Business Brilliant

by Lewis Schiff

  Hirst was born into even less auspicious circumstances than Laliberté. He never knew his biological father, and his stepfather left the family when Hirst was twelve. His working-class adolescence in Leeds was marked by poor grades in school and a couple of arrests for shoplifting. “I grew up with quite an impoverished background,” he told Time magazine in 2007. “I didn’t see any possibility that I would ever get paid for doing anything I enjoyed.”

  Hirst always liked drawing as a boy, but he was rejected from the art college in Leeds. He moved to London and for two years he worked as a laborer on construction sites. Finally, on his second try, he was admitted to Goldsmiths’ School of Art at the University of London.

  There was a recession in the art world during Hirst’s school years, and galleries weren’t taking on new talent. So in 1988, Hirst curated and organized an independent show of Goldsmiths student works in London’s desolate Docklands area. Hirst scraped up the cash to rent out a vacant warehouse, curated the show, and printed up the programs. Just as Guy Laliberté started out running the little street festivals in Baie-Saint-Paul at an early age, Hirst made his first mark in the art world in an organizing role, as a curator, not an artist.

  The art show was called Freeze and it would become legendary for launching the careers of a new generation of British conceptual artists. Hirst’s own contribution to the show was unremarkable, though. It was an assemblage of cardboard boxes glued together and decorated with house paint. Hirst was living in public housing at the time, and couldn’t afford to actually produce some of the art he had designed on his computer. Thanks to Freeze, however, he met an art dealer who was willing to front him $6,000 to execute his first substantial work.

  Hirst didn’t pander. He did what he loved. He had always been fascinated by death and decay and had spent some time working part-time in a mortuary, where he sketched dead bodies. With $6,000 in hand, he produced A Thousand Years, a large glass case with the head of a slaughtered cow lying inside it. Also sealed inside the case was a colony of flies that bred maggots in the cow’s rotting flesh. Above the severed head was an electric bug zapper. “In the rush to feed, they are massacred,” wrote one London art blogger regarding the work. “To live is to die.”

  It was repulsive. It was disgusting. And when it was shown publicly for the first time in 1990, Charles Saatchi, the world’s most famous art collector, stood before it with his mouth agape in awe. He gave Hirst a $60,000 commission to produce his next work, a 14-foot tiger shark suspended in a gigantic tank of formaldehyde. It was titled The Physical Impossibility of Death in the Mind of Someone Living and it became Hirst’s signature artwork, an icon of 1990s British conceptual art. In 2004, Saatchi would sell Hirst’s pickled shark to a New York hedge fund magnate for a rumored $12 million.

  By then Hirst’s reputation had been solidified as one of the richest, most successful artists of all time. In 2006, at the age of forty, he was worth an estimated $160 million, which is more than the net worths of Andy Warhol, Pablo Picasso, and Salvador Dali combined at the same age.

  He achieved this with the help of 120 employees in a factory-style studio, where “original” Damien Hirsts are turned out under his supervision, but usually without his ever so much as touching them. He has paintings made of spin-art that take three minutes to produce and are priced at $10,000. He has a series of “dot” paintings—colorful dots on white canvas—that he admits he lacks the technical skill to do properly. His best ones, he says, are done by an assistant named Rachel.

  And like Laliberté, some of Hirst’s most masterful moves have been made at the juncture where art and commerce meet. In 2003, Hirst paid $15 million to buy back 15 of his own early paintings from Charles Saatchi in order to help control supply and demand of his seminal work. Experts could not recall any artist ever making such a wise and far-sighted investment maneuver.

  Then, in September 2008, just a week after the debt crisis sank Lehman Brothers and shook financial markets all over the world, Hirst defied doomsayers and auctioned off $198 million worth of his own artwork at Sotheby’s, exceeding even the high presale estimates. The auction was unusual because it was the first time any artist had managed the sale of his work directly to the public, cutting out the fat commissions normally enjoyed by his London and New York dealers. Hirst got the idea from his previous experience with Pharmacy, a London restaurant he partly owned. When the restaurant closed in 2004, Hirst personally oversaw auctioning off everything inside it, right down to the matchboxes. He raised $20 million that way, far more than the restaurant itself was worth.

  Hirst’s most controversial financial creation, however, is a small sculpture called For the Love of God. It is the most expensive work of art ever made. In 2006, Hirst had a platinum cast fabricated from an eighteenth-century human skull he bought in an antique shop. The cast was then coated with 8,601 flawless diamonds at a reported cost of $28 million. Hirst announced an asking price of $100 million and in August 2007 he claimed he’d gotten it, in cash, from an anonymous consortium. But critics speculate that he and his business manager are a part of the secret consortium, and that the actual price fell short of $100 million. If true, it would mean nonetheless, that Hirst still maintains an ownership stake in his most valuable piece, a stake he can always sell at a later date.

  Around the time of that announcement, a New York Times editorial scolded that “Mr. Hirst . . . has gone from being an artist to being what you might call the manager of the hedge fund of Damien Hirst’s art. No artist has managed the escalation of prices for his own work quite as brilliantly as Mr. Hirst. That is the real concept in his conceptualism, which has culminated in his most recent artistic farce: a human skull encrusted in diamonds.”

  It’s curious that this Times editorial didn’t register any disapproval of the crazed escalation of art-world prices in general. The article seemed to say that it’s okay for art dealers and collectors to speculate and profit from rising prices, but if an artist excels in profiting from his own work, he somehow suffers a loss of artistic integrity.

  It could be that the Times editorial reflects a certain ambivalence among the middle class about following the money. All Hirst has done is display typical middle-class millionaire interest in the wealth his work creates. The Business Brilliant survey found that 8 in 10 self-made millionaires have a substantial ownership stake in their work, while 1 in 10 say that although they don’t have ownership now, they are seeking it.

  There is a very wide gap of experience here between the middle class and self-made millionaires in this respect. Among the middle class, just 1 in 10 have an ownership stake in their work, and just 2 out of 10 say they are seeking it. But here is a survey result I find much more interesting. More than 6 out of 10 also agree that owning a stake in one’s work is important. So, in simple terms, almost two-thirds of the middle class see the value of having an ownership stake in one’s work, but less than one-third of the middle class is doing anything about it!

  Why don’t more middle-class people do what they love and follow the money? Why does one-third of the middle class acknowledge the value of having equity in one’s work while doing nothing to pursue it? Is it really as Marsha Sinetar said, that you need to overcome your self-doubt and stop letting fear hold you back?

  Certainly no one would accuse Laliberté and Hirst of suffering from self-doubt and trepidation. But self-confidence isn’t everything, either. There are many bold, self-confident artists in the world who are also fairly rich and successful. How come none of them bought back their early works or run their own auctions, as Hirst did? Controlling supply and cutting out useless middlemen are fundamental business practices that are literally centuries old. Why was Hirst the first artist ever to apply such a time-tested strategy to his career?

  And think about this. When Laliberté announced to the 60 or 70 members of the fledgling Cirque du Soleil that he and his two partners wanted to take over ownership of Cirque as a private for-profit company, he needed his performers
and his creative team to go along with the plan. The ranks of Cirque had already been thinned somewhat by dissension at the time. Laliberté was in a vulnerable spot. Any one of the key members of Cirque could have asked him for a tiny slice of the pie—maybe a 1 percent nonvoting ownership stake in the new company—as a condition of staying. A few of them probably would have gotten it.

  One percent of Cirque du Soleil would be worth about $20 million today. But none of them even asked.

  Why?

  The Paralysis of the Paycheck

  In the spring of 1969, a young psychology researcher named Ed Deci ran a series of experiments at Carnegie Mellon University that involved watching college students play the Parker Brothers puzzle game Soma. The results of Deci’s experiments, which have been supported by dozens of other studies since then, challenged a lot of traditional ideas about how and why people work, learn, and play.

  The experiments also cast an interesting light on why some people might have an easier time than others in finding work they love and following the money.

  Soma is a deceptively simple three-dimensional puzzle. There are seven irregularly shaped plastic blocks that can be fitted into a perfect three-inch cube if they are put together the right way. The Soma puzzle can be solved by making other shapes, too, including a couch, an airplane, and a begging dog.

  For his experiment, Deci put two sets of students in separate rooms and gave them all Soma puzzles. He asked them to solve the puzzles in as many different ways as possible within half an hour. The students in the first group were simply asked to try their best. The students in the second group were told they’d each get a $1 reward for each puzzle shape they solved. After half an hour, Deci announced to both groups that the experiment was complete. He asked them to wait a few minutes while he left the room to print out some questionnaires.

  The students didn’t know it, but the experiment didn’t really begin until Deci left. He was absent for exactly eight minutes. During that time, another experimenter watched the students through a secret one-way mirror. He took notes on what they did with their eight minutes of free time.

  The experiment revealed some curious differences in the behavior of the two groups. Many of the students in the first group, the ones who hadn’t been paid, continued to try and solve the Soma puzzles during the eight minutes Deci was gone. But most of the students in the other group, who had been offered the $1 rewards, dropped the puzzles soon after Deci left the room. Deci hypothesized that for this second group of students, the monetary rewards had interfered with whatever intrinsic sense of challenge and enjoyment Soma might have provided them. The first group, having been offered no rewards, probably had more fun. That would explain why they kept playing with the puzzle even after they’d been told the experiment was over.

  The students who were paid to play Soma likely experienced their $1 rewards as tools of control. Deci thinks this is why they stopped playing Soma once the money stopped. The dollar reward spoiled any sense of fun they might have had while solving the puzzles. “People experience [controls] as being antagonistic to their autonomy,” Deci wrote. “So these events drain people’s sense of enthusiasm and interest in the controlled activities.”

  Today Deci holds a psychology chair at the University of Rochester. He heads an academic center there devoted to the study of what is known as SDT, self-determination theory. Psychologists in the SDT field have cataloged more than 100 experiments that demonstrate how short-term rewards for behavior generate longer-term loss of interest and enthusiasm. Once blood donors were paid to give blood, they were far less likely to donate again for free. Kids rewarded with a certificate for coloring with magic markers lost their interest in coloring. Volunteer writers at a college newspaper quit volunteering after they’d been paid to write for a week.

  “[This is] what millions of us—well-meaning parents, teachers and managers—are doing to the people we reward, whether we realize it or not,” wrote Alfie Kohn in his 1993 bestseller Punished by Rewards. “[We are] killing off their interest in the very things we are bribing them to do.” When a national pizza chain started offering free books for children who visit their restaurants, one prominent psychologist sourly predicted the end result as “a lot of fat kids who don’t like to read.”

  Kohn points out that rewards themselves are not really the problem. It’s how vividly we experience a reward as that “tool of control.” Experiments with other common workplace controls such as being closely supervised, being evaluated on a task, or being placed in competition with others, all show diminished interest in the work as a result. This is especially true if the work demands some degree of creative thinking. Offering rewards and controls together—carrots and sticks—is worst of all. Work environments that are driven by monetary incentives and close supervision tend to sap worker enthusiasm for tasks that they might otherwise find interesting. Productivity can drop because employees feel an overwhelming need to reassert their personal sense of autonomy. So they get passive, withhold their input, or fail to give a full effort.

  Deci and his colleagues at Rochester have found that these kinds of negative, self-doubting thoughts arise when we feel controlled and our autonomy is under attack. The emotional need for autonomy expresses itself more subtly than physical needs like hunger or thirst. You probably wouldn’t say you’re feeling “autonomy-deficient” after a week of working in a demanding job. You’re more likely to wonder if you’re getting sick of the business—a business you once felt sure you loved. At the end of the work week, you just want to do something different to make yourself feel better.

  Deci hasn’t coined a catchy name for what’s going on here, although he commonly refers to it as the “undermining effect.” For our purposes, I’d like to call it something else: Paycheck Paralysis.

  You may have entered a career because you enjoy the work. As your skills develop and your capabilities expand, you should enjoy it even more, but the carrot-and-stick workplace environment undermines those pleasurable feelings. That’s Paycheck Paralysis. Even as you keep getting better at what you do best, you’re losing the passion you’ll need to go out and get an ownership stake in it. Paycheck Paralysis can make you fall out of love with what you do—just enough so you never get to find the money while doing it.

  Here’s what’s even worse: If you truly love your work, you’re that much more likely to suffer from Paycheck Paralysis. The equation is pretty simple. People who feel real pride and passion in what they do have that much more to lose when workplace rewards and controls block their enthusiasm. The resulting feelings of lost autonomy, of being a pawn, would be much more grievous than if they’d never cared for the work to begin with.

  I’ve noted before how more than 6 out of 10 middle-class respondents in the Business Brilliant survey think that it’s very important to obtain an ownership stake in one’s work, but most (8 out of 10) of survey respondents aren’t even trying to get it. Why are so many of them essentially demotivated about something they say they consider very important?

  Could Paycheck Paralysis partly explain why the English teacher never writes her book or the accountant never opens his own private practice? The butcher, the baker, the candlestick maker—some of them never follow the money on their own because they are under a kind of demotivating spell, one that they’re not even aware of.

  It was Deci’s original Soma puzzle experiments that revealed a rare immunity to Paycheck Paralysis. A small percentage of the students who played Soma for money seemed to be impervious to feeling undermined. They were in the group that received $1 rewards for solving the puzzles but, when the half-hour period had ended, kept trying to solve the puzzles. To borrow a phrase from Deci, these students did not experience the rewards “as controls that were antagonistic to their autonomy.” Instead, they seemed to experience the rewards as free money for doing something fun that they’d gladly do for free. Unlike everyone else in the experiment, they enjoyed the puzzles and the money.

  Deci says n
ow that these students would rank very high on what he and his colleagues at Rochester call “autonomy orientation.” People who are considered highly autonomy oriented are more likely to seek out tasks because they are interesting and challenging. They are also more likely in general to take responsibility for their own behavior instead of blaming circumstances or other people. At the opposite pole are people who have a “controlled orientation,” which suggests a dependency on rewards and what others demand, rather than on what they want for themselves. The controlled orientation (along with an anxious and fatalistic streak called “impersonal orientation”) is at the root of Paycheck Paralysis.

  On the website for the University of Rochester SDT program (www.psych.rochester.edu/SDT/questionnaires) there is a 17-point questionnaire that helps you locate where you fall on the General Causality Orientations Scale. For instance, if you’ve been offered a new job at a company where you’ve worked a long time, how likely is it that the first question to arise in your mind is, “What if I can’t live up to the responsibility?” or “Will I make more money at this position?” Those are the impersonal-orientation and controlled-orientation responses. The autonomy-oriented first thought might be, “I wonder if the new work will be interesting.”

  If you take the test and score low on it, at least you’ll know that you’re prone to Paycheck Paralysis. That perhaps is the bad news. The good news is that, if you’re like half the middle class and you want to follow the money but haven’t, you can stop judging yourself for procrastination, risk-aversion, or laziness. You’re having what is for you a natural reaction to feeling controlled. The first step for snapping out of Paycheck Paralysis and asserting your autonomy is to understand how and why you might be under its spell.