In The Magazine

Getting A Good Paddling

Wednesday, April 29, 2015

Part of the strategy for placing the winning bid at an auction is knowing when to raise your paddle. Business partners Alexander Gilkes and Aditya Julka raised theirs at exactly the right time in 2011 when they founded Paddle8, their New York–based online auction house, where hitting “Enter” at the right moment, coupled with the right dollar amount, secures a coveted item. Their collector and bidding community, which is now estimated at 500,000, spent some $36 million in 2014 on Paddle8 auctions, a 140 percent increase over sales in 2013. While contemporary art has been the site’s mainstay, as of this October Paddle8 will also feature jewelry, watches, toys, books and fashion accessories.

Gilkes and Julka, 35 and 33 respectively, have recognized that dust has settled on classic brick-and-mortar auction houses—Christie’s, Sotheby’s and Phillips (where Gilkes served as worldwide director of marketing), as well as regional houses here and abroad. It’s not that Gilkes and Julka feel that the final gavel has fallen on such establishments, but, rather, that traditional auction methods no longer properly serve a vast spectrum of new, young collectors and sellers.

“The first auction I ever attended was one in 2010 that Alexander was leading at Phillips, his first as an auctioneer,” recalls Julka, Paddle8’s CEO and cofounder with Gilkes, who is president. At the time, Julka, a native of India where he trained as an engineer, was just a year out of Harvard Business School, and “sort

of interested” in buying art for the walls of his then Lower East Side apartment, which he was sharing with fellow Harvard grad Osman Khan (now Paddle8’s COO). “Even though I had an inclination to collect and the financial means to do so, I had no idea what to collect,” he says. “The other fact was that most auctions at the big houses were happening at 11 a.m. on a Tuesday when I would be on the fortyfourth floor of a Midtown building, knee deep in an Excel data model,” he adds, referring to his then stint as a consultant at McKinsey. “It wasn’t easy for me to get downtown to a Phillips showroom at that time of day.”

“So, we have focused essentially on consolidating the whole middle market for art and collectibles,” says the dashingly handsome British-born Gilkes, who could easily offer himself up for bidding as a lunch date at one of the many charity auctions Paddle8 handles. “Paddle8 is able in a very effective manner, and as the only online model, to sell lots in the thousand- to hundred-thousand-dollar category,” he says. While some of Paddle8’s younger clients might one day be able to find that excess $130 million needed to buy a Picasso or Giacometti, a Klimt or Bacon for which someone like a Leonard Lauder can easily raise the paddle, most of their buyers want to own good but affordable contemporary art. “The reason names like Warhol and Koons, Hirst and Emin endure is that they each have brand value,” says Julka. “Brands matter. These artists have earned critical acclaim through major museum shows, galleries and collectors’ validations, and Paddle8 collectors want a part of the cultural history they’ve made, are making, and embody.”

“Today’s collector is better informed, better educated, better traveled, craves immediacy and is digitally savvy, and an online model such as Paddle8 plays perfectly into that trend,” adds Gilkes.

The bidding process at Paddle8 sale is not unlike that of, well, bidding for a vintage Barbie on eBay. It’s just that the goods one finds on Paddle8 are decidedly better and hipper. It’s a simple matter of registering, then launching into the bidding process, monitoring the inprocess auction (each typically lasts two weeks), and, ideally, securing the winning bid.

Despite the fact that most Paddle8 buyers are clicking away alone at home or in the office in pursuit of a Tracey Emin print or Jeff Koons painted skateboard, there is a decidedly social aspect and cachet to the site (among the scores of twentysomethings ensconced at terminals in the Cooper Square headquarters is Britain’s Princess Eugenie, hired in 2013 as a benefits auction manager; there are 100 employees scattered among the New York, LA and London offices.). “We are big believers in the social impact of collecting,” stresses Gilkes. “A significant part of our business is our benefit auction division. Where we are bringing the offline fundraising galas for major museums and foundations online.” Paddle8’s consulting auction curators include such brand names as Grace Coddington, Bob Colacello and Tory Burch, along with art historians and techies from Gagosian, Pace, Christie’s, Sotheby’s, Tumblr, and elsewhere.

Gilkes and Julka concur that it would be a bad bid not to make full use of one of their best assets, Tory Burch. Indeed, they hosted an offline event with her at the 94th Street townhouse of Jeanne Greenberg Rohatyn to celebrate Jeanne’s auction. By their estimates, it was a successful night that brought together luminaries from the art and fashion worlds—and it even had Anna Wintour’s official vetting when she arrived. Paddle8 recognizes that given the right people and the right moments, it makes sense to host events. But the company has also recognized that on a day-to-day basis, aspects of the traditional auctions business have become outdated. To lure people to an evening event increasingly means ensuring they experience something special, and Gilkes and Julka have a knack for doing so.

Another reason so many boldfacers choose to sell (and buy) their goods through Paddle8 is because few other houses would bother dispensing with closets full of moderately valuable goods. Bob Colacello, in a bout of spring-cleaning, decided to unload memorabilia from his days on the assembly line of Warhol’s Factory. “Bob said to me, ‘I understand that one man’s junk can be another’s treasure, and I have incredible pieces under my bed,’ and he meant literally so,” recounts Gilkes. “He asked if we could conduct an auction for him. We sent a specialist to his house and cataloged everything from Bruno Bischofberger posters [Warhol’s European dealer] to Keith Haring New Year’s Eve party invitations. The sale created a very intimate portrait of Bob’s years with Warhol.”

Christophe de Menil, whom Gilkes and Julka characterize as “the Forrest Gump of the twentieth-century art world, since she knew and knows everybody,” chose Paddle8 to help sell off works from her collection in December 2014. While one of those pieces, a Fred Sandback sculpture, sold for six figures, most of the items de Menil wanted to part with were estimated at a far lower price point. Gilkes and Julka are convinced that had she brought the items to Christie’s or Sotheby’s, with whom she has strong relationships, they wouldn’t have been able to tease out the kinds of collecting stories that Paddle8 created and promulgated. In retrospect, the partners realized that the sale represented a moment for de Menil to share with Paddle8’s young generation of online buyers how and what she had collected over the years.

As for its name, like many start-ups at inception, Paddle8 stuck when there was no chance to bid for anything else. As Julka recounts, Gilkes came up with what was then a working name. Julka and Gilkes were conducting a field study with a former Harvard business school professor of Julka’s who was so smitten with the concept that the professor took out a checkbook and said, “‘Okay, guys, who do I make this check out to?’” recounts Julka. At that moment, the only name Gilkes and Julka had was Paddle8, the eight referencing a lucky number in Asia. “We said, ‘Make it out to Paddle8,’” says Julka, “which meant we had to incorporate the next day.”

But the stray check from an admiring mentor to a favorite mentee was not sufficient to launch Paddle8. Since Julka and Gilkes decided to setup shop in 2011, they have led Paddle8 through three rounds of funding (with a fourth rumored to be announced)—and they have clearly been calling the correct numbers and emailing the right funders. To date, they have secured $17 million from a variety of sources, including, most notably, Mousse Partners, the private investment firm controlled by the family behind Chanel, and Founder Collective, a venture capital fund headed by David Frankel. Other name brands who have written checks are the artist Damien Hirst, the Mellon family, Alexander von Fürstenberg, art dealer Jay Jopling and Hikari Yokoyama, the art dealer/advisor.

It’s fun to watch the dynamics between Gilkes and Julka, echoing, perhaps, the collegial back-and-forth energetic banter between auctioneer and bidder. Their rapport mimics that of brothers separated at birth or club pals—one deferring to the strengths of the other. Julka, more the business/numbers guy, Andrew the polished face of glamour and social connections (often at events with his fashion designer wife, Misha Nonoo). But both evince the kind of energy and buzz that fills many an auction room at prime bidding. They could sell you on anything.


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