Artemis images: providing content in the digital age.

Christine Nazarenus tried to retain her optimism. Thirteen had always been a lucky number for her, but Friday, the thirteenth of July, 2001, had the earmarks of being the unluckiest day of her life. She was more than disappointed. She was shattered. Yet she knew that she had hard facts, not just gut feel, that offering images and products on the World Wide Web was the wave of the future. She was sure that the management team she had put together had the creativity and skills to turn her vision into reality. Managing her own company had seemed the obvious solution, but she hadn't counted on how overwhelming the startup process would be. Now, two years later, she was trying to figure out what went wrong and if the company could survive.

It had been so clear on day one. Archived photographs and images had tremendous value if they could be efficiently digitized and catalogued. Sports promoters and publishers had stores of archived information, most of it inaccessible to those who wanted it. Owners and fans represented only part of the untapped markets that the Internet and digital technology could serve. She had conceived a simple business model: digitize documents using the latest technology, tag them with easy-to-read labels, and link them to search engines for easy retrieval and widespread use. But over the ensuing months so many factors affected the look, feel, and substance of the company that Artemis Images would become.

So many things seemed outside her control that she wondered how she could have been so sure of herself back in February of 1999. Enthusiastically, Chris had approached a number of friends and acquaintances to help in the formation of a new "dot-com" company that seemed a sure bet. Frank Costanzo, a former colleague from Applied Graphics Technologies (AGT), shared Chris's enthusiasm, as did long-time friend George Dickert. George, in turn, contacted Greg Hughes, who was enrolled in a business planning course. Grateful for the opportunity to help launch a real company, Greg took the idea and honed it as part of a class assignment. The plan was a confirmation of Chris's confidence in the venture. But as she looked over the original plan, she knew there was a lot of work yet to do. Greg understood the business idea, but he didn't understand the work involved to actually run a business. George and Frank understood digital technology and project management, but, like Chris, had never launched, much less worked for, a start-up company. Chris knew that she had the technology and talent she needed and felt confident that the four friends could construct a business model that would put Artemis ahead of the current image providers. Greg's business plan looked like the perfect vehicle to appeal to investors for the funds they needed to proceed.

The Business Idea

In 1999, Chris had been working for three years as VP-Sales out of the Colorado office of AGT, a media management company that provided digital imaging management and archiving services for some of the largest publishers and advertisers in the world. AGT had sent Chris to Indianapolis to present a content management technology solution to the Indianapolis Motor Speedway Corporation (IMSC) as it prepared marketing materials for the 2001 Indy 500. IMSC is the host of the 80+-year old Indy 500, the largest single day sporting event in the world, NASCAR's Brickyard 400, the second largest single day sporting event in the world, and other events staged at the track. Chris's original assignment was a clear one: IMSC needed to protect its archive of photographs, many of which had begun to decay with age. The archive included five to seven million photographs and dynamically rich multimedia formats of video, audio and in-car camera footage.

Chris discovered that the photo archives at IMSC were deluged with requests (personally or via letters) from fans requesting images. She was amazed that a relatively unknown archive had generated nearly $500,000 in revenues in 1999 alone. Further discussions with IMSC researchers revealed that requests often took up to 2 weeks to research and resulted in a sale of only $60-$100. However, IMSC was not in a position, strategically or financially, to acquire a system to digitize and preserve these archives. Not willing to leave the opportunity on the table, Chris asked herself, "What is the value of these assets for e-commerce and retail opportunities?" Without a doubt, IMSC and some of her other clients (Conde Nast, BBC, National Motor Museum) would be prime customers for digitization and content management of their collections.

Chris knew that selling photos on the Internet could generate substantial revenue. She conceived of a business model where the system would be financed through revenue-sharing, rather than the standard model where the organization paid for the system up front. IMSC was interested in this arrangement hut it was outside the normal business practices of AGT. AGT wanted to sell systems, not give them away. They couldn't see the value of managing other organizations' content.

As Chris told the story, her visit to the archives at IMSC was her "Jerry Maguire" experience. In the movie, Jerry is sitting on the bed when everything suddenly becomes clear and now he must pursue his dream. Like Jerry, Chris believed so passionately that her idea would bear fruit that, when AGT turned down Chris's request for the third time, she quit her job to start Artemis Images on her own.

Building a Team

When AGT was not interested in Chris's idea of on-site digitization and sale of IMSC's photo archives, Chris was not willing to walk away from what she saw as a gold mine. She contacted her friends and colleagues from AGT. Swept up in the dot-com mania, Chris named her company "e-Catalyst." e-Catalyst was incorporated as an S-corporation on May 3, 1999 by a team of four people: Christine Nazarenus, George Dickert, Frank Costanzo, and Greg Hughes. (See Exhibit 1 for profiles of these partners.) Expecting that they would each contribute equally, each partner was given a 25% interest in the company. Chris fully expected them to work as a team, so no formal titles were assigned, largely as a statement to investors that key additions to the team might be needed and welcomed. As another appeal to potential investors--and to broaden the team's expertise Chris and George put together a roster of experts with content management, systems and technology experience as their first advisory board. Greg's professor and several local business professionals agreed to serve on the board of advisors, along with an Indy 500 winning driver-turned-entrepreneur, and Krista Elliott Riley, president of Elliott Riley, the marketing and public relations agency that represented Indy 500 and Le Mans Sports Car teams and drivers. Chris felt confident that her team had the expertise she needed to launch a truly world-class company.

Chris and George quit their jobs and took the challenge of building a company seriously. They contacted one of the Rocky Mountain region's oldest and most respected law firms for legal advice. They worked with two lawyers, one who specialized in representing Internet companies as general counsel and one who specialized in intellectual property rights. With leads from her many contacts at AGT, Chris contacted venture capitalists to raise money for the hardware, software licensing, and personnel costs of launching the business.

The dot-com bust of 2000 did not make things easy. Not wanting to look like "yet another dot-com" in search of money to throw to the wind, Chris and her team changed their name to Artemis Images. Artemis, the Greek goddess of the hunt, had been the name of Chris's first horse as well as her first company, Artemis Graphics Greeting Cards, her first entrepreneurial dabble at the age of 16. Chris had always been enthralled with beautiful images.

Artemis Images's Niche

In her work at AGT, Chris had observed that many organizations had vast stores of intellectual property (photos, videos, sounds, and text), valuable assets often underutilized because they exist in analog form and may deteriorate over time. Chris's vision was to preserve and enable the past using digital technology and the transportability of the World Wide Web. Chris envisioned a company that would create a digitized collection of image, audio, and video content that she could sell to companies interested in turning their intellectual property into a source of revenue.

Publishers and sports promoters were among the many organizations with large collections of archived photos and videos. Companies like Boeing, General Motors, and IMSC are in the business of producing planes, cars, or sporting events, not selling memorabilia. However, airplane, car, and sports fans are a ready market for photos of their favorite vehicle or videos of their favorite sports event.

Proper storage and categorization of archived photos and videos is complex and expensive. In 2000, the two common solutions were to sell the assets outright or to set up an in-house division devoted to managing and marketing them. Most organizations were unwilling to sell their assets, as they represented their priceless brand and heritage. Purchasing software and hiring specialized personnel to digitize and properly archive their assets was a costly proposition that lay beyond the core competence of most companies. Chris's work with AGT convinced her that there were literally thousands of companies with millions of assets that would be interested in a company that would digitize and manage their photo and video archives.