WHAT STARTED THIS

The profile, titled "The House That Hova Built"—released online September 6, and in print September 9—really started seeing pickup today for this particular line:

He gets a little agitated when the subject of Zuccotti Park comes up: "What's the thing on the wall, what are you fighting for?" He says he told Russell Simmons, the rap mogul, the same: "I'm not going to a park and picnic, I have no idea what to do, I don't know what the fight is about. What do we want, do you know?"

Jay-Z likes clarity: "I think all those things need to really declare themselves a bit more clearly. Because when you just say that 'the 1 percent is that,' that’s not true. Yeah, the 1 percent that's robbing people, and deceiving people, these fixed mortgages and all these things, and then taking their home away from them, that's criminal, that's bad. Not being an entrepreneur. This is free enterprise. This is what America is built on."

Jay-Z's certainly not the first person to criticize the Occupy movement for a perceived lack of direction, but he may be its most famous.

THE RESPONSE

One Occupier has since responded in kind by planning a protest (or "teach-in") outside of his upcoming concerts at the Barclays Center in Brooklyn:

On SEPTEMBER 28th we will arrive at his sold-out Barclays concert to lovingly show Jay-Z what we want and how he can help: by encouraging his fans to take action for social justice in their communities, schools, workplaces, and homes.

Join us September 28 at Barclays at 6pm for an Occupy Wall Street teach-in and musical performance. Let’s be a sincere answer to Jay’s question. In turn we will ask one of him, one Florence Reece wrote in the 1930s and still matters now, “Which Side Are You On?”

THE MIDDLEMAN

Meanwhile, Def Jam Records founder Russell Simmons—who was responsible for bringing Kanye West down to Zuccotti Park last year—published a blog post regarding Jay-Z's comments, in which he both defends the rapper and takes him to task for not knowing better:

Jay-Z's words matter. He was honest enough to say that he didn’t understand it. A lot of Americans don’t. He was also honest enough to recognize that there are some in the 1 percent who "deceiving" and "robbing," so I know in his heart he gets it. I know he is a compassionate person who cares about the poor, so I'm certain if I had two more minutes with him, I could change his mind.

PRECEDENT

Previously, Michael Skolnik—who is the editor-in-chief of Simmons's site, GlobalGrind—published a post about Jay-Z and Occupy Wall Street last November, when the rapper caused a ruckus by debuting a shirt after a Madison Square Garden concert that read "OCCUPY ALL STREETS."

The shirt, sold by Jay-Z's Roc-a-Wear apparel line, was controversial on its debut, as the company explained that it wouldn't be donating profits to the movement that ostensibly inspired the design. Back then, Skolnik and GlobalGrind decried any controversy over the shirt, noting the "factious [sic] media" who had, in his mind, drummed up controversy over nothing, and urged readers not to look too far into the shirt:

The corporate-controlled media is so thirsty for the blood of the celebrities that they try to find silly and frivolous things to separate great messengers from the people. The media, and I am not just talking about the right wing media, needs to give up on this divisive style of journalism and start to support the 99%. You can own your old-school corner of the media, but you cannot own our future. We are sick and tired of the media treating the Occupy Wall Street movement like it is some rag-tag group of hippies who are camped out in a park. This movement has grown so quickly and so widely that it has inspired heroes of ours, like Jay-Z, to spread the message for us.

It would appear, in retrospect, that Jay-Z was never too "up" on the message.

[Ed.: All of this goes without mentioning the fact, of course, that he's an investor in a basketball team playing at a stadium named for one of the largest financial institutions in the world, Barclays Bank.]

What happens now? Well ...

CONCLUSION

1. Occupy will have its musical protest outside the Jay-Z concert. They will likely not come up with anything as good as previous Jay-Z protesters, but here's hoping.

2. It will receive some degree of press coverage, but likely not too much (though more if the protesters are manhandled by security or cops).

3. Jay-Z will make a canny reference about the entire thing in a song.

4. Somewhere down the road, someone will have another opportunity to ask Jay-Z about this entire incident in a future magazine profile.

5. Repeat.

Further Reading:

Shocker: Jay-Z Officially Doesn't Care About OWS [ANIMAL New York]
Jay-Z Says He Didn't Understand Occupy, but That Didn't Stop Him From Profiting Off It With T-Shirts [Gawker]

fkamer@observer.com | @weareyourfek

They might have tried for a bank loan, or made do until they saved enough for the renovation, but neither option was very appealing, so the Hillises did what everyone with a creative vision and a lack of cash seems to do these days: they launched a crowdfunding campaign.

“I don’t think it’s any different or less valid than when PBS or NPR ask people to donate for a free tote bag, or the Kickstarter campaign in Detroit to build a life-size statue of RoboCop,” said Mr. Hillis, who has thus far raised about $7,000 (with two weeks to go on a $50,000 campaign) on Indiegogo. “As long as you’re transparent about where the money is going, you’re putting together something that people want to be a part of.”

Although it might seem counterintuitive—aren’t businesses supposed to get their money by selling things?—crowdfunding has become increasingly popular among entrepreneurs. Using online platforms like Indiegogo, Smallknot and Lucky Ant, businesses have raised money to cover everything from startup costs and special projects to operating expenses. For the business owner, the appeal is obvious: loans are hard to come by, while online fundraising provides access to what is essentially interest-free (and sometimes entirely free) capital, depending on the perks and in-kind services they offer in exchange—which run the gamut from being worth as much as the contribution to a thank you card.

In a place like New York, where hyper-gentrification has driven many popular businesses from neighborhoods, it’s clear that mom-and-pop’s, even popular ones, sometimes require more than patronage to stay afloat. And rather than bemoaning their demise, many people are willing to pay for the luxury of keeping them.

“I think that more and more people are recognizing that small businesses are integral to community identity and they’re also an endangered species in many places,” said Jonathan Bowles, the director of the Center for an Urban Future. “I do think that many people are going to be increasingly putting money up to ensure that their favorite small businesses stay viable.”

But what does it mean for the future of for-profits? Are small businesses capitalist enterprises whose success ought to be determined by the free market, or cultural institutions deserving of our protection and coddling? Can they be both?

“People want to buy local and be more connected to the businesses around them,” said Slava Rubin, the co-founder of Indiegogo, where small businesses have been crowdfunding since 2008. “It’s emotion and commerce coming together.”

Indiegogo is organized around the belief that anyone should be able to raise money for anything, as long as they’re upfront about where the money’s going and what they’re offering in exchange for contributions. Its many successful campaigns prove that people will “fund” or “contribute to”—both Indiegogo and Smallknot insist on using the language of investment and gently but firmly corrected The Observer when we referred to such monies as donations—every endeavor imaginable.

From opening a vegan donut shop (Brooklyn’s Dun-Well Doughnuts) to paying for a couple’s in-vitro fertilization (the first crowdfunded baby was born just recently), people can be surprisingly generous. Sure, some are motivated by the perks or in-kind goods and services that most businesses offer in exchange for cash (Video Free is giving away everything from free rentals to a private screening with comedian David Cross), but others seem moved by little more than the spirit of generosity. Dun-Well, for example, offered a coupon for a free doughnut in exchange for a $25 contribution. It was claimed by 58 people.

In Mr. Rubin’s view, crowdfunding allows for a shift from a basic transaction to a relationship, which is essentially the same thing as branding. “Now small businesses get to create campaigns, gauge interest in new concepts and create lasting relationships with their customers,” he said.

Sarah and Allon Azulai, a husband and wife team who operate Park Slope coffee shop Kos Kaffe, agree that crowdfunding had been an surprisingly fun way to connect with customers. The couple recently ran a Smallknot campaign that raised $4,500 for an awning to block the direct sunlight that routinely cleared out their coffee shop for several hours every afternoon.

“I don’t know if it will change the game for small business, but many small businesses, you’re just making a living,” said Mr. Azuli. “No one is putting away hundreds of thousands of dollars in reserve, so when you need an awning or a new delivery van, you almost always have to go outside to get the money.”

Kos Kaffe offered perks—like cards for free drinks in exchange for $10 investments or a coffee of the month club for $75—which made the whole thing more akin to selling goods ahead of time, Mr. Azuli said.

Indeed, Smallknot is quite insistent that perks be more than mere tokens. “It’s really important that they’re not out there shaking the cup,” Smallknot co-founder Ben Rossen said. “With patronage of the arts or a creative project, it’s easy to give for the sake of giving, but it’s really not the same when you’re giving to an existing business. I think among a lot of business owners, there’s sort of a perception out there that crowdfunding is kind of magical, this idea that people will give me money just because I’m there.”

And while crowdfunding is an excellent way to test whether a new concept will be popular, it does risk triggering resentment from customers who feel that patronizing a business should be enough. Mr. Hillis said that one customer came into the store recently and asked, “Are you the guy begging for money?”

“And while it is the digital equivalent of a handout, I wouldn’t have done it if our linoleum was crappy and we just wanted to replace it,” Mr. Hillis said, adding that he thought it was important that crowdfunding be limited to one-time projects rather than run-of-the mill replacements.

“If you’re a coffee shop and your boiler’s busted and you need a new one, well, you’re a business, you make money, why can’t you get that with your revenue?” Mr. Hillis asked. No one wants to seem like a charity case.
Yassir Raouli, who operates Bistro Truck with his wife, Elsa Leon, said that he was hesitant when Mr. Rossen, a fan of their food truck, first contacted the couple about using Smallknot to help fund Rustic L.E.S., the brick-and-mortar restaurant they’re opening.

“I wasn’t too excited, to be honest. It sounded like we were going to beg for money and I didn’t think it would be good for the brand,” Mr. Raouli said. But he was eventually won over by the platform’s focus on in-kind exchange (and his wife’s enthusiasm). The couple raised $8,000 to buy kitchen equipment, money that came through at a time when things were taking longer than expected and the couple was short on cash.

Jonathan Hack, one of the customers who contributed to Mr. Raouli’s campaign, said that he was moved to participate by his love of Bistro Truck’s food.

“The food is also definitely higher quality than a normal lunch I would get during a workweek and costs a whole lot less,” he wrote us in an email. “With Rustic, it is my understanding that they would bring this simple but creative cooking style to a restaurant setting. This is the sort of restaurant that I like to frequent.”

Many of the small business owners we talked to were, in fact, more than a little surprised by how many of their contributors were not friends, family, or even regular customers. Last year Aurora Anaya-Cerda opened La Casa Azul, a bookstore in East Harlem specializing in Latino literature and bilingual books for children. She raised almost $40,000 raised through Indiegogo. (A private investor matched the amount.)

“Seventy percent were people I didn’t know,” said Ms. Anaya-Cerda, who offered incentives ranging from t-shirts, discounts and autographed books to one’s name on a donor wall. “There were people from East Harlem, but also people from different states, London, South Korea and Australia.” Ms. Anaya-Cerda turned to crowdfunding because banks wouldn’t give her the amount of financing she felt she needed to make a go of it.

“I’m now working harder not just for myself, but for everyone,” Ms. Anaya-Cerda said.

But is crowdfunding really a solution to a lack of bank loans with reasonable interest rates, or retail rents that force out even beloved independents? Ami Kassar, the CEO and founder of MultiFunding, which advises small businesses on lending options, doesn’t think so.

“I’m all in favor of new ways for businesses to access capital,” said Mr. Kassar. “But as a country we shouldn’t be putting all of our eggs in one basket and think we’ve solved the problem. We should be focusing on getting banks to lend to small business. In my mind, crowdfunding is an experiment that’s nascent and I can’t see it having a big impact.”

The looming Securities and Exchange Committee regulations—which offer great promise in that they would allow for equity investing in small businesses—might also prove prohibitively onerous for a lot of mom-and-pop’s, Mr. Kassar said, possibly requiring them to provide costly audited financial statements to raise any crowdfunding capital at all.
“My frustration is that mostly it’s going to help tech startups,” he said. “I can’t personally see it being this magic bombshell. Nothing is as easy as you think it’s going to be.”

Even Amy Cortese, the author of Locavesting: The Revolution in Local Investing and How to Profit From It and a big booster of the practice, thinks that until crowdfunding can offer equity stakes and investment returns, its potential will be limited. Social returns are great, sure—Ms. Cortese noted that she’d contributed $40 to La Casa Azul bookstore even though she lives in Brooklyn and doesn’t know the owner—but she wouldn’t spend her savings on a small business unless she expected the money to earn a decent interest rate of 5 or 10 percent.

“If we really want to shift money from big, bad Wall Street companies to ones that we care about, people will need a return on investment,” said Ms. Cortese. “You can’t retire on a film credit or a t-shirt.”

kvelsey@observer.com

Needless to say, Kidult is pissed.

He recently fired off a few unhappy Tweets to let the world and his followers know how he feels about Marc Jacobs' appropriation of his art:

Anyone in SoHo this weekend who happened to stroll by the Mercer Street boutique would've spotted this in the window:

The Observer contacted a press representative for Marc Jacobs to ask: Does Mr. Jacobs himself know about all of this? Was he involved in any of the direct decision-making? Have they sold any of the shirts? And finally, who the hell is running their Twitter feed, and have they been promoted over the last two weeks? The fashion label has yet to return a request for comment.

fkamer@observer.com | @weareyourfek

One of the masterminds of the show was described in the publicity materials as "already notorious for having executed his dog on video tape." This was Tom Otterness. In 1977, a few years after moving to New York from Wichita, Mr. Otterness shot and killed his dog on camera for a video called "Shot Dog Film." The piece was too much even for many of his anarchic contemporaries. When The Observer visited the artist's Gowanus studio, he anticipated our question.

"Oh, let me guess," he said. "Go ahead. Ask."

Why did he kill his dog for the sake of video art?

"What the fuck do I do with this?" he said. He grew visibly upset. "Certainly the scene it was part of-it was in the context of the times and the scene I was in." He began again. "It is something I've grown to understand that nothing really excuses that kind of action. I had a very convoluted logic as to what effect I meant to have with that video. Whatever I had in mind, it was really inexcusable to take a life in service of that."

A foot-tall bronze statue of a dog, done in Mr. Otterness' comic, through-a-glass-darkly style, sat on a desk facing its creator, not quite smiling.

You've probably seen Mr. Otterness' work even if you have no idea who he is. His cartoonlike bronze sculptures are all over the world—in New York at the 14th Street A-train station and in Rockefeller Park in Battery Park City. His newer work, some of which will be shown at a solo exhibit at Marlborough Gallery, on 57th Street, at the end of the month, has only become gaudier since the No Wave days. His bio for "The Times Square Show" still sums up his style: "toy-like but horrifying." At the massage parlor in 1980, he exhibited a suit made of solid lead and sold plaster figurines, like miniature versions of what's now in the subway station, for $4.99. Though he now builds large-scale bronze sculptures on commission for display in parks, libraries and the backyards of the fabulously wealthy, Mr. Otterness has remained at heart a street artist, perhaps at the cost of his legacy.

"To me, it's the idea of, who do you work for?" he told The Observer. "Do you work for rich people at the top, or do you work for a popular audience? Clearly there are risks from a fine-art view of taking this approach. I put my money down. I made my bet on this. What it really means is the work loses prestige in the art world because of its popularity. That's the dilemma."

There were severed limbs made of plaster, bronze and stone scattered across the studio. On a dusty table in a cluttered back room sat a large arm with exaggerated features that looked like it belonged to a colossal Mickey Mouse. A 4-foot-high set of feet rested on a pedestal, cut off just above the ankles. A perfect sphere of a head, about 3 feet in diameter and connected to the top of a 14-foot ladder-cum-neck, looked down on the room with a menacing smile.

Mr. Otterness was carving the face into a clay statue of a frowning cartoon lion when The Observer arrived. His black shirt and blue jeans were covered in dust, and his long, white hair was pulled back into a ponytail. Behind a large worktable stood a plaster mold of Mr. Otterness' unfinished sculpture The Consumer, a fat man with a long ramp going into his mouth. On the ramp are the cast members of late capitalism: factory workers, infrastructure, trucks carrying shipments of goods and services. These are to be digested and fall as pennies from the sculpture's rear end.

Next was a model for a piece about the economic collapse, a spiral containing a fantasy about 18 different stages in the evolution (and disintegration) of the capitalist system—home buyers, lenders, then investment banks, then a stage labeled "America cracks up," and the last, "everyone goes to heaven."

Where will this be exhibited?

"Oh, this is just for somebody's backyard," Mr. Otterness said. "A private collector wanted to explain to his daughters the financial meltdown and how we arrived at the place we're in now. I'm telling you, it's incredible. You wouldn't believe the kind of backyards you see in this business."

There was a time when Mr. Otterness' name was spoken in the same breath with his more famous contemporaries in CoLab. He was at the meeting when Ms. Smith and Ms. Holzer were voted in. He exhibited a series of 45-foot-long tables in MoMA's sculpture garden in 1987. Now his work is thoroughly confined to the public realm and private commissions. His solo show at the end of the month is his first appearance in a gallery in three years.

"Context means so much," said Andrew Witkins, the director of Barbara Krakow Gallery, which represents Ms. Smith and Ms. Holzer. "The work can stay the same, but if the context changes, it's no longer about the 'masterpiece.' It's just people doing interesting things and wanting to have conversations. Tom's work is figurative and in some sense it's accessible, and for that reason I think he's frequently misunderstood."

Mr. Otterness started out misunderstood. The CoLab artists were outsiders initially. The collective was conceived as a "grant-getting machine to recover what rightly belonged to artists," according to a membership newsletter, The CoLab Daily Purge, from May 1982. "Personal animus against Marcia Tucker and Alanna Heiss was also involved." 

"Ah, so they wanted to combat me?" Ms. Heiss, the founder of P.S.1 and the director of Clocktower Gallery, in Tribeca, told The Observer. "It's my memory that in between studios we were able to house CoLab here at Clocktower as a temporary gathering spot," Ms. Heiss, already successful in galleries and museums at the time of CoLab's conception (and so, the enemy), said in her defense. "My thought about CoLab is that it provided a venue for the expression of people that were trying to be youthful, optimistic, utopian. These are platitudes, but they are real and necessary. We wouldn't have much of a city if we never had these things going on."

While many of the CoLab members have remained involved in public art, most made their names in the gallery system. Mr. Otterness has never quite found such acceptance.

"Everything still comes out of public projects for me," he said. "At the time when we came up, in '77, we had a whole population of artists that were unemployed. A lot of stuff was happening on the subways and on the streets. That's where the action was for us. The gallery shows, in my mind, merely subsidize the public work."

The man who shot his dog for art currently makes an average of seven figures for large private commissions in someone's backyard. "Of course, there are some contradictions," he said. "Talking about populism and having this studio? Working in bronze at that scale? I mean the inherent contradictions of where I came from and where I am. To be a critic of capitalism but to have these benefits? That's kind of strange. But I made this gamble knowingly. It's a conscious risk or sacrifice—either way."

As for CoLab, the group fell apart in the mid-'80s when members started to get picked up by galleries. The building in Times Square that the collective occupied for the month of June in 1980 is now a Red Lobster.

mmiller@observer.com

But it turns out that cities and companies differ in a very fundamental regard: cities almost never die, while companies are extremely ephemeral. As West notes, Hurricane Katrina couldn't wipe out New Orleans, and a nuclear bomb did not erase Hiroshima from the map. In contrast, where are Pan Am and Enron today? The modern corporation has an average life span of 40 to 50 years.

This raises the obvious question: Why are corporations so fleeting? After buying data on more than 23,000 publicly traded companies, Bettencourt and West discovered that corporate productivity, unlike urban productivity, was entirely sublinear. As the number of employees grows, the amount of profit per employee shrinks. West gets giddy when he shows me the linear regression charts. "Look at this bloody plot," he says. "It's ridiculous how well the points line up." The graph reflects the bleak reality of corporate growth, in which efficiencies of scale are almost always outweighed by the burdens of bureaucracy. "When a company starts out, it's all about the new idea," West says. "And then, if the company gets lucky, the idea takes off. Everybody is happy and rich. But then management starts worrying about the bottom line, and so all these people are hired to keep track of the paper clips. This is the beginning of the end."

Under this framework, at what stage is Netflix, shares of which have tripled in 2010?

Check out the Biggest Wall Street Stars of 2010.>>

(via Tim O'Reilly Twitter)

mtaylor [at] observer.com | @mbrookstaylor

Bloomberg reports that Munger, speaking at the University of Michigan last week, said that people who're suffering in the current economic climate should "suck it in and cope." After praising bank bailouts, he breaks out this little gem: "Now, if you talk about bailouts for everybody else, there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies."

Saying that the economy would have been much worse without the bailout, and so "I think when you have troubles like that you shouldn't be bitching about a little bailout."

Then he said that Germany in the 1920s didn't manage its de-stabilized economy effectively, and what happened next? "We ended up with Adolf Hitler."

“The number of jobs in America’s emerging clean energy economy grew nearly two and a half times faster than overall jobs between 1998 and 2007… Pew found that jobs in the clean energy economy grew at a national rate of 9.1 percent, while traditional jobs grew by only 3.7 percent between 1998 and 2007.  There was a similar pattern at the state level, where job growth in the clean energy economy outperformed overall job growth in 38 states and the District of Columbia during the same period....This promising sector is poised to expand significantly, driven by increasing consumer demand, venture capital infusions, and federal and state policy reforms.”

The Pew study carefully defines green jobs to include employment in: “(1) Clean Energy, (2) Energy Efficiency, (3) Environmentally Friendly Production, (4) Conservation and Pollution Mitigation, and (5) Training and Support.”  This is an important and methodologically sound study and Pew is to be congratulated for a thorough and creative piece of policy analysis.  (O.K., the professor in me is enough of a wonk to get a little thrilled by the quality of this work… what can I say?).

I am seeing increasing signs of the mainstreaming of green business and its move out of public relations and green washing into the world of hard-headed, realistic business practice. As performance measurement systems have become ubiquitous within organizations, management has focused on reporting cycles that include quarterly, monthly, weekly and even daily reports. This focus on the present creates an organizational culture and environment that makes it very difficult for the issue of long term sustainability to be taken seriously. However, we are starting to see the notion of sustainability added to the definition of effective management. Organizations seek to maintain themselves. An organization that fails to take into account the long term sustainability of the planet may survive while everything around them dies, but the odds are against them. My view is that healthy organizations depend, more than they think, on a healthy planet.  Organizations have trouble absorbing those long term considerations, but many of the best managed companies are starting to learn how to act sustainably.

It comes down to the issue of waste and the relationship of efficiency to good management.  Why wouldn’t an organization strive to maximize the productive benefit of all of the resources that they have access to?  One way that successful organizations thrive is by keeping the costs of production and service delivery as low as possible without sacrificing quality. If there is a technology that can allow you to use less energy, water or other materials in production, all things being equal, why wouldn’t you use it? The issue is often one of competing capital investments. The funds for reducing waste are the same funds needed to actually produce the product or service you are selling. Shouldn’t the rate of return for sustainability investments be analyzed the same way you would analyze other investments?  The mania for short term financial gain is both the enemy of sustainability and also, as we learned in the recent economic crash, the enemy of a sound economy as well.  This was clearly articulated by Mindy S. Lubber, the President of Ceres, a U.S. coalition of investors and environmental leaders in mid September, 2008:

“The fiscal crisis on Wall Street is a painful lesson in how entire industries can delude themselves into ignoring the most fundamental issues -- in this case, the hidden risks from easy sub-prime mortgages. It also reveals the vast pitfalls of an economic system obsessed with short-term gains and growth at all costs while ignoring essentials such as building long-term shareholder value and protecting the future of the planet. As we confront global climate change -- perhaps the biggest challenge mankind has ever faced -- business and government leaders have an opportunity to learn from the ongoing Wall Street debacle and get it right.”

I often hear arguments about the relative role of government and the private sector in building a green economy. This is more of the same old tired debate about socialism vs. capitalism. At the risk of stating the obvious, let me reiterate: The war between the commies and the capitalists is over…. And the winner is…. both. We need government to encourage "green" practices with regulation and incentives, and; we need the private sector to actually do the work of building the green economy.  The Pew study indicates that over the past decade the green economy has grown faster than the rest of the economy. The Obama recovery strategy is built on the idea of using government funds to accelerate that growth. It makes sense to me.