HOUSTON: When Tad Smith and I spoke early last week, we had one overriding thing in common: jet lag.
I was one day into an ordeal that, on past experience of West-East long-haul air travel, would last at least a week.
The 53-year-old chief executive officer of Sotheby鈥檚, the international auction house, was midway through his torment, with the major part of a round-the-world tour of the firm鈥檚 main offices still ahead of him. 鈥淚t鈥檚 a crazy week,鈥� he said. I fuzzily concurred.
Smith鈥檚 week had begun by ringing the bell at the New York Stock Exchange, where Sotheby鈥檚 is the oldest listed company, to celebrate its 275th anniversary. Sotheby鈥檚 is older than the US, and older still than the UK, which it predates by 57 years. That is some legacy.
The thrust of recent strategy, however, has been toward the East, the next stop on Smith鈥檚 world tour. Just a few weeks ago, the firm reported better-than-expected earnings figures for 2018, boosted by $1 billion in sales from its Hong Kong hub 鈥� the best performance since it started in Asia 45 years ago.
It was achieved against some tricky macro-economic headwinds. 鈥淚n the middle of the year the Chinese stock market softened a bit, and throughout the year expectation for Chinese growth softened,鈥� Smith said.
There was also the growing threat throughout the year of a looming trade war between the US and China, and the risk that Sotheby鈥檚 might fall victim to anti-American sentiment on the part of Chinese buyers. So do Chinese customers perceive Sotheby鈥檚 as an American organization?
鈥淚 think they perceive us as a global company based in the US. We have literally centuries of British roots, so in so far as they think of it at all they also might think we鈥檙e in Britain,鈥� he said.
We have a huge demand from our clients to buy modern Islamic and modern contemporary Arabic art.
Tad Smith
Of course, Sotheby鈥檚 is offering Asia something more refined than soya beans or oil-rig equipment, which have become bargaining pieces in the trade war negotiations. Old masters, luxury jewelry and watches, and fine wines 鈥� $100 million worth of it last year 鈥� are its stock-in-trade. Up-market real estate and vintage motor cars are handled through franchise operations that use the Sotheby鈥檚 brand, or through partnerships.
Smith explained the dynamic of the luxury auction business. 鈥淲e鈥檙e encouraging people to provide us things that we then sell. We have both the need to get supply in, so we can fill our sales rooms, and the need to get demand in, so we can sell our items,鈥� he said.
Several factors determine that balance between supply and demand, such as the number of estates that become available, financial pressures on asset-rich people, and 鈥� sometimes 鈥� family feuds. But the most important factor, 鈥渢he crucial marginal growth driver,鈥� he said, was 鈥渄iscretion.鈥�
鈥淚f people are feeling their things will sell at acceptable prices, they鈥檙e more likely to sell and our sales will get larger. Anything that affects the psychology and dampens or conversely strengthens a prospective seller鈥檚 confidence that something will sell, will affect our business. If people don鈥檛 think trade wars or anything like that will affect them, they will sell,鈥� he said.
Smith was in Dubai, at the firm鈥檚 offices in the swanky art hub, the Gate Village in the financial center, to spread the 275th birthday cheer and to prepare for an auction of rare watches this week. A previous sale of precious time-pieces attracted $2.6 million of sales.
鈥淭he Middle East is a very important part of what we do. When I came in four years ago as CEO we began the effort to invest in a permanent office in the UAE. We thought that having a very senior and more invested presence here would be important for our business, and we鈥檙e thrilled with the result. So, yes, the Middle East, all the way across the GCC countries, is very important for us,鈥� he explained.
黑料社区 will continue to be an important part of that strategy, both in terms of supplying works for sale and as a plentiful source of buyers.
鈥満诹仙缜� has a rich archaeological, architectural and cultural history, and 鈥� with the establishment of MISK and the Al-Ula project 鈥� it is clear there is a keen focus, both on preserving that history, and on developing the artistic scene there. This kind of focus naturally means there is an interest in the range of works and services, including educational initiatives, that we offer,鈥� he said.
--------
BIO
BORN
1966, Chapel Hill, North Carolina
EDUCATION
鈥rinceton University, BA
鈥arvard Business School, MBA
CAREER
鈥cKinsey & Co 鈥� Adviser
鈥MG Entertainment 鈥� Corporate executive
鈥tarwood Hotels and Resorts 鈥� Internet executive
鈥eed Business Information (Part of Reed Elsevier) 鈥� CEO
鈥ablevision Systems Corporation 鈥� President, Local Media
鈥adison Square Garden Company 鈥� President and CEO
鈥otheby鈥檚 鈥� CEO
--------
Are customers in the Middle East vendors or purchasers? 鈥淥n balance, the Middle East is a significant provider of great objects to sell, but the most attractive portion of it for us is their buying. Mideast is a net purchaser, and that reflects their obvious wealth and financial importance,鈥� he said.
What are people in the region buying? 鈥淲ell, how about a spectacular Rembrandt for the Louvre in Abu Dhabi,鈥� he said, in reference to the work 鈥淪tudy of the head and clasped hands of a young man as Christ in prayer鈥� by the Dutch master bought at Sotheby鈥檚 London for 拢10 million ($13 million) last year and recently unveiled at the UAE capital鈥檚 new center of culture.
鈥淭hey are buying beautiful art from all parts of the world. They鈥檙e buying amazing, dazzling watches, they鈥檙e buying incredible jewelry, with a really robust aesthetic and great taste. People with better taste than mine say they have great taste,鈥� Smith said.
The region also increasingly supplies the rest of the Sotheby鈥檚 network with art works from its rich cultural tradition. 鈥淲e have a huge demand from our clients to buy modern Islamic and modern contemporary Arabic and Iranian art. In the past four years we sold over $125 million worth of Islamic and Middle Eastern art to clients from all over the world. That鈥檚 what鈥檚 interesting about the Middle East sales 鈥� it attracts clients globally. It鈥檚 a big market for us,鈥� he said.
It is also a rapidly changing global market place. The traditional image of an art sales room 鈥� a posh man with a gavel declaiming incomprehensibly in a smoke-filled baroque salon 鈥� is all in the past. 鈥淔or one thing, it鈥檚 not necessarily a man, it can often be a woman,鈥� said Smith, before outlining the rapid technological changes overtaking the art auctions business in the digital age.
鈥淟ast year 37 percent of things sold worldwide were sold online. It was an important year. More lots we鈥檙e purchased online than by any other method, either in the room or on the phone.
It was the first time in the company鈥檚 nearly three centuries of history. It鈥檚 grown gangbusters,鈥� he said.
Sotheby鈥檚 has already tested a new time-based bidding system, along the same principle as used by eBay, which could soon lead to an all-electronic auction system. 鈥淭hat is a gigantic leap forward where you have electronic buying and electronic consignments. You can take your phone, fill an electronic form on our website and you can consign things that way too. Electronic consignments and sales will be a rapidly growing proportion of our business in the coming years,鈥� he said.
Smith鈥檚 background is in keeping with the task of introducing 21st-century techniques to a business with 18th-century origins. A McKinsey alumni, he was an executive with various companies in the entertainment, leisure and information businesses, before joining the Madison Square Garden Company, the group that runs the iconic New York entertainment venue and other sports and leisure operations.
As with the rest of the companies that Smith has worked for, Sotheby鈥檚 is entering the digital age in a hurry. 鈥淓ach of them has a certain creative part of the business that is attached to another part that is a selling organization and the support services for that, and crucially all of them are increasingly dependent on digital marketing technologies,鈥� he said, like a true digital executive.
But the job with Sotheby鈥檚 appears to mean more to him than just another bit of Internet-age experimentation. 鈥淭his really isn鈥檛 work, it鈥檚 a gift to be in an organization with these talented people and these beautiful objects and the ability constantly to learn. For the past four years I鈥檝e had the opportunity to learn more about art and collectibles and jewelry and watches, and to see all parts of the world,鈥� he said.
The only frustration of the role? He thought for a brief moment. 鈥淛et lag,鈥� he answered.