Larry Gagosian
Maxims for Vintage Watch Dealers and Collectors
The global art market totaled $67.8Bn in 2022, and saw an incredible 30% rise in overall prices for the 12 month period ending in 2Q23. The luxury watch market is larger at $75Bn (of which $25Bn is secondary) and experienced a positive but comparatively muted 10% growth during the same period. Based on recent auction results and the increasing number of unsold lots, both markets are losing steam quickly. Both are luxury markets, but there are some key differences:
Art Vs Watches
Unique Pieces vs Production Runs - Luxury art in general are unique pieces. Watches are manufactured in production runs, so a collector has more options to purchase. OnlyWatch auction watches, custom-ordered watches, celebrity-worn watches and very small volume independent watches exist, but are the exception.
Extreme Price Volatility vs Medium Volatility - Both markets experience bear markets, but the art market tends to experience much more volatile pricing swings, making watches look cute in comparison. In terms of absolute values, some paintings command prices in the 8 digits, while only a handful of watches break the 6 digit mark.
Nurturing Artists vs Manufacturer Relationship Management - Art dealers nurture and fund young, promising artists for the primary market, whereas authorized dealers of watches focus on maintaining their relationship with established manufacturers.
Eye vs Eye + Technical Expertise - Although evaluating art requires its own set of technical expertise, a keen eye for beauty is paramount to success. Watches require both an eye for design and technical expertise due to the mechanical aspect.
Despite these key differences, there are also some key similarities - Both markets have strong asymmetries of information between dealers and collectors. And despite their huge size, both are also basically unregulated, allowing smart, aggressive participants to compete and succeed regardless of background.
And of all the participants in the art market, no one looms larger than Larry Gagosian. I’ve always been interested in Gagosian not only because of our shared ethnicity, but also because he embodies the vintage version of the rags to riches American dream; an almost Clint Eastwood like anti-hero that rose from selling framed posters in obscurity to hobnobbing with billionaires and securing his hegemonic position in the art world. The New Yorker magazine recently published a ‘Profile’ on Gagosian titled "How Larry Gagosian Reshaped the Art World" which I encourage you to read, and which was the inspiration of this post. If you don’t have time to read the whole article, David Serra on Twitter summarized it into 34 maxims. (By the way the ‘Profile’ series are great, don’t miss the one on Jensen Huang, founder of Nvidia.)
Larry Gagosian reminds me of some other business leaders of the same ethnicity1, including Ara Hovnanian, CEO of Hovnanian Enterprises, one of America’s leading homebuilders, and the recently deceased Michael Kazanjian, the legendary Beverly Hills jeweler. They all share some uncanny similarities - the ability to effortlessly switch between charming and stone-faced, a booming, preacher-like timbre, a refreshing bluntness, a genius for real estate, detailed obsession with entertaining and developing social connections, strong domain expertise, and superhuman stamina and drive even in advanced age. They were all American born sons of first generation immigrants and reached the top of their respective industries by the 80’s and 90’s.
I can’t think of anyone in the vintage watch industry that resembles Gagosian, past or present. In general, vintage watch dealers are more soft spoken, almost cerebral and much more pedestrian. Perhaps this is because a prerequisite to success with watches is studying and memorizing minute technical details, which attracts a certain personality type. We do have our own set of charlatans, but they seem to pale in comparison to dealers in other luxury industries such as art and real estate. Thankfully, several younger personalities have joined our industry via TikTok, which is exciting and should be celebrated. On the whole, I guess you could say we would be closer to classic car dealers but more indoorsy.
Personalities aside, both the art and watch markets share many peculiarities, and there are some lessons that can be gleaned from The New Yorker profile on Gagosian. In the interest of brevity, I’m not going to quote the article directly, and instead select 15 of David Serra’s concise “maxims” which are based on The New Yorker article and add my own commentary on how it relates to the vintage watch world. These are just a selection and I encourage you to read the whole list, or better yet the whole article.
1. The best way to raise the price of something is to say that you would never sell it.
Next time you see “NFS” under an Instagram photo, remember this quote.
3. You can be so successful selling to the masters of the universe that you *become* one.
Room for improvement here by watch dealers, although it is kind of hard since watches are usually priced in the 4-6 digits. For starters, we could improve our appearance; most of us are too focused on our wrists and dress kind of sloppy.
4. Art is just money on walls.
Many vintage watch dealers are former collectors that are honestly passionate about their trade. But as a dealer, it is important to remember that watches are just money on wrists.
9. You can sell things that aren’t for sale.
Collectors are fickle; those who say they will never sell can be convinced.
11. Self-reflection is how you lose your edge. A shark keeps swimming.
Contrary to our image as greedy middlemen making fat margins, vintage watch dealers often sell short or at a loss, and if we reflect we tend to get more conservative. Also, memory of/nostalgia for old prices can be detrimental. Not dissimilar to “stay hungry, stay foolish”
14. Don’t forget that relationships run everything.
Collectors and dealers are happy to pay a premium to buy the exact same watch from someone they trust.
15. Bluntness is appealing to busy people.
And in my experience, the less I talk, the more I sell.
17. Expanding a market is the first step to owning it.
The Italians succeeded and continue to succeed in this - steel chronographs yesterday, 70’s dress watches today.
18. Find information asymmetries. Don’t tell other people about them. Not even your lover.
Some asymmetries are hiding in plain sight - for example the auctions listings that I highlight in this Substack.
23. You can build a billion dollar business without formal meetings, protocol, bureaucracy, and hierarchy.
Watch dealers can build million dollar businesses with a smartphone and some capital.
26. If you love what you do the only exit strategy is death.
Most of us tend to slow down rather than go out firing.
30. Be as liquid as the day is long. You can buy things at a heavy discount in recessions.
The recession is now; liquid dealers and collectors will make strong gains by buying over the next 6-12 months.
31. Money flows fast when the customer believes the opportunity is fleeting.
“I have another collector coming in to look at it tomorrow!”
32. Pricing is guesswork.
Not only is it guesswork, the guesswork changes constantly.
34. Five hundred years ago people were complaining money ruined art. They say the same thing today.
Collectors, watch journalists, even dealers say this about watches. But our industry is growing and more robust than ever.
Finally I leave you with an interesting quote from the original article:
“People in the art world are incredibly insecure. The richest guy walks into the room. He wants a certain painting, but he can’t get it. Immediately, he’s insecure. That really is part of what Larry does. He exploits that.” A friend of Gagosian’s described attending a dinner at the dealer’s Manhattan town house, along with a fabulously wealthy tech founder, and witnessing a look of “real consternation” on the young man’s face as it dawned on him that, for all his money and power, he was not as connected as Gagosian, not as cultured, not as cool. Everybody was having a grand time, yet this potentate was experiencing an unspoken social demotion. Suddenly, he was a mere arriviste—a visitor at a club to which he didn’t belong. “It’s incredible,” Loïc Gouzer, a friend of Gagosian’s and a former co-chairman of contemporary art at Christie’s, marvelled. “He inverted this thing where normally the art dealers were trying to emulate their clients. Larry’s clients are trying to emulate him.”
Pro-tip: Armenians with last names ending in “-ian” are usually descendants of those who survived oppression and genocide in the Ottoman Empire by migrating to the Middle East or Europe, before emigrating the the US. Those with names ending in “-yan” are usually from the former Soviet Republic of Armenia.