MEMORIES OF STEVE

Steve: Always Value Conscious

One frigid winter day in the late 1970s, I ran into Steve at some meeting in midtown Manhattan, a time and event now long forgotten. What isn’t forgotten is that when the meeting ended and we went outside into the freezing weather, I was reasonably comfortable in my wool overcoat, but Steve was freezing.  No overcoat, not even a jacket.

I suggested that he buy a coat. He agreed. So off we went to Paul Stuart, my favorite men’s store, just a few blocks away on Madison Avenue. After quickly trying on a few, he picked one. He then asked the salesman the price.

Oops.

“That much for an overcoat? Too much. Besides, I’ll never use it in California.”

We left the store. I in my overcoat, warm. Steve coatless, freezing.

At my 1980 retirement from Morgan Stanley party, Palo Alto

Investor…Mentor…Estranged

Mike Markkula was an Intel product marketing manager when I first met him around 1970. An early Intel employee with sizable stock options and lots of other interests, he retired wealthy in the early 1970s. 

Mike discovered Steve Jobs at a 1975 meeting of the Homebrew Computer Club. When the two Steves – Jobs and Wozniak – formed Apple Computer in 1976, Mike financed them with a $91,000 equity investment. For this, he ended up with one-third the company. It turned out to be a profitable investment.

In late 1977, I recall well two introductions, one product and one personal. Apple introduced the Apple II personal computer, and Mike introduced me to Steve Jobs. 

Mike and Steve were close, very close, for 10 years. But the friendship collapsed after the well-known 1985 schism at Apple when Steve was fired from the company he co-founded.  Since then, as far as I know, the two had no contact.

Very sad.

The Odd Couple

In the spring of 1980, toward the end of my five-year association with Morgan Stanley as a technology analyst, I initiated a meeting that remains indelible in my memory. I introduced Morgan Stanley to Apple Computer. Or rather, I introduced Bob Baldwin to Steve Jobs.

For those of you unfamiliar with Robert H.B. Baldwin, let me tell you a little about him. A summa graduate of Princeton, three-sport varsity athlete, Undersecretary of the Navy, member of Augusta National, banker to the Fortune 500, and Chairman of Morgan Stanley – and not to mention, the owner of two middle initials. The epitome of the white-shoe Wall Streeter. In other words, the un-Steve Jobs.

The occasion for their meeting was a computer show being held at the New York Hilton Hotel, just three blocks north of Morgan Stanley headquarters on Avenue of the Americas. Apple was exhibiting its modest product line, the Apple II and Apple III, and Steve was manning the booth.

Morgan Stanley at the time acted as investment banker only for the crème de la crème of American and international business: AT&T, General Motors, DuPont, General Electric, IBM, Merck, Standard Oil, et al. No pipsqueak start-ups for them.

But the winds of economic change were being recognized even in the hallowed halls of Morgan Stanley. There were some in the firm who perceived that the second industrial revolution – information technology – might soon create some major new industries, new companies, and new investment banking opportunities.

After what must have been a lively partners meeting in early 1980, the firm decided to compete for underwriting the forthcoming Apple IPO. And who better to sell the merits of Morgan Stanley than Bob Baldwin? Well, as it turned out, maybe others would have been better. Nonetheless, Bob is the partner I took to meet Steve Jobs.

My role? For the three preceding years, I had been the self-anointed evangelist of personal computers in general and Apple in particular on Wall Street and at Morgan Stanley. I used to take my Apple II on visits to clients, trying to demonstrate that this playful-looking product had a potential far greater than its then perception as a toy for hobbyists and gamesters.

Besides proselytizing the financial community, I also spent a lot of time singing the PC’s praises to influencers and journalists. As Mike Moritz (now of Sequoia Capital) wrote in his book, “The Little Kingdom”:

“The reporters who trooped through Rosen’s New York office found that he was using an Apple. So Rosen became, in some ways, Apple’s most influential sponsor,,, one of Apple’s best salesman.”

But Morgan Stanley was a particularly tough sell. Before they would approve purchase of an Apple II for me (so I wouldn’t have to cart the one Apple gave me between home and office), I had to prove to the IT department that a PC could do something that their mainframes couldn’t do.

So I did. And it took just one demo. In a meeting before the IT staff, I opened a beta version of VisiCalc, the world’s first practical spreadsheet. It was a new application just created by Dan Bricklin and Bob Frankston that was available only on PCs (and initially, only on Apples). I populated the rows and columns with a financial model (something that bankers could understand), changed the value of one cell, then hit the recalc key. The value of every cell in the worksheet was instantly recalculated. “Wow” resounded throughout the room. They had never seen anything like this before. Their resistance melted, their approval was given, and a Morgan Stanley check was cut to purchase one Apple II for me.

So I was the “Apple guy” at Morgan Stanley, the one who had known Steve Jobs for the last three years. Moritz writes:

“[At Apple] Rosen was given the sort of customer service reserved for sheikhs and princes. When he didn’t understand some feature of the Apple…he called Jobs or Markkula at home.”

Thus, I became the designated go-between.

Baldwin and I walked to the Hilton, ascended the escalator to the ballroom floor, where trade shows were domiciled, and headed directly to the modest Apple booth.

“Steve, meet Bob Baldwin. Bob, Steve.”

For the next 20 minutes, the following weird situation took place: Steve engaged in a monolog about how insanely great the Apple PCs were, and simultaneously Bob delivered his own monolog of why Morgan Stanley was the nonpareil banker of the financial world.  Neither seemed to listen to, nor care about, what the other was saying. Steve had no clue about investment banking, and Bob’s total knowledge of computers was that Morgan Stanley had some. Yet strange as this dialog between monologists was, somehow Morgan Stanley ended up as the lead underwriter. Apple went public in December, 1980, and the rest, as they say, is history.

Incidentally, intoxicated by the success of the Apple offering, Morgan Stanley modified its historical big-company strategy and went on to become one of the leading technology bankers, a leadership position that continues to this day.

Circa 1982

A Mac By Any Other Name

A couple of years before the January 1984 introduction of the Mac, Steve convened an offsite meeting of the Macintosh Division in Monterey.  I had been invited by Steve to attend and make a presentation to the group. Here’s how Mike Moritz captured some of that session in “The Little Kingdom”:

After dinner, someone who looked like a demure orthodontist, with thinning silver hair and owl-eyed spectacles, performed what, in computer circles, amounted to a cabaret act.  The figure wearing a Mac T-shirt over a long-sleeved dress shirt was Ben Rosen.  He had turned a reputation gained as a Wall Street electronics analyst, the industrious publisher of an informative, sprightly newsletter, and host of annual personal-computer conferences into a career as a venture capitalist.  Before he started investing in computer companies his comments had been sought as much as his ear. 

For the Mac group Rosen worked from a casual script of observations, wisecracks, tips, and industry gossip…He talked about low-priced home computers… Some of the frivolous rustle disappeared when Rosen started to talk about IBM whose personal computer had been providing severe competition for Apple.  He admitted to being impressed by a recent visit to IBM’s Personal Computer Division in Boca Raton and described what he thought were its plans for three new personal computers.  Then he looked around the room and said…”Mac is your most offensive and defensive weapon.  I haven’t seen anything that compares to it.”

He quizzically mentioned another industry rumor: “One of the things going around Wall Street is an IBM-Apple merger.”

“IBM already said they weren’t for sale,” Randy Wigginton, a young blond programmer, shot back.

“We have a crisis looming,” Jobs told Rosen, from the back of the room.  “We’ve got to decide what to call Mac.  We could call it Mac, Apple IV, Rosen I.  How’s Mac strike you?”

“Throw thirty million dollars of advertising at it,” Rosen said, “and it will sound great.”

Mac it was named. But, oh, what might have been…

The Industry Change That Didn’t Happen

In 1999, Compaq was going through a management crisis. The board appointed me Acting CEO in April. Midway through  my four-month tenure I received a call from Steve requesting that we get together to discuss an “important matter.”

Curious, I flew to the Bay Area, and met Steve at an Indian restaurant in Menlo Park. It was a haunt of his; he could always get great vegetarian meals there.

After we finished with the amenities and reminiscences, we got to the purpose of the meeting. Steve wanted Compaq to offer the Apple operating system on its PC line, adding to the Microsoft OS that had always been our sole OS. At the time, Compaq was the world’s largest manufacturer of PCs. Our adopting the Apple OS would be seen as a feather in Apple’s cap (and a pretty visible slap at Microsoft).

The catching up with Steve was fun, the food was great, but the OS idea never gained traction. Upon further analysis, it didn’t make sense for either Compaq or Apple. Compaq wasn’t about to declare war on Microsoft, our partner from our birth in 1982, and Steve had second thoughts about licensing their crown jewels.

By the way, Nora Ephron had a funny piece about Apple in The New York Times on Oct. 15 in which she expressed the wish that she “had thought of that thing where you connect the ‘i’ to the next word.” It turns out that Compaq Computer, not Apple, had thought of it first. In the year 2000, Compaq introduced the iPaq, a year before Apple’s iPod introduction. (Guess which product has been more successful.)
[Subsequent correction: As several of you have pointed out in your comments, the IMac (1998) and iBook (1999) preceded the iPaq. Mea culpa.]

Unknown meeting circa 1981

Wide-ranging Convictions

The Western Electronic Manufacturers Association used to hold annual industry conferences in Monterey. Steve keynoted one of the conferences in the early 1980s. But rather than tout the greatness of Apple, or the potential of personal computers, or anything material or mundane , Steve spoke passionately for 40 minutes on one subject -- the dangers of nuclear warfare. That was it.

The audience, needless to say, was dumbfounded. Steve spoke, took no questions, and sat down.

Steve, it turns out, had a lot of passions.

Easy Come, Easy Go

In 1979, the year before Apple went public, Mike Markkula called to offer me the opportunity to buy $1 million worth of Apple stock. I thought about it, considered it, and ultimately declined. Why? I felt it would compromise me. Even though Apple was a private company then, I was writing about it regularly in my capacity as a securities analyst. I knew it would soon become a public company. As such, I felt that meaningful stock ownership would affect my judgment on the stock.

In retrospect, I was somewhat over-cautious. Indeed, judging by the ethical standards of Wall Street of the last decade, I must look like some kind of nut.

So what did I forgo?  Apple stock is up about 150 times from its IPO price, adjusted for splits, and maybe 500 times from the price I was offered.

But, in the words of Edith Piaf, Je ne regrette rien.

My Last Contact With Steve

The year is 2007. Steve Jobs is now on the top of the world. He had created or transformed at least five fields -- computers, music, animated film-making, telephony, and industrial design. In June 2007, I decided to email him after having had no contact for eight years. I just wanted him to know that I had happily returned to the Apple fold after two decades in the desert. I didn’t expect a reply.

A few weeks later, to my surprise, I did receive a response. I was touched to hear from him, and touched by what he wrote.

                     From: Benjamin M. Rosen

                      Subject:  30 years later -- from Ben Rosen

                      Date:   June 4, 2007 9:06:02 AM EDT

To:   Steve Jobs

Hi Steve,

When you created and then showed me the Apple II in late 1977, little did I know how much it would change my life -- to a much more exciting one.

Well, after a 20-plus year interlude with that other OS (necessitated by my Compaq involvement), I thought you'd be pleased to know that for the last few years I've returned to my roots.  I'm once again an avid Apple user and evangelist.

Imagine, Ben Rosen, former Compaq Chairman, now a Mac enthusiast!

Warm regards,

Ben

                     From: Steve Jobs

                      Subject: Re: 30 years later -- from Ben Rosen

                      Date:    August 1, 2007 7:58:57 PM EDT

To:   Benjamin M. Rosen 

Ben,

Sorry for my delayed reply - I was on a much needed family vacation for the past three weeks.

Wow - this news makes my day!  I'm glad to hear it.  I hope you like what we've done with the Mac.  I'm biased, of course, but I think its light years ahead of Windows.

How are you doing?  We haven't seen each other in years, but I remember the times we spent together very fondly.

All the best,

Steve

It gives me a great deal of pleasure to think that on August 1, 2007, I made Steve Jobs’ day.

RORY STEWART ON AFGHANISTAN

We invaded Afghanistan ten years ago.  We’re still there. Why?

Why do we pump in $130 billion per year into a government that has a $1 billion budget?

What are we doing wrong?

Why do we mismatch our priorities with our resources?

Why are we so perpetually optimistic?

What should we be doing?

There is no one better to answer these questions than Rory Stewart. I first wrote about Stewart in January 2010. A remarkable person with an equally remarkable background (British military, foreign service, best-selling author, deputy governor in Iraq, manager of a Kabul foundation, Harvard professor – and all in his 20s and 30s), Stewart was elected to Parliament in the Tory victory last year.

Having walked through, lived and worked in, and written extensively about
Afghanistan, he recently spoke at a TED Conference. You’ll be hard pressed to find a better assessment of the Afghanistan situation. And it’ll make you (even more) depressed at the folly of the political and military leadership that has persevered against all reason in its ill-reasoned Afghanistan policy. He's the talk, brilliantly conceived and beautifully delivered:

In one biting excerpt from his talk, Stewart devastatingly notes that every general and many politicians have come in saying, “I’ve inherited a dismal situation but finally I have the right resources and strategy that will deliver.”

Gen. Barno, 2004:  “Without question, this is a decisive year in Afghanistan.”

Gen.  Abuzaid, 2005:  “I think this can be a decisive year.”

Gen. Richards, 2006: “This will be the crunch year for the Taliban.”

Espen Eide (Dep. Foreign Minister), 2007: “This is a decisive year for the future of Afghanistan.”

Maj. Gen. Champoux, 2008  “I think next year will be the decisive year.”

Gen. McChrystal “We are knee-deep in the decisive year.”

David Milibrand (UK Foreign Minister), 2010: This will be a decisive year.”

Guido Westerwelle (German Minister for Foreign Affairs) “2011 will be a decisive year.”

BY THE WAY, MEET VERA STARK

By the way, you ought to meet Vera Stark. You can, in the highly entertaining new play at Second Stage Theatre, “By the Way, Meet Vera Stark.” Now in previews, “Vera Stark” is directed by Jo Bonney and written by the accomplished Lynn Nottage, a MacArthur Fellow and Pulitzer Prize winner for the 2009 play, “Ruined.”

“Vera Stark” involves racism in Hollywood over a 70-year period -- 1933 to 2003.  In the thirties, black actors were relegated to only the most menial roles in movies.  But Vera Stark was not satisfied with her debut role as a maid in “The Belle of New Orleans.” And therein lies the starting point of the play.  Without giving anything away, during the succeeding decades Vera’s roles, and Vera herself, change radically.

Now it’s probably true that you didn’t wake up this morning and say to yourself, “Tonight I’d really like to go see a play about racism.” But you should have, because “Vera Stark” manages to take a serious subject and, through wonderful writing, acting, direction and set design, transform it into a funny and rewarding experience.

The seven actors, playing a dozen roles, are uniformly engaging. And the abrupt change in the tenor of the play from Act I to Act II is as startling as that in “Sunday in the Park with George.” Nottage’s writing is impressive – examples that stick with me are a flirting scene that’s perfectly executed, a hilarious put-down of academic pontificators on talk shows, and a movie-within-the play that could stand on its own.

Vera Stark and her first husband, Larry Barksdale

Not least of the attractions is the intimacy of watching marvelous talents in a 299-seat theater. Should “Vera” eventually move to Broadway, and it well may, let’s hope it doesn’t lose its impact by playing in a much larger house.

After you’ve seen the show, watch the following quasi-serious eight-minute video by Herb Forrester, who’s created a remarkable documentary about Vera Stark. Wait a minute. A documentary? Does this mean Vera Stark is real? Was there actually a 1933 movie entitled “The Belle of New Orleans”?  Or is this a send-up of the show? Or all the above? See the show. Watch the video. Then you decide. Of course you can watch the video now, but it’ll make more sense after you’ve seen the play. By the way, “By the Way, Meet Vera Stark” closes May 29, so hurry.

LIBYA: COLONEL WHAT'S-HIS-NAME

There I was yesterday morning, drinking my coffee and reading the latest about Libya in the New York Times and the Wall Street Journal. Something was bothering me. And then it struck me. The two papers spelled the Libyan leader’s name differently. One started his last name with a “G” (the WSJ), the other with a “Q” (the NYT). Moreover, the Journal inserted an “h” into his name, the Times didn’t.  Gadhafi vs. Qaddafi.

The Times, of course, often has some differentiation, occasionally arcane, in its style manual. For example, in any article about Libya, the leader's first mention is different from later mentions. The first is always Muammar el-Qaddafi. Subsequent ones are Colonel Qaddafi. (With the latter name, you might say the Times got the el out of there).

Do other papers share this spelling inconsistency? I poked around a little, checking the Libyan leader’s spellings in a variety of other U.S. and foreign publications . It turns out there is very little agreement among them. Montreal (Gaddafi) differs from Toronto (Gadhafi). Germany (Gadhafi) differs from France (Kadhafi).

Surely there must be agreement among the Arab-speaking media? But no. Tripoli (Al Qathafi) differs from Al Jazeera (Gaddafi), and both differ from OPEC (El Qaddafi).

Only in Britain is there some spelling consistency, which strikes me as odd. Normally, the British papers aggressively go after each other tooth and nail, and rarely collaborate on anything. Yet here they are apparently having got together and agreed upon a common spelling. The BBC, Guardian, Financial Times, Daily Telegraph, Daily Times, Independent – even Number 10 Downing Street -- are of one spelling (Gaddafi). Only the The Economist goes its own way (Qaddafi). But, then, The Economist often goes its own way.

Now here is either the most amusing or the most discouraging part of this story. Getting our foreign policy consistent among our various government departments and agencies is understandably difficult. Rare is the time that the President and State and the CIA are on the same page on policy. But why should it be so hard for them to agree upon a common spelling of one of the world’s really bad guys? Apparently it is. Otherwise, why would we read about the White House railing against Gaddafi when Sec. Clinton is threatening Qadahfi?  Meanwhile, the CIA World Factbook likes to refer to him as Col. Muammar Abu Minyar al-Qadhafi?

And so far we’ve only been talking about his last name. As to his first name, you have a choice around the world of five spellings: Muammar, Mouammar, Moammar, Moammmer, and Moamer.

My guess is that instead of consulting the OED or Wikipedia or a library information desk (remember library information desks?), the media and governments around the world instead randomly combine the five first-name possibilities above with the eight last-name spellings --  Al Qathafi, Al-Qadhafi, El Qaddafi, Gaddafi, Gadhafi, Kadhafi, Qaddafi, Qadhafi. The result is 40 possible permutations of a first and last name. They then pick one of the 40 out of a hat, and that then becomes the name of the Libyan leader.

No wonder getting our foreign policy right is so tough. Maybe we should start with our spelling, and work up from there.

United States Press

Wall Street Journal – Moammar Gadhafi

New York Times - Muammar el-Qaddafi (first mention in article)

New York Times - Colonel Qaddafi (subsequent mentions)

New Yorker - Colonel Muammar Qaddafi

Washington Post - Moammar Gaddafi

Time - Muammar Gaddafi

Huffington Post - Moammar Gadhafi

Newsweek - Muammar Gaddafi

CNN - Moammar Gadhafi

United States Goverment

The White House - Muammar Gaddafi

State Department – Mr. Qadhafi

CIA World Factbook - Col. Muammar Abu Minyar al-Qadhafi

United Nations

United Nations - Muammar Al-Qadhafi (first mention)

United Nations - Mr. Qadhafi (subsequent mentions)

Canada

Montreal Gazette - Muammar Gaddafi

Toronto Globe and Mail - Moammar Gadhafi

British

BBC - Col Muammar Gaddafi

Guardian - Muammar Gaddafi

Financial Times - Muammar Gaddafi

Telegraph - Muammar Gaddafi

Economist - Muammar Qaddafi

Independent - Muammar Gaddafi

Number 10 Downing St. - Col Gaddafi

Europe

Le Monde - colonel Mouammar Kadhafi

France Soir - Mouammar Kadhafi

Spiegel Online - Moammar Gadhafi

Middle East/Africa

OPEC - Colonel Moammer El Qaddafi.

Al Jazeera - Muammar Gaddafi        

The Tripoli Post - Muammar Al Qathafi

Gulf Times Qatar - Muammar Gaddafi’

Zaman Turkey - Muammar Gaddafi

Mail & Guardian South Africa - Muammar Gaddafi

Australia/Asia

The Australian - Moamer Kadhafi

The Times of India - Moamer Kadhafi

CALTECH vs. VINCE LOMBARDI

Last night, 19,763 sports fans paying hundreds to thousands of dollars for tickets jammed Madison Square Garden to welcome all-star Carmelo Anthony as a new member of the New York Knicks basketball team. The Knicks won.

Also last night, a few hundred students (paying nothing) attended the Caltech-Occidental basketball game at Caltech’s Braun Athletic Center. Caltech won.

A conference win! Caltech 46, Occidental 45

Caltech’s victory came despite the fact that President Obama attended Occidental for a couple of years, and he probably picked them to beat Caltech. But he had no more prescience in this game’s outcome than he did in picking the Bears to win the Super Bowl. Caltech still won.

There are some who think that the Knicks game was more worthy of national attention than was the Caltech game. Indeed, judging by the comparative press coverage (about 1,000 to 1 in the Knicks's favor), attendance (about 100 to 1), and ticket prices (infinite ratio), the Knicks seem to hold the zeitgeist edge.

But judging by historical implications, it’s Caltech all the way. For the first time in the last 26 years, Caltech won a conference basketball game. A record 310-game losing streak – longest ever in the United States by any sports team – was broken. Like so many of its achievements in science and technology, Caltech accomplished something that no one else in history has ever been able to do.

Havoc broke out in Pasadena. Nobel laureates raised toasts to the winning athletes. Students interrupted their problem sets to cheer a sports team. Even The New York Times featured Caltech, not in the Science section, but on the second page of the Sports section. This indeed was a Big Event.

Yet somehow, during these 26 years in athletic purgatory, Caltech still seemed to function. Heads didn’t roll. Presidents kept their jobs. Coaches weren’t fired. Scientific breakthroughs kept being made. Nobel prizes continued to be won. Incoming student SATs remained the highest in the nation. And every year it was ranked a top-10 university. Indeed, midway during The Losing Streak, U.S. News in 1999 awarded tiny Caltech academic hegemony over some other pretty highly regarded and far larger schools:

1.  California Institute of Technology 


2.  Harvard University 


3.  Massachusetts Institute of Technology

4.  Princeton University

5.  Yale University


6.  Stanford University 


7.  Duke University

8.  Johns Hopkins University

9.  University of Pennsylvania 


10. Columbia University

This raises a momentous question: Can it be possible that Vince Lombardi was wrong? Vince Lombardi wrong? Remember, he’s the über-successful coach for whom the Super Bowl trophy is named. He’s the coach who’s currently being memorialized by an eponymous Broadway play. And he’s the coach best remembered for popularizing:

“Winning isn’t everything. It’s the only thing.”

(Despite that saying’s enduring fame, it strikes me as a really dumb credo. But I digress.)

So here's my question: Is winning the only thing? If so, Caltech should have been completely embarrassed over the last 26 years. The school should have buried its collective head in shame. Losers, losers, losers.

But Caltech hasn’t been a loser. To the contrary, some consider it an American treasure. A small school (just over 900 undergrads) with an oversize reputation for academic and research achievement. A school where a surprisingly high percentage of the students engage in intercollegiate athletics, and for fun. Where there are no athletic scholarships. Where the institutional culture subscribes not to the Lombardi-esque philosophy, but rather to that hoary value that some of us were taught as youths, “It’s not whether you win or lose, but how you play the game.”


So team, enjoy your victory. But remember, keep having fun.

Ben Rosen, Caltech, ’54

CLASSICAL MUSIC ECONOMICS: IS THERE A SOLUTION?

American Orchestras: The Sound of Trouble

The Detroit Symphony, which has just emerged from a 34-day musician’s strike, is in such economic straits that it may have to disband.

Time Magazine, June 13, 1969

Detroit Symphony Cancels Season as Musicians Strike

The management of the debt-burdened Detroit Symphony Orchestra canceled the rest of its season on Saturday, after executives and the players failed to resolve a strike that has lasted four and a half months.

The New York Times, Feb. 19, 2011

Time magazine’s piece over forty years ago described the entire classical music industry as being in mortal peril, and not just in Detroit. Indeed, the death of classical music is a perennial topic, yet somehow orchestras have persevered. Should we be any more worried today than we were in 1969?

Is the Detroit Symphony’s dire situation a one-off phenomenon, or is it part of a larger problem affecting classical music organizations throughout the United States? Clearly, there are extenuating circumstances in Detroit. This once-proud centerpiece for American manufacturing has been in a four-decade economic tailspin. One measure of the decline: its population has fallen from 1.5 million in 1960 (No. 5 in the U.S.) to 900,000 now (No. 11).

Unfortunately, Detroit is not alone as far as its orchestra’s turmoil is concerned.  There are myriad other indications that classical music is in deep trouble financially.  Recent press articles have cited financial issues with a host of other orchestras. Most American orchestras are operating at a deficit – and that’s after philanthropic contributions. Indeed, income earned from ticket sales usually accounts for less than half the operating budget of a musical performing arts organization. Even selling out the house doesn’t solve the problem. Those orchestras lucky enough to have endowments have been eating into them to meet operating expenses. And, unlike European arts organizations, which are heavily subsidized, American groups get essentially zero financial support from federal or local governments.

There are at least two exceptions to this bleak outlook. The Los Angeles Philharmonic and the Boston Symphony have the luxury of owning cash cows that enhance the orchestras’ financial situations. In L.A., it’s the very profitable Hollywood Bowl, and in Boston it’s the highly successful Tanglewood summer festival. But outside of those two orchestras, it’s difficult financial sledding for the other majors, and worse for the smaller organizations.

So how will all this play out?

Well, there is one scenario that could be a harbinger.  It’s not a pretty scenario, but it’s one that has allowed a once-proud but financially strapped orchestra to survive.

In the early 1990s, after six decades of performing, the New Orleans Symphony ran out of money, donors and time. It went bankrupt. In its ashes, the Symphony’s musicians got together and created the Louisiana Philharmonic, the nation’s first musician-owned and –operated orchestra. The musicians run the organization, control the board, hire and fire, raise money, and pay themselves. And therein lies the rub. In order to survive as an orchestra, they pay themselves astonishingly little – an average of $23,000 per year. A little over $10 per hour. Pretty frightening, no?

By contrast, the Detroit Symphony members earned a minimum of $104,000 last year. (That’s a number somewhat below the salaries earned by members of the other major orchestras.) They rejected an offer in the low $80,000s.  Here’s the issue management faced, as reported by the Detroit Free Press this weekend: “The DSO has lost $19 million since 2008, remains in default on the terms of its $54 million in real-estate debt and is rapidly depleting its endowment to cover the red ink.”

There’s no easy answer. The musicians want not just a living wage, but one also reflecting their talent, years of training, and status as being among the elite musicians in the country. Management wants a solution that reflects the exigencies of a virtually bankrupt organization. As the Detroit meltdown illustrates, there’s a wide gulf that separates the two positions.

Now I believe that talented classical musicians are absolutely deserving of  earning far more than most of them are getting around the country, but they’ve run into an economic model that just isn’t able to properly compensate them anymore. And it’s not getting any better. Youth isn’t exactly flocking to classical music as tastes are dumbing down. Schools aren’t helping by cutting arts budgets.  Philanthropy is the only solution, and there are signs it’s stretched pretty far. New young philanthropists have to be developed to replace the ageing ones, but it’s not clear that classical music is attracting new wealth. It’s not a pretty picture.

By the way, we attended a concert Saturday night in New Orleans of the Louisiana Philharmonic, and it was terrific. The orchestra sounded wonderful, conductor  Carlos Miguel Prieto was electric, and the house was packed. There were encores, standing ovations, and even an audience member who mamboed spontaneously (this is New Orleans, after all) as the orchestra played a selection of Leonard Bernstein’s dances. There was a world premiere of Terence Blanchard’s Concerto for Roger Dickerson. And a spectacular performance of Philip Glass’s Violin Concerto No. 2 played by Robert McDuffie, for whom Glass wrote the piece.

The LPO model is one solution. They produce a fine product, one that an audience appreciates and relates to. But it’s a draconian solution that requires that the musicians provide the subsidy. Somehow, that doesn’t seem fair.

Solving the economic problem of classical music is not easy. If it were, someone would have figured it out already. Perhaps fresh thinking is required.

Any thoughts?

FINALLY: THE SECOND AMENDMENT EXPLAINED

Reading about the plight of (former) Rep. Chris Lee yesterday, it was hard to ignore the photo that he posted to his would-be doxie. There was the handsome representative from western New York posing with no shirt on and showing off his reasonably well-defined pecs. Seeing a legislator dressed (or undressed) this way reminded me of the true, yet little-known, story behind the writing of the Second Amendment.

Just to get you interested, the Second Amendment does not mean what you think it does. It has nothing to do with guns. Never has a piece of federal law ever been so misunderstood. For over two centuries, everyone in this country has misinterpreted what the Founding Fathers had in mind. Now, for the first time, in an exclusive of Through Rosen-Colored Glasses, here is what they really meant when they gathered on that steamily hot day in Philadelphia to codify the rights of our newly independent citizens.

When I say it was hot, it was really a scorcher of a day. Nonetheless, our dedicated public servants had finished up on the First Amendment in the morning and were then proceeding on in the afternoon to frame the second. They had just begun the discussion when one member of the committee asked the chairman if, given the crushing heat, he could roll up his sleeves of his outer coat. Remember, this was not only pre-air conditioning, but it was a time when men wore decorative, multilayered and brutally warm costumes – wool, satin, frills, cuffs. Other members then asked the same permission, and it was granted. They all rolled up their outer coat sleeves.

But to little avail. They were still schvitzing. (You probably didn’t know Yiddish was spoken then.) They tried to write the rights, but they were just too uncomfortable. So another member asked the chair, “May we also roll up our inner coat sleeves.” Permission granted. And then later: “Our shirt sleeves?” Permission granted.

Sweet relief! They were all so happy with their new comfort, that they immediately got back to work and decided to share their newly gained right with all Americans for all times. And thus, on December 15, 1791, was adopted the Second Amendment to the Constitution of the United States of America:

The right of the people to bare arms shall not be infringed.

(Full disclosure: This idea was blatantly stolen from a New York Times op-ed piece of a couple of decades ago. I’d like to give credit where due, but extensive searches for the original have come up empty.)

A VERY BLACK SWAN

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