Post-Merger, Auctionata | Paddle8 Will Be Known as Paddle8
The company will do away with the unwieldy two-part moniker.
Two players in the online auction realm merged in May, and will now modify their name to reflect their unified identity. Auctionata acquired Paddle8 and briefly operated under the unwieldy name Auctionata | Paddle8. The company will soon rebrand as Paddle8, CEO Thomas Hesse told artnet News in a phone conversation today.
“It just doesn’t make sense long-term to operate under two names,” he said.
In addition to simplifying, the name change also deemphasizes the Auctionata brand, which was tainted in April when international accounting firm KPMG accused the company of engaging in improper trade practices, including company executives bidding up the company’s own lots.
The choice of brands came as a surprise to some insiders, talking to artnet News off the record, who indicated that Paddle8 had been missing its revenue targets consistently in recent months. Some key staffers had left by the time the acquisition was announced, and a round of layoffs followed it became public.
Paddle8 launched in 2011, founded by the trio of Phillips veteran Alexander Gilkes, startup veteran Aditya Julka, and merger and acquisition specialist Osman Khan. In three rounds of fundraising, Paddle8 raised $44 million from 13 investors, including heavyweights like British artist Damien Hirst, London dealer Jay Jopling, Greek shipping tycoon Stavros Niarchos, and New York/London dealer David Zwirner.
After initially focusing on emerging artists in a bid to serve buyers and sellers of relatively low-priced items, the company had several rounds of fundraising that it used to try to break into other luxury markets, without much success.
Paddle8’s acquisition by Auctionata came shortly after the demise of another online auctioneer, ArtList, which folded in July after two years, reflecting the struggles of many online auction startups. (artnet has operated its own online auction business since 2008.)
Auctionata launched a year after Paddle8. Founded by Alexander Zacke and Georg Untersalmberger, the auctioneer boasts investors including French fashion magnate Bernard Arnault. The firm had raised some $88 million by May; the online database Crunchbase reflects that the merged company has raised some $95.56 million in four rounds from 13 investors. Hesse declined to disclose staffing numbers; insiders speaking to artnet off the record estimate about 200.
Hesse says the company is banking on the combination of Auctionata’s livestreamed auctions with concurrent bidding from various buyers and Paddle8’s shiny brand, developed through partnerships with nonprofits and institutions like the Guggenheim Museum, as well as celebrity curators for some of its sales, from Elton John to Ellen DeGeneres.
We spoke to Hesse by phone and posed some questions.
Q: Even companies like Uber and Lyft are encountering skeptical investors. Are you facing some of the same headwinds?
“It’s true that the whole climate of investment in startups has cooled off a little bit, but the positioning we have in the market is unique, and we have a strong shareholder base of very prestigious investors and partners like Hearst and MCI. They have been extremely supportive.”
Q: Isn’t the art market, with which Paddle8 is closely associated, softening? Does that present a challenge?
“Even if the art market overall may not be growing, our share of that market is growing significantly, and Auctionata | Paddle8 is very much present in the luxury category—watches, classic car activity, wine, jewelry—these are all businesses that have been doing well overall. The market is coming our way, and it is growing.”
Q: Paddle8 wasn’t entirely successful in branching out from art into other sectors of the market. Is it the best face for the merged company?
“When it came to making a brand decision, we felt it was Paddle8 that was the most suitable brand to continue on a successful path, though Auctionata will be a key engine driving things from the inside.
“You have to remember that while we have decided that Paddle8 will be the brand, the change is not happening tomorrow. We will for the time being have two websites, and there are two customer databases that we’re gradually bringing together. We will conduct more video selling, which will broaden Paddle8’s capabilities and its reach, and we will in a subtle but meaningful way add other categories. We will align the look and feel of the two places. It will be a very natural convergence.”
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