How To Stumble Into The Art Business

You can find this week’s TL;DR here.

Key Lessons:

• You need no formal training.

• Copy someone else’s idea.

• Sell things, make money.

• Add value with a frame.

• Rent your space out.

• Hire employees.

Last week on Methods of Prosperity

Warren Buffett emphasizes the synergy between being an investor and a businessman. He advocates that success doesn't always require extreme risks. There is potential for extraordinary outcomes in entrepreneurship, despite a high failure rate.

Mohnish Pabrai is a devoted follower of Buffett’s investment principles. Inspired by his entrepreneurial father, he learned early about business challenges and opportunities.

Pabrai began his career balancing a full-time job with his startup, TransTech. He mitigated risk by ensuring a fallback plan. His strategic growth led to a successful sale of TransTech. Which provided capital for investment. He turned $1 million into $13 million over 10 years.

Today, Pabrai is a successful portfolio manager, managing approximately $1 billion.

Part 97. Larry Gagosian

It was at a group show in Soho, 1981, organized by the dealer Annina Nozet. Larry Gagosian bought three pieces on the spot. The artist? Jean-Michel Basquiat. The following year, he mounted Basquiat’s first show in L.A., where he had opened a bigger, nicer gallery. Basquiat stayed at Gagosian’s house in Venice. Along with Basquiat’s girlfriend at the time, a not-yet-famous Madonna.

Only a decade prior, he was selling posters on a street corner of Los Angeles in the early 1970s. Larry Gagosian didn’t display much ambition or a clear career direction in his youth. He attended UCLA, where he studied English, joined the swim team, and did a little photography. He graduated from UCLA with a degree in English literature in 1969. That process took him six years due to dropping out a couple of times.

In 1969, he pleaded guilty to two felony charges of forgery. The charges stemmed from his use of someone else’s credit card. The card was being passed around by a bunch of his friends. It was a stupid mistake. He received a suspended sentence and probation.

It was the sixties, and he was in no hurry. He was a good-looking guy who liked chasing girls and playing pool and getting stoned with his pals. There was a brief, ill-considered marriage in Vegas. He married his college girlfriend, Gwen Ellen Garside. They divorced after sixteen days.

Garside explained that she'd married him with a false understanding. That’s what she stated in the divorce papers. The false understanding was that they would have children. She expected them to both work and save to be self-supporting and to build a future together.

Larry cycled through a series of odd jobs. Which included working at a record store, a bookstore, the graveyard shift at a gas station. Then, through a cousin, Gagosian became an assistant at the William Morris Agency. They hired him to answer phones and read scripts. But he hated the airless corporate environment. He likened the experience to a knife fight in a phone booth. William Morris may have fired him. Michael Ovitz supervised him there, who insisted that Gagosian quit. “I tried to get him to stay”, Ovitz recalled, adding that he thinks Gagosian could have made a formidable agent.

He was not particularly drawn to business. He had no formal art training. He had no exposure to the art world growing up; his family was middle-class, and art was not a part of his upbringing.

Larry Gagosian was born on April 19, 1945, in Los Angeles, California, as the only son of Armenian parents. Gagosian has a sister, Judy. His grandparents immigrated from Armenia, and both his parents were born in California. His father was a stockbroker named Ara.

Gagosian rebelled as a teenager. It was hard for his father to discipline Larry. His father’s life didn't seem particularly disciplined. Most of Ara's stockbroking involved his relatives. He seemed to always be trying to talk them into buying securities from him. 

Gagosian’s aimlessness frustrated his father. His father once said in exasperation, “If you just do something with your life, I'll buy you pot.” In 1969, the year Gagosian finally graduated, Ara died of lung cancer. He was fifty-nine.

It was the early 1970s. Gagosian started working as a parking attendant in Westwood. He didn’t mind the job. It paid better than the ninety dollars a week he’d made at William Morris. Then one day, in a moment now enshrined in art world lore, he noticed a street vendor. The vendor was selling posters at the edge of the parking lot.

He approached the vendor. A kitten toying with a ball of yarn and other images you might find on the wall at a pediatrician’s office. That’s what was on the posters. But they seemed to be selling.

He realized he could replicate the business. He started by buying inexpensive posters for about a dollar each. They didn’t sell for much. The posters came from a company called Ira Roberts of Beverly Hills. Gagosian started buying direct from the firm and selling on his own. Until he had a realization. By framing them, he could sell them for as much as $15 to $20. Which was a substantial profit margin for him at the time.

Art was an arbitrary choice. Selling posters wasn’t supposed to be a stepping stone to becoming an art dealer. Larry didn’t think of it that way. He saw it as a way to make money when he had no other clear prospects. But then he realized that selling higher-priced posters could yield greater profits. Which sparked his ambition. That led him to see art as having commercial value. That’s when something clicked.

He leased a little patio on Broxton Avenue in Westwood and sold framed posters to passers-by. Local craftspeople sold leather goods and painted trinkets. He began renting space to them on the patio, in exchange for six dollars a day and ten percent of their gross. He called it The Open Gallery. It was working, so he expanded his operation in 1972. He hired a few people and moved indoors, opening a proper shop on Broxton.

One early employee was the musician Kim Gordon from Sonic Youth. She assembled thousands of picture frames for Gagosian. In a 2015 memoir, Gordon recalled him shouting at her. She worked too slow for him.

Larry started to project an image of success that was out of proportion to how well he was actually doing. From his first days in the business, stories circulated about unpaid bills. He had creditors chasing him, and a repo man showing up for his car. Gagosian’s employees ran to the bank in hopes that there would be money there for their paychecks. Whoever got there first was going to get paid on time.

Gagosian began carrying fine art, prints and photographs. The actor Steve Martin went into his poster shop in Westwood.

Steve Martin wasn’t the only young Hollywood type who was starting to collect. Steve and his friends would get drawn in by something in the window. They’d find themselves in conversation with the gregarious proprietor.

Gagosian had no training in art history, but he had a keen sense of aesthetics and design. He’d stumbled into the art business. He also was a quick learner. Next to his bed, he had these stacks of art books. He dated a woman around this time named Zillery Twill. She recalled that Larry was studying.

One day in the mid-70s, Gagosian was paging through a magazine. In which he came across a series of photographs he liked. Moody, black and white shots by the New York photographer Ralph Gibson. Gagosian called Gibson and announced, “I've got this gallery. How about a West Coast exhibition?” In those days, Gibson was selling prints for $200.

Gibson agreed, but on one condition. Gagosian would have to buy three or four as a guarantee. Gagosian flew to New York with a check. He was about to meet a legendary art dealer who would change the course of his life.

To be continued…

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– Sean Allen Fenn

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