RedBubble paints a rosy picture

Summary:Melbourne-based online art retailer RedBubble is close to becoming cash-flow positive, according to the start-up's co-founder Martin Hosking.

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.

bootstrappr opinion: BOOM

Topics: Start-Ups

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