Sunday Snapshots (5th April, 2020)

$12 Million Shark, Privacy and COVID-19, HBO's intriguing move, Signaling, and Unfold

Hey everyone,

Greetings from Evanston!

I hope you and your loved ones are safe. As we start off April, I’m looking forward to not just surviving but thriving through this process. I’ve made significant process on my upcoming book, have been taking an online class on AI, and gone on a long walk every day.

But if you’re like me, you’re starting to get a little stir crazy and have a feeling that you haven’t talked to anyone outside a very small circle in the last few weeks. This is an open invitation to catch-up if we know each other or to talk for the first time with the person who sends you these emails every week. If you want to chat, just drop me note by replying to this message and we’ll set something up.

And in case you missed it, I posted a 3800+ word breakdown of an episode of The Crown. A couple of people I look up to reached out and said that they enjoyed reading it. I think you will too.

With all that out of the way, let’s talk about this week’s Snapshots in which I want to explore:

• The absurd world and valuations of contemporary art

• Privacy in the age of consensual surveillance

• HBO’s intriguing move to catch up

• Signaling as a Service

• A new app I’ve been playing around with

• And more!

Book of the week

How many times have you walked into a museum, went to the contemporary art section, and said something along the lines of “Yeah I could make something better than that?” This question is quickly followed up by “How in the world does this cost so much money?” and in usually less polite words. I’m one of the people who always asked this question. So when a friend of mine recommended The $12 Million Stuffed Shark by Don Thompson about the absurd world of contemporary art, I had to read it.

Here were the questions I wanted answers to:

• What are the drivers of seemingly irrational markets?

• What the relationships between the different players like auction houses, dealers, artists, collectors, and museums? When do they cooperate with each other? When do they not?

• What is the importance of branding and how have people done it successfully?

• Is art a good investment?

After reading the book, here were my takeaways:

• Drivers of seemingly irrational markets: Social status. Once you go above a certain income bracket, money has little value. Buying a Lamborghini or a Ferrari is cool but a bit on the nose. You can always have another house in Aspen or Lake Tahoe but how often can you really flaunt it? Almost every rich person has a yacht! You need to distinguish yourself. Nothing does that better than hanging a Jeff Koons painting that used to be at the Guggenheim until you bought it at a highly publicized auction event. It’s the same reason why people buy a Rolex? Do they care about the mechanisms and the craftsmanship? Sure. But appreciation often takes a back seat to signaling. In the case of the Rolex, you’re signaling that you have made it. In the case of a piece of a rare piece of contemporary art, you’re signaling your patronage of the arts (putting yourself in the same category as the royal families of Europe during the Renaissance) and your perceived good taste.

• The players: Artists sit at the bottom of the totem pole. Dealers scout for and cultivate upcoming artists. These dealers build relationships with auction houses and private collectors. Auction houses and private collectors both want the art that they auction or buy to be displayed at prominent galleries and museums. Within this hierarchy of collectors at the top to artists at the bottom, there are more hierarchies still. There are branded dealers who get to work with the best artists, branded auctions houses like Sotheby’s and Christie’s that work with these dealers, and the multi-billionaires that sit on the board of museums like MoMA and Tate Modern. It looks something like this:

  

• Branding in art: To be honest, it’s not that different from branding in any other “irrational market.” You create a convincing cocktail of artificially limited supply, create a unique approach towards customers, and steal brand value from existing players. The limited supply comes from prestigious dealers giving patronage to a few new artists every year in order to maintain their prestige. The unique approach to customers is the cultivation and drama of the auction. And dealers, artists, and auction houses are all willing to steal brand value from museums like MoMA, Guggenheim, and Tate Modern.

• Art as an investment: In general, a bad idea. Thompson dedicates a whole chapter on the topic and covers art index funds, how to best choose artists to invest in, the rise of Asian artists. But unless you have some unique informational or taste advantage, you’re better off staying away from contemporary art. However, since the book was written, the rise of investment apps like Otis (the artist behind their current drop, Tracey Emins, is featured in the book) have made investing in art a little more democratic and affordable. If you’re interested in art investing, you can start there.

I don’t know if I can recommend this book to everyone. If you’re interested in the art world, this is definitely one of the most comprehensive and complete painting of the art world I have seen. Grab a copy here.

Long read of the week

Apps Gone Rogue: Maintaining Personal Privacy in an Epidemic by MIT

Benjamin Franklin once said:

Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.

We should heed his advice.

The consensus view described in this paper by MIT scientists is that we will get out of the current shelter-in-place situation across the world through massive testing and tracking. One proposed way to do this is through using an app on your phone that can track you location, trace contact with infected individuals, and keep a record of your health.

This would need a creation of a database with location, interaction, and health data. Needless to say that this would be unprecedented in most countries. What’s more? It seems like we are willing to do this consensually. We are willing to do anything – anything to get out of the current situation. The Singaporean Government has already made this technology freely available to developers worldwide.

It makes complete sense. We are seeing historical unemployment, a crumbling economy, and a drastic change in day-to-day lives. All that is true.

But I’m concerned about the erosion of our privacy rights. We are careless in how we share information with companies, but at least they are largely silo’ed. We must design systems that safeguard us even if they fall in the wrong hands. There seems to be inherent tradeoffs between effectiveness in dealing with pandemics and maintaining privacy rights, but we must design and implement solutions that can be rolled up once this pandemic is over. We must listen to Franklin.

Note: Thanks to Snapshots reader Steven for sharing this story on his Twitter.

Business move of the week

HBO makes 500 hours of programming free

In the streaming wars, HBO is typically seen as the grandfather who is finding it difficult to keep up with the new kids on the block. Yet, it has an incredible back catalogue of content – The Wire, Sopranos, Newsroom, Game of Thrones to name a few. Amidst the turmoil of COVID-19, HBO is mobilizing this catalogue.

This week, it made over 500 hours of its prime programming available for free.

What’s the calculus here?

• 📈 Buy-in to stories: If you watch a couple of seasons of Westworld, you’ll be much more likely to watch the third one. You’ll have greater buy-in for the characters, the plot, and the universe. So after all this blows over, you will continue to subscribe to HBO at full price.

• 📈 Brand goodwill: You spend hours engaging with the content and remember HBO as one of the things that got you through these unprecedented times. You develop a positive association with the brand and are favorable and more perceptive to current and future offerings.

• 📉 Lost revenue: Current customers cancel/pause their subscriptions as most of the content is now free. HBO don’t get their subscription revenue and it also leaves somewhat of a sour taste in your mouth as the most expensive subscription is just being given away – something that you’ve paid for over some period of time and supported.

• 📉 Watch and leave: A large percentage of the audience who will watch these shows will not come back to subscribe at full price. HBO will have spent some marginal dollars to service these customers in aggregate.

If I were HBO, I would make the first seasons of all shows free and require a subscription for everything else. That would mean the buy-in mechanism would still be at work, brand goodwill would still increase, there would be lower lost revenue because of customers canceling/pausing as they would still want all the seasons, and lower watch and leave customers as they still around and pay to “finish” the shows.

This is a high-wire act and I am divided about which side HBO will come out on. We’ll see where the chips fall for the granddaddy of TV. In the meantime, go watch Succession and let me know who you support.

Random corner of the week

Signaling as a Service by Julian Lehr

This piece on how software companies have a difficult time building in social status was interesting. First of all, Julian’s website is the most unique and cool website I’ve ever seen. It truly seems to be a reflection of how he thinks.

The piece reminded me of the Hermès lipstick. You can’t show off a lipstick in the same way you can show off a Birkin bag.

Julian offers a three step solution to this problem – messaging, distribution, and amplification – and demonstrates how companies can use the latter two to build their brand. He also shares plenty of case studies from companies like Tinder, Snapchat, Fortnite, and Superhuman.

Go read the piece, it’s one of the best I’ve read this year.

App of the week

Unfold by Andy McCune

I’ve been playing around with Instagram again as an outlet for a different kind of creativity and the app Unfold has been my crutch throughout the process. It takes its hint from old collage apps and gives the user a set of templates. If you are active on Instagram, it’s definitely worth a look.

Developer Andy McCune is an inspiration and I’ve talked about his other project before. If you want to learn more about him, check out his interview with David Perell.

Meal of the week

My friend Somil made pizzas this week that I got to try out. One was a simple tomato sauce and cheese pizza. The another had multiple cheeses, mushrooms, and caramelized onions. Both were delicious. Thanks to Somil for feeding us.

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That wraps up this week’s Sunday Snapshots. If you want to discuss any of the ideas mentioned above or have any books/papers/links you think would be interesting to share on a future edition of Sunday Snapshots, please reach out to me by replying to this email or sending me a direct message on Twitter at @sidharthajha.

Until next Sunday,
Sid