“Confessions of CEOs” is a series on how business owners are changing the service landscape. Today, we’re chatting with Niccolò Filippo Veneri Savoia, CEO of Look Lateral, a financial blockchain ecosystem that authenticates, values, and acquires art in real-time. He shares his secrets on building wealth through art as an asset class, possibly even through COVID-19.
Why Look Lateral?
In 2012, I had wanted to replace the artwork in my kitchen, so I went online to see what I could find, and I found almost nothing. When I did, I couldn’t be sure I would be getting the real thing or a counterfeit. I spoke with 300 gallery owners, and only 50% of them had a website, never mind e-commerce. There was no easy way to purchase top-quality authenticated international art online. At the time, the renowned art critic, journalist and my mother, Mariagrazia Savoia, spearheaded Look Lateral as a magazine for art, design, and fashion. When I became CEO in 2013, I decided to push the company towards e-commerce in a way that guarantees art provenance, and this meant creating a hyper-curated marketplace for art leveraging blockchain.
Art is not only one of the most critical aspects of each nation’s history; rather, it also represents an essential asset class. There are $1.75 trillion art assets; this market is likely to grow to $2.2 trillion within three years. However, the market size is only 60 billion, and the transactions always involve the same few people. There is a considerable gap between the art market and the rest of the world.
What are the barriers to the art market and how does Look Lateral overcome them?
Currently, there are three: lack of transparency, illiquidity, and lack of accessibility. Look Lateral addresses these problems by creating an ecosystem that identifies, documents ownership, and creates a market share for every art piece in question. Our system tackles these issues in four ways:
1) Item identification: Our proprietary adhesive label, which is easily and safely applied to the back of a work of art or directly onto its certificate of authenticity. It is reliable and thin; it can’t be transferred to a different work of art, and it can’t be replicated or cloned. Every tag is unique. It’s crazy that this doesn’t exist right now.
2) Provenance (i.e. a well-documented record of ownership). We record important information and opinions of the artwork to our blockchain, and we have a reward mechanism to incentivize players to record these things. We record if the artworks are in museums, record exhibitions, experts, the conditions of artwork, and so on.
3) Price indexing: This minimizes pricing error. Our methodology creates the index to price the artwork based on transactional data.
4) Fractional Marketplace of Art (FIMART): Our marketplace supports the trading of art assets, whether it is a fraction of the artwork or financial derivatives or the whole piece. Only artworks that are tagged, have information on ownership in our databases, and are priced by us may be listed in our marketplace. A centralized trading platform like this increases the number of potential buyers and increases the liquidity of the art market.
How can people maintain their wealth through art as an asset class?
According to experts such as those from Le Commerce, art represents a stable investment asset that offers an average annual return of 4.6% even during times of instability such as during political unrest or viral crises. This is especially true if there were art derivatives, art indexes and art lending.
If you look at Deloitte and other reports, 10% of art owners would need a loan using art as collateral. These art owners include the top 1000 museums in the world, the top 1000 galleries, foundations, institutions, corporations, governments, etc. These entities are stable and solvent. There is a potential market of at least $175 billion.
The time is now, and it’s even more compelling because of COVID-19 and the possible next crisis. Many of those entities will need loans or monetization as soon as possible. And art is even more attractive during a financial and global crisis, as one of the best refuge and safe asset class.
How does art as an investment vehicle help further culture?
It’s a more scalable way to support museums and galleries. Museums, as an example, are not allowed to sell more than 20% of a given art piece (else they lose their non-profit status and are then categorized as for-profit galleries. During times like coronavirus, many of these establishments could shut down permanently due to enforced government closures if they don’t find alternative ways to monetize their assets within a reasonable timeframe. It would be a real loss if people were no longer able to appreciate the masterpieces of artistic leadership and history.
What drove your passion for art culture?
My father and my mother have always tried to bring me to museums, exhibitions, and openings. Some fond memories as a child include “The Celeste Galleria” in Palazzo Te, “Phillippe Parreno” at Palais de Tokyo in Paris, and “Tino Siegel” at the Guggenheim. As my mother was a journalist in fashion and design, I could always “breathe” culture in my everyday life since I was a kid. At that time, I didn’t understand how influential culture was. It was only in retrospect that I realized its significance. Something that has stuck with me throughout the years was “Know the history so you can understand the present and think about the future.”
How have you built your team?
I started with people I knew, who were in turn, connected to the key industries I was seeking. Then, when I identified the skills that I needed, I tried to add some of the best people in the world for that skill. For example, we have Piers Armstrong, the VP of Marketing at Amazon as our business advisor. As our analytics and finance advisor, we have Antonio Mele, a Professor of Finance at the Swiss Finance Institute based in Lugano (USI), who also spent a decade as Professor of Finance at the London School of Economics and Political Science.
Who’s been an integral part of growing the business?
We’re big fans of Certilogo (a leader in product authentication), or Artnet (a leader in art sales). We’re elated that they’re working on such an innovative project with us. We also have partners like Orrick, financial institutions and banks who back us with their reputation and stability.
What words of wisdom can you share?
The most important thing is to be resilient. Always find people that don’t believe in you or there will be problems on your journey. Make sure all the people around you will play their role but also advocate value. You will need to test and then stress test every single part of the business. You will need to have people verify the solution you have made. We overcame obstacles and prevailed, and to build something like the ecosystem we have, you need to develop a multilayer product. If you don’t have that, you won’t be able to execute a viable product.
When all is said and done, what do you hope for Look Lateral to achieve?
We want LookLateral to be the financial on-ramp to art culture as a prominent asset class, whether it’s paintings, wristwatches or film.
Look Lateral is a preferred partner on Beaze.