander Zacke: They buy pretty much everything except European furniture. They don’t really like it. They buy a lot of Indian art, miniatures, and contemporary Indian art. I see the same trend happen in Morocco, Argentina, Mexico, and Turkey, where artists of those nationalities get a lot of attention within their countries.

The crazy thing with the art world is that there are artists everywhere and nobody recognizes they are there. They are hiding in small galleries and they tour around. Someone will buy a painting and hang it in their apartment. A year later, they have forgotten the artist’s name. After 30 years, they die and their kids decide they want to learn about the painting because their parents liked it so much. They send it to us and we tell them everything about it, and often surprise them by telling them that the painting is worth $250,000. It’s funny because in a lot of cases they are often ready to give it away. >>>

From Berlin, Bringing Art Auctions Online: Auctionata CEO Alexander Zacke (Part 6)

Sramana: There is a very compelling element to your story. You are going to have access to the larger ticket items that are the economic drivers of a traditional auction house. However, traditional auction houses do not have the ability to scale. Auctionata has the ability to scale much faster.

Alexander Zacke: That is exactly the case. We can scale very quickly. Auction houses have not grown as fast as the market that surrounds them. We believe that since we can reach a global audience, we can scale much better. People are coming from all over the world to these auctions. They will register and then 30 minutes later, buy a piece for $100,000 and send the money the following morning. >>>

From Berlin, Bringing Art Auctions Online: Auctionata CEO Alexander Zacke (Part 5)

Sramana: What is your commission structure?

Alexander Zacke: Our standard fees are 20% from the seller and 20% from the buyer. Our fees are negotiable, depending on the value of the consignment. The overall commission we receive will likely be less than 30%.

Sramana: You said that you raised some money to build this company. Can you talk a bit more about your financing strategy?

Alexander Zacke: We did a small round in 2012 and then a Series A after our first round of successful auctions. We took a total of $21 million from German venture funds between the seed and Series A. By the time we took our Series A financing, we had already shown a large user base and a viable business. >>>

Building Fat Startups: Nasuni CEO Andres Rodriguez (Part 7)

Sramana Mitra: I just have one last set of questions before we retire. You are one of the few entrepreneurs I have interviewed who has roots in Latin America. We see entrepreneurial activity in the technology industry from Indian and Chinese entrepreneurs. Why has Latin America been slow on developing in the technology industry?

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From Berlin, Bringing Art Auctions Online: Auctionata CEO Alexander Zacke (Part 4)

Sramana: How do you manage the courier service? Is it your own service or do you use a commercial service? Where are you having the paintings shipped to?

Alexander Zacke: We pick up the merchandise as soon as we obtain an auction contract. We then catalogue the item and run it through our in-house services. We take photos, authenticate the pieces, write descriptions, and link our work with research found in international art databases. We catalogue the piece scientifically and then list it in our online shop or put it up for auction.

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Building Fat Startups: Nasuni CEO Andres Rodriguez (Part 6)

Andres Rodriguez: I’ll tell you the short answer. For young entrepreneurs today, they can do it but they have to have technical people in the team that have lots of equity in the company. The one thing that an investor wants to see is the proof point that you have a concept. This is for the kind of company that you were just telling me about where what you’re trying to prove is a concept. It’s really about getting traction or users. I don’t think it has changed as long as you can get a technical team that can work. A group of two or three engineers can build a lot of value to prove a concept in six months. An investor will fund that. That is the way to do it with no track record.

Sramana Mitra: You’re right. That’s a very interesting observation. You can build if it’s a group of highly-skilled engineers who are willing to work for equity and do not cost a lot of cash. You can get to a certain level of validation working with customers and build technology. That is a scenario that can be funded. What I’m saying is, that’s not a concept financing, that is a business financing.

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From Berlin, Bringing Art Auctions Online: Auctionata CEO Alexander Zacke (Part 3)

Sramana: Did you expand Auctionata to include other auction house functions once you had verified market interest through valuation services?

Alexander Zacke: From there, everything progressed very quickly. We did 400,000 valuations in our first year.

Sramana: How did people find out about the site? How did they know you existed and that you offered the valuation services?

Alexander Zacke: They came to us through organic Google searches. >>>

Building Fat Startups: Nasuni CEO Andres Rodriguez (Part 5)

Sramana Mitra: In modernizing the enterprise storage using cloud principles, was there any other competitor or were you the first to come into that space?

Andres Rodriguez: When we came out, we thought we were the first but there are always competitors in the space. We have competitors today.

Sramana Mitra: Big opportunities tend to have competitors and that’s not a bad thing.

Andres Rodriguez: Absolutely. If you’re not chasing an idea that another company is chasing, you should be worried.

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