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In a world full of app-based startups, you’re unlikely to be the first startup knocking on a potential customer’s door. What can he do to convince people that his company was different?

THE CHALLENGE

When Sean Green started ARTLOCAL – a smartphone app providing information about art events and exhibitions – he knew he could provide a win-win-win solution. Artists would get exposure for their art, galleries would attract collectors, and collectors would be able to target gallery visits more efficiently. However, he was concerned that his paying customers, the galleries, were suffering from "platform fatigue."

In a world full of app-based startups, you're unlikely to be the first startup knocking on a potential customer's door. What can he do to convince people that his company was different?

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THE BACKGROUND

In Sept. 2012, Mr. Green's friend left her corporate job to become a full-time artist. When he visited her studio for the first time, he was blown away by her art. He wondered how she could market it to the public. With a background in computer science, his natural inclination was to start thinking about technology-based solutions. He knew that he could build a mobile platform so artists could gain exposure for their art, but he had to find a way to monetize it. Given the low income of most artists, it didn't seem realistic that they would send him a monthly fee.

"I started researching the industry," Mr. Green recalls. "It became clear that most of the money flows through the art galleries and auction houses, and so I decided to build my business model around driving engagement and revenue from them."

But technology is relatively new to the art world and galleries are starved for time, so they don't have a lot of time to spend learning about different options. "They'd tell me that they were crunched for time and asked why they should put any time into my project."

How could he get their attention and support?

THE SOLUTION

Mr. Green used a four-pronged strategy to gain traction with the art galleries. First, he had to find a strong value proposition for all the users. "The artists benefit from the exposure," explains Mr. Green. "To the galleries we deliver an audience, information about that audience, and ways to interact with that audience. Galleries now buy expensive ads in art magazines, but have no idea who reads them. With our app they get metrics and, through our new exhibition tool, they also get ways to customize engagement with their customers."

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But why would the art collectors be interested in a mobile platform? Mr. Green says that he has spent a lot of time with knowledgeable art insiders – collectors, consultants, enthusiasts – listening to them and trying to understand the kinds of problems they have.

"I realized that everyone wants to make the gallery-going experience more efficient. The art world is truly global and even avid collectors often feel that they are on the periphery and can't easily navigate the international art scene." As one prominent art collector, an early investor in ARTLOCAL, put it, collectors need a "one stop shop tool" to guide them to art they want to see when they visit a city. ARTLOCAL is intended to provide that tool.

The second part of Mr. Green's strategy is to build a team with strong technology skills and deep experience in the art world. Raymond Nguyen has joined ARTLOCAL as co-founder and CTO. Mr. Nguyen's software development experience has been critical to building the platform. Steve Miller joined as a founding partner. Mr. Miller is a New York-based artist and collector with strong connections to top-selling artists and galleries that has opened doors for the venture.

Third, Mr. Green realized that this, like many business-to-business markets, is a "lemming market." Art galleries usually want to know who is involved before committing. This makes it essential to get big name galleries – the influencers – involved early on.

The final piece of the puzzle is to understand the competition really, really well. "It's very helpful to find someone who is a user of a rival app," explains Mr. Green. "When you sit down and walk through the platform with them, it becomes evident what they like and what they don't like." Not only has this knowledge helped to improve the platform, it has also provided a valuable basis for developing a marketing plan that differentiates ARTLOCAL from the competition.

THE RESULT

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Although these are still early days for ARTLOCAL – the platform has had a soft launch but will not be fully launched until the early summer – Mr. Green reports promising results to-date. Prominent art galleries in Toronto and New York have signed on, including New York-based Jack Shainman Gallery, Luhring Augustine, and Paul Kasmin.

There are roughly 5,000 users on the platform, a number which is increasing steadily, and, encouragingly, users are spending an average of just under 10 minutes in the app at each visit. The company is expanding and Mr. Green is working on developing the market in a third city. The win-win-win solution he envisioned two-and-a-half years ago seems to be coming together.

Becky Reuber is a professor of strategic management in the Rotman School of Management of the University of Toronto.

This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They now appear every Tuesday on the Report on Small Business website.

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