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Profiles

Artesian

By Eric Peterson | Mar 08, 2021

Aerospace & Electronics California

Company Details

Location

San Francisco, California

Founded

2018

Ownership Type

Private

Employees

30

Products

Custom-built computers

Founder and CEO Noah Katz is growing sales of high-end PCs with an innovative marketing approach that broadcasts the manufacturing process online.

San Francisco-based Artesian pivoted from 3D printing focused on "making props for video games" to building computers in 2015, says Katz.

"We developed a reputation for high-quality, precision custom work, which allowed me to start selling computers in late 2017," he says. "Having a reputation, having a brand, having an image, having some reviews -- all of that was very, very helpful."

Incorporating in early 2018, Artesian took off in 2020. "The majority of the growth all occurred in 2020, when everybody was stuck at home," says Katz.

Early on, the company ran afoul of some online stores who had banned "mining rigs" for Bitcoin and other cryptocurrencies, but Katz says that was never the primary target market. "You can mine cryptocurrencies on your smartphone if you want to, but a lot of large payment processors are simply terrified of crypto machines," he explains. "The majority of the market, though -- especially what we built last year -- is about gaming."

That said, plenty of customers buy Artesian computers for use at work and home for video editing, recording, animation -- anything that requires some serious computing punch.

"Everything is custom," says Katz. "You can certainly order the normal specs -- you can certainly choose to go through the checkout process and not click any buttons -- but 95 percent of customers will start to adjust the buttons and the dials and make something truly unique and custom for themselves."

Prices start around $1,000 and typically tops out at $6,000, but a deluxe Artesian unit with all the bells and whistles can run $30,000. Among the options: custom etching, vinyl wraps, premium cases, and upgraded components.

Every single computer build is live-streamed on Twitch, where Artesian has an audience of 70,000 followers. Katz attributes 80 percent of the company's orders to the strategy, noting "We broadcast 10 to 16 hours a day, seven days a week."

The confluence of manufacturing, social media, and live broadcasting has catalyzed Artesian. "Our presence on Twitch, livecasting every single build the company does, is pretty freaking unique and pretty amazing," says Katz. "It's just a really unique, hyper-transparent, brand-aware place to do our marketing and get the product created."

He continues, "Everyone watches their build get built live. Nobody else in the world does that, and random strangers can pay money to upgrade other random strangers' builds, or their favorite partner's build that they've been watching for years and years. It creates an incentive and a social interaction on a second level: you literally can buy something from our company and receive something that is superior to what you purchased, thanks to the generosity of strangers."

With a production staff of about 10 employees, Artesian is now shipping about 300 computers a month. "More than 10 a day on average across both coasts," says Katz. "That includes really, really high-level builds that can take five, 10, 15 hours and really simple things that take only a couple hours."

The marketing dovetails into product quality, namely the fact that YouTube influencers would "lament" the deficiencies of competitors' products, he adds.

"We use the highest-quality parts in the industry," says Katz. "There's absolutely no corner-cutting, down to the screws -- the best cases, the best RAM, motherboards, graphics cards, power supplies, everything. We do not make money by cutting corners."

Artisan's supply chain is global, but the company doesn't source components directly from manufacturers. "We work with all of the country's largest hardware distributors," says Katz. "We have contacts in all of the world's largest manufacturers of high-quality components, but they aren't interested in you until you are buying shipping containers full of parts."

Wait times once ran between two to four weeks, but now "depend on what you order," says Katz. "If you order the hardest-to-manufacture parts sold in the U.S -- parts that are incredibly scarce -- we can't miracle-work that into being more available."

Artesian's sales boomed by 1,000 percent in 2020 as the company's workforce increased from three people in 2019 to about 30 in 2020, the same year that the company opened a second location in Charlotte, North Carolina.

Final assembly is handled at both the California and North Carolina locations, as is some CNC production of wooden panels. Artesian works with contract manufacturers for metal fabrication and other needs, but will likely bring more capabilities in-house in the near future.

Katz forecasts growth of at least 300 percent in 2021, noting, "Our goal is 800 percent growth."

Challenges: The PC supply chain has gotten increasingly fragile, says Katz. Between COVID-19, tariffs, accelerating obsolescence, and increased demand, "It's incredibly hard to source things."

As demand outstrips supply, the manufacturers increase their suggested retail price, leading to confusion in the market. "Every month has been a fresh dimension of pain for manufacturers," Katz laments.

And Twitch can be a bit of a tightwire walk. "You're doing a live broadcast," says Katz. "If something goes wrong live on camera, that certainly is a worry, although we've been pretty good about that."

He also says "hyper-customization" can also be quite challenging: "There's a lot of little moving pieces."

Opportunities: "By the numbers, we're not a very large custom parts production business, but that is one of the unique things we do -- we build custom wood and glass and metal panels for a variety of cases," says Katz. "So a customer who doesn't have a PC from us . . . can still buy a product for us. That should be the genius play for us, because then we're expanding the market beyond people who need whole computers. That's a 100X bigger market potentially, but it is a way bigger challenge. You have to way more SKUs in stock and you're at the mercy of different designs and different material considerations."

But he sees a path to scaling production of cases and other components "because our competitors have a design cycle for those that's measured in years, and ours is measured in weeks."

Needs: Katz is looking to invest in a laser cutter and new employees. "There's always a talent crunch," he says. "We're always essentially hiring, because we're sifting through applicants and trying to find people that have a capacity to build computers with a level of skill like a mechanic who's worked on a thousand Toyota Camrys. If you hand them a Lamborghini, they know this is where the wheels go, this is where the engine goes. They can understand the nuances of any car because they've worked on a lot of cars. That's the thing with computers: A lot of it is similar, but you throw some new interesting new customizations and products in the mix -- a $5,000 rotating spherical computer case -- you have to know the quirks and features of a $100 metal box to understand how the crazy things start working."

Also key: knowledge of gaming and Twitch. "It really is experience you can't get from a university or college program," says Katz. "The majority of scaling will come from finding people who are really talented at talking about this stuff, building it, and at the same time also from time to time broadcasting live on twitch and interacting with people who are ravenous fans who are sometimes asking tough questions to answer." He concludes, "It's a bit like reading the news but also solving a Rubik's Cube at the same time -- tough job."

Growth capital would also be nice, but Katz says he doesn't think VC firms understand the space and the dynamic with Twitch. "The outlay is massive for inventory, and I would like to have more to spend on marketing, but we spend zero dollars on marketing," he says. "When you're doing this live, personal relationship building, it's more like selling a luxury car in some ways. . . Nine out of 10 customers are personally in contact with human beings here, and that's important."

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