Using the internet
IT was an idea which has transformed forever the art market in India. Until the arrival of Saffronart, the Indian art market was largely a cosy club and it was difficult for an outsider to break in. Prices for paintings were arbitrary and fluctuated widely, depending on whom you knew among the dealers and artists. New entrants were often looked upon with suspicion.
The winds of change blew through the genteel art world with the introduction of the internet into the whole process of the auction. It took two bright and savvy MBAs with a passion for art and a flair for business to seize the opportunity. Dinesh and Minal Vazirani, the founders of Saffronart, were perceptive enough to see that the 21st century art buyers had a different profile from those of the last century. They were no longer confined to a small elite circle of long time art patrons.
There was a growing demand for Indian art among the prosperous Indian diaspora keen to maintain cultural links with their country of origin. There was also a vast and largely untapped market in the new breed of high-earning professionals and entrepreneurs. These new age business people were both knowledgeable and acquisitive, but usually did not have the luxury of time to travel to auctions. They preferred to get all the information online and bid from the comfort of their homes or offices. Deepak Shahdadpuri, a private equity investor and serious collector, explains his preference for Saffronart’s online auction: ‘With a fixed closing time for each lot, I only need to log on at the appropriate time and know that I can participate towards the works closing whereas in the traditional model, depending on the time taken for the lots beforehand, there is no clarity when the lot I am interested in is being auctioned. Often I spend an hour waiting for the lot I came for and other times I show up late which is very frustrating. I also like the anonymity the internet allows.’
Today 60 per cent of Saffronart sales go to buyers outside India, with the vast majority being overseas Indians, mostly professionals aged between 25 and 55. Initially, it was the international client base that was more receptive to online auctions but over time Saffronart has brought credibility to the online space within the country as well.
Being art lovers and collectors themselves before they actually thought of starting a business, the Vaziranis were also conscious that the vibrant and rich artistic talent of the country was hugely underpriced by international standards. They have played a part in fuelling the art boom by making access to Indian contemporary art simple and instantaneous.
Saffronart has not only opened up the market but has brought standardisation in prices to the market. Dinesh Vazirani points out proudly: ‘By going online, we published prices for Indian art for the first time, establishing transparency in the market.’ The business was helped by this remarkable openness.
Although some believe that the Vaziranis’ success was a result of good timing coinciding with the internet boom, the couple also had the resolve and skills to make Saffronart succeed. A number of high-end fine art online ventures which began around 1999 roughly the same time as Saffronart folded up, including Sotheby’s internet-auction initiative and EBay’s foray in taking Butterfields Auctioneers online. In fact Saffronart’s unique business model has attracted Harvard Business School to write a case study on the company.
Over the years Saffronart has innovated and improvised to keep improving its successful business model. Dinesh recalls, ‘We decided that our play was going to be online. We wanted to target the international market, but also realised that contemporary Indian art had very little physical presence in the West and even less mental space. There were never any exhibitions of contemporary art; just a few auctions which don’t help that much.’
Besides auctions, Saffronart held events in conjunction with galleries, taking the brand and Indian art to the international market. These shows were a way of registering the physical presence of the works of art so that the offline model could complement the online model, although Dinesh is quick to point out that ‘there are many purchases without actual viewing because you will have buyers who are very knowledgeable and can look at the image and decide what they want to buy.’
The Vaziranis’ very first exhibition opened in Hong Kong in 2000 and the company went on to mount large scale exhibits in New York and Los Angeles. The first show in New York was a landmark for Indian art globally, featuring a strong collection of works by 12 of India’s leading modernists. With an exhibit space of around 20,000 square feet and over 100 works, this was the largest exhibit of Indian art ever showcased internationally. Unfortunately less than half the works sold, resulting in a loss of almost $200,000. But Saffronart was in for the long haul and not deterred. Such perseverance has benefited not just the company but the Indian art market as a whole which is now viewed in a new light abroad.
Kavas Bharucha, a collector since the early seventies when there were barely a handful of galleries says, ‘Contemporary Indian art has captured global attention. This process has been greatly assisted by Saffronart, which has taken outstanding works of art beyond the shores of the country to an unparalleled audience throughout the world. With sophisticated sales through the internet, I believe that good Indian contemporary art will continue to scale unprecedented heights.’
Much of the boom in Indian art began with the rapid price appreciation of the modern masters, particularly the doyens of the Progressive group. F.N. Souza’s Lovers sold for just under $1.5 million in Saffron’s Winter 2005 auction and in 2006 a seminal work Climat by S.H. Raza sold for $1.4 million and a work by Tyeb Mehta for just over $1.1 million. But Saffronart was not content to concentrate solely on the modern masters and in March last year decided to hold dedicated auctions featuring contemporary artists – another first for the market. Separating contemporary art as a genre in stand-alone auctions allowed a focus on new media such as photography, digital art and installation, thus expanding the scope of the auction house and bringing in new and younger collectors who wanted to view fresh talent and cutting edge trends.
Starting with a client base in four countries, today Saffronart has clients spanning the globe, including the US, UK, Taiwan, Japan, Hong Kong, UAE and Australia. The last auction saw an unprecedented 600 collectors registering to bid, with 30 per cent of them being new bidders. As Minal points out, ‘There has also been a significant increase in European and American collectors interested in the field. Over the last few years, we see a marked increase from one auction to the next in the level of interest among non-Indians.’ So in addition to their Mumbai gallery, Saffronart started a gallery in New York in 2004 and this year will be opening a London space as well. The works on sale at its auctions and website are delivered virtually anywhere in the world accompanied by a Saffronart authenticity certificate.
The Vaziranis have introduced an element of transparency and openness to the Indian art market that has been welcomed universally. Deepak Shahdadpuri, a regular bidder at most of the auction houses including Saffronart, Christie’s, Sotheby’s and Bonhams, has a preference for the online model which Saffronart pioneered. ‘I used to be intimidated by the large auction rooms at Christie’s and Sotheby’s, and was not comfortable with the auction process. The traditional auction has many flaws including difficulty in assessing how many people were bidding, whether every bid was genuine and there was no way of being able to audit the process if it was ever necessary. On top of that I found the process rushed and chaotic which sometimes forced me to overbid and other times to drop out too early.’
With auction sales of over $35 million in 2006, and additional fixed-price sales of over $15 million, Saffronart leads auction houses such as Christie’s and Sotheby’s in its categories. Lower buyer’s premiums – 10 per cent until 2006 and now 15 per cent – compared to the 20 per cent at other auction houses is also a draw. The Vaziranis nevertheless maintain that rather than battling, the auction houses actually complement each other, as the more players there are the greater the exposure for Indian art. As Saffronart focuses on the secondary market and does affiliated exhibitions with some of India’s best galleries, they have earned their success without treading on too many toes.
The young couple who set up Saffronart almost single-handedly seven years ago had the advantage of extensive and varied business experience before they floated their new venture. Minal grew up in Los Angles and went to UCLA where she graduated in chemical engineering with a minor in art history. She went on to do an MBA at INSEAD in France. She met her future husband whilst in college in the US. Dinesh had a degree in art design and engineering from Stanford University and an MBA from Harvard. After a stint abroad the couple moved to India. Dinesh worked for a while with his father who owns a construction company, WMI Cranes. Minal became a consultant for Accenture and later, Booz Allen and Hamilton. They spent much of their spare time at art galleries since collecting Indian art had become an all-absorbing hobby. They eventually decided that they would like to make art more than just a recreation and Saffronart was born. The name, Minal stresses, has no political connotations whatsoever. They felt saffron was a word that best described those elements of India and Indian art that they wanted to highlight: colour, flavour, rare, difficult to obtain, high-end.
The couple built up the business working as a team. Minal is now the behind-the-scenes force, handling the strategy, international operations and the structuring of the company, while Dinesh is the more public face working closely with galleries, dealers, collectors and representatives of the trade.
Traditionalists in the art world, who were once sceptical of the feasibility of selling expensive art on the internet, have had to change their minds. Many fine art auction houses around the world have introduced an internet element to their auctions by outsourcing it to Live Auctioneers, a company that works with EBay. Perhaps a real tribute to the success of Saffronart’s internet auction model is Christie’s Live, launched in July 2006, which brings internet bidding to the traditional auction room. The confidence of the Indian art market in internet auctions is evident in the fact that the highest winning bid on Christie’s Live till date was for an Indian painting: $408,000 for La Terre by Sayed Haider Raza in New York in September 2006.