Magnus Resch answered the questions from Philipp Westermeyer.
https://omr.podigee.io/312-omr-309-mit-magnus-resch
Super interesting talk about the projects he launched (Gymondo, Larry’s List, Magnus App). The interview was in German, I share here my notes in English. He shortly explains how he started but the biggest part of the interview is about Magnus App, an app that brought price transparency to the art gallery world. It enables you to take a pic of an artwork and know who that’s from and how much it’s worth. Sounds like a fairy tale.
Unfortunately Magnus.net website is down. The App is nowhere to be found on Google Play Store or on Apple App Store. All is down or disappeared. The Instagram account of the Magnus App is still there, but has less than 1.000 followers, strange for something that is supposed to be already very successful.
How it started: very classically, studied at St Gallen. Etc.
Gymondo
Magnus Resch founded Gymondo: https://www.gymondo.com/en/ and later sold it to Prosieben/Sat1. Customized fitness program. In 6 weeks, they shot videos of personal trainers in Berlin. Ads on TV after Germany’s next top model, certainly a good fit and good reason for matching a TV channel and this Personal trainer App. The startup went to the TV channel incubator and the founder left.
Larry’s List
After that, Magnus Resch decided to launch something related to the topic of his PhD: the art market. He had created an art gallery when he was 20 years old. So he created Larry’s List in Hong Kong:
https://www.instagram.com/larrys_list/
https://www.artberlin.de/markt-marken/larrys-list/ an art collectors platform, telling you who collects whom. If I’m a gallerist and I want to sell a Warhol in Singapore, I can use Larry’s List to learn who is collecting Warhols in Singapore. It started as a “we sell addresses” business model. Now most of the money is made through Instagram. They show artworks on Instagram, saying “we have this work of art, who wants to buy it?”, and then people buy it, with works that can cost $100.000 or more. Or they would post on instagram “we are looking for works from this artist, who wants to sell?”, and then the folllowers send the pics of matching works of art to be sold.
Larry’s List has 120.000 followers. It’s like an instagram art gallery. The most important art collectors are on this platform. No website, just instagram. They focus on already famous artists, they don’t present new artists. Only artworks starting $50.000. Average price is around $150.000.
Marcus Resch the co-founder is no longer operatively involved. Larry’s List employs 7 full time employees. Quite a profitable business.
Even if you don’t buy art, just follow the account, very nice pics. For example they regularly show pics of the collections of famous art collectors.
Quite impressive such a business working just thanks to Instagram. The start of the service went pretty slow. They had all the art collectors on the larryslist.com platform, and they followed instagram more and more.
The instagram account promotes its own auction events, as well as events of partners as work then as a lead generation for these other auction events.
The Instagram makes around one million euros revenue.
Magnus App
The biggest problem of art market is that (almost) nobody buys art.
Because 3 questions need to be answered:
- What should I purchase?
- How much is this?
- Is this a good investment?
Magnus App: a shazam for Art. You take a picture of an artwork and the app tells you:
- Who is the artist
- Title of the artwork
- Date of the artwork
- Price of the artwork and comparison with similar artwork prices
First year, the app didn’t make any money. The goal was first to collect data. To create the world’s biggest art database. For the first time, the price of artwork became transparent and available for everybody. The app analysis these data. Magnus Resch did his PhD in economy and analysed what makes a art gallery successful, wrote a book about it “Management of art galleries”. And then the logical next step was: what makes an artist successful, and all these collected data helped find the answer, and a new book will be published December 2020 “How to become a successful artist”.
The results of the data analysis has already been published in Science Magazine, written with a Harvard professor: Albert-László Barabási. You can find the doc here:
The idea is to tell if an artist will become successful in the art market.
One side of the art market is the auction world, where all prices are transparent and you can access the data through various services: artnet (frankfurt), arprice (france). These firms collect data from Christies, Sotheby’s… Artnet makes a revenue of 20 million dollars per year.
The other side is the art galleries world, where there is no transparency, a complete blackbox.
So the Magnus App enables to bring transparency in the art galleries prices with crowdsourcing: users not only take pictures of the art, they also take pictures of the price lists. When an artwork is uploaded to the platform, either it is recognised, or not. If not, then a team manually documents some information so that the next it shows up, more data is available.
10 million art works are referenced in the database, only thanks to this crowdsourcing, and it’s “99,6% accurate” (no proof, but feeling of the founder).
Vision is that any person who wants to purchase art should have the reflex to check the Magnus App first, whatever the price level is. The data of the auction houses is also listed, so you find both sides of the market in one app. 90% of the transactions happen in the gallery art market.
Prediction is also possible: how much will this artwork be worth in 5 years. This data is valuable also for banks and insurance companies. Will the price of this artwork go up or down in a few years?
For the future, Magnus Resch is looking for new investors to polish the Magnus app. First investor is Leonardo di Caprio. How could this be possible? On the day of the app launch, the New York Times wrote an article about how the app would revolutionize the art market. The famous actor read the article and asked one of his employees to organize a meeting. They met, had a few hours drive in New York visiting a few galleries together, and then his investment team took care of the investment. The actor posts regularly about this topic on his Instagram account.
How could NYT already at the start write about the app launch. Probably because the idea was really new and journalists understood the idea. Also what helped is that the founder was already well known around the topic art market. NYT had written already about Larry’s List. Management of art galleries book was already a best seller. Also the fact that he was a teacher on that topic.
The other investor is the most important art collector of the world but the founder doesn’t give his name, just that he is from the USA. Interesting is that the founder actively wanted exactly that investor on board and he “hunted” him.
The founder values his company at 20 million euros, but it does a very small revenue until now through a few partnerships. “Data is gold”.
Problem for works between $50.000 and $100.000 is that there is more demand than offer.
90% of art work is sold for below $10.000. And for them, there is a huge offer and very small demand.
So how to become a successful artist? That’s what the founder proposes on Magnusclass.com and at his class at Yale University. The answer is: how you paint, what you paint, has no relation with your financial success. What really matters is what is your network. Artfacts.net helped for the analysis. Compare career of successful and unsuccessful artists. The founder notices that everything is connected to the very beginning of the life of the artist, in the first 5 exhibitions. If the artist manages to be showed in specific galleries in the first 5 exhibitions, he will stay successful for the rest of his life. If he is not displayed in these specific galleries at the beginning, he will stay unsuccessful forever. It took 3 years to analyse this data. If you start at the top, you stay at the top. If not, you stay at the bottom. These specific galleries are not many, just 5 to 10, and they are almost all in New York, almost all directed by white men, and these galleries have excellent relationship with the most important museums of the world. For example, Guggenheim Museum between 2003 and 2010, 90% of the shows were from artists from the top 5 galleries.
Who are the top New York galleries? The top 4 employ 800 employees in 41 spaces and represent 300 artists:
- Larry Gagosian, Gagosian Gallery
- Pace Gallery
- David Zwirner (German who grew up in New York)
- Hauser & Wirth (from Switzerland)
The 5th one is probably Marian Goodman, but there are more at the same level for the 5th position.
More about the top galleries here:
https://news.artnet.com/market/art-dealer-succession-analysis-1433257
All in all, the learning is that artist students in art schools learn only how to make art, how to use a pencil, etc. And art history. But this has no impact on their success. But artists are not “discovered”. All successful artists nowadays are amazing self sellers. It’s about contact with the top galleries. So if you live in Europe, your chance is low. You must be in New York, network not only with the galleries but also with the artists that are represented by these galleries. And that’s obviously the reason why the founder of this app moved to New York 7 years ago. The founder guesses that the value of your work is 20% the work in itself, the rest is networking. What is good art? It’s subjective.
The price makes the worth, it’s the main marketing instrument of an artist.
There are 20.000 galleries. Not all of them are in the database, but the main active ones are there.
Books
Management from Art Galleries, 3rd edition, sold 40.000 books.
100 secrets of the art world, sold thousands of time at the Moma in NY for example, $10 book, very successful, kind of book you find at the counter just before paying at the bookshop. Total the authors could make around $100.000 with that book.
Teaching
How did it start? Wrote PhD at 25. After Gymondo, had more time. Published management from art galleries based on his PhD, and then got asked by St Gallen if he wanted to teach, art market, tech. He teaches there for the last 7 years.
Then because of St Gallen teaching, Columbia University contacted him.
Then after the paper got published, Yale asked him to teach in MBA classes.
Harvard Case Study: Harvard Business School found interesting how active he is in the art market and how he tries to bring transparency to the art market, make a business out of it.
Bonus
Tip: always ask for 20% discount when you buy at an art gallery. And if you pay on same day, negotiate more.
This made me discover an indirect competitor: Smartify that can be used in museums to know more about the paintings you are seeing.
Favorite new artist:
Chris Succo https://www.artsy.net/artist/chris-succo
Tyler Mitchell, photograph: https://www.tylermitchell.co/