etoy.SHARE-CERTIFICATE EYB No. 449
On April 6, agent ZAI resigned as CEO of etoy after 12 intense years. The board of etoy.CORPORATION asked the management team consisting of agents MONOROM, HAEFLIGER and ZAI to assume interim shared leadership of the art group. Reasons for this change are both organizational and personal in nature: for etoy the change triggers a number of radical changes in strategy. First, the reasons, then the implications:
1. Most relevant: Leadership and experimental production outside the traditional art market demands permanent adaption and transformation.
Since 1994 etoy lives the corporate sculpture and since opening up the group for new agents and financial investors in 1998 etoy exploits the shareholder company model to compensate and to share concrete ownership/power with its workforce (agents who produce etoy.ART) and financial investors (individuals and institutions who pay for etoy.ART). This core remains intact and the fundamental pillar of the sculpture on both levels: conceptually and as a pragmatic practice to fuel etoy.OPERATIONS. The 15 year history of the group is proof of concept and underlines sustainability – especially in a period of insecurity.
What needs to be questioned and adapted is the organization of our leadership and production. Rather than replacing individuals and sticking to a given system, etoy adapts the system to better fit the environment and the individuals dedicated to etoy at this moment in time.
etoy.HAEFLIGER, economist/researcher: “Leadership in our business is fraught with conflict because art does not measure in bottom line, hours, investments, and number of employees. Fine media art today is easy to access (technically), complex to produce, close to impossible to appropriate, and harder to sell than traditional (object based) art. Yet it remains equally fragile in its reception, susceptible to social, organizational, and emotional environments, and focused on exceptional quality. The creation of innovation, and the production of knowledge in general, is fragile within any organization. Creative energy, enthusiasm, vision, collaboration, care, accuracy and dedication to quality cannot be ordered and authority is pointless. Leadership, hence, needs to be indirect, supportive, encouraging, caring, and careful. Companies that manage to create exceptional quality products and iconic designs in-house are rare. Companies or collectives that create fine art successfully are even more rare. etoy has been dedicated to create exceptional experimental art outside the framework of the genius/star and gallery system. etoy continues to adapt its organization to own learnings and updated insights from research and practice in a team of agents.”
While a chief executive officer seamed appropriate to manage etoy's transformation from being a closed group of 7 etoy.AGENTS (1998) to a group of more than 20 part time etoy.AGENTS and about 300 registered etoy.SHAREHOLDERS (2009) leadership must be radically questioned now.
etoy.ZAI: “etoy's vertical integration strategy started to fail. A number of functions must be disintegrated (sales, PR, corporate finance) as a consequence of the excessive burden facing the management team. Production and development tasks took a back seat. I will no longer be available to lead the crew of etoy.AGENTS. This involves certain risk factors and short- range chaos but at the same time enables regeneration.”
2. After 12 years agent ZAI wishes to shift his focus from management back to production.
3. Human resources: etoy's departing chief financial officer could not be replaced last year. Many agents fell into sleep/hibernation mode and seem unable to self-start and engage in the group's activities. Countless tasks remain open. A core group of 8 agents and interns frequently contribute. The excessive burden of coordinating a scattered group of part-time agents kept the CEO and other members of the management away from effective production.
4. Corporate finance in an art firm: Inbreeding and self-infatuation led certain “expert” commissions in Switzerland to judge media art based on speculative news value and superficial “fake-proposals” rather than assessing artists' real world performance and intellectual impact. etoy will not predict its artistic performance by tailoring future work on commissions' likely short-term tastes. Works such as the “digital hijack” and “TOYWAR” were situational, unpredictable, processual, fast-changing, and ultimately not fundable under past and current funding regimes. Funding priceless, high-risk art takes courage and vision, both currently unavailable from public institutions for the funding of future projects.
The costs to complete submissions of funding proposals during the last five years were dramatically higher than revenues from this sources (Bundesamt fuer Kultur, Sitemapping.ch, Migros Kulturprozent etc). A careful evaluation of funded projects and juries active in this field showed that expectations for the future are miserable and not worth participating.
Private sources supported etoy repeatedly over the last decade. Building the SARCOPHAGUS required a large loan. A big part, currently 50'000 USD is outstanding and the management did not succeed in converting it or refinancing it on time. The dim financial outlook is about to create a liquidity crisis and requires drastic measures.
5. Low return on investments. High capital investments over the last 3 years yielded returns below expectations. In an adverse environment, etoy tried to recover investments in infrastructure and art installations but failed so far.
The following strategic changes take effect immediately:
1. Outsourcing of sales activities. etoy cuts back on direct sales efforts in order to reduce its corporate center. An evaluation of art galleries is currently under way and we're open to discuss a collaboration with a top level gallerist anywhere in the world.
2. No more efforts for public funding. etoy stops submitting proposals to short-sighted, fickle, and narrow-minded funding committees as of now. This frees up considerable management resources at effectively no cost. As in the past, etoy will need to rely on visionary private creditors who understand art as a high-risk endeavor and invest capital, courage, and style for an uncertain but exciting future.
3. Suspension of all capital investments. After heavy investments in infrastructure (2006-2009) that resulted in improved etoy.TANKS (link) and excellent production facilities in Zurich, etoy freezes capital investments immediately. Investments in human capital continue unchanged: etoy trains agents, interns, and members of management in all sorts of hands-on conceptual and social twists that increase brand value long-term.
4. Cutback on press relations. See press statement (LINK). Mainstream press coverage is good for superficial visibility but very inefficient to communicate memes that hack deep inside the cultural code of civilization (e.g. the memes that etoy tries to create with MISSION ETERNITY since 2005). Analysts pointed out that etoy had plenty of superficial media attention in its history. This cut on mainstream press work creates a risk for accusation of arrogance and for negative coverage, a price we're willing to pay.
5. Rejection of an offer from LUDWIG BOLTZMANN INSTITUT, Linz, to conserve and process the historic etoy.WORK “digital hijack” from 1996. The conditions under which the massive archive work would have taken place seamed not 100% clean and emotionally highly explosive due to brand squatting and marketing activities of a former (Austria-based) member of etoy. The management decided to concentrate on the productive future rather than to get involved in PR fights about the past. Art history will be done best after two meters of dust cover etoy.BACKUPS and after all “digital hijack” entrepreneurs died.
6. Drop in share price anticipated. The 2009/2010 outlook is uncertain and the market remains volatile. The share price depends on current sales and the management outlook for the mid term, in other words dependent on sales forecasts and, given the discussion above, the collaboration with a gallery. etoy calls on our shareholders to consider their networks and ask themselves how they could get involved in etoy and the strategy that will sustain organizational art production in the 21st century!