Equity (Over/Shares #3)
One of my best friends in the world is composer Alexis C. Lamb. Alexis came to Yale in 2018, during my second year, and we immediately became fast friends. That friendship has gotten us through some crazy times, including the raucous year of 2020-2021 when Alexis and I both had the distinct pleasure of facing a global pandemic and the moral bankruptcy of university bureaucracy at the same time. We were each other’s quarantine pod, each other’s personal references, and I even had the proud honor of doing makeup and cutting hair for Alexis’ socially distanced wedding. (Don’t worry. I watched a YouTube). Suffice it to say that I would be significantly worse for the wear if Alexis Lamb hadn’t been in my life the past four years.
Recently, Alexis and her wonderful wife, Danna, left New Haven for Alexis to pursue a degree in composition at the University of Michigan School of Music, Theatre & Dance. They bought a house in Ypsilanti, Danna got a job teaching elementary/middle school, and Alexis is now basically taking the world by storm with her chamber music. (More on that below). Recently, Danna and Alexis came back to New Haven for a visit. We were talking about music and finance (yes, I’m obsessed) when Alexis mentioned something that has been on my mind for months.
“I can’t believe someone let me buy a house before I understood what ‘equity’ meant.”
Alexis went on to explain that it wasn’t until she came to our talk at Tsai Center for Innovative Thinking at Yale this past spring that she had ever heard anyone talk about equity from a financial perspective. And this is very interesting because, you see, all artists and arts institutions have been talking about for the last couple of years is “equity.” I can’t tell you the number of panels, lectures, and diversity trainings I’ve been to where the theme is “equity.” Artists talk about equity in terms of access—how do we equitably provide the opportunity for more people of color to have access to commissioning opportunities? We talk about it in terms of parity—how do we equitably get women in positions of leadership? And we talk about it in terms of representation—how do we equitably construct a workplace that represents that type of diversity that we want to see in our audiences. We push for equity, we argue about equity, and we commit ourselves to equity.
“I can’t believe someone let me buy a house before I understood what ‘equity’ meant.”
To artists and arts institutions, equity is defined roughly as creating a world that is “fair.” And fairness and justice are wonderful things to strive for.
However, in business and finance, equity isn’t defined as “fairness” at all. In business and finance, equity means ownership.
I’ll explain.
When an entrepreneur starts a business, she owns 100% of that business. She owns 100% of the equity. As she grows that business, she can choose whether or not to give away parts of that business. She can find a co-founder and give them part of the equity before she has money to pay them. She can take on an investor and give him part of the equity so that she can grow her business with the investment, therefore making all “equity-holders” (aka “shareholders”) money. If you were to purchase stocks on the public market, you would be buying equity of a company. If you were to buy into a house, you would hold equity in that asset.
Equity is perhaps the most powerful wealth creating tool that humans have constructed. Billionaires are billionaires not because they are paid tremendous salaries. No, in fact, I have read that from the time Amazon was founded in 2006 to 2021, Jeff Bezos’ salary was a mere $81,000. (I say “mere” somewhat ironically, knowing full well that most of us artists would kill for that type of salary). But it’s not his salary that makes him a wealthy man. No, he’s wealthy because he has equity in his company, Amazon. That equity is worth hundreds of billions of dollars. If he were to sell his shares of Amazon, his equity, to someone else, he could reasonably expect to get that much money for the sale.
If you can start to wrap your head around the financial definition of equity as “ownership,” you will start to see how money flows to those who utilize this definition.
Most of us artists don’t come across this definition of equity, possibly because it is not status quo for us to own anything. Think about it. Many of us live in expensive cultural centers where we pay rent for our apartments rather than owning our homes. If we work for arts institutions, we are compensated through wages and are not given the option to hold equity in the company we work for. (And before you come for me, yes, I know, sometimes we work for a nonprofit that doesn’t have shareholders.) And because money is tight for most of us, we can’t afford to put money away in the most common way of holding equity—investing in retirement funds.
Now, artists do hold a powerful asset that they can translate into equity—their work. But more on that on another day. For now, let me leave you with one final memorable anecdote.
I remember the first time I worked with the incredible Elizabeth Santaus, Midnight Oil Collective's bookkeeper. Elizabeth works at Dressler Santaus Colman and serves on the board of FUSE Theatre of CT, a wonderful nonprofit theater in Connecticut that promotes new works and engages youth in the New Haven area. One of our mentors, Margaret Cartiera, introduced us to her and we have never looked back. Elizabeth cares deeply for the arts. She’s been invaluable to our company and we regularly recommend that our artists work with her.
During our first meeting, she asked us what any good bookkeeper would ask at the top of the meeting.
“What does Midnight Oil Collective do?”
If you’ve ever been a founder, you will understand that that little question can be shockingly difficult to answer. At that point in our journey, we were about a year into our work and were barely sure of our model, much less our ability to cogently describe it to a professional.
I distinctly remember us fumbling for what felt like forever, trying to describe how it was that we supported artists. Finally, my co-founder, said, “We are trying to advocate for artists equity!”
Her face lit up, “We’ve been discussing how to allow for artists to have equity at Fuse!” she said.
It didn’t matter that in that moment, Sola meant “we are trying to advocate for fairness for all artists” and that Elizabeth meant “We have been discussing how to allow artists to have ownership for years.” At the end of the day, we were all there to try and figure out a world that truly supported artists.
But that leads me to my final question: Can we truly create a fair, equitable world for artists if artists don't have access to owning meaningful equity? Equity does exist in the arts, it’s just a bit…complicated. Next week, I am going to dive into arts institutions and discuss the ways in which folks are trying to solve that complication.
For now, however, I am going to leave you with a beautiful string quartet by my bestie, Alexis Lamb. It is about her house, and she sent it to me when I asked her if it was ok if I referenced her in this article. “It’s probably my favorite piece I’ve written actually,” she texted me. Now it is one of my favorite pieces of her’s as well!
This is Part 3 of CEO Frances Pollock’s ongoing series, “OVER/SHARES”: essays examining the intersection of arts and business. It originally appeared on her personal Facebook on September 26, 2022. Read Part 1 here and Part 2 here.
Photo by Patrick Fore on Unsplash
