From Startup to Secret Weapon

When Bill Lederer first began talking to the press after securing his first round of funding, he had the hunted look of a man who’d come very close to losing his shirt. Lederer put himself through college selling frames and art supplies with his father. Years later, when his father developed cancer, he decided to quit his burgeoning Wall Street career to return to the family business. After coming to terms with the industry’s real-world limitations, Lederer and his wife moved the frame trade to the Web. Lederer launched, now, an online poster and print shop.

It was a hard road. Lederer came so close to folding that when he finally secured funding at a hotel in California, he’d maxed out his credit and had to ask the startled investor for plane fare home. Then everything changed. On Wednesday, Lederer announced that had been acquired by Getty Images (GETY), parent of a group of stock photography and footage houses, for up to $85 million in cash and 4.5 million shares of Getty Images stock, which, on that day, meant a total of around $200 million. “The resources Getty will bring, their progressive management approach, the enormous quantities of content …” Lederer drifts off and then remembers a more immediate bright spot. “This is going to provide real security for my family.”

Lederer’s has become the Getty family’s secret weapon against the rising specter of Bill Gates’ pet project: Corbis. Getty Images is the monster of the business, with more than 30 million images and 13,000 hours of film footage, while Corbis owns 25 million digital images and doesn’t have the reach of the other two big houses – the Image Bank and Visual Communications Group.

But Corbis is the most fearsome enemy of the bunch. “This wasn’t done with Corbis in mind,” argues Mark Getty, executive chairman of Getty Images and grandson of billionaire J. Paul Getty, but he doesn’t deny a particular distaste for his competition. “Corbis is different from the rest, because no one has tried to force a brand across all the different product lines,” says Getty. “And Corbis has spent more on technology.” Despite his sudden success, Lederer had a startling encounter with humility after his victory dinner with his VCs and Getty. “It was the most expensive dinner I’ve ever paid for,” he says. “On the way home the gas station rejected my credit card. I’d been reading a Wall Street Journal article about my getting $200 million, and there I was at midnight, stuck on the side of the road.”