The New York Times is running an interesting story today on Larry Gagosian’s influence within the world of art. It strikes me that the service Gagosian offers would be nearly impossible to automate or digitize. He has leveraged a personal rolodex (social capital), fine taste in art and experience in deal making to invent an amazingly scalable career. The most scalable careers seem to be ones that exploit niche knowledge and social capital (perhaps the most important un-clonable asset).
From the Story…
Larry Gagosian wasn’t the first dealer to realize that art was a commodity, and that for the right price anyone would part with anything. But he brought a brazenness to this once-genteel realm that left rivals speechless. With a Rolodex filled with hedge fund investors, Russian oligarchs and real estate magnates, he would pitch paintings that weren’t even for sale, knowing that if the offer were large enough, the owner would thank him.
“Larry made it a business deal and business guys were more comfortable with that,� said Maurice Tuchman, an art consultant and former chairman of modern art at the Los Angeles County Museum of Art. “It was like they were buying a building, or shares of IBM. No rigmarole.�
To understand Mr. Gagosian’s success you need to understand that the postwar art world is basically a stock market with a couple of thousand really valuable shares. Few people have any idea where those shares are located, because they’re hanging in the homes and sitting in the warehouses of collectors, who, for obvious security reasons, tend to keep their holdings well-guarded secrets.
If you want to spend $30 million on a de Kooning, you can check what’s in the catalogs of the coming Sotheby’s and Christie’s sales. But if you don’t find what you want, you’ll probably call Mr. Gagosian. One of his talents is simply ingratiating himself with the richest collectors in the world, which gives him access to their homes, which allows him to take note of what great works are where. By all accounts he has an excellent memory, but his secret weapon, if it can be called that, is the lowly camera, which he’s been known to use on the Q.T.
In many instances, Mr. Gagosian is effecting trades in which none of the parties know the identity of anyone else. Collectors say they typically receive calls from him saying something like, “If you want that Francis Bacon, you need to give me your Lichtenstein and the two Basquiats.â€� Who is on the other side of that trade, or whether the Bacon came from Mr. Gagosian’s private stash, is never discussed.
His database, Mr. Cramer says, “is a Fort Knox of information.�
Mr. Gagosian, in short, is a one-man Nasdaq, an exchange where he helps set the price, not to mention the size of his commission. Unlike an actual stock exchange, though, this one is always open for business, and when it doesn’t get expected trades, it gets loud and profane. Mr. Gagosian has been known to pepper art consultants contemplating the terms of a deal with 20 calls in a single day, and if the answer isn’t the one he wants, you’re advised to keep the children away from the phone.
“He’s something of a genius,â€� says Peter Schjeldahl, art critic of The New Yorker who has attended many of Mr. Gagosian’s shows. “We think of genius as being complicated. But geniuses have the fewest moving parts.â€� He added: “Gagosian is simple. He’s basically a shark, a feeding machine.â€�
