Launched in 2017, the Masterworks art investment platform democratizes the high-end art market, allowing regular investors like you and me to purchase shares of museum-worthy paintings for as little as $20. The platform uses a proprietary art transaction database and machine learning tools to identify high-yield art investments and exit opportunities.
But how did a new-age startup succeed at breaking through the high walls of the blue-chip art market? Scott Lynn’s unconventional thinking deserves credit for taking Masterworks from a concept to a thriving community of 880,000 members.
Whether you aspire to build the next e-commerce giant or go-to business app, Lynn’s endeavors as an entrepreneur pack several lessons for you. Let’s take a closer look.
Scott Lynn’s Entrepreneurial Journey
Masterworks might be Lynn’s most recent and best-known venture. But he has kept the spirit of entrepreneurship alive for more than 25 years.
Lynn’s early successes include Treeloot, a popular online game that ranked among the top 20 sites on the internet until 2001, and AdKnowledge, an adtech firm that helped web publishers to monetize their audiences with dynamic banner placements.
Then came Payability in 2014. The digital lending platform has provided more than $6 billion in capital to e-commerce businesses.
Besides being a passionate entrepreneur, Lynn has actively invested in contemporary art since he was a teenager. In a span of 15 years, he has built an internationally recognized collection featuring pieces by Clyfford Still, Mark Rothko, and Willem de Kooning.
Lynn’s interest in fine art led him to realize its investment potential. As an asset class, blue-chip art – museum-caliber pieces by world-renowned artists worth millions of dollars – has consistently outperformed traditional asset classes like S&P 500 investments. It exhibits low correlations to other asset classes during periods of economic decline and offers better risk-adjusted returns.
Alongside this realization, Lynn also understood that the common public didn’t have access to the exclusive world of auctions and private sales. This sowed the seeds for a solution that could level the playing field in blue-chip art investing, and the outcome was Masterworks.
In just a few years, Masterworks has acquired 392 paintings with a cumulative value of more than $912 million. The platform holds each painting for up to ten years, eventually selling it and distributing the profits to shareholders.
In 2022, Masterworks paid out returns worth $25 million to users. The company even raised $110 million in a Series A funding round in 2021 led by Left Lane Capital at a valuation of more than $1 billion.
Key Lessons for Entrepreneurs
In the process of making fine art investible through Masterworks, Lynn has become a role model for new entrepreneurs. Here are the most vital takeaways from his approach..
Don’t Be Afraid to Shake Things Up
Lynn isn’t afraid to challenge the status quo, and that’s evident from his willingness to disrupt a closely guarded market like blue-chip art.
Traditionally, fine art investments have been accessible only to ultra-rich individuals with troves of dispensable cash. High price point aside, the market also lacks transparency and can be intimidating to newcomers.
Lynn understood the challenges ordinary investors face when navigating the world of fine art and introduced the fractional art investing model. Whenever the Masterworks team purchases a painting, they securitize it with the SEC. That, in turn, allows the public to buy fractional shares of multi-million-dollar paintings at a starting price of $20
Moreover, he recognized that making art investments affordable wasn’t enough. Users needed insight into market dynamics to be able to invest with confidence. It led Lynn and his team to build a one-of-its-kind database of auction sales dating back to the 1950s.
With all this information at their fingertips, users can identify paintings worth their money. Plus, it helps the company’s acquisition team select pieces with maximum momentum for investing.
This presents a crucial lesson for any entrepreneur looking to break into a change-resistant market dominated by established players. Instead of letting the challenges dissuade you, find ways to make your offerings stand out and breathe new life into a traditional market.
Embrace a Hands On Approach
As you tread the waters of entrepreneurship, it’s easy to get caught up in high-level decisions and lose touch with your company’s day-to-day operations.
But Lynn isn’t like most entrepreneurs. Instead of taking a step back, he actively participates in everyday tasks at Masterworks. Whether it’s manually entering data from paper-based auction catalogs to computers, monitoring demand and supply trends, or using predictive analytics to identify exit opportunities, Lynn is always eager to get in on the action.
The hands-on approach has helped Masterworks build a horizontal organizational hierarchy where employees are always driven and motivated. When they see the founder and other C-suite executives willing to get their hands dirty, it encourages them to give their best shot.
For an aspiring business leader, it is one of the most crucial learnings.
Have Faith in Your Ideas
Turning a company like Masterworks into a household name is no easy feat. While the concept of fractional ownership isn’t new, it isn’t something you typically associate with blue-chip art. From potential customers to regulators, Lynn faced a lot of resistance from different corners. But he didn’t let these challenges get the better of him.
Instead, Lynn trusted his instincts and came up with out-of-the-box solutions to overcome each roadblock. And when the platform started gaining traction, he left no stone unturned to scale it.
What can you, as an aspiring entrepreneur, learn from Lynn’s determination? The road to success won’t be easy. But if you keep at it and devise ways to overcome each challenge, your efforts will pay off.
Setting Yourself Up for Success
Starting your own venture is challenging, and that’s an understatement. However, the success of Masterworks under Lynn’s leadership shows that you can build a successful business with conviction and innovative thinking. Also, get involved in the intricacies of your company’s daily operations to inspire your team.