Sotheby’s InstitutePrinciples of Business I<br />Professor Whitaker<br />September 21, 2011<br />Week 3<br />
production functions<br />© Amy Whitaker - awhitaker@cca.edu<br />
Costs<br />Fixed Costs: overhead (rent, utilities). Does not vary with level of production.<br />Variable Costs: materials...
Eadweard MuybridgeTime-Motion Studies<br />
Frederick Taylor Scientific Management<br />
Art?<br />
Damien Hirst – For the Love of God<br />© Amy Whitaker - awhitaker@cca.edu<br />1,106.18 carats = £12 million<br />Craftsm...
The artist Ai Weiwei<br />
“The use of slip without glaze is highly unusual on porcelain, although typical on stoneware, with which it bonds more com...
“The seeds, cast in porcelain, are painted with black slip — essentially liquid clay — and fired. (Some 1,600 residents of...
Roberta Smith’s idea:<br />Sell in bags to help defray cost of exhibition and so people can experience it<br />Difference ...
equilibrium pricing vs. “winner’s curse”<br />© Amy Whitaker - awhitaker@cca.edu<br />“A painting is not a loaf of bread o...
William Eggleston<br />
Jenny Holzer<br />
Sol LeWitt<br />
Antony Gormley<br />
Gormley<br />
“Added Value”<br />“Value-based pricing”<br />
The creativity of the business model<br />© Amy Whitaker - awhitaker@cca.edu<br />
Excess Capacity<br />ZipCar<br />AirBnB<br />Kickstarter<br />
Scalable Technology<br />
Fixed vs Variable Cost			<br />Sotheby’s<br />Airlines<br />Babysitter<br />Tour de France team<br />Museum exhibition<br />
ReCaptcha<br />
Oberonfmr.com<br />Take waste that a company has to pay to dispose of and turn it into fish food<br />Your negative extern...
Radiohead<br />In Rainbows is the seventh studio album by the English rock band Radiohead. It was first released on 10 Oct...
Donuts!<br />
How much does it cost to make a donut?<br />Premium donut - $2 - $3.50 price<br />Basic donut - $0.80 - $1<br />Inputs: Fl...
supply and demand <br />© Amy Whitaker - a.whitaker@sothebysinstitute.com<br />S<br />(Supply)<br />P<br />(Price)<br />D<...
The alternate universe in which all donuts are created equal. Price = $9/dozen<br />
Idea-driven business<br />Brand as idea or purpose<br />For-profit or non-profit<br />Big picture or everyday<br />The rea...
Business-model sleuthing:start making guesses (“sketching in numbers”) <br />
© Amy Whitaker - awhitaker@cca.edu<br />Inputs: Beer – fancy and cheap, Hot Dogs – buns, hot dogs, toppings <br />
Happy Dog: what beyond the production function makes a successful businesS?<br />© Amy Whitaker - awhitaker@cca.edu<br />G...
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Sotheby's Institute Week 3 Whitaker 20110921

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Principles of Business I:
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Production Functions

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  • Plumbing store next to fancy boutiquesWhat if earthquake, no rents, and theneveryone needed plumbing fixtures(John Harvey boat)
  • EFFICIENCY
  • Like a scan of a poem, can deconstruct but not entirely – if you have some semblance of art, which is to say brand.
  • http://www.nytimes.com/2010/10/19/arts/design/19sunflower.html?_r=1&amp;scp=2&amp;sq=tate%20modern%20turbine&amp;st=cse – Roberta Smith
  • Cost of labor, replicability, generosity, community of people. Value of the first one versus a copy
  • http://www.artnet.com/Magazine/reviews/laplaca/Images/laplaca5-14-21s.jpg
  • BUSINESS STRATEGY
  • REINVENTIONS OF TRADITIONAL MANUFACTURING --TECHNOLOGY
  • Sotheby's Institute Week 3 Whitaker 20110921

    1. 1. Sotheby’s InstitutePrinciples of Business I<br />Professor Whitaker<br />September 21, 2011<br />Week 3<br />
    2. 2. production functions<br />© Amy Whitaker - awhitaker@cca.edu<br />
    3. 3. Costs<br />Fixed Costs: overhead (rent, utilities). Does not vary with level of production.<br />Variable Costs: materials, hourly workers. Varies with level of output.<br />Opportunity Costs: the cost of your next best alternative. The value of your time.<br />
    4. 4. Eadweard MuybridgeTime-Motion Studies<br />
    5. 5. Frederick Taylor Scientific Management<br />
    6. 6. Art?<br />
    7. 7. Damien Hirst – For the Love of God<br />© Amy Whitaker - awhitaker@cca.edu<br />1,106.18 carats = £12 million<br />Craftsmanship = £1 million<br />Sales price = £50 million<br />Gallery cut = 50% [£25 million]<br />Net revenue = £12 million<br />Cost of skull? Overhead of studio? Profit? <br />The value of his “his conception, his creative oversight, and his sheer chutzpah”<br />– Sandy Nairne<br />
    8. 8. The artist Ai Weiwei<br />
    9. 9. “The use of slip without glaze is highly unusual on porcelain, although typical on stoneware, with which it bonds more completely. But “stoneware” lacks the cultural resonance of “porcelain,” which refers to a form the Chinese invented, and using glaze would have made the seeds less seedlike and probably very slippery, creating a different problem for the public.”<br />
    10. 10. “The seeds, cast in porcelain, are painted with black slip — essentially liquid clay — and fired. (Some 1,600 residents of a village that once provided porcelain to the imperial court produced them over the course of several years, as documented in a video that accompanies the piece.) This process yields a matte finish that looks exactly like that of real sunflower seeds, but slip lacks glaze’s imperviousness to wear and tear.”<br />- Roberta Smith, New York Times<br />
    11. 11. Roberta Smith’s idea:<br />Sell in bags to help defray cost of exhibition and so people can experience it<br />Difference between art and commerce: Cost structure of making this? How many people and how much time do you think this took?<br />
    12. 12. equilibrium pricing vs. “winner’s curse”<br />© Amy Whitaker - awhitaker@cca.edu<br />“A painting is not a loaf of bread or a can of beans or a Cadillac convertible or a share of General Motors stock. . .”<br />- Arthur Rosett, Attorney General for the U.S. Government, 1963<br />[from Art Theft]<br />
    13. 13. William Eggleston<br />
    14. 14. Jenny Holzer<br />
    15. 15.
    16. 16. Sol LeWitt<br />
    17. 17.
    18. 18. Antony Gormley<br />
    19. 19. Gormley<br />
    20. 20.
    21. 21. “Added Value”<br />“Value-based pricing”<br />
    22. 22. The creativity of the business model<br />© Amy Whitaker - awhitaker@cca.edu<br />
    23. 23. Excess Capacity<br />ZipCar<br />AirBnB<br />Kickstarter<br />
    24. 24. Scalable Technology<br />
    25. 25. Fixed vs Variable Cost <br />Sotheby’s<br />Airlines<br />Babysitter<br />Tour de France team<br />Museum exhibition<br />
    26. 26. ReCaptcha<br />
    27. 27. Oberonfmr.com<br />Take waste that a company has to pay to dispose of and turn it into fish food<br />Your negative externality is someone else’s positive, with some investment<br />
    28. 28. Radiohead<br />In Rainbows is the seventh studio album by the English rock band Radiohead. It was first released on 10 October 2007 as a digital download self-released, that customers could order for whatever price they saw fit, followed by a standard CD release in most countries during the last week of 2007. The album was released in North America on 1 January 2008 on TBD Records. In Rainbows was Radiohead's first release after the end of their contract with EMI and the end of the longest gap between studio albums in their career.<br />
    29. 29. Donuts!<br />
    30. 30. How much does it cost to make a donut?<br />Premium donut - $2 - $3.50 price<br />Basic donut - $0.80 - $1<br />Inputs: Flour, Sugar, Oil, Labor, Overhead<br />
    31. 31. supply and demand <br />© Amy Whitaker - a.whitaker@sothebysinstitute.com<br />S<br />(Supply)<br />P<br />(Price)<br />D<br />(Demand)<br />Q<br />(Quantity)<br />
    32. 32. The alternate universe in which all donuts are created equal. Price = $9/dozen<br />
    33. 33. Idea-driven business<br />Brand as idea or purpose<br />For-profit or non-profit<br />Big picture or everyday<br />The real world in which some donuts are better than others – and the donut company can be mission-driven<br />
    34. 34. Business-model sleuthing:start making guesses (“sketching in numbers”) <br />
    35. 35.
    36. 36. © Amy Whitaker - awhitaker@cca.edu<br />Inputs: Beer – fancy and cheap, Hot Dogs – buns, hot dogs, toppings <br />
    37. 37. Happy Dog: what beyond the production function makes a successful businesS?<br />© Amy Whitaker - awhitaker@cca.edu<br />Gordon Square Gets Musical<br />Gordon Square Gets Literary<br />Orchestral Manoeuvres at the Dog<br />Musicians who are dishwashers<br />Ticket sales that go straight to the band<br />

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