Felix Salmon

Colin and I have a habit of emailing interesting people and asking them to breakfast. In 2010 we did just that with Felix Salmon (FMS from here on out), whose blog we had been reading for years. His reply, reprinted here without his permission, was “I'm not a big breakfast person, mornings are always when I'm at my most hectic and grumpy... any chance of a non-breakfast meet?” So we opted for drinks at The Crosby Hotel and became fast friends. His email, Axios Edge, comes out every Sunday covers the biggest business and finance stories of the coming week. Plus it always has great charts. You should subscribe. - Noah (NRB)Felix here. If you’ve been to the Metropolitan Museum in New York, you’ve probably been to the Temple of Dendur, a magnificent gift from Egypt to the United States that’s housed in its own custom addition. The building (designed in 1978 by Kevin Roche, who died in March) is named the Sackler Wing, in honor of the family that helped pay for a large chunk of the costs. On Wednesday, the Met said that it would accept no more gifts from the Sacklers, or at least from the branch of the family that became dynastically wealthy by creating the current opioid crisis. In doing so, it follows the lead of the Tate, the Guggenheim, and other institutions. The National Portrait Gallery, in London, even decided to give up £1 million that the Sacklers had previously promised them. Why is this interesting?There are two different views of what’s going on here. The first is the “dirty money” theory. The Sacklers made their billions by profiteering off death and misery, and it’s simply unethical to accept money thus tainted. The second is the “anti reputation laundering” theory. This theory sees the Sacklers’ gifts as attempts to redeem their reputation through philanthropy. While museums are ostensibly in the art business, they’re also in the business of bestowing cultural cachet onto insecure social climbers. It’s easy to imagine how the Sacklers might have loved the way in which their name will be associated in perpetuity with a magnificent temple from the first century BCE — and how that early philanthropic win led to the Sackler name appearing on many more museums globally. Under this theory, the gift itself is not problematic. The bad people have less money, the good people have more money, what’s not to like. What’s problematic is rather the transactional nature of the philanthropy — the fact that the Sacklers want and expect something in return for their cash. If a museum were to publicly accept Sackler money today, that action would send a loud message that the Sacklers remain socially acceptable in the highest echelons of polite society — a message that I’m sure the Sacklers would be very grateful for, and willing to pay a lot for. Just like Anthony Scaramucci was happy to shell out big bucks to receive (I’m not making this up) the Hedge Funds Care Award for Caring.I’m more sympathetic to the second theory here. Museums should do nothing to rehabilitate the reputation of the Sacklers, who are very bad people. If by accepting the Sacklers’ money an institution in any way launders that reputation, then it should not accept the money. If the Sacklers were genuinely motivated only by the purest philanthropic desires, they could just donate their millions anonymously. (One very easy way: Give the money to a Donor Advised Fund, and then ask the DAF to give the money to the museum anonymously. All DAFs will do this, and it’s not only legal, it’s tax-deductible, too.)Of course they’re not motivated by the purest desires and they won’t donate anonymously. To refuse a public Sackler gift is to refuse all Sackler gifts, because in the world of the Sacklers, all gifts are public. If the general public more easily groks the “dirty money” theory (which I think they do), it makes sense for museum leaders to run with it.The overarching heuristic: The richer and more powerful the donors, the more strings that will be attached to their gifts. Even in the world of non-profits, there’s no such thing as a free lunch. (FMS)Framework of the Day:My mom first introduced me to this systems change framework, as it’s come to some prominence in the world of educational change. Over the last year I’ve thought about it a lot as it relates to driving technology change and adoption in large organizations. It’s been top of mind again and wanted to share it. (NRB)Quick Links:Previous Sackler mentions in the email: Patrick Radden Keefe’s amazing Sackler profile from two years ago (WITI 3/20) and Radden Keefe on the New Yorker Politics and More podcast talking about the family’s role in the opioid epidemic and the current lawsuits against them (WITI 4/25). (NRB)  A very thoughtful interview with the composer Ryuichi Sakamoto. I had the pleasure of speaking to him about a very special hotel in Tokyo. Watch this space for more soon.  (CJN) I first heard about the Square Cash Card from Dan Frommer’s Points Party newsletter (Dan was previously mentioned in 4/29 WITI). It hooks up to the Square Cash app (similar to Venmo) and then gives you a virtual and physical debit card to spend down your balance. Nothing shocking there except they also offer “Boosts” which give you discounts when you use it. You can have a single Boost on at a time and one of the options is $1 off at any coffee shop. Whether it’s your local or Starbucks, if you use your Square Cash Card they just give you a dollar back from your purchase. I tried it this morning and was shocked that it actually worked. (NRB)Nice piece from on the history of rideshare scooters and their increasing weight. The author Reilly Brennan also has an excellent weekly email on the future of transportation. (NRB)One of the articles that comes to mind most often for me is the excellent 2016 Verge piece from Kyle Chayka on the global aesthetic. “We could call this strange geography created by technology "AirSpace." It’s the realm of coffee shops, bars, startup offices, and co-live / work spaces that share the same hallmarks everywhere you go: a profusion of symbols of comfort and quality, at least to a certain connoisseurial mindset. Minimalist furniture. Craft beer and avocado toast. Reclaimed wood. Industrial lighting. Cortados. Fast internet. The homogeneity of these spaces means that traveling between them is frictionless, a value that Silicon Valley prizes and cultural influencers like Schwarzmann take advantage of. Changing places can be as painless as reloading a website. You might not even realize you’re not where you started.” (NRB)Thanks for reading,Noah (NRB) & Colin (CJN) & Felix (FMS)

Why is this interesting? - The Sackler Edition

Felix Salmon (FMS) joins us for a second WITI today. He previously wrote about the Sackler family and philanthropy for WITI 5/17. You can find him regularly over at Axios and his Sunday business and finance email Axios Edge. - Noah (NRB)Felix here. A few auction records have been shattered recently. In April, “The Kaws Album” by KAWS sold for HK$116 million at Sotheby’s in Hong Kong, or $14.7 million. Then “Devolved Parliament” by Banksy sold for £9.9 million, or $12.2 million, a few days ago at Sotheby’s in London. Finally Yoshitomo Nara’s “Knife Behind Back” sold for HK$196 million, or $25 million, again at Sotheby’s in Hong Kong. (The previous auction records for KAWS, Banksy, and Nara: $2.7 million, $1.9 million, and $4.5 million, respectively; what’s more, the Banksy was a collaboration with Damien Hirst.)Why is this interesting?Art-world types will immediately notice that all three sales happened at Sotheby’s, which has in recent years been playing second fiddle to its archrival Christie’s. What’s more, they took place not in New York, the center of the art-auction world, but in Hong Kong and London. Art-world types will also generally sneer at the people paying these record prices, saying that these paintings barely count as art in the first place, let alone art worth 8-figure sums. “The Kaws Album” and “Devolved Parliament” are not-very-funny one-note jokes, while “Knife Behind Back” is an oversized cartoon figure. So, what’s going on? Why are these artworks so expensive? Part of the reason is relatively mundane: All 3 canvases are old-fashioned paintings, and all of them are unusually large. In the art world, size matters, and paintings have had primacy for centuries. (They’re relatively easy to store and display, they meet your walls’ need to be filled, and works on paper are fragile, discoloring in the sun.)At the same time, collectors have always collected the art that they love. These artists have large fan bases, and the top 0.01% of those fan bases will want to own strikingly large unique works. All you need is 2 rich collectors duking it out in an auction room for a single piece, and a crazy new record is set.There’s something else going on, though, which is the way in which the collectors are surely congratulating themselves right now for being ahead of the curve. For well over 100 years, art collectors have embraced the tradition of the “avant-garde”—the idea that their ahead-of-the-curve eye can identify artists doing something dangerously new, something that’s hard for the old guard to understand and appreciate. Didn’t the academicians sneer at Duchamp and Basquiat, just as the self-proclaimed art-world elite are sneering at KAWS?The irony is that each successive generation of artists has in many ways become easier to understand and appreciate. Try to unpack the layers and craftmanship in “Las Meninas” by Velazquez, then look at, say, “The Dance” by Matisse. The “difficulty level” has clearly gone down, not up. Then fast forward to Pollock’s drip paintings, Warhol’s Marilyns, and finally the cartoonish stylings of Koons and Murakami. Each is simpler, more universal, more easily grokked, more exportable than the last. You need less and less specific cultural context or connoisseurship to appreciate these works.Not all art has gone pop, of course: There’s a strong countertrend of art becoming ever more hermetic and accessible only to the cognoscenti, that goes back at least as far as Duchamp and Beuys. But the minimum level of sophistication that an artwork needs in order to fetch 8 figures at auction has clearly been falling as the world of art collectors has expanded and globalized. (FMS)Comic of the Day:XKCD’s map of mobile phone functionality. True story: A few years ago I was on a plane and I saw a guy open a briefcase only to pull out a tape player, map, book, notebook, and pen. I was impressed. (NRB)Quick Links:David Foster Wallace partisans be damned. There is only one good commencement speech, and it’s this one, from Yale Law School professor Daniel Markovits. He recently turned it into a very long book, but the substance of the book is all here. (FMS)The Christmas Sermon 2012 – “On Not Believing In Canada” (FMS)Since Felix is our guest today it seems worth pointing to one of his favorite pieces in case you’ve never read it. Money is Memory basically posits that “from a technological point of view, money is equivalent to a primitive form of memory.” (NRB)Thanks for reading,Noah (NRB) & Colin (CJN) & Felix (FMS)Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

Why is this interesting? - The Pop Art Edition

Felix Salmon (FMS) joins us for a third WITI today. He previously wrote about the Sackler family and philanthropy for WITI 5/17, and about expensive popular art for WITI 10/9. You can find him regularly over at Axios. And sign up for his Thursday business and finance email Axios Edge. - Noah (NRB)Felix here. Recently Colin dropped this story into the WITI Slack, about Arnd Erbel, a Bavarian baker who’s making Brezn without yeast. Brezn are the Bavarian form of what Americans call pretzels, but in the rest of Germany this emperor of bakes is just called a Brezel—or, for reasons that we’ll come to in a minute, a Laugenbrezel. The story reminded me of my favorite YouTube video of all time, an 11-minute mini-documentary called La Laugenbrezel that has been watched 25,426 times. I don’t like to think about how many of them are just me re-watching it. Why is this interesting?Noah likes to troll me with his love for hard, tasteless American pretzels. Other Americans claim to like the doughy version that can be bought from street vendors selling dirty-water hot dogs, or even the bizarre “artisanal” pretzels that briefly cropped up next door to me at a place called Sigmund’s when I lived on Avenue B and 3rd Street. The NYT wrote up Sigmund’s after it opened, with a photograph of a pecan-and-caramel pretzel which to this day is I think the most obscene thing that august newspaper has ever published. Amazingly, the headline on the piece is “Making Soft Pretzels the Old-Fashioned Way”—something that could only be written by someone who has never been to southern Germany.I’m half German. More to the point, I’m half Swabian. My mother grew up in Bad Cannstatt, a town just east of Stuttgart whose main claim to fame is the Brezel. (Also, Mercedes-Benz, but the Brezel always comes first.) When she came to visit me in Berlin one summer, she spent two full days trying to find a decent Brezel, and then just gave up, dejected. It’s basically impossible to find a good Brezel outside the three states of Swabia, Bavaria, and Baden, each of which has their own distinct version of the bake. (That said, I’ve found some decent attempts in northern Switzerland, and honestly, a lot of the Baden versions are not that great.)A true Brezel has the same kind of external bite as a great bagel, although it’s much softer on the inside. If it’s Swabian (as it should be) then the arms are nice and crunchy, in perfect contrast to the doughiness of the belly. It’s also baked with large salt crystals that provide a perfect surprising tang when they hit your tongue. And just like the bagel, the Brezel is a defiantly local speciality. You can’t get a good bagel (or pizza) in San Francisco; you can’t get a good Brezel in Berlin or New York. Sorry folks, that’s just the way it is.I’m going to reserve judgment when it comes to Erbel, Colin’s Bavarian baker, because I haven’t had his Brezn. But he works without yeast, which is weird; he doesn’t use lard, which is bad; and well, he’s Bavarian, which makes him automatically suspect to a Swabian partisan like myself. I also disapprove of Erbel’s idea of adding fine salt after baking: it loses the crucial texture of the salt. Also, just going from the photographs, he’s burning them. A Brezel should be light brown, not dark and blistered, although I did once have a very good and quite dark Pfefferbrezel, or pepper pretzel, in Bayreuth.Photos from the Saveur Brezn article.There’s a very good reason you can’t get a good Brezel outside southern Germany, and that reason is volume. Frank, the store in the YouTube video, is on a quiet street corner in Bad Cannstatt, and it makes 2,500 of them per day. Substantially all of them are sold to the store’s neighbors, who would never dream of starting their day without a Brezel for breakfast. Up the street is Treffinger, which serves exactly the same purpose for its own micro-neighborhood. You get up in the morning, you go down to the bakery, you buy your Brezeln, you rush them back home while they’re still warm from the oven, and then you eat them with your family. You do this every day, and every day the master baker wakes up at 4am to bake them for you, subtly adjusting his baking technique to that day’s warmth and humidity.The economics of the Brezel only work if you can turn out a couple of thousand of them per day. That helps to pay for the big steam ovens and all the other machinery you can see in the video, including the device that sprays the dough with lye, or caustic soda, just before they go into the oven. (Hence the name Laugenbrezel, or lye pretzel.) A Brezel is like a razor blade, or an espresso: The more you make, the higher quality each one becomes. A Brezel is similar in some way to the classic NYC slice. It needs high-end professional machinery to make, and it’s best eaten within minutes of coming out of the oven. (The Brezel wishes it had the shelf-life of a French baguette.) As a result, the stores selling it need a steady stream of local customers.So next time you hear someone like Noah waxing lyrical about the wonder of “pretzels” that taste exactly the same as they did three weeks ago, just ask whether he’s ever been to Stuttgart. If the answer is no, then he almost certainly doesn’t have a clue what he’s talking about. (FMS)Comic of the Day:Courtesy of Saturday Morning Breakfast Cereal. (NRB)Quick Links:Speaking of the NYC slice, here’s my favorite theory on why it’s so much better than what you can find in other cities: We’ve got older ovens. "As you cook, some ingredients vaporize, and these volatilized particles can attach themselves to the walls of the baking cavity … The next time you use the oven, these bits get caught up in the convection currents and deposited on the food, which adds flavor." (NRB)Matt Levine on being able to buy fractional shares of stock (NRB)What makes a good maze? (NRB)Thanks for reading,Noah (NRB) & Colin (CJN) & Felix (FMS)Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

Why is this interesting? - The Brezel Edition

Felix Salmon (FMS) joins us for a fourth WITI today. He previously wrote about the Sackler family, expensive art, and pretzels. You can find him regularly over at Axios. And sign up for his excellent weekly business and finance email Axios Edge. - Noah (NRB)Felix here. The editor-in-chief of Mother Jones magazine got ratioed on Thursday for making this observation:The context, while also trying to walk the tightrope of the WITI no domestic politics rule, was a Pete Buttigieg fundraiser in a Napa wine cave that was viewed as being elitist.Why is that interesting? Jeffery is right: Wine caves are ordinary agricultural phenomena, but they’re also avatars of elitism. There are four kinds of wine cave, which (since this is a Noah Brier joint) we can put into a 2x2 matrix:Vineyard/Utility (Aging) is the kind of wine cave that Jeffery is talking about. Wine needs to age, and it needs to age at a constant temperature. If you just put it in a barn, that would be dreadful: It would be hot during the day and cold at night, not to mention hot during the summer and cold during the winter. So for millennia, winemakers have aged their wine underground, where temperatures stay constant throughout the day and year. When they need to check on their wine, they enter their wine cave and take a sip. They might occasionally show visitors around, too, and let them try what’s aging in various barrels. Home/Utility (Storage) is less obviously necessary. Once the wine has been bottled and sold to a customer, that customer’s main job is to drink it. All you need for that is a wine glass and a corkscrew. Still, it’s always nice to have some extra wine on hand, and sometimes you’ll buy wine that will be even better in a few years. Or maybe you’re just saving it for a special occasion. In that case, you’ll want to store it somewhere.That’s where personal wine caves come in. They can be a small under-the-counter wine fridge, a small side room in a basement, or a huge subterranean complex, but their primary purpose is always the same: To make sure that the wine doesn’t vary in temperature too much over time. (It’s worth noting that the best temperature for storing wine is not always the best temperature for drinking wine, but it’s nearly always fine.)Vineyard/Theater (Sales) is a gimmick. There’s often something quite romantic about a vineyard’s wine cave, and so the winemakers will sometimes turn their storage area into an event space and serve meals there, among the barrels. It can feel a bit stilted and artificial since most people don’t actually want to eat a meal in 55-degree temperatures. Still, the kind of people who might be willing to spend thousands of dollars on wine are probably used to eating in warm rooms with windows, so why not give them something memorable?Often the “wine caves” where meals are served aren’t the actual places where the wine is aged, but are rather specially-constructed rooms which can be set to their own temperature and placed next to a purpose-built kitchen. It’s all highly theatrical, but still, there’s nothing wrong with a bit of theater. Home/Theater (Spectacle) is the kind of place you hold a fundraiser. When you become Very Rich, you can have multiple dining rooms in a single house—and that house will probably have some kind of extensive wine storage. It doesn’t take much imagination, at that point, to start building a dining room into the wine storage. The reason is, again, mostly theatrical: Maybe you start your evening with cocktails in the sitting room, then have a nice three-course meal in the dining room, and finish with digestifs in the wine tasting room. At some point, your dining table could end up seating 35 people and being illuminated by a crystal chandelier built into a tree’s roots, de gustibus non est disputandum. But at that point, you are no longer anywhere near the world of winemakers carefully aging their wine in a temperature-controlled setting. (FMS)Chart of the Day:Are beer caves a thing? Chinese beer consumption via, appropriately, Felix. (NRB)Quick Links:AbeBooks most expensive sales of 2019 (NRB)Quanta profile/interview of Jessica Flack, who runs the Collective Computation (C4) group at the Santa Fe Institute (NRB)Desperate Beijing motorists marrying people just so they can secure a license plate for their car (via RPB)Thanks for reading,Noah (NRB) & Colin (CJN)PS - Noah here. I’ve started a new company and we are looking for a sr. backend engineer to join the team. If you are one of those or know anyone great, please share. Dinner’s on me at a restaurant of your choice if you help us find someone.Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

Why is this interesting? - Wine Cave Edition

Felix Salmon (FMS) is a friend, finance writer (subscribe to his excellent Axios Capital newsletter), podcaster, and four-time WITI contributor (Pop Art, Sacklers, Wine Caves, and Brezels). Today’s edition is an old post of Felix’s from 2013 that I recently re-read and asked if we could republish it. He said yes, so here it is. - Noah (NRB)Felix here. In 2013 I spent a couple of days participating in the inaugural Berkeley Ideas Festival. I was asked to present a “provocation” on the second morning, in between heavier sessions covering topics like the effect of 3D printing on the manufacturing workforce and the rise of the plutocracy.So I thought I’d be a little servicey, and let the audience into a secret: specifically, the secret of how to buy happiness with money.Berkeley is a fun place to give such a talk, since it’s full of the kind of people who are convinced as a matter of principle that money can’t buy happiness. (Where “money”, much of the time, is code for “San Francisco”.) They buy the idea of the hedonic treadmill — the theory which says that we all have our own set level of happiness. Good things can happen to us, which make us happy, and bad things can happen to us, which make us sad, but the effect doesn’t last very long. Even if very good things happen to us, like winning the lottery, or very bad things happen to us, like becoming quadriplegic or losing a spouse, we eventually end up back where we started. (The only reasonably sure-fire way of bringing the set point down, interestingly enough, is becoming and then staying unemployed.)Now there are things which make us happy, briefly. You might even have heard the saying that “anybody who thinks that money can’t buy happiness, has never bought a puppy“. But every adult also knows that for all their upside, puppies also come with a downside.So what we’re looking for here isn’t something which will lift the line forever — only spiritual gurus promise that. And it’s not something where short-term happiness ends up being paid for with long-term side-effects. Instead, what we’re looking for is something that will predictably make us happier in the short term, that will have very little in the way of negative long-term effects, and that can be repeated as often as you like. Basically, any time you want to be happier, spend some money on this, and you’ll be happier. And then it’s over, and you can go back to your life, and if you want to do it again, you can.Why is this interesting?This is a non-trivial task, because of the way the hedonic treadmill works: you get used to stuff. Remember those lottery winners. People become habituated to nice things: while your bigger house or fancier car can indeed make you happy in the short term, you get used to it pretty quickly, and before long you just become scared to lose it. I was very happy with my living conditions when I was in college, but I’d hate to go back to them now. So if your goal is happiness, you don’t want to wind up in what I think of as the collector mindset: the feeling that whatever you have is somehow incomplete, and that buying new things is a way of temporarily filling a void. We don’t want that: we don’t want something where you’re sad when you don’t have it. We just want something where you’re happy when you do have it. And which you can buy with money.Most of the time, in most areas, even if money doesn’t buy happiness, it does buy quality. If you spend $100,000 on a car, it’s going to be a better car than the one rusting away on the second-hand lot which is on sale for $3,500. The positive correlation between price and quality is a basic law of capitalism — but there are exceptions. And one of the main exceptions is wine.Michelle Vaughan, TART / SMILE / STONE / GLUG, 2018, hand-set letterpress prints, ink on 15" x 19" paper, each edition of 10, printed at The Arm in Williamsburg using vintage Gothic wood type on a Vandercook SP-15 press, available from Theodore:Art in BushwickIf you study what happens in blind tastings, you get the same result over and over and over again. You can try this at home, if you like; I’ve done that many times, with friends, and it’s a lot of fun. You can do a scientific analysis of more than 6,000 wine tastings, which found a negative correlation between price and quality. Or you can look at the wines which win medals at wine competitions, where it turns out that winning one competition gives you no greater likelihood of winning the next one, and where if you enter the same wine two or three times in the same competition, it can appear all over the place in the final results.But here’s the trick: if you can’t buy happiness by spending more money on higher quality, then you can buy happiness by spending money taking advantage of all the reasons why people still engage in blind tastings, despite the fact that they are a very bad way to judge a wine’s quality. If you know what the wine you’re tasting is, if you know where it comes from, if you know who made it, if you’ve met the winemaker, and in general, if you know how expensive it is, then that knowledge deeply affects — nearly always to the upside — the way in which you taste and appreciate the wine in question.Fortunately, nearly all of the time that we taste wine in the real world, we do know what we’re drinking — and we do know (at least roughly) how expensive it is. In those situations, the evidence is clear: When we know how much we spent on what we’re drinking, then the correlation between price and enjoyment is incredibly strong.The more you spend on a wine, the more you like it. It really doesn’t matter what the wine is at all. But when you’re primed to taste a wine which you know a bit about, including the fact that you spent a significant amount of money on, then you’ll find things in that bottle which you love. You can call this Emperor’s New Clothes syndrome if you want, but I like to think that there’s something real going on. After all, what you see on the label, including what you see on the price tag, is important information which can tell you a lot about what you’re drinking. And the key to any kind of connoisseurship is informed appreciation of something beautiful.In another session at the Berkeley conference, I interviewed Randall Grahm, the biodynamic winemaker. I love biodynamic wines, even though I think that the philosophy behind them (cosmic rays, etc) is in large part completely bonkers. And I think that a large part of the reason why biodynamic wines taste so honest and delicious is that the discipline of biodynamic winemaking forces winemakers to spend much more effort and concentration on the way they grow and harvest their grapes. Similarly, when you really pay attention to the wine that you’re drinking — something which you’re much more likely to do when you know that it’s expensive — you’re going to be able to discover beauty and nuance which you might otherwise miss.What’s more, it stands to reason that the more we know about what we’re drinking, the more we’re going to like it. And that if you’re talking about something as complex and enigmatic as wine, the apotheosis of agricultural artistry, then there’s going to be more to find in a bottle of fine Burgundy than there is in a bottle of Blue Nun. After all, the global consensus on which wines are the very best in the world has been remarkably consistent for centuries.Taste in wine is a real thing, which, while it does change over time, does so much less radically than does, say, taste in furniture. It’s an elusive thing, hard to pin down, and there are many reasons why it’s especially hard to isolate in the artificial environment of the blind tasting. But it does exist, and it’s undeniable that nearly everybody who buys and drinks expensive wine (say, $20 per bottle and over) gets real pleasure out of doing so. (“Real pleasure”, I should note, is a redundant phrase: all pleasure is real, no matter whether its genesis is more likely to be a label or a liquid.)And here’s the really clever bit: even if you think that this is all just a case of the Emperor’s New Clothes, and that the whole concept of fine wine is at heart a con, the correlation between price and pleasure still holds up. As Daniel Kahneman says, it’s one thing to know your cognitive biases; it’s something else entirely to overcome them.I, for instance, am absolutely convinced, on an intellectual level, that the whole concept of “super-premium vodka” is basically one big marketing con. Vodka doesn’t taste of anything: that’s the whole point of it. As such the distinction between a super-premium vodka and a premium vodka is entirely one of price and branding. And yet, it works! The genius of Grey Goose was that it created a whole new category above what always used to be the high end of the vodka market — and in doing so, managed to create genuine happiness among vodka drinkers who spent billions of dollars buying up the super-premium branding. But if someone asks me what kind of vodka I’d like in my martini, I still care, a bit. And if I my drink ends up being made with, say, Tito’s, I’m going to savor it more than I would if I had no idea what vodka was being used.What’s more, you don’t need to spend hundreds of dollars on first-growth Bordeaux for this to work. You just need to spend a little bit more than you normally do — enough that you consider it to be a special bottle of wine. That’s it! When you sit down and pop it open, probably with people you love, in pleasant surroundings, everything is set for a very happy outcome.And you can do this again and again and again. Spend money on an expensive bottle of wine, open it up, drink it, enjoy it, repeat. I’m not talking about collecting wine, here, that’s a different pathology. I’m just talking about drinking it. There’s really no downside, beyond the money you’re spending — a single bottle of great wine, shared with a friend or two, isn’t even going to give you a hangover. You can convert money into happiness as often as you like: it never gets old.This explains, I think, why rich people tend to be so fond of fine wine: it’s the most consistently reliable way that they can convert money into happiness. So if you have a bit of disposable income, get yourself down to your local wine shop. It’ll make you happy, I promise. (FMS)Partner Post: WITI x BrightlandSince it launched, we've been fans of Brightland, a new olive oil brand started by Aishwarya Iyer (profiled in MMD here). It’s a new consumer brand that feels soulful, has a clear aesthetic vision, and tastes really good. The olives are grown from a family farm on the Central Coast of California and Iyer’s vision is to show people the benefits of authentic olive oil, a far cry from the dusty, dark green bottle sitting in the back of a cabinet. This product is designed to be front and center in your kitchen and with your cooking. Plus, it fits nearly every lifestyle: vegan, vegetarian, pescatarian, Keto, Paleo, Atkins, and Mediterranean. Arise is their new product, a limited edition 100 percent Basil Olive oil. The tasting notes are smooth, herbaceous, warm, and peppery, with hints of clove and undertones of mint and anise. Brightland offers subscriptions to all of their products, and are kindly offering WITI readers free shipping with the code WITIARISE.Art initiative of the day:Beirut Editions is a relief aid campaign to support NGOs working on the front lines of aid and activism in Lebanon in the wake of the Aug 4 explosion. 100% of sales from limited-edition art prints will go towards providing emergency relief to marginalized communities in need of immediate assistance.All limited-edition prints and originals have been donated by a diverse range of illustrators, artists, designers, and printers.Quick Links: Why are TV ratings dropping for sports? (NRB)The Man Who Refused to Spy from The New Yorker. “The F.B.I. tried to recruit an Iranian scientist as an informant. When he balked, the payback was brutal.” (NRB)Which states had the best pandemic response? (CJN)I’m giving a talk on digital transformation and change management at a web event we’re putting on in two weeks. If those topics are up your alley it’s free to join. (NRB)Thanks for reading,Noah (NRB) & Colin (CJN) & Felix (FMS) —Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).

Why is this interesting? - The Wine Happiness Edition

Felix Salmon (FMS) is a friend of WITI, finance writer (subscribe to his excellent Axios Capital newsletter), podcaster, and five-time WITI contributor (Wine Happiness, Pop Art, Sacklers, Wine Caves, and Brezels).Subscribe nowFelix here. In mid-November, hedge fund billionaire Ken Griffin bought a 1787 copy of the Constitution at Sotheby’s and promised to lend it to the Crystal Bridges museum in Arkansas.Why is this interesting? Putting aside the crypto angle, which has been covered elsewhere, Griffin’s victory sheds some light on contemporary auction dynamics in general. Griffin’s aim was exactly the same as that of the underbidder: To buy the Constitution and then lend it to a museum. There might have been a difference in exactly which museum was going to receive the donation, but that hardly explains the ferocity of the bidding war between the two sides. Griffin paid well over $40 million not to ensure the Constitution would find its way into a museum—that was always a given whether he won or lost—but to be the person who got to lend it to a museum. Griffin held two big strategic advantages in this fight. First, he knew exactly who he was bidding against, and also knew exactly what their maximum bid was because they published that number on their website. That made it easy for him to work out exactly how much to bid such that they couldn’t muster a larger bid. In general, advertising your maximum bid to rival bidders is a suboptimal bidding strategy. Second, he knew the tricks of the trade—including the power of the pre-negotiated irrevocable bid. Long before the Nic Cage memes took off, Sotheby’s had to secure the lot for itself, rather than see the business lost to archrival Christie’s. In order to do that, Sotheby’s guaranteed the seller, the Dorothy Tapper Goldman Foundation, that it would receive a certain minimum sum from the sale. That guarantee created a serious financial risk for Sotheby’s. If no bidder materialized at or above the reserve price on the lot, then Sotheby’s would find itself in possession of a 234-year-old piece of paper that it never particularly wanted to own, and that would very publicly have failed to sell at auction. That object would be hard to sell, and meanwhile, Sotheby’s would be out somewhere in the region of $15 million. Sotheby’s, therefore, found a “third-party guarantor” in the person of Ken Griffin. Griffin committed to bidding at least a certain amount for the copy of the constitution, in return for a share of the upside if the document ended up selling for far more than the guaranteed amount. Importantly, Griffin was entitled to his share of the upside whether or not he ended up winning the auction.There’s an interesting twist to this particular tale, though: Artnet’s Katya Kazakina reports that Sotheby’s received the guarantee from Griffin after the ConstitutionDAO (decentralized autonomous organization) had amassed a significant war chest.  On its face, that doesn’t make a lot of sense. If the DAO was certain to bid, Sotheby’s could be sure of selling to them and didn’t need to worry about getting stuck with the object.The problem was: If the DAO came in very visibly and credibly promising to outbid anybody with less than $40 million to spend, for an item that was only estimated at $15 million to $20 million, then there was a real risk no one else would bother to bid at all. In theory, anybody could just come in and bid $39 million for the lulz, safe in the knowledge that the DAO would outbid them. But in practice, given the layers of vetting you need to go through in order to be able to bid at that level, Sotheby’s couldn’t count on such a thing. In order to guarantee some kind of a bidding war, the auction house was willing to give significant upside to Griffin. He, after all,  could credibly want to buy the Constitution for at or near the amount the DAO was willing to pay, and therefore couldn’t be easily accused of working in cahoots with the seller—or Sotheby’s itself—to merely drive the price up.Another reason Griffin was happy to bid against the DAO is that he was going to get more value out of winning the auction than the DAO was. Griffin has acquired a valuable object, which has a lot of utility to him. He has now been identified as an American patriot willing to put many millions of dollars into buying and preserving a copy of the Constitution. He can borrow money against that copy on a non-recourse basis (which means no bank can come after any of his assets other than the object itself); he can donate it to a non-profit and take a tax deduction for doing so; he can lend it to a museum and thereby curry favor with its billionaire founders. Plus, of course, he might in theory be able to sell it at a future date for a significant profit. Little if any of that utility was available to the crypto collective that Griffin was bidding against.This was also never a fair fight. One side had a war chest of over $45 million and was willing to spend every penny. The other side was an individual so rich that dropping $45 million—or even $145 million—on a single object would make no discernible difference to his lifestyle or his wealth. It’s easy to see why such individuals are such coveted clients of the auction houses, and why Sotheby’s might be happy to treat Griffin generously in any given transaction. Finally, this whole affair says interesting things about the trustworthiness of auction prices. In an art world that’s notorious for opacity and mendacity, published auction prices are the closest thing there is to a gold standard—an unfudgeable and indelible record of how much someone really paid for a certain work at a certain time. And yet, once third-party guarantees get involved, headlines soon follow using words like “murky” and “mysterious”.  It’s easy to see why. When the DAO bid $40 million, they were committing to pay a total amount of $46.2 million.  And yet they got outbid by someone paying $3 million less than that amount. For anybody using auction prices as a guide to the maximum amount that a bidder was willing to pay in a certain saleroom on a certain day, the $43.2 million figure is decidedly misleading. After all, the DAO bid more than that themselves.And while $43.2 million is definitely the final net cost to Griffin, in another sense it doesn’t represent the true net cost he was willing to pay. Think about it this way: If Griffin had stopped bidding after the DAO’s $40 million bid, the DAO would have won the auction, the final recorded price would have been $46.2 million, and Sotheby’s would have written Griffin a check for somewhere in the region of $4 million. The second after the DAO made that bid, Griffin was $4 million in the black. By putting in an extra bid at the $41 million level, he swung all the way to $43.2 million in the red. The cost of that final bid, to Griffin, was the magnitude of the swing — some $47.2 million. Historically speaking, Christie’s would have reported the price paid by Griffin as $47.4 million; any side dealings involving irrevocable bids and third-party guarantees were considered a separate, confidential matter. Today, however, both Sotheby’s and Christie’s subtract the amount payable to the guarantor from the gross price payable by the winning bidder, when the guarantor wins the work. In this case, that means Sotheby’s reported the final price paid not as $47.4 million but rather as $43.2 million. Of course, it’s impossible to convey all that subtlety in a single reported number. Sotheby’s has a simple binary choice: It can record the final price paid as $47.4 million, or it can record the final price paid as $43.2 million. Neither number fully represents the “truth” — because auctions aren’t nearly as clean and simple as many art-world observers would like to believe. (FMS)Quick Links:Eating at 8,000 Chinese restaurants (CJN)How to go full Gatsby in the festive season (CJN)Always enjoying the Foreign Desk radio show by Monocle (CJN)--WITI x McKinsey:An ongoing partnership where we highlight interesting McKinsey research, writing, and data.The impact of ageism. New research quantifies the struggles that midcareer workers—those 45 and over—worldwide face and suggests possible interventions to level the playing field. Listen to a new episode of The McKinsey Podcast where Mona Mourshed, CEO of Generation, unpacks a recent report.--Thanks for reading,Noah (NRB) & Colin (CJN) & Felix (FS)—Why is this interesting? is a daily email from Noah Brier & Colin Nagy (and friends!) about interesting things. If you’ve enjoyed this edition, please consider forwarding it to a friend. If you’re reading it for the first time, consider subscribing (it’s free!).