Is Something Valuable If No One Knows It Is?

Is Something Valuable If No One Knows It Is?

If you follow my Tweets (and you should since I am awesome) you would have known that last week I was at a financial services seminar and wow did I get a lot of post ideas out of it.  In one of the “classes” an energetic presenter told a story told that I haven’t been able to shake from the forefront of my mind.  You may have heard the story as it is a couple years old already, but Wikipedia provides a great beginning synopsis:

In an experiment initiated by Washington Post columnist Gene Weingarten, Bell donned a baseball cap and played as an incognito street busker at the Metro subway station L’Enfant Plaza in Washington, D.C. on January 12, 2007. The experiment was videotaped on hidden camera; among 1,097 people who passed by, only seven stopped to listen to him, and only one recognized him. For his nearly 45-minute performance, Bell collected $32.17 from 27 passersby (excluding $20 from the passerby who recognized him).

The actual Washington Post article fills in the gaps (excerpts):

The musician did not play popular tunes whose familiarity alone might have drawn interest. That was not the test. These were masterpieces that have endured for centuries on their brilliance alone, soaring music befitting the grandeur of cathedrals and concert halls.

Three days before he appeared at the Metro station, Bell had filled the house at Boston’s stately Symphony Hall, where merely pretty good seats went for $100. Two weeks later, at the Music Center at Strathmore, in North Bethesda, he would play to a standing-room-only audience so respectful of his artistry that they stifled their coughs until the silence between movements

Bell always performs on the same instrument, and he ruled out using another for this gig. Called the Gibson ex Huberman, it was handcrafted in 1713 by Antonio Stradivari during the Italian master’s “golden period,” toward the end of his career, when he had access to the finest spruce, maple and willow, and when his technique had been refined to perfection….Bell bought it a few years ago. He had to sell his own Strad and borrow much of the rest. The price tag was reported to be about $3.5 million.

In the three-quarters of an hour that Joshua Bell played, seven people stopped what they were doing to hang around and take in the performance, at least for a minute. Twenty-seven gave money, most of them on the run — for a total of $32 and change. That leaves the 1,070 people who hurried by, oblivious, many only three feet away, few even turning to look.

“At a music hall, I’ll get upset if someone coughs or if someone’s cellphone goes off. But here, my expectations quickly diminished. I started to appreciate any acknowledgment, even a slight glance up. I was oddly grateful when someone threw in a dollar instead of change.” This is from a man whose talents can command $1,000 a minute.

Listening to the presenter talk about the subject and then rushing back to my hotel room to read the entire article something started to stir within me.  It was an uneasy feeling of, does wearing a Tag Heuer or driving a Mercedes Benz (picture is of a really hooked up Benz called a Maybach) really matter unless someone else knows what you are wearing or driving?  The timex will literally tell you the exact same time and the hyundai will take you to that same place.  The authors of the articles foresaw the emotions that the article would rumble in some readers,

MARK LEITHAUSER HAS HELD IN HIS HANDS MORE GREAT WORKS OF ART THAN ANY KING OR POPE OR MEDICI EVER DID. A senior curator at the National Gallery, he oversees the framing of the paintings. Leithauser thinks he has some idea of what happened at that Metro station.

“Let’s say I took one of our more abstract masterpieces, say an Ellsworth Kelly, and removed it from its frame, marched it down the 52 steps that people walk up to get to the National Gallery, past the giant columns, and brought it into a restaurant. It’s a $5 million painting. And it’s one of those restaurants where there are pieces of original art for sale, by some industrious kids from the Corcoran School, and I hang that Kelly on the wall with a price tag of $150. No one is going to notice it. An art curator might look up and say: ‘Hey, that looks a little like an Ellsworth Kelly. Please pass the salt.'”

Leithauser’s point is that we shouldn’t be too ready to label the Metro passersby unsophisticated boobs. Context matters.

But should context matter? Is “value” simply the feeling you get when you look at your $10K watch or drive your $50K car? For the most part is luxury just the abstract idea of being sold bragging rights either to someone else or even yourself?

I have struggled with the concept of value vs worth before and would love to hear your thoughts.

27 Responses to Is Something Valuable If No One Knows It Is?

  1. I have problems with it too. If a company trades for $20M is it worth $20M, even if it earns 1.5M/yr, has CoH of $13M, and $7M of highly-valuable NOL?

    Well, Mr. market says it’s worth $20M, but I think it’s worth more than that.

    In regards to this: ” For the most part is luxury just the abstract idea of being sold bragging rights either to someone else or even yourself?”

    Yes. Luxury is the price you pay for marketing. With some marketing, people would have paid a luxury price for Bell’s performance.

    BTW, if you’ve read this far, follow @MJTM on Twitter. He is worth following ;)

  2. I’d have to agree with sam – it’s not really all in the talent, there’s a lot of branding (and breaks) along the way. My dad always used to say “It’s only worth what someone will pay for it, not what some book says”. I think luxury has a lot to do with bragging rights – it makes you feel like you’ve earned it, even if you bought it with debt.

  3. I saw Josh Bell in concert in SF. Quite a talent.

    It just goes to show that branding goes a long, long, long way.

    A lot of stuff (Writing, music) is good enough. It’s what you do with the brand that matters.

    Financial Samurai

  4. Heck yeah context matters! Those folks in the subway station were not there to listen to fancy pants classical music. They were there with a purpose, to get from point A to point B. When they go to see Bell in concert, they know what they’re paying for, (a virtuoso performer and awesome acoustics), and their purpose is to absorb and be carried away by the performance. The concert goers have already set aside the time for the performance. The subway travelers have not.

    For myself, I don’t buy luxury items to impress others. Yes, a Ford Escort will get you to your destination just as efficiently as a BMW 5 series. However, if you appreciate quality, relatively low noise, smooth ride, etc. and you can easily afford it, then why not buy a Beemer to get you there? A nice luxury car can allow you to kick back and enjoy the journey as much as sitting in your favorite chair at home with music on the stereo.

    If all you want out of a watch is to tell time, then use your cell phone or buy a cheap Timex. If you just want to impress your friends, buy a cheap pirate or clone. If premium craftsmanship gives you a warm and fuzzy feeling every time you look at the watch, then buy a quality time piece and savor every moment you interact with it.

    • I don’t know what I want, but I think you might be right about making the wearer / the driver feel good. But I guess the next question comes with, at what cost? and for what purpose (is it really to make you feel good vs. to make others jealous)?

  5. At yard sales, sellers will sometimes puff in indignation at a low-ball offer. “Why, I paid $200 for this thingamajig. It’s worth at least $100″. No, right now it’s worth ten cents on the dollar. Maybe in a little while some else will offer more or less, and that’s what it will be worth then. But at this point in time-space, it’s twenty bucks.
    Utility is one thing. Value is another.

    • ugh The Pops is the same way! His basement has recently almost reached horders status, and it doesn’t matter how much I try to reason with the man that it is irrelevant how much you spent on the Pentium computer 12 years ago…if it has less power than my cell phone it is time to be thrown out

  6. very interesting discussion. i think value is relative to each one of us, and each’s perception of it determines the worth of the acquisition whatever it may be. so the two are interdependent. utility however in my opinion is independent, however closely tied (or should be at least) when determining value/worth. it is not always however.

  7. I’ve heard that story before and it had the same impact on me as it had on you. I heard that a lot of children tried to stop and listen but their parents would hustle them along. I think the article I read was more about taking time to notice your surroundings. Either way, it proves the point that you shouldn’t do things to impress others. Spend your money where you find the most value, not so that you can say you went to a certain concert or have a certain item. In a different context it doesn’t even matter.

    • You are right the story was completely geared towards the “smell the roses” crowd but the study is so much deeper than that.

      I am not saying don’t try an impress others, all I was trying to discuss is WHY are you buying the luxury item. Is it to impress others? that’s fine as long as you know and have come to terms with that being the reason you are paying extra lol

  8. An object’s value is simply what someone in the free market is willing to pay.Hearing about the $32 he made playing on the street is actually uplifting news for all the aspiring artists, musicians and writers out there … just because you’re not getting paid much at the moment doesn’t mean that you’re not talented! It just means that the world hasn’t recognized your talents yet, so keep trying.

    • “just because you’re not getting paid much at the moment doesn’t mean that you’re not talented! It just means that the world hasn’t recognized your talents yet, so keep trying.”

      – Screw that…if you are making $32 a day playing for 10 hours a day maybe it is time to look into a minimum wage job so you can make double (at $8 an hour). But maybe that is why I am no an artist

      • Did you make $8 an hour when you started blogging? Or did you work for less-than-minimum-wage while you built your blog to success?

        • I didn’t start this blog for money. If the artist is playing just to play then I understand but if it is as a second stream of income then there are probably better uses of his or her time

          • True, unless he’s building towards a long-term investment. Maybe an artist can start off by playing unnoticed at a street corner for pennies a day until gradually his reputation in the community grows. The local paper runs a feature story on him; word-of-mouth spreads about this talented new busker. After 6 months he’s an established local fixture and earning $150 a day in tips.

  9. I think some artists or people aren’t as concerned with how much money they make. They are probably happier playing their music or what not and making as much as they can from that as opposed to working a minimum wage job.

    • I also think some artists, get excited about being “the starving artist that the world doesn’t understand”

  10. This is a great post and an great anecdote. We’ve all been victim to buying something meaningless just because other people will recognize it as a symbol (of wealth, of style, etc) and then regretted the money spent when the fad fell to the wayside. Not to get too philosophical, but isn’t the wealth of everything based on recognition? I guess the point is to see beyond the facade and make decisions based on need rather than supposed wants. Doing so would really help us all cut back on frivolous spending.

  11. $32 for 3/4 of an hour work is not bad at all, but I get your point.
    value vs worth is a tough question. We all make this judgment all the time. If I think the value of something is less that the cost (worth) then I try not to buy it. We also pay for things that are not worth it to many people. We probably pay around $1,000 premium to live in the city. People that don’t want to pay that move to cheaper location. good post.

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