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Monday, June 13, 2005
Harkening back to the boom-bust days is a useful way to gauge the seriousness of current plays that appear bubble-ish. To wit: art.com. They recently closed a $30 million round of VC funding before being bought out by AllPosters.com, for those scoring at home.
The official history on the company website notes that by 2000, it was one of a very rare breed of online retailers which were "cash flow positive." Perhaps this promise was what excited Getty Images so much when they bought them out for $200 million in cash and stock in 1999.
Clearly, the potential was overblown. Pud's crew danced a merry dance on the apparent grave of art.com in 2001 when the company hit a speedbump. Apparently it wasn't going so well. Art.com was dragging down its parent company.
It gets hazy after that, but all we know from the recent glowing reports from VC-land is that it was a heckuva good idea for the art.com people to "build a successful company for five years" and then get the $30 million, rather than "taking $10 million for a startup." This overlooks the fact that the founders probably had to raise cash (about $500,000) for the domain name when they launched the company (which they apparently did, in the initial round of VC), and the fact that Getty overpaid for the company shortly after it got going. So much for the slow build theory.
Anyway, art.com is either a growing powerhouse, or an example of VC neo-bubble thinking that hopes to sell the company to a greater fool for a greater valuation. Either way, you can buy posters of dogs playing poker there. Hmm, come to think of it, that's some pretty cool art. I think this one's gonna do OK after all.
Edit: they're using my IP address to show the purchase price in $Cdn. Shut up! I'm liking these dogs more all the time.
Posted by
Andrew Goodman
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D'oh!
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