Felix Salmon

Whither Groupon?

Felix Salmon
Sep 1, 2011 16:29 UTC

Our fabulous social media guru, Anthony DeRosa, doesn’t use Groupon, and neither do I, and neither do any of the people in our social circles, that we know of. Now we’re guys, while Groupon skews female. And most likely we do know people who use Groupon; we just don’t know who they are. But the fact is that at heart it’s pretty uncool. That’s fine — many hugely successful companies are uncool and based on saving people money, up to and including Walmart. But here’s the problem: Groupon can’t afford to be uncool just yet, because it needs to do one last big capital-raising round at a high valuation in order to get the cash it’s going to burn through in the coming year or two.

Henry Blodget has some smart analysis today, concluding that “if Groupon raises a boatload of money in an IPO, the company will be able to keep spending aggressively on marketing and not have to worry about running out of money or dealing with slower growth for a while.” So it’s important that Groupon is able to tell its high-growth, high-intrinsic-profitability story at least through its IPO.

But Groupon’s web traffic looks like it might be falling, and Connie Loizos has been talking to analysts, including PrivCo’s Sam Hamadeh, who increasingly, don’t buy it:

Groupon’s model simply doesn’t make sense, say the number crunchers. While the company’s early success was premised on customers spending an average of $15 per month — and being affordable to acquire — these days customers cost Groupon in the double-digit dollars to acquire, says Hamadeh, and they’re spending closer to $3 a month, with “every indication” that even that figure is declining, says Hamadeh.

The monthly spend per customer is a key number to look at. There doesn’t seem to be any doubt that it’s going down; the big question is whether it’s going to level off with Groupon becoming a big and sustainably profitable business, or whether it’s just going to approach zero.

Or, to put it another way, can Groupon make the transition from being a fun fad to being a basic part of the way people spend money on a monthly basis? I think it can. But in order to do that, it’s going to have to concentrate increasingly on targeting and on the quality of the merchants it chooses to feature.


Groupon is going to crash and burn because it has neither a sustainable business model nor any real assets. It owns no pyhsical or intellectual property, and it’s business model is easily replicable.

All it “owns” is an idea (i.e. online coupons), and a not particularly revolutionary one at that.

Ten years from now people will be listing Groupon’s decision to turn down Google’s buyout offer as one of the most boneheaded financial decisions ever.

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Why I’m talking about Tim Cook’s sexuality

Felix Salmon
Aug 26, 2011 17:30 UTC

Every so often I put a blog post up, start getting feedback on it, and realize I’ve got things horribly wrong. And then sometimes, very rarely, the opposite happens: I put up a post and discover that I was more right than I ever suspected. My post yesterday on Tim Cook’s sexuality is one of those times.

Which is not to say that it’s uncontroversial. I’ve had significant pushback on it, and on the video above, from both inside and outside Reuters. The negative responses fall into a few broad categories:

Haven’t we moved on?

This is rarely accompanied by an elucidation of exactly what it is we’re meant to have moved on from. If it’s the kind of world where people are scared to come out at work, then, first, I’m sorry, but we haven’t. There are, obviously, no reliable statistics on how many LGBT people are out at their work, partly because “out” isn’t the nice, binary concept that a lot of journalists would seem to like it to be. (More on that later.) But I can tell you that I’ve had a lot of private feedback from gay professionals thanking me for my post, saying that it’s still hard for them to come out in the workplace, and that more open discussion and open acceptance of executives’ homosexuality is something we’re only beginning to work towards.

It’s still not normal, in most workplaces, to have an open and accepting culture where all gay employees feel comfortable being open about who they are and who they love. Apple, by all accounts, is very good on that front, and Steve Jobs’s other billion-dollar startup, Pixar, is even better. But the very fact that neither Apple nor Tim Cook has ever said anything about this aspect of his identity is a clear indication that people are still worried about it. The closet is an institution designed to protect LGBT individuals from scorn and hatred; without that scorn and hatred, it would not exist. It exists. And, lest we forget, neither the federal government nor most states gives equal rights to gay couples; in most states, including California, it’s still entirely legal for a company to fire someone just for being gay.

More generally, it’s still the exception rather than the rule for successful gay people in the public eye to be out. Some gay people who achieve success feel a responsibility to serve as role models and advocate for equality and public acceptance. That’s great. But what we see very little of is the people who simply don’t hide who they are, and who don’t make a big deal of it — the non-political gays. And the reason we see so little of it is because it’s a very tricky act to pull off. Instead, we have the institution of the “glass closet”. Which is clearly just a stepping stone on the path to full acceptance. So I think it’s reasonable to say that we’re a very long way from having “moved on”.

Why should shareholders care?

The number of things that shareholders care about, with respect to any given company, is as varied as the number of shareholders itself. But certainly there’s no particular or obvious reason why Tim Cook’s homosexuality is relevant to Apple’s shareholders, qua shareholders. As journalists, however, the media has a responsibility to more than just a company’s shareholders: its responsibility lies to the public as a whole. Including millions of gay professionals, their friends, their families, and people who aspire to being gay professionals. For these people, seeing Tim Cook rise to a position of such prominence and power is something to celebrate. If the media keeps that news on the down low, we’re therefore doing a disservice to that large and important part of our readership. Meanwhile, if shareholders don’t care, that’s fine. Most news is of no interest to most people. But that doesn’t mean it shouldn’t be published.

What business is it of mine what Tim Cook does with his genitals?

This isn’t an issue of sex, it’s an issue of sexuality — a central part of who all of us are. It’s about attraction, and identity. Not genitals.

Now admittedly Tim Cook’s sexual identity isn’t any business of yours either. But it’s worth asking who exactly we’re protecting here. Tim Cook hasn’t complained about coverage of his sexuality, but a lot of straight people who don’t know him seem to be very upset about it. It seems a bit like the old attitude of “I don’t care what consenting adults do in private, just so long as they don’t stick it in my face.”

All too often, secrecy surrounding someone’s sexuality is imposed upon that person by the straight society surrounding them. It’s the “I don’t want to hear about it” attitude which reached its nadir in the Don’t Ask Don’t Tell policy. Many gay professionals — I’m tempted to say most gay professionals, at least outside the creative industries — act very much in line with an implicit policy of don’t-ask-don’t-tell; coming out to co-workers is done individually, on a case-by-case basis, and acts as a sign of deeper friendship and outside-of-work socialization. And it contrasts quite sharply with the overt displays of straight employees who happily plaster their cubicles with photos of their spouses and children or unselfconsciously talk about the attractiveness of members of the opposite sex.

This is irrelevant, so we should ignore it.

Not when ignoring it is the problem. As commenter Hamranhansenetc said on my original post, “what you mean by ‘ignoring Time Cook’s sexuality’ is ‘pretending he is straight.’” It’s rude to do that. And skirting the issue of Cook’s sexuality only encourages and exacerbates that problem. As Hamran continues (you should really read the whole comment, it’s great), “In the larger sense, it does not matter that Tim Cook is gay and not straight. However, it does matter when the media pretend Tim Cook is straight and not gay. And that is what we are talking about here.”

Another commenter, RaidV92C, reacted a rather different way, but just as accurately: “This is not newsworthy, it’s west coast, liberal media, hollywood forcing homosexuality as NORMAL on the general public.” Yes. Exactly. Homosexuality is normal. And people who object to stories which cover an executive’s homosexuality as being as unexceptional as another executive’s wife and children are exactly the people who are winning if no mention is made of Cook’s sexuality.

Do we report that executives are straight?

Yes, all the time, especially when we talk about their families. And more generally straight is the default option — people are assumed to be straight unless we’re told otherwise. No LGBT person likes it when they’re assumed to be straight, but it happens every day.

Isn’t this a salacious invasion of Tim Cook’s privacy?

There is nothing salacious about someone being straight, or being gay. Insofar as you think it’s salacious, that’s because you think that being gay is somehow naughty, or shameful. Is this an invasion of privacy? To a certain extent, yes. More people know more things about Tim Cook now than they did a few weeks ago. That’s what happens when you become the CEO of Apple.

In any public corporation, there’s a small number of people whose jobs are outward-facing, and at the top of the list is always the CEO. He’s the public face of the company; if you see a corporate profile on the cover of a glossy magazine, chances are it will be illustrated with a big picture of the CEO. If you don’t want your face splashed across the world’s media, then you shouldn’t be CEO of a massively valuable company which touches millions of people. Sometimes, as in the case of Mark Zuckerberg, entire movies — and not particularly accurate ones, either — are made about you and your personal life. Reporting that Tim Cook is gay is absolutely nothing, in the invasion-of-privacy stakes, compared to The Social Network. But CEOs, especially CEOs of public companies, are public figures. Their salaries are a matter of public knowledge. When you’re a public figure, you lose a certain amount of privacy. And the higher your profile rises, the more privacy you lose. Tim Cook knows that; he knows that it’s silly to expect to be the CEO of Apple without the world knowing that he’s gay. So let’s stop pretending that we’re not talking about this subject for his sake.

Finally, one critical note I got went so far as to say that “I would think people who are gay don’t care” that Cook is gay. Which is almost hilariously, completely wrong. All the feedback I’ve got indicates, unsurprisingly, that LGBT people really care about this — they care about it a lot, and they want to see it celebrated as widely as possible. It’s perfectly natural to feel pride and joy when a member of your community rises to a position of great success and prominence.

I’ve been incredibly heartened by the thanks I’ve got from gay friends, gay acquaintances, and gay people I’ve never run across before, all saying that they wish there were many more people pushing this line of argument. And I was also heartened, when I talked to John Abell about this yesterday for the video above, that he thinks the same way: not only should the media cover Cook’s sexuality in a more matter-of-fact way, but that they will, as well. Cook himself need do nothing.

At the same time, though, I agree with Nicholas Jackson that it would be great if Cook was more open about his sexuality. The glass closet is not an unpleasant place to be. The more transparent the glass, the less likely you are to have people making you uncomfortable by assuming that you’re straight. And at the same time, by never “officially” coming out, you get to avoid having to talk about your sexuality in public — something very few people like to do.

It’s sad and rather silly that gays have to make some kind of formal and official statement about these matters; certainly straights don’t. But without such a statement, as we’ve seen, the media gets cold feet talking about sexuality, and perpetuates the stigma associated with homosexuality. A very common response to my piece from journalists was to question my sourcing: how did I know that Cook is gay? Do I have first-hand knowledge? (No, and if I did, I would never have written my post.) Do I have reliable sources? (No, I’m simply passing on information which is in the public realm, just as I do with dozens of other pieces of information every day.) And isn’t it unethical to talk about something unless you know for sure that it’s true?

What’s unethical, I think, is perpetuating the false idea that Tim Cook is straight — an idea which, it turns out, many people had. One person said it was “disappointing” that I disabused her of that notion. Why she should be disappointed to learn this news I can only guess, I haven’t asked. But honest journalism has to be honest. If I allow you to continue to believe a falsehood, that’s a form of dishonesty. And I, for one, am not comfortable with that.



You challenge people to posit why they are ‘against gay’ lamenting they would have no argument – and then you say imply that to be anti gay must mean that one is a ‘closet gay’.

Your upside down premise (‘Mr Math’???, really???) of asking people to provide ‘valid arguments’ and then spewing something such stupid and childish positions that don’t deserve a reasonable response – in fact only validates how you and the ‘gay agenda’ are miserably ideological.

I’m not making an anti-gay statement.

I’m making an anti-gay supporter statement.

You losers claim ‘morality’ and then go on to make absurd claims.

Homosexuality is a disease. It is the misalignment of gender, and sexual orientation. Just as most complex forms of behavior are learned – they can be unlearned. We are in fact biological machines – and we will one day have the ability to create an adaptive environment that creates outcomes we desire – including sexual orientation.

That we don’t yet have the ability to correct homosexuality, and that gays can live otherwise healthy and normal lives, does not change the fact that it is a medical condition that would otherwise be cured.

100 years ago, were someone to have discovered a cure, or therapy for ‘gay’ that worked – gay simply would not exist for the most part, certainly not the extent that we have a disproportionate minority of bit&es in the media raving about it all day.

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Thanks, Steve

Felix Salmon
Aug 24, 2011 23:26 UTC

It’s a sad day: only this morning I was reminiscing about my days exploring the Apple Macintosh in Palo Alto in 1984. Like much of the world right now, I’m reliving Steve Jobs’s greatest hits on YouTube, I’ve got a bit of a tear in my eye, and yet I can’t imagine how Jobs could possibly go out on a higher note than this.

Jobs took Xerox PARC’s ideas about what the personal computer could be and made them reality; he brought back Apple Computer from the brink of death to being the most valuable company in the world; he created a whole new class of electronic device, with the iPad; he even reinvented the telephone. And, of course, he’s still around, at least for the time being — he’ll stay on as Apple chairman (and, in one of the most touching parts of his resignation letter, as “Apple employee”).

So thank you, Steve, for everything you’ve done. You’ve relieved me of more money than I care to mention in public, and I don’t begrudge you a cent of it. In fact, even with the massive run-up in Apple’s share price over these past years, I’ve always been convinced that the best use of $1,000 or so has always been to buy an Apple computer, rather than Apple stock. The extra productivity conferred by the machine, I’m convinced, will give you a much better return on your money than any equity.

Here at Reuters, I made sure that I could work on a Mac before I accepted this job, and even though we’re standardized on PCs, you see Apples all over the company, up to and including the CEO’s office. None of that is going to change with Jobs’s departure as CEO. Does Apple still have an outsize personality who can slice away extraneous features on hardware, say no to the demands of the marketplace, and give us not what we think we want but what we never knew we wanted? I think it does: Jony Ive fits the bill quite nicely. And Apple’s amazing relations with its suppliers — the way that it can get chips and hardware into its devices that the rest of the world can’t get its hands on for any amount of money — is now baked in to the organization, rather than being reliant on a single man.

The formula, then, is clear. And with or without Jobs, Apple is, for the foreseeable future, going to coin simply astonishing amounts of money. It made $7.3 billion of profit just in the last quarter, on revenues of an almost unimaginable $28.6 billion. That makes Apple one of the most profitable companies the world has ever seen — and makes its stock look almost cheap, even at a market cap of $350 billion.

No one man can be responsible for all or even most of that kind of performance. Jobs has always been the exception who proves the rule as far as the cult of the CEO is concerned — he’s one of very, very few CEOs who really did make an enormous difference to their company. But even so, he’s just one guy, and he’s built around him a super-talented team who know exactly what’s expected of them. We’re not going to see Tim Cook coming out and talking about “one more thing” at a WWDC keynote presentation, but we don’t need to. Apple is a dominant company now, and is more than big enough to be able to withstand a leadership change at the top.

Today’s news, and tomorrow’s, will rightly be all about Jobs. But in a few years’ time, I look forward to the seeing the case studies showing how Apple, seeing an entirely predictable event coming down the road, set up an elegant and model handover from Jobs to Cook. Jobs knows that he will be judged on this — and I’m quietly confident that he’s done it perfectly.


At the risk of offending friends and colleagues who labour in the anonymity of the South Bay, I’m moved to laughter when I read of someone contrasting the suburbs of Cupertino and Santa Clara, and hoping to draw out a real distinction.

The vast swath of that portion of Santa Clara Valley has long been filled out by cookie-cutter suburbs. Cupertino is no different in any meaningful regard than Campbell, Los Gatos, Sunnyvale, Mountain View, Palo Alto, or even the less-dense areas of the city of San Jose.

That Apple chose Cupertino back in the eighties is an accident of time and circumstance. That they choose to remain there is (I believe) more of happenstance–they want to move into the former Hewlett-Packard campus that existed long before Apple was even formed.

I don’t fault those who live and work in the South Bay for being proud of the firms that are part and parcel of the physical geography of the place. Just as I wouldn’t do so in any of the other places where I’ve worked where a significant concentration of an industry’s wealth is forced into narrow geographic confines (cf. Wall Street, Hollywood).

To Kaleberg’s point about the corrosive effects of “crowning glory” architecture: I share the feeling that Apple’s efforts in this regard will prove to be a distraction–not a major one, but just enough so that the carefully balanced spinning wheel that is the Cook-led company can suddenly find itself in dangerous precession.

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Joe Weisenthal is right about the Ira Sohn conference

Felix Salmon
May 25, 2011 17:57 UTC

Joe Weisenthal says I’m wrong about the Ira Sohn conference. But that doesn’t mean he thinks that David Gaffen is right. Gaffen reckons that people go to these events so that they can trade in and out of stocks in the space of 10 minutes. Weisenthal, by contrast, sees value somewhere else entirely:

It’s not often that you get to hear the thought process and reasoning employed these financial professionals. Within the broader scope of financial media, you hear a lot of managers and pundits making their arguments in broad strokes, with lines like “We’re bullish on US banks because of low rates, yada yada yada…“And that kind of stuff really is useless. But these are professionals who usually have portfolios of just a handful of stocks, who have done a tremendous amount of research on each one before pulling the trigger, and frequently they do have original insights.

So you shouldn’t go out and by MBIA just because a manager likes it. But if you’re looking for original thinking on stock selection, the speeches, presentations, and letters of big hedge fund managers is frequently some of the best stuff around.

This is a good point. The best way to extract value from Ira Sohn presentations is to concentrate not on the stocks that the hedge fund managers are talking about, but rather on their methodology. At the very least, you’re likely to learn a few ways of looking at a company that you hadn’t thought of before. These fund managers, then, can improve the way that investors do their own research on companies, even if they’re not going to be delivering up great investment ideas on a plate. Use their methodology on a stock which none of them are looking at, and you might just be able to find a hidden gem.

There’s another way to look at the fund managers’ investment techniques, and that’s as a way to evaluate the managers. The idea here is that the managers who have the smartest techniques are likely to be the best managers to invest in. On this front, I’m far from convinced: as I told Gaffen, the analyses presented to the Ira Sohn conference are really sales pitches more than they are transparent views into how hedge fund managers think and invest in the real world. For all their joined-up thinking at Ira Sohn, most successful fund managers in reality use techniques which they would hesitate to admit to in public.

But in any case, you’ll never get the important nuance about how these fund managers think from reading news reports about the conference. So I still don’t see the point in sending a bunch of reporters to cover it.


“Most successful fund managers in reality use techniques which they would hesitate to admit to in public.”

Felix, oh, c’mon.

Just because most people aren’t winning in the market doesn’t mean nobody is. These winners aren’t fairies and leprachauns — there are a number of them and we know many of their names.

Just because someone is making money, they must be a crook?

You can read many many years of Warren Buffett’s letters if you want. There are dozens or hundreds of ways of analyzing whether a company will do well over the long haul found in his letters and speeches alone. All legit and this just from one man! If you work really hard and keep just his openly shared strategies in your head all at once, you will do very well.

Warren Buffett has been outstanding but he is not alone; a significant number of other managers are smart enough, creative enough and hard working enough to outperform over the long haul.

Hedge fund managers, with the possible exception of Rennaissance Technologies, aren’t day traders anyway. Day trading doesn’t work well when you are so big that you move the market.

Well, these men certainly don’t need your approval to be winners. Most people are humble enough to feel very grateful when smart people share their ideas. Buffett’s annual meeting is full of such people (many very good investors already) who aren’t too proud to admit that they have much more to learn.

So what motivates these people?
(1) Ego. If you are one of the smartest, most talented people around and few people know it, that is not much fun.
(2) Attract more investors, I agree.
(3) Light a fire under your good ideas. If you have a great idea, buy some shares, and don’t tell anybody, it may take a long time for the market to discover these insights. If you help investors see what you saw, that could be a trigger to help move the stock.
(4) Take criticism. If your grand thesis has holes you didn’t see, its better to have smart people tell you then to suffer losses in the market later.

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Felix TV: The Ira Sohn conference

Felix Salmon
May 24, 2011 16:51 UTC

It’s the Ira Sohn conference tomorrow, with well over a thousand people paying four-digit sums, and sometimes more, for the privilege of listening to boldface fund managers talk about their investment ideas. The conference gets a lot of press, not least from Reuters, but these presentations are not the kind of thing that individual investors — or even financial journalists — are really qualified to judge.

Hedge funds — and venture capitalist funds, and private-equity funds — have a certain mystique which rubs onto their managers, especially when those managers have posted impressive investment returns over the past few years. The Ira Sohn conference has even more mystique, since with many of these fund managers it’s the only time they speak in public, and as a result the audience is primed to expect something very special.

But as with any investment, it’s important not to get caught up in hype. Precisely because the Ira Sohn conference has so much hype and mystique, everything coming out of it should be treated with extreme prejudice. If you find a great investment idea in an improbable and unexpected place, that’s likely to be a much better bet than if you think you’ve found a great investment idea coming from a professional fund salesman in a highly-artificial context.

Investing in hedge funds is hard enough; investing in individual hedgies’ ideas is pretty much impossible. The only people who should even try are other hedgies, or possibly endowment managers who see a lot of idea flow and have significant experience of getting caught up in a story and then seeing how it plays out. Sometimes the highest-conviction ideas are also the worst ideas. Unless and until you’ve lived through those kind of experiences, you’re probably best off simply ignoring everything coming out of the Ira Sohn conference.

Felix TV: The next head of the IMF

Felix Salmon
May 17, 2011 02:43 UTC

Most of this video is reasonably serious: I genuinely do think that Christine Lagarde is going to be the next managing director of the IMF. And it probably won’t take long before she gets the job, either.

At the end, I throw out a very left-field name which almost nobody outside the world of sovereign-debt geeks has ever heard of. But there’s a serious point there: the single biggest job of the IMF managing director is going to be navigating and architecting a round of pretty much unprecedented sovereign-debt restructuring deals. Can Lagarde do that? I don’t know that she can. But there’s one man who undoubtedly can.


Well, Lagarde is also a former lawyer – so should help her, should she want and get the job. Her English is impeccable and she’s very well respected. And the IMF can of course hire Cleary and others to advise on the technical/legal aspects – the head of the IMF though needs to be able to hang with world leaders on an equal footing – that clearly reduces the pool of candidates. And at this particularly moment, my guess is that it makes sense for a European to get the job – but that’s not to say that an Asian one wouldn’t be helpful too as much of the rebalancing of the global economy will depend on how Asia and of course India/China manage their economy over the next few years. My sense is that having a European at the IMF might help on the EZ sovereign situation – but in global terms (and despite the risk of contagion) these are fairly small matters compared to the effect of addressing global imbalances…

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Too Big To Fail, the movie

Felix Salmon
May 11, 2011 20:55 UTC

Over the weekend I watched the HBO movie version of Too Big To Fail, and I talked to Andrew Ross Sorkin about it on Monday.

As you can probably tell from the movie trailer, it’s got lots of dramatic music and equally dramatic moments — Paul Giamatti (Ben Bernanke), for instance, telling a room of assembled politicians that he’s spent his entire academic career studying the Great Depression, and that “if we do not act, boldly and immediately, we will replay the depression of the 1930s. Only this time, it will be. Far, far worse.”

It’s a curious fish, this film: there are so many white guys in suits that unless you already know the story going in it’s pretty much impossible to tell who’s who — with the exception of the lead character, Hank Paulson, played with searing intensity by William Hurt. And this isn’t the story of the crisis — for that, the Oscar-winning Inside Job will serve you much better. This is just the story of the short period of time during which Lehman collapsed, AIG was bailed out, and TARP got enacted.

What I worry about is that with the movie concentrating on a brief period of time — just one month in the course of a crisis which started much earlier and ended much later — the public will continue to think of TARP as the defining bailout and government action of the crisis. In reality, however, monetary policy was much more important than fiscal policy, and TARP wasn’t even the most effective fiscal policy — that was the Obama stimulus package which was pushed through in early 2009.

The movie is also a combination of too complicated and too simple. It’s too complicated in that there are too many characters and it’s hard to keep them all straight, and the occasional kludgy attempt at explaining, say, why AIG collapsed falls very flat. And it’s too simple because the corners that were cut turn out to create misleading impressions — that Warren Buffett was willing to buy into Lehman Brothers at $40 per share, for instance, or that the Chinese government was a significant shareholder in Frannie.

But the fact is that even though the financial crisis really did threaten the global economy, it wasn’t really a thrilling human drama. As Lloyd Blankfein says to his chief of staff Russell Horwitz, “You’re getting out of a Mercedes to go to the New York Federal Reserve, you’re not getting out of a Higgins Boat on Omaha Beach. Keep things in perspective.” If you want a thrilling drama, then Hollywood is good at making those. And if you want to understand the financial crisis, this film is too constrained in time to really explain what happened. So I’m not sure really what the film is good for, beyond providing some welcome money for financial journalists like Sorkin, Joe Nocera, and Bethany McLean. I’m all in favor of that!


only what their Wall Street brethren did (when they created synthetic CDOs): they’re both trying to sell the highs by offering crap to consumers too dumb to know any better.

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Art as a game

Felix Salmon
Apr 27, 2011 16:43 UTC

Adam Lindemann and Amalia Dayan make a great couple: they’re both immersed in the upper reaches of the art market, with Adam mostly buying and Amalia mostly selling. I spoke to them at the Artelligence conference — an entire event devoted to the dubious concept of “art as an asset class” — after they presented a slideshow of works which were sold at auction in 1973 and which are worth lots of money today.

Lindemann is a fascinating character: he treats the art world as a game, with the score kept in dollars. And Dayan, of course, is a great enabler — the lesson of looking at the current value of those works sold in 1973, she said, is that “if you buy great, great art, and the right work by the right artist at the right time, you win huge time.”

But of course that argument is fundamentally tautological, since Dayan’s definition of “great, great art” is precisely whatever art is most expensive right now. Similarly, when Dayan says that Picasso and Warhol are “quite consistently good, always,” that statement only really makes sense once you realize that in her mind, “good” is a synonym for “expensive.”

I asked Lindemann for the maximum amount of money he would ever spend on a work of art if he knew its value was going to zero, since I thought that might be a good proxy for the aesthetic value of great art, as opposed to its speculative value. But he was honest enough to tell me that he’d never buy such a work, no matter how cheap it was. When Lindemann collects art, he wants his work to be valuable and important to others — his own aesthetic enjoyment in the work isn’t enough.

There’s a telling back-and-forth at one point in the interview, when I ask Lindemann about late Jasper Johns, and Lindemann starts sneering about the polite, established artist living in Caribbean luxury and selling new paintings for $3.5 million apiece at Matthew Marks. Lindemann’s a provocateur, but when Dayan says, laughing, that now he’s said that “we can not buy anything at Matthew Marks any more,” she’s not entirely joking. The art world is all about building and establishing relationships, and being rude about a major gallerist’s biggest-name artist is never particularly endearing.

And Lindemann’s view of Robert Scull, the collector who sold his collection at that 1973 auction and was pilloried for it, has to be put in the context of Lindemann’s own brush with infamy when he allegedly flipped Jeff Koons’s Hanging Heart back to the gallerist he bought it from for a profit of almost $20 million. (“Our role is against the dealers,” says Lindemann at one point. “We try to get one over on the dealers.”)

Lindemann refuses to comment on the Koons deal specifically, saying only that “I never bought anything I intended to resell” while his wife looks on with a priceless look of skepticism. And he does then admit that he has flipped art in the past. But the bigger message of this interview, I think, is that what we’re seeing here is a plutocrat at play. Lindemann loves buying and selling art — probably more than he loves the art itself. And he can easily afford to lose millions of dollars if a deal goes wrong. It’s a fun game for him. But it does ultimately put the lie to the idea that art is some kind of long-term store of value, rather than a plaything for plutocrats.


What do you think are the biggest mistakes an amateur artist can make to blow there chances with a dealer, or is just how impossible is it for a new artist to break into the market and get recognized. I have noticed that there are quite a few artist, and artworks traded on the high end. How do you as dealers keep from being bored to death seeing the same pieces at auctions all the time. Is their room for some fresh blood.

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Felix TV: The peculiar economics of event ticketing

Felix Salmon
Mar 17, 2011 21:57 UTC

Remember the weirdness surrounding LCD Soundsystem tickets? Well, it applies to sporting events too, as this video explains. Shortly after it was made, Jim Ledbetter sold his Knicks tickets for $500 each, which allowed him to net a pleasant profit on their $110 face value and still see the game from a cheaper section.