‘Catering To The Pirates’ As Start-up Business Model
“The stock industry is about $6 billion dollars if you count photos, videos, and everything. That’s obviously not a small number, but if you think of the usage of visual content and how little payment there is, this industry should be a $30 to $60 billion industry,” said Christian Toksvig, CEO of start-up StockUnlimited in a recent interview. And says Toksvig, “It’s that gap that I’m interested in and to do that I have to cater to the pirates” who use images and graphics illegally.
Toksvig and StockUnlimited Chairman (and majority investor) Andy Sitt both have experience looking longingly at the potential of that gap. Sitt is founder of two businesses that are in similar markets (123RF and Inmagine.) And Toksvig was in business development at Getty Images before starting StockUnlimited with Sitt in 2014.
In wanting to make the process of using legal content so “attractive and easy and affordable” for people who are not graphic designers and experts, that in launching the service, he was “really focusing on what is it that prevents people” to not use content.
Toksvig contends that difficult licensing practices are the major cause – so StockUnlimited has eliminated that complication. They create all of their own content. So unlike companies where the creators are paid on a per piece basis by usage, StockUnlimited works with employees of third-party studios who are the content creators. He explains that this no-royalty structure is especially important where he thinks his strategy will be most successful– with those companies that have explosive growth working with small and medium businesses like Squarespace or Canva.
StockUnlimited, says Toksvig, will be looking for partnerships with these kind of graphics and design firms to scale. “That’s really where the frontier of getting regular users to use legitimate design and content sits right now. My strategy is not just being a destination site. The nonprofessionals will go to the place where they can get their project done, whatever their project is. That’s why we focus a lot on bringing the content to them. We just want them to use our content.” For now StockUnlimited has just vector graphics and illustrations, but they are planning to add to their business most other kinds of images and stock graphics.
Toksvig declined to name the deals as they are “still under wraps.” But the relationships will be a simple revenue share when announced.
Talent in Southeast Asia
StockUnlimited says that it is adding images to its collection at a ferocious rate: They claim a library of over 330,000 graphics or vectors, adding 50,000 new images per month. They have paid for the content without outside funders. Toksvig says that he and Sitt put in $5 million between the two of them so far, but that “Now we are in the process of raising further funding for the extra investment in content that we’re about to start making.”
They are sourcing the images through designers from Southeast Asia. Toksvig said he and his business partner noticed that “most of the really nice graphics content is made in either the Philippines, Indonesia, Thailand. Those places really have strong design traditions and very good designers.” After some research, they decided that they had an opportunity to work with local partners who could hire some great talent on full-time salaries. The partners “created big studios of full-time quality designers across Southeast Asia. We basically can direct this enormous resource of great designers, and that’s what we’re doing.”
StockUnlimited creates briefs to direct the art studios using four basic methods of research:
- The secret sauce. “We have some algorithms that analyze Google GOOGL -2.86% image search basically to give us some pretty solid research and pretty solid data on what is actually popular and what people want to download.”
- Checking out the competitors. “We look at what is popular on stock platforms.”
- Tried and true categories. “We know certain categories and certain types of design are popular.”
- What people are saying. “We follow trend magazines and graphic design blogs and all kinds of stuff like that.”
The glamorous life of a CEO
Toksvig travels constantly: He is Danish, the company is set up in Chicago, and the design all takes place in Southeast Asia.
When asked what he spends his time on — besides travel — he said sheepishly, “This is going to sound so lame, because I basically sit and stare at my website. Then I write to the IT guy and the product people and say, ‘I think that button needs to move a little bit. There’s an error there.’ You really get so focused on the product because the product has to be right before you can start marketing it and really start pushing it out. And then I obsess about customer comments. And my customer support people probably hate me because I jump into their conversations while they’re having them.”
Still, Toksvig is unapologetic. “At this stage of a business life, it’s just so important to be able to understand how people perceive what you’re trying to do, right? You just want to suck as much data and information out of people as you can. It’s only then that you know if you’re delivering the value that you set out to deliver.”
Note: Size of overall industry in first paragraph from earlier version.