This Company Wants You to Invest in Kehinde Wiley, Sneakers, and Skateboard Decks
Kehinde Wiley, St. Jerome Hearing the Trumpet of the Last Judgment, 2018. Courtesy of Otis.
Courtesy of Otis.
Art collectors usually want to show off a little. It’s no accident that major artworks snagged at auction are often referred to as “trophies”—in theory, they’re meant to be lived with, displayed, and marveled over. But a new breed of art-investment platforms are banking on the idea that a younger class of collectors may be intrigued by co-ownership, a model in which each individual owns only a fraction of the work in question.
Co-ownership platforms treat paintings and sculptures in the manner of publicly traded assets, offering shares to collectors whose budgets might be quite modest. The latest player in this burgeoning field is Otis, a platform that skews toward a demographic somewhere between the mainstream art world and hypebeast culture. Launching this week, Otis’s first offering will be Kehinde Wiley’s St. Jerome Hearing the Trumpet of Last Judgement (2018), purchased by the platform for $237,500 earlier this year. This will be followed by co-investment opportunities in more unexpected items, from Supreme skateboard decks and vintage comic books to an Hermès Birkin bag and a Rolex 6265 Daytona watch. A KAWS tondo painting will also be part of the initial suite of offerings; given the recent market frenzy around the artist, it seems likely to spark interest.
There’s a lot to puzzle over here. Why, for instance, would someone invest $50, or $5,000, to claim a small percentage of an artwork (or a watch) that they’ll never be able to live with (or wear)? And if one of the goals is to provide buyers with the feeling that they’re supporting the arts, why would they choose one of these new platforms over a model like Kickstarter, which already allows small donors to become patrons?
For Michael Karnjanaprakorn, the thirtysomething who founded Skillshare before launching Otis, the answers to those questions are nuanced. The name itself is likewise layered. Otis is a name that implies “wealth” in Old German, but also nods to Kanye West and Jay-Z’s 2011 song of the same name, which prominently features an Otis Redding sample; and, like Oscar and Casper, it’s an approachable, anthropomorphic moniker.
Karnjanaprakorn envisions the future Otis user’s motivations as being a mix of financial interest (actually making a return on their investment) and a desire to have a deeper relationship with the “cultural artifacts of our generation.” Co-ownership of real estate is also part of the mix, and early promotional materials also cite a wild and slightly confusing array of other assets, from vertical farms to films and albums.
Courtesy of Otis.
“We’re not really an auction house; we’re not really a fund, an art gallery, a museum, or a collector,” Karnjanaprakorn added. “We’re a combination of all of those things.” He posited Otis as “a culturally relevant, community-owned museum, powered by the people in the community.”
Artworks and other items co-owned by Otis users will be on display in a dedicated location in New York’s East Village; Karnjanaprakorn compares it to something like the Brant Foundation’s wildly popular Jean-Michel Basquiat exhibition, which was free to the public, but required timed tickets for entry. Otis owners would receive priority access, of course. “It was really important to make sure that none of the artwork that we acquired would ever be locked up and hidden in storage,” he said.
Otis’s model isn’t dissimilar to other co-ownership platforms, like the U.K.–based Feral Horses. A user can buy however many shares of an artwork they desire during the initial offering. Otis aims to retain each work for a period of around 5 to 10 years, after which it could be sold at a profit, theoretically driving gains for co-owners. (At some point, the goal is to allow owners to trade or sell their individual shares.) Karnjanaprakorn said that Otis would operate like “a tier-one collector, or a museum”—in other words, like an institution dedicated to nurturing the longer arc of an artist’s career, rather than someone looking to flip works for a quick and easy payday.
Still, I remained a bit stuck on the concept: Wouldn’t someone with $500 or $1,000 to burn want to put that money toward a more modest artwork they could actually hang in their bedroom, rather than one they could merely go visit as a fractional “owner?” Karnjanaprakorn doesn’t see those things as mutually exclusive.
“There’s always a part of a market that’s inaccessible to someone,” he said. “If you want to buy a print and put it in your home, you can definitely do that. But if you want to also own a piece of a Basquiat—you can do that, as well. There’s the utility of privately being able to enjoy the artwork in your house, but there’s also the public utility of feeling like you’re a co-owner.”
Francesco Bellanca, co-founder of Feral Horses, echoed many of these points. That platform launched in 2017; initially, its plan was to acquire artworks that would then be leased to third parties, though they have since abandoned this part of the funding model.
“It comes down to a bigger conversation on the meaning of ownership itself,” Bellanca said. “We don’t want to be a replacement for art purchases. We don’t believe that people should choose between buying artwork and hanging it at home, or buying shares on Feral Horses.”
JAGO, Habemus Hominem, 2009–16. Photo by Marilù Parisi. Courtesy of Feral Horses.
Bellanca’s platform is likewise trying to chart a path between investment and a certain form of patronage or inclusion—a sense of community among co-owners. “We’re in the market to offer a different value proposition; we want to allow people to connect, own, and invest in art more than they are today,” he explained. “On the other hand, we don’t want to think of Feral Horses as a way to coldly speculate on art.”
That said, Bellanca sees more opportunities for gains in a co-ownership model, versus a nascent collector who is buying modestly priced works and hoping the artist becomes the next overnight sensation. “Buying a $1,000 artwork is statistically not going to be a great investment—at least financially,” he said. “In the art market, there’s an inverse correlation between supply and demand, making it very hard for emerging artists to grow in value. But with the model of co-ownership, you can have access to higher-value pieces, increasing your chances of getting a positive return on investment.”
Feral Horses users can currently try to sell their shares at any point in time, at whatever price they choose. The total number of shares available for any given artwork is set in advance by the platform. For instance, a painting by Patrick Hughes is broken down into 7,200 possible shares, each offered at £10 (about $12.50), since the work’s estimated value is currently £72,000 ($90,100). With previous Feral Horses artworks, Bellanca claimed that “we saw our users selling in the secondary market for an average 25 percent profit on the initial price.” Prospective co-owners are also offered additional, more tangible perks, not dissimilar to the tiered rewards offered to Kickstarter patrons: books, poster prints, studio visits with the artist.
Masterworks, a platform established in 2017, is also vying for art co-owners, especially those who might be wooed by hard statistics. In-house editorial poses questions like: “Can Andy Warhol Beat the S&P 500?” (Short answer: Yes.) Currently, the site is pushing a 1979 Warhol work from his “Reversal” series, acquired by Masterworks for $1.8 million. “Similar” works, the site avers, have enjoyed an 11.25% internal rate of return (IRR). Users are not, as of now, allowed to sell their shares after the initial offering; any profits would only accrue when Masterworks unloads the Warhol at some point in the future.
There are plenty of reasons to be both optimistic and skeptical about this new crop of co-ownership platforms. They all stress a desire to “democratize” the market, but that presupposes a large audience of small-scale investors with hundreds or thousands of dollars to invest in art assets (rather than, say, paying off their student loan debts or mortgages). Otis does add an interesting spin on the existing model by seemingly appealing to a younger demographic—readers of Complex or Juxtapoz, rather than Artforum. It will be interesting to see if Otis’s bet pays off; if a younger guard of collectors will actually be interested in fractional ownership. When a new product drops at the Supreme store in Lower Manhattan, for instance, a line of young buyers wraps around the block. Will Otis be able to capture the attention of this crowd, for whom snagging a so-called “grail” most definitely means not having to share it with anyone else?
An artist like KAWS is an interesting case, and one in which Otis’s distinct focus overlaps with the more traditional white cube. “When we first started working on this, every single person we talked to in the art world said to stay away from him,” Karnjanaprakorn recalled. “He’d be a flash in the pan; he has no support; he’s a street artist; he sold out because he did the collaboration with Uniqlo. People are having a really difficult time understanding why he’s doing so well as an artist; it’s because he built a global fan base, and he leveraged the internet to do that.”
Otis is hoping to similarly leverage the internet to allow even modest investors to buy into that wave. And if it works for street artists–turned–art market darlings, perhaps it’ll also work for less intuitive investments, from Supreme gear to Incredible Hulk comic books.