Josh Chodniewicz, Art.com (AllWall.com): Bootstrapped 10 Years Before a $30M Round

1Mby1M Research · 1Mby1M Case Study

Interviewer: Sramana Mitra

This interview is part of the case study-based research and entrepreneurship education work of 1Mby1M, the global virtual accelerator founded by Sramana Mitra.

Abstract

Josh Chodniewicz co-founded what became Art.com in 1994, launching an online poster business, AllWall.com, with just $35,000 in personal savings and no outside funding until 2004. Early growth relied on aggressive, capital-light customer acquisition – becoming one of Yahoo Overture’s first pay-per-click advertisers, building an in-house affiliate program that drew 750,000 linking websites, and partnering with eBay to auto-list millions of products on a success-fee basis.

The company reached $1 million in revenue by 1999 and $10 million two years later, accelerated by a pivotal 2001 acquisition of its larger, venture-backed rival Art.com from Getty Images for a fraction of Getty’s original investment, funded through a seller loan repaid in seven months. In 2004, after a decade of bootstrapping, Chodniewicz raised $30 million and merged the combined business with competitor AllPosters. This case illustrates how a decade of disciplined, self-funded growth and opportunistic acquisition of a struggling venture-backed competitor can outperform capital-heavy rivals, reinforcing the 1Mby1M principle that bootstrapped efficiency often beats early fundraising.

Transcript of the Interview

Sramana Mitra: Let’s start at the very beginning of your journey. Where are you from? Where were you born, raise, and in what kind of background?

Josh Chodniewicz: I was born in New Jersey. I am the oldest of seven kids. My parents had seven kids in nine years.

Sramana Mitra: Sounds exhausting!

Josh Chodniewicz: Yes. Having three kids of my own, I have a new appreciation for that. I now understand why they weren’t at every one of my soccer games. I was the son of an entrepreneur. My father was an entrepreneur. He paid his bills building houses and spent a large amount of his time pastoring a church. My mom was his partner in life. She was a receptionist. She did accounting work. They are a great team. If you ask me how I got started, I had an entrepreneurial bend at a young age.

Sramana Mitra: Entrepreneur’s kids are very often entrepreneurs. My father was an entrepreneur as well. I knew, when I was 16, that I wanted to be an entrepreneur.

Josh Chodniewicz: Right. This morning, my wife wasn’t feeling well, so I took the kids to school. On the way to school, we were talking about the differences between working for someone versus working for yourself. One of the comments the kids made was funny. They said, “How many jobs does Jeff Bezos have?” They thought that he must have a thousand jobs to have a lot of money.

I was seven years old when I started my first business. I was engaged at a zoo. That was when I learned that chickens lay an egg every day. Those eggs then get bought for 10 cents each at that time. They’re basically laying dimes for you. I convinced my parents to allow me to have 70 chickens in my backyard. That was the beginning of a little chicken business where I made $3,000 that year. You go through a process of seeing the benefits of running a business.

Sramana Mitra: What did you do for schooling?

Josh Chodniewicz: I did not go to college. Through the 12 years of schooling, I’m not sure my parents uttered the word college to me. My father was born and raised in Buenos Aires. He came to America as a 16-year-old with $20 in his pocket. He never did more than 7th-grade education because they decided he was going to work to help pay the family bills.

He took a job at an architecture firm and started working as a helper there. He didn’t have much in education. He spoke Spanish predominantly. It just wasn’t important to him, so it ended up as not important to me. I’m not saying it’s not important.

Sramana Mitra: You started a company right away after high school?

Josh Chodniewicz: I already had some things going on the side. I helped with my father’s construction business. I stepped in to help the business. The second and third year out of high school was when I started Art.com.

Sramana Mitra: Why Art.com?

Josh Chodniewicz: This was in 1994. It was a while ago. A buddy of mine called me up. He was at Virginia Tech. He was getting his Computer Science degree there. He said, “Josh, I know something that’s going to be huge one day – the internet.” We started talking about it.

I bought myself a modem and started playing around with it. We brainstormed in a diner in New Jersey. Nobody was using it. To give context, one out of 800 Americans had an email address in 1994.

Sramana Mitra: Right. I started my first business while I was a grad student at MIT.

Josh Chodniewicz: In MIT, at least, you had an email address, right?

Sramana Mitra: Yes, it was exciting.

Josh Chodniewicz: You got a world that’s evolving. Interestingly enough when Mike and I got together, we thought that the best thing we could sell online was books. We thought, “Barnes & Nobles is going to crush us.” We decided to pass on that.

Then we thought that music would be really big. It’s clear that music would be digitized. That was also the day and age when Columbia house was around and they were selling 12 CDs for a penny. We thought that that was not a good business. We thought that the next best solution would be selling a picture. What you see on the screen is what you get.

For example, I’m a Boston Red Sox fan. I live in Austin, Texas, how can I get a poster? It’s hard to do that without the internet. The solution had not been built. The facilitation of the solution made a lot of sense inside of the internet. We started a business doing that. We launched it with 3,000 SKUs that we scanned. We did all the taxonomy around them.

Sramana Mitra: You started with just posters?

Josh Chodniewicz: Yes, then it turned into reproduction art prints. A few years later, we added framing services.

Sramana Mitra: This was all at the beginning of the internet. Your customer acquisition strategy was what?

Josh Chodniewicz: We were the 9th company in the world to start with Yahoo!’s Overture. They were the ones that invented pay-per-click. You could come in for a penny and we negotiated with them for fractions of a penny. We were paying fractions of a penny for millions of search terms.

The beauty of what we offer is that whatever you think about, we’ve got a poster for it. We could use that long-tail situation much like what Amazon did with books. Search engine was a big part of what we did. In 1997, we built one of the first affiliate programs in the world. We built that on our own. We didn’t use anybody else’s software.

We then went out to acquire websites. There were sites like WebRings. They would put together groups of sites around a certain topic. Let’s say Star Wars. Here is a ring of 600 Star Wars websites. We went to WebRings and said that we wanted to email all 600. We scraped those sites for their contact info.

We reached out to them and told them, “We have Star Wars posters that your fans might be interested in. Here’s a gallery. We’ll give you a quarter for every dollar we sell.” Our margins were high. It was around 65%. The beauty behind that was, no capital upfront and pay 30 days after the sale happens on the affiliate side. Everybody wanted it. That was a big push. We had 750,000 websites linking to us.

Sramana Mitra: All this happening bootstrapped?

Josh Chodniewicz: $35,000 of our own money. We didn’t raise any money until 2004.

Sramana Mitra: What was the revenue trajectory with search engine and affiliate marketing as the drivers?

Josh Chodniewicz: The other consumer driver for us was our partnership with eBay in 1998 to list our products. We were talking to eBay about why their marketplace didn’t have the traction. The problem was their listing fee. They were charging a 10-cent listing fee.

I have three million products. I want to list them and it will fill all these gaps, but I can’t pay them 10 cents when they don’t have the buyers. I’ll gladly pay the percentage on success. They did that for us. The moment something sold, we auto-listed it again. It sold through the roof.

In 1998, we sold more products on eBay than any other company in the world. We also eventually saw over 10% of our revenue coming from the Amazon marketplace. This was later on. You asked about the revenue trajectory. It was slow to start. It felt like molasses in the early years. We took $16,000 out. We lived in the same apartment together.

Sramana Mitra: Was it just the two of you?

Josh Chodniewicz: We hired a couple of people in our fulfillment area.

Sramana Mitra: It was very lean.

Josh Chodniewicz: Super lean. Everything had to be out of our revenues. Think about that. We start with $35,000 and bought a $3,000 server. We were paying $600 a month for the internet connection.

Sramana Mitra: How long did it take you to hit a million in revenue?

Josh Chodniewicz: I believe it was 1999. It took five years. Our real traction started in 1997. A couple of years later, we got to $1 million in revenue.

Sramana Mitra: How about $10 million?

Josh Chodniewicz: Two years later. We went from $800,000 to $2.4 million. In the following year, $10.4 million.

Sramana Mitra: All those channels took off at that point.

Josh Chodniewicz: Going from $800,000 to $2.4 million, that was all us. At that time, we were allwall.com. Our leading competitor was art.com. Art.com went through a more traditional trajectory. It raised $15 million in venture capital. It ended up being sold to Getty. Getty paid $135 million for the business. Getty bought it in 1999. Then over the next two years, they pumped an additional $200 million.

Sramana Mitra: Was Art.com making that kind of money or was it just speculative?

Josh Chodniewicz: They were the same size as us.

Sramana Mitra: I was in Silicon Valley at that time. I did three startups as founder CEO during that period.

Josh Chodniewicz: It was crazy times.

Sramana Mitra: How did the $2.4 million to $10 million happen?

Josh Chodniewicz: We bought Art.com. We bought them pennies on the dollar. We had a situation where we ended up buying this business for way too little. The end price was $618,000. We borrowed it from Getty. They loaned us the money to buy the company from them. It was a wonderful experience.

We ended up buying them and paying off the loan in seven months. We had five years to do it. All their revenues continued to us. We just cut all their expenses except for the COGS. We probably had about 30 people. Now we own the Art.com domain.

Sramana Mitra: We are now in 2004?

Josh Chodniewicz: 2001 was when we acquired Art.com. Then 2004 was when we raised $30 million and combined it with our leading competitor at that time called AllPosters. I called up the other CEO and said, “We can shoot bullets at each other or we can join and shoot them at the rest of the world.” We put the businesses together in 2005.

Sramana Mitra: You ran the company?

Josh Chodniewicz: I did not. The other gentleman did. I was on the Board.

Sramana Mitra: All these three entities combined was a print business. It was not original art.

Josh Chodniewicz: It was not original art. In 2004, I had launched an original art business inside Art.com. We built a platform for artists to connect and tell the world everything they’d like to and showcase their artwork. We spent about under a million to build it. Six months into it, I had 75,000 artists signed up and over 400,000 original works. It was a wonderful product. That was what I said I wanted to do originally.

Sramana Mitra: What happened to art.com eventually?

Josh Chodniewicz: About three years ago, Walmart acquired Art.com.

Sramana Mitra: Between 2005 when you went on the Board to 2018, it was just organic growth?

Josh Chodniewicz: Yes. It’s interesting to see what happens to the company when the founders leave. It is dramatic.

You put operators in there. We didn’t have the experience that we would have liked to see. I was the remaining founder on the Board. To watch hired guns run the business, it did well in certain areas. In other areas, it didn’t do as well. A lot of innovation goes away.

Sramana Mitra: Passion is what goes away often. It’s a different way of building businesses.

Josh Chodniewicz: There are a lot of businesses that can still do very well with the right people.

Sramana Mitra: You had the customer acquisition figured out. You had the product-market fit. Executing on those gives a certain amount of growth.

Josh Chodniewicz: Exactly. Then you have the rising tide of the internet. We never saw the massive $10 billion valuations.

Sramana Mitra: What was the peak revenue?

Josh Chodniewicz: A couple of hundred million.

Sramana Mitra: When Walmart acquired the company, what kind of price did they pay?

Josh Chodniewicz: It was on the downtrend. The Walmart acquisition was not a good one. It was not something I voted for frankly. It wasn’t beneficial to shareholders. It’s interesting as I think about the life of an organization like that. You saw Art.com in the hands of Getty. It didn’t work. Spending $300 million on a business that now has $2 million in revenue and losing $2 million a week.

Sramana Mitra: The problem is this is what’s happening again. That bubble cycle of getting to unicorn status in six months and ridiculous liquidation preferences has come back. The market is going through another bubble cycle.

Josh Chodniewicz: I remember having a term sheet in 1998. We talked to a few venture firms. I remember having this term sheet for $5 million. I forgot how much exactly. The gentleman also told us that we would be spending it on marketing. They started telling us that we were going to use this on this kind of ads. None of them works. I may have done it wrong. On the other side of it, I could have been spending that on building a brand without the substance.

Sramana Mitra: You could have gotten a good exit as the other guys did.

Josh Chodniewicz: Exactly.

Sramana Mitra: I hate businesses like that.

Josh Chodniewicz: I have a hard time building business like that. I watched my father build a business. He built a house for a certain amount of money and sold it for more. That’s a profitable mindset. If you build a product for $400 and sell them for $80, maybe you’ll sell a lot, but it won’t work.

Sramana Mitra: The internet has unfortunately given rise to this kind of scammy behavior.

Sramana Mitra: What did you do after Art.com?

Josh Chodniewicz: We were in San Francisco. I moved to New York and lived a couple of years there. Frankly, I think I dealt with an identity crisis. All I knew was Art.com. I had to get around that. I started making investments in startups. I saw quite a bit of success in that.

Sramana Mitra: What did you invest in that really did well?

Josh Chodniewicz: A company called Mixbook. They’re a competitor to Shutterfly. They make photobooks. They make it in my style. They sell them for more than they make them. They’ve been growing every single year. I was the original investor there. They raised one venture round.

Sramana Mitra: The company has already sold?

Josh Chodniewicz: It did not. It’s still running. I did have a small exit where I was able to take out 5x my original investment. That was nice. Now you see the value of that business is significantly larger. That opened my eyes to the secondary market of investing and also the problems with that. I knew whatever I did, I wanted to be passionate about it. That’s just how I am. I’m compulsive. I want to win.

Sramana Mitra: You can’t be a good entrepreneur without being compulsive.

Josh Chodniewicz: Maybe so. I also wanted to do something big. We had 1,200 people in Art.com at its biggest point. I spent some time thinking about what I would do next. I facilitated a discussion room. I hired a facilitator. I got in a conference room with others to brainstorm. We settled on Fundify where we’re trying to simplify the startup landscape of funding.

With equity crowdfunding, laws have changed. I really like the idea of disintermediating the world and allowing individual investors to deploy their capital into this asset class even though they’re not accredited. You don’t have to be a millionaire to earn these types of returns.

Sramana Mitra: We’ve been doing this accelerator since 2010. We’ve seen the whole equity crowdfunding thing come together and evolve. My two cents is that the vast majority of companies who go out to raise money are not fundable. They need work.

Josh Chodniewicz: That’s correct.

Sramana Mitra: In our accelerator, we state up front that just by joining One Million by One Million, don’t expect that you’re going to get introduced to investors. If you’re not fundable, we’re not going to introduce you. We work with them. We send them to investors when they’re fundable. This is a phenomenon that I expect that if you have an equity crowdfunding platform, you’ll be working with this issue. Somebody will have to prepare them. Some will be ready but not all.

The second thing is these equity platforms are not comfortable leading the rounds and pricing the round. They want somebody else to lead the round and then fill out the round. With my community, that creates a problem.

If I can find a lead investor for my company, I can find a follower investor as well. It’s much easier for me to work with my own network and find both the lead and the follower. As an equity crowdfunding platform, if you don’t give me a lead term sheet, then you’re not very useful to me.

Josh Chodniewicz: There’re a lot of great thoughts there. I agree that most companies are not ready for funding. They need some trusted advisors. We aim to provide some of that.

Sramana Mitra: Getting companies fundable is a high-touch process. That is not necessarily a scalable process. I would say we may be the only accelerator in the world that has done some scalability on that. We have created a lot of curriculum. We’ve done so many now. It’s like pattern matching. That takes time.

One of the things that we’ve done is we’ve released a large chunk of our curriculum on Udemy. Udemy has 50 million users. My point is, if you take on the job of trying to coach these people, that is very difficult. Then comes the issue of leading the round or just following.

Josh Chodniewicz: We’re not really looking to tackle helping the earliest companies. If someone’s close, we want to help them. On your second point on leading versus following, I 100% agree with that. There are some regulatory things that are missing. We are thinking about how to remedy that. You could lead it or put it all in. You could put a certain amount that sets the term that allows you to get to a certain milestone. We’re thinking about that heavily.

Sramana Mitra: I’ve tried to work with these equity platforms, but I always end up doing all the work to find the lead.

Josh Chodniewicz: The startup would have created a campaign page that shares their data and sells their pitch 24/7. That’s the beauty behind the platform. That’s the bigger value. That’s what most of the platforms are building now. I do think that startups would still have to sell themselves.

Sramana Mitra: In 15 minutes, I can make 30 introductions; but those introductions would have to be followed up on. The place where the crowdfunding platforms have made a good impact is in the advanced selling of products. That’s one area where we’ve seen a lot of success.

Josh Chodniewicz: Yes, the Kickstarter type of platform.

Sramana Mitra: That’s now equity funding though.

Josh Chodniewicz: It’s not but there’s a place for that. There are other places where that doesn’t work.

Sramana Mitra: Especially in the world that we do a lot of work with, that’s where retail investors don’t know how to deal with that stuff. If you want to play in that world, you need to surround your equity crowdfunding platform with people who are technology investors.

Josh Chodniewicz: I agree with that. The holy grail comes when you’re able to add value from delivering some funding and not just the platform piece. Equity funding as a whole is up. We’re going to get smarter on how to accelerate that.

Sramana Mitra: Very good. It was a pleasure to meet you.

Key Takeaways

• Josh Chodniewicz bootstrapping AllWall.com (later Art.com) for a full decade on just $35,000 in starting capital, reaching $1 million in revenue by 1999 and $10 million by 2001 before raising any outside funding.
• Customer acquisition was built almost entirely through capital-efficient channels: early pay-per-click advertising with Yahoo Overture, a self-built affiliate program that attracted 750,000 linking websites, and a success-fee listing partnership with eBay that made the company the platform’s top seller in 1998.
• In 2001, the bootstrapped company acquired its larger, venture-backed rival Art.com from Getty Images for $618,000, financed by a loan from Getty itself and repaid in seven months – a turning point that took revenue from $2.4 million to $10.4 million.
• After 10 years of bootstrapping, Chodniewicz raised $30 million in 2004 and merged the business with competitor AllPosters, later selling to Walmart; the case underscores how bootstrapped, profit-minded operators can outlast and ultimately absorb heavily funded competitors.