Arts Entrepreneurship Podcast: Making Art Work
Arts Entrepreneurship Podcast: Making Art Work
#272: Alex Farkas (Founder of UGallery) (pt. 1 of 2)
Today we released part 1 of our interview with entrepreneur Alex Farkas. In 2006, he founded UGallery--a curated online gallery offering a unique selection of heirloom-quality artwork from both emerging and established artists.
He studied art history, sculpture, and entrepreneurship at the University of Arizona and launched Ugallery upon graduation. After being part of San Francisco’s vibrant art market for 15 years, Alex packed up and moved to Amsterdam, where he runs the business today. Join us for a better understanding of all that goes into selling art online. https://www.ugallery.com/
Welcome to the Arts Entrepreneurship Podcast. Making art work. We highlight how entrepreneurs align their artistry, passion and vision to create and pursue opportunities to capture value in the arts. The views expressed by guests on the Arts Entrepreneurship Podcast are solely their own and do not necessarily represent the views of the podcast or its hosts. The appearance of a guest on the podcast, the venture they represent or reference to any product or service does not imply an endorsement or recommendation by the podcast or its hosts. The content provided is for entertainment and informational purposes only and does not constitute business advice. Here are your hosts Andy Heise and Nick Petrella.
Andy Heise:Hi Arts Entrepreneurship Podcast listeners.
Nick Petrella:My name is Andy Heise and I'm Nick Petrella, we have Alex Farkas with us today. He founded U Gallery in 2006. It's a curated online gallery offering a unique selection of heirloom quality artwork from both emerging and established artists. He studied art history, sculpture and entrepreneurship at the University of Arizona and launched U Gallery upon graduation. After being part of San Francisco's vibrant art market for 15 years, he packed up and moved to Amsterdam, where he runs the business today. We'll have U Gallery's link in the show notes so you can read more about Alex, his team and see the art offerings available on the site. Thanks for coming on the podcast, Alex.
Alex Farkas:Thank you for the warm introduction. That's wonderful.
Nick Petrella:You grew up in your mom's studio and gallery, so do you always want to have a gallery?
Alex Farkas:Actually no, I think growing up in my mom's business and seeing her make art, I really wasn't interested in going in that direction. There was even kind of a time period when I was finishing college and she was still trying to figure out what she wanted to do next. She was looking to sell her business and she asked me if it was something I'd be interested in and I really I just felt as though I knew that industry really well from growing up in it, but I didn't want to do it. And then just kind of a number of circumstances happened and I wound up back in it. But I didn't want to do it. And then just kind of a number of circumstances happened and I wound up back in it. And maybe that's common for a lot of us where we find ourselves back to what we kind of grew up with. But it wasn't my intention at all.
Andy Heise:Yeah, maybe, maybe a common theme with, like particularly family businesses, right?
Alex Farkas:Yeah, when I was really small my mom did so much to kind of grow her business. She had been a potter who wound up in this small arts community in Northern Arizona that's where I grew up in Jerome, and it's a town of about 400 people up in the mountains and mostly artisans and creatives and people who just kind of wanted to drop out a little bit in the late 60s and early 70s and my mom found herself up there. She was making pottery first out of the basement of her house and selling it from a little store there and then she kind of grew her business and she was very creative in ways that she used her art to grow her business and then ultimately she started selling other artists work and she really kind of transitioned to only doing that eventually because it was more lucrative and I think she enjoyed it. She also said something like I've made more pots than I needed to in five lifetimes. So I watched that process when I was small and I was always in her store helping put things together and make sales. When I was, I don't know, maybe four or five, I started having a table around. The holidays I'd pick mistletoe that grew around the mountain and I had Alexander's Mistletoe Company. I gave away a lot of free kisses to sell my mistletoe, but that was kind of my first venture in her store. And so I just grew up with the business and saw how it worked and I thought, well, there's probably a lot of other things out there that'd be interesting to do, and maybe that's why I didn't go back to it.
Alex Farkas:And then, when I was at the University of Arizona studying art and art history, she really encouraged me. She said you should also think about looking to a business degree because I think you'd learn a lot of other practical skills and also you might enjoy it too. And the university had this cool entrepreneurship program where over the course of a year, they teach you how to come up with an idea, write a business plan, pitch it, and then you get to go to these case competitions if they like your ideas. So I was in the art school. I was really passionate about what I was seeing there and there were all these young students who were really struggling to get from the student aspect to the professional career.
Alex Farkas:So we came up with this idea that we were going to create an online art gallery to help student artists turn into professional artists and the school liked it. They helped us along. They sent us to these business case competitions throughout the year. We went to the premier one in Canada and an international competition in Indiana and they had cash prizes and kind of amazingly and luckily, we worked hard but we won both competitions. So that was really great validation that this idea might actually be more than just a school project. And when we graduated, my one business partner and I, we decided to pull our winnings from the competitions and pretty much every other cent in our bank accounts and we said and pretty much every other cent in our bank accounts. And we said let's give UGallery a real try. That was 2006. And so we graduated in May and we launched the business in August.
Andy Heise:Oh, that's amazing. So the whole concept was a college project that you were working on.
Alex Farkas:Yeah, so that's why I say, you know, even as I was getting to the end of school, I really still didn't have a concept that I was going to get kind of pulled back into this world. The whole entrepreneurship program was more just something to see more of the world and figure out how businesses really work. And then, of course, this idea I'm sure was just seeded by my childhood and came right back to it. And then, once we were going, we were going that's it, I've been doing this business ever since then. That's it, I've been doing this business ever since then.
Andy Heise:That's amazing, yeah. So what did an online gallery look like in 2006? And for some context, for listeners, like Facebook was just kind of becoming popular and, like Instagram, didn't even exist yet. So what did an online gallery look like?
Alex Farkas:Pretty different we were definitely one of the early people in the space. It was an interesting time because it was before people, as you're saying, were using social media in a certain way. People weren't buying cars and household goods online, and so we got a lot of questions in the early days about if people would really buy art on the internet. And I think what we kind of worked out over the years is how the space grew up to um. You know, in the early days it was a challenge to get one good image of artwork. We didn't really think too much about, um, how we were going to describe art. It was just about getting some pieces on the site. There really was a very rudimentary shipping practices in place. So we were really clever.
Alex Farkas:As 23-year-olds we managed to go to UPS stores corporate and get them to set up an account so anyone could go and say I have a U Gallery artwork to ship in any UPS store in the country and send it. But the quality of the packaging just varied widely. People would send paintings in nice boxes. They'd send them with a couple scraps of cardboard and a bunch of packing peanuts, and so I think a lot of the expectations of e-commerce are what changed for the online galleries. So it wasn't that the standards were lower, but we were just still working it out. There weren't these expectations of free shipping and fast shipping and nice packaging. It was all just stuff that Amazon was like bringing into the world and people were starting to understand, and I think that's where our space has changed so much, as all of the other e-commerce businesses that kind of came up also influenced how people wanted to interact with our gallery and all the other online galleries too.
Andy Heise:Yeah.
Nick Petrella:You know, business people often talk about having a moat around a business intellectual property, high cost of entry, and so on. You know, as Andy often talk about having a moat around a business intellectual property, high cost of entry, and so on. You know, as Andy said, you started in 2006. Facebook was starting around then and you were a disruptor back then. Right, but given that we'd have a different we had already had a different online gallery on the podcast a few months ago what's different about your business that would keep competitors at bay?
Alex Farkas:Yeah, that's a good question. That was something that we got asked even when we were students doing the class project and going to judging panels. What really has separated us is we've set ourselves on this model of curation service and it seems simple. You'd say that's not really a true competitive advantage because anyone can do it. And it seems simple, you'd say that's not really a true competitive advantage because anyone can do it. But it turns out it's really hard to do it.
Alex Farkas:We really hold our artists and our clients on the highest esteem and so, as a start, we always choose the artists that we show from day one. We chose all the pieces that we put on UGallery. So that kind of set us aside from the very beginning, because mostly what you saw in the early days and still now are these open marketplaces where people can sell anything they want. So that kind of put us on this path that people could come to you gallery and expect this level of quality in the artwork, that they could trust that what they were buying from us was vetted by us and was worthy of hanging in their home or their office. And then, on the other side, even though we're an online business, we've always said let's position ourselves like a physical gallery.
Alex Farkas:That's what I grew up with, obviously being in my mom's business, and so I wanted even though we were selling through the internet to have this personal touch with people. So that means really getting on the phone and talking to clients. We send handwritten thank you notes to every single person who buys something from us. Even if they bought from us 10 times, we still send them a card sending messages knowing about people's lives, their kids, their dogs, that sort of stuff. And so I think, even though it seems simplistic, our advantage has always been that we really care and that art is this kind of personal, human, visceral, emotional reaction and we aren't removing that just simply because we're on the internet. It's all about kind of maintaining what the art business has been about for the 150 years preceding us. So I think it's a it's an interesting question. It's.
Nick Petrella:It's always fascinating to hear what people think about that yeah, it's certainly one that we've discussed before, and it depends on the artist. Some people don't necessarily want to be online, they only want to be in person, so I was just curious.
Alex Farkas:Yeah, I think it has to work for both sides right and we do seek out artists who have that fit. Clearly it's a partnership. We've worked with some of the same artists since 2006. So I think that goes to show that longevity is important. But, yeah, there's definitely a need to find the right fit artists who want to be represented online, and I always feel as though we're one piece of a whole marketing puzzle for an artist. So I don't say just show with us. It's about finding good gallery partners in different places and hopefully we can be that good gallery partner for artists online.
Nick Petrella:So you're just one sales channel for that, yeah.
Alex Farkas:Yeah, same for our business. I always believe that if you can limit having just one point of failure as an artist, that's really important. So, saying, I have a gallery in the West Coast and a gallery in the Midwest and a gallery in the East Coast and I have an online gallery here that I trust and maybe a second online gallery over here that I trust, that creates this really kind of robust sales effort and hopefully they all work together in some way that they're upholding the artist's work, their portfolio, but also attracting different customers and maybe selling different bodies of work. I think that's when artists can really make the most of their career and, you know, hopefully make a living out of it.
Andy Heise:Yeah, that curation value proposition that you talked about that you gallery offers, was that? Was that part of the initial inception or did you evolve into the curation, you know, specialty or something?
Alex Farkas:Yeah, it was from day one. We decided that we would choose the art we would show, and it's fun, because I grew up in this gallery with my mom, and so when we started the company, I said you know, I really need help to do this. This is something you've already been doing, for at that point she'd been doing it almost 40 years, and so she started helping me in the very first days when we started picking artists, and she still does it with me today. We're almost two decades later and this is something we do, and it's been really nice for me to have that family connection. Ugallery is a family business. Now I bought my partners out in 2018. And so I run the business with my wife, and then I also work with my mom a couple days a week. It's something that is really kind of sweet for me. I like that part of it a lot.
Andy Heise:Yeah, that's awesome, it's a great story, yeah, this question might be a little in the weeds, but it's relevant to what we've been talking about here, especially with artists having representation in multiple regions and even online. How does it work if an artist has a piece on UGallery but is also showing it in a regional show or in a gallery in a city somewhere?
Alex Farkas:Yeah, good question. We do ask for exclusivity on the art we show. So if an artist is going to have a show and they want to put pieces from UGallery in this event, we would ask them to let us know so that we can coordinate. We always take art down if it's going to be shown physically, and we do it for a couple of reasons.
Alex Farkas:One, even though it's hard to believe, we've double sold art in the past and there's nothing more heartbreaking to us, to the artist, to the client, when a piece gets sold twice and then someone's unhappy. And then also there's the kind of practical considerations of if a piece gets damaged somewhere. So we really try and make sure that the pieces that we're showing on YouGallery are set aside for us and then we work to rotate artists' portfolios, gallery set aside for us and then we work to rotate artists portfolios. So we do kind of an annual review of every artist portfolio to help them along, to make sure that if pieces need to be moved or if we need to change things up, we do that and then it's not just something that sits indefinitely on our website.
Andy Heise:Yeah, and so, if I understand that correctly, you're really you gallery really represents a specific set of pieces from an artist, not necessarily an artist's whole body of work.
Alex Farkas:Exactly so.
Alex Farkas:When an artist shows with us, we'll pick out.
Alex Farkas:Typically, we like to start with something like 12 to 20 pieces of an artist's work, and I even encourage artists, if they're going to choose to show their work in multiple online venues, to really designate separate sets of work, because one it helps with the things we just talked about. But then also when customers come and look for an artist's work we live in the age of google people will google an artist's name to see, and it can be confusing or actually just a turn off if they see that the same paintings or sculptures or what, yeah, have you are listed in multiple places. It's just, um, it's kind of a confidence that the art is original, one of a kind, and that also that it's of some demand too. So I kind of encourage artists the same as they would approach having a physical gallery, um kind of strategy that they do the same with their internet presence and not just plaster their work everywhere for the sake of exposure, cause I don't think it always works in the ways that they think it might.
Nick Petrella:Yeah, you know, in regular businesses non-arts businesses they talk about turns. You know how long does an item stay on your site? It's a good question.
Alex Farkas:I mean really from day one I've tried to figure out how to track our inventory turn. It's a really complicated thing. With one of a kind pieces, I think what we've come to is that we typically give artwork about two years give or take, and sometimes it depends on different factors. Sometimes art is really specific and I know there's a buyer for it, but it's about finding the right buyer. Also, there's this interesting kind of evolution that happens whenever new artists get started with us. I always encourage them to give it time and we ask for artists to give us work for six months exclusive, not take it down to start with, because it takes time for the whole buying cycle to happen. And this is what we've seen in our business throughout the years.
Alex Farkas:People don't just come and find an artwork and buy it usually on the same day. They shop for maybe a space in mind or an idea and they'll look and browse and put together wishlists and they'll talk to their spouse and think about it and really believe it or not. Our buying cycle is usually about six months. So you can imagine with a new artist it can take a while to start to build traction, and even some of the artists that we've been most successful with over the years. Sometimes the first six months to a year we work with them. It's a little slow, and then we try different things.
Alex Farkas:I always say, since it's a partnership, we should consider what we can do to make it better.
Alex Farkas:So that's the marketing efforts on our part. If we aren't showing the right mix of pieces, maybe we need to change that part of it up, but working together to figure that out. And then, yeah, in terms of inventory turn, I think two years is a good number because that leaves this time for clients doing their searching and then also it gives the site some kind of stability without constant churn. At the same time, I think it's a good amount of time for things not to look too stale If someone comes back five years later and they say is this artwork still in this portfolio? And it's interesting too. I even see that when we do our kind of annual reviews and take certain things down, it often spurs people to come back and say you know, I have my eye on this piece and it's now no longer on the website. Is it still available? So there is this kind of scarcity and some of the same things that you'd expect with any kind of sales and marketing strategies work with art too, so we try and take that into account as well.
Nick Petrella:That's good. Just yesterday I read an article that arts majors are some of the worst paying college majors five years after graduation. Does that help your business model in any way or no?
Alex Farkas:No, I don't know that those are related. I think it was a big determining factor when we were launching UGallery that we had heard a statistic that five years out of school, something like 10% of arts majors were still making art and then, 10 years after art school was 1%. It was really small, so that was definitely a motivating factor. I think in general, growing up in a gallery and now running this business for so long, our biggest motivation is just in helping connect artists and clients and keeping art careers alive and helping people succeed in the ways they want.
Alex Farkas:You know, I know arts are underpaid. That's across all art spectrums and it's really a shame. I think there's a lot more to it than just that surface of it. But yeah, I mean our goal is to help artists succeed and I'll do anything I can to help the people we work with do better and figure out their strategies and marketing and sales, not just on YouGallery but for their whole career. Because you know we're all in this together. We're a commission-based business, so I don't succeed unless my artists succeed too. So it's really important in that respect, absolutely.
Andy Heise:Yeah, and sort of similar along the same lines is does, does kind of the Pareto principle apply here? 80, 80, 20 rule, um, you know, do you have most? Of your sales, coming from a smaller sample of the artists that you represent.
Alex Farkas:I think it's a little more stratified than that. Um, certainly there, I guess I would say I think some of it is self-fulfilling. We have some artists who are very involved with us. They're active yeah, they're very active, and that goes a long way. People who spend the time to submit new work to us weekly and give us information to promote them. That really helps. But I do know, as with any business, you have artists or products, whatever you sell, that are going to be better sellers than others.
Alex Farkas:I think we try and create a nice diverse portfolio that fits with what our clients are looking for, but with a little bit of the unexpected too, and we take on new artists all the time.
Alex Farkas:So you can imagine, for 20 years we're taking on new artists, you know, every week and month. There's always going to be this kind of X factor of, uh, we love it, we believe in it and is it something that's going to resonate with our clientele? And sometimes it's surprising to us and we just try. You know, as I've said before, that we work with artists to make their experience most successful with us and, uh, giving them all the tips and tools. Like we start every artist off with a welcome call where we go over how you gallery works and what we've seen be successful in the past and then trying to keep an ongoing relationship and keep it working for people.
Alex Farkas:But yeah, I mean you definitely see that we're less of a long-tail business, I think, than you'd expect with a marketplace, or some people might only sell a piece of art once every couple of years. That's not really good for anyone because as a high touch business, we have to keep an eye on our resources. We're a small business, you know. We want to make sure that everyone who's participating with us is actually participating.
Andy Heise:So, talking about the artists you represent, how do you find those artists? Are you actively seeking them out? Are they mostly finding you and you mentioned? Have you identified any attributes of those artists that make them maybe sell better than others? You mentioned being active in promotion, but are there other attributes?
Alex Farkas:Yeah, in 2006, when we launched YouGallery, we realized, wow, we really have this chicken and egg problem with the business. We need inventory. If we don't have art to sell, we don't have customers, and so it's always been a priority for me to find artists that fit with what we're doing. In the early days, we paid any artist that we accepted $100 to post five pieces on UGallery, just to get their work on the site. That's what we needed to do to have a gallery. No-transcript.
Alex Farkas:I spent a lot of time in the early years visiting art schools. I would just hit the road, fly to a city, go to all the art schools, post flyers, talk to classes. That's when we were really focused on student artists. And then, about a year and a half into our business, we really kind of acknowledged that student artists we own that space pretty well at that point. And then also realizing they weren't necessarily the people who were asking for what we were doing. Realizing they weren't necessarily the people who were asking for what we were doing, it was more artists who had been out there a bit longer. Realizing it's really challenging to find the right mix of galleries not making sales and would you guys work with us? And so our business model really transitioned at that point, and we still work with a few student artists here and there, but mostly the people we work with now are mid-career artists, people who have been at this for a couple decades, and they're looking for good online exposure and anything else we can provide them and so, kind of.
Alex Farkas:With that, our recruiting and artist seeking has evolved. We receive probably about 50 to 100 passive applications a week, so people who just find us and apply, which is really wonderful. So people who just find us and apply, which is really wonderful. And then I still see people out. Anytime I'm online and I see something that's interesting or I'm at a show and see an artist that I like, I'll talk to them. But surprisingly, the thing that's been most successful is referrals from our existing artists, because they can speak to their experience with us and also, as you probably know, artists kind of travel and what I'd say like like-minded paths and aesthetics, and so the people who are doing well, maybe they're studio mates with someone else who's doing something similar, and so that can be really beneficial to us. So you know that that kind of to your next question speaks a little bit to what we've seen be successful.
Alex Farkas:In some ways, people's tastes have not changed for a long time. There's kind of a similar aesthetic of for what we specialize in. We say our gallery is here to help people have beautiful art in their homes and so, because that's what our focus is on, we're probably speaking to this crowd of enduring characteristics like nice landscapes and abstracts and things like that. So we know a little bit about what sells. Obviously, we have a lot of data from over the years and I try not to over-optimize our business for those things, because you have to keep trying new things and also, in order to keep our gallery interesting and dynamic, we have to keep bringing in new blood.
Alex Farkas:Like I said, you never know. There's always this X factor of what might be interesting to our clientele, but we do try and keep in mind what's already in the gallery. We don't want too much overlap, we don't want it to be too dissimilar. There has to be some kind of fit. It's like curating anything, right If you're a collector. In some ways I'm collecting all this art over the years. I don't own any of it, but it's this personal vision of mine of what it's all supposed to look like and I'm always kind of tweaking and refining and changing my minds about certain things, and it's really a fun process from my perspective. Curation is it's a never ending journey really yeah, it's a never ending journey, really yeah.
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Nick Petrella:Thank you.
