Bruce Nussbaum                     April 2015

I’d like to suggest that the roles of the art dealer and venture capitalist as curators, patrons and social mobilizers are essentially identical. Further, I’d like to suggest that the process of “making” art today is essentially identical to the process of “making” startups.  The gallery and the incubator are singular spaces specifically designed to maximize volatility within a network of makers, gate-keepers, investors, marketers and, ultimately consumers.

Each of these players navigates this larger volatile creative space inside a smaller buffered and protected space, harnessing the volatility. Guiding the players at the center is the Curator/Patron—the art dealer or the incubator VC (angel investor/venture capitalist).  Dressed in the ceremonial garb of the “trusted friend” or the “knowing insider,” the Curator/Patron has personal ties to all the players inside the network and is primarily responsible for “shaking the network” to boost the speed, frequency and magnitude of the volatility within its space.  The Curator/Patron personally “makes the market.”

There are two goals to “amping up the volatility.”  The first is to maximize “disruptive innovation” and generate the unique, the original, and the most valuable. The second is raise the price paid for the new value, whether it is a Monet or an AirBnB IPO. The idea then is that the Gagosian Gallery and Kleiner Perkins use the same process to spin creativity and value out of man-made volatility. Innovation and creativity then, are social, not technological, processes that can be built.

Let’s begin with Paul Durand-Ruel, who, in the late 19th and early 20th centuries, invented the role and practice of the modern art dealer. There is a wonderful exhibit in the National Gallery in London on “Inventing Impressionism,” which describes Durand-Ruel’s emergence. It begins with rejection—the rejection in  1863 by the Paris Salon, sponsored by the French government and the Academy of Fine Arts (the established Old Money/Old Authority) of a new school of painting—Impressionism.

The Impressionist painters—Degas, Monet, Manet, Cezanne, Pissario, Renoir, Sisley and others—set up with their own Salon, the Salon de Refuses, which drew ridicule from the public, the press and the art establishment. Few, if any, paintings were sold.

Enter Durand-Ruel. His father was an established art dealer in Paris and as Durand-Ruel took over the business, his curatorial reputation was significant.  He made that reputation by supporting the immensely popular and successful 1830 School of painters in France.  Durand-Ruel was the first—and only—art dealer to add his reputational and financial value to the new Impressionists—but it took two decades for him and the painters to succeed. He had to overcome opposition from the public, official artistic circles and established collectors.

And he had to take risks. He was called “an unrepentant risk-taker” and a “speculator” in his time (he went through two bankruptcies). Not only did he play the role of Patron himself, he established the first private, global network of collectors to further leverage the buying and selling of art—making a new modern market and adding fresh new volatility to the art space.

Durand-Ruel,as a private art dealer, stood in place of the Paris Salon, as a curator of the new school of art. He built a private network of New Monied Collectors, the rising industrialists, financiers and merchants of the late 19th and early 20th centuries, to replace the state-backed museums, Royal, Religious and Old Family Money sources of buying art. He did this by going global, staging shows and setting up galleries abroad to bring in New Money Collectors from New York, Philadelphia, Boston, Chicago, London, Berlin, Moscow and St. Petersburg.

He brought finance for the first time into art by borrowing large sums from banks and partnering with investors to buy dozens and hundreds of paintings at a time from painters, “cornering the market.” Durand-Ruel, during his lifetime, bought 1,500 Renoirs, 1000 Monets and 400 Degas.

He used modern marketing and branding strategies to boost the value of his paintings and their painters. He staged the first solo, rather than group show and published the first monograph on a single Impressionist artist to market a painter’s work.

Durand-Ruel, then “vibrated” this network of new Collectors and Patrons by selling and buying, by making a market. By personally controlling so many paintings, he “gifted” a collector with a Manet or Sisley at a price, then had that collector offer it at a higher price to another collector he selected. Durand-Ruel was at the center of this network, personally working as the trusted agent to each and all collectors, moving the value of the paintings higher and higher, faster and faster. At auctions, he would bid paintings higher to build further value into the work or prevent prices from falling, supporting existing value.

Within this vortex, the Impressionist painters found demand for their creations and value for their work.  Durand-Ruel provided buffers to the volatility of the market he himself created by buying whole collections from individual artists, providing the money to work. He loaned money, paid for studios, commissioned future work, paid for their travels to the US and elsewhere to advertise their work—all providing the protection, the buffer to move within his art market, his volatility.

The art market, like the VC and IPO markets, is opaque and secretive, defined more by personal ties than clear market pressures. Durand-Ruel managed his volatility in person and in secret. While collectors offered commissions personally to Impressionist painters, the vast bulk of their work passed first to Durand-Ruel, and then to collectors.  He managed the speed of their sales, the magnitude of their price changes and the velocity of their exchange among collectors.  At the same time, Durand-Ruel managed the artists’ buffering as they moved through the volatility of his collector network.  In this way, a volatile vortex was manufactured, drawing the best paintings from Impressionist School artists.

A wonderful series of articles on the Silicon Valley incubator, YCombinator, in Fast Company, shows a nearly identical process at work in the business world of startups.  AirBnB came out of YCombinator, as did many other new companies.

http://www.fastcompany.com/section/the-y-combinator-chronicles

What lessons might we learn from these two examples of Volatility? One is certainly the sociability of volatility. Volatile spaces can be manufactured. Second, is the probability of creativity. Shaping a Vortex, building a Volatile space, through which creative people can transit, boosts the chances of generating originality. Third, Volatility can have a market structure, as in art auctions, but in the case of incubators and art galleries, most of Volatility comes from key opaque, personal relationships. Fourth, the roles of Curator and Patron are as critical to Innovation as that of the Creative.  

Curators must value the new over the old to promote innovation. Patrons must finance the new over the old to promote innovation.  Paris has “lost its vibe” because of the failure of its Curators and Patrons. New York has a renewed vibe because it has good Curators and Patrons (although not good enough—entrepreneurs complain that there is a dearth of Angel Investors in NYC compared to San Francisco. In the case of new art as opposed to new startups, there is no shortage of Patrons willing to invest or Curators willing to cheer).