Cory Sandrock, who teaches the Business of the Creative Sector, knows a lot about both finance and the arts.
He is a Theatre graduate from Northwestern’s School of Communication and holds an MBA from The University of Chicago Booth School of Business. He has extensive experience in capital markets, strategic planning, financial analyses, commercial real estate, and investment management, with a career that has moved from theatre and film production to investment banking and private equity. Sandrock currently serves as the Managing Director of Pareto & Company, a private investment company targeting the real estate, dental, and finance industries. He has also written and directed numerous theatre productions.
Below are his answers to our faculty spotlight questions.
What are some common misconceptions about how finances work in the creative sector?
The biggest misconception is the belief by artists that finances are somehow different in the creative sector than in the rest of the world. Although the products that a photographer and a manufacturing company create are very different, their accounting practices should be very similar – math and general financial practices are the same regardless of industry. As artists, embracing this concept and using good numbers to speak the language of business will help us access a wider pool of investors and donors because our work will be taken seriously on both a financial and creative level.
Why is it important for aspiring creatives to understand the economic side of the industry?
Instead of wishing that decisions were not being made based on how much money a choice might generate, understanding the economics driving a project can help creatives brainstorm ways to problem solve that maintain its profit as well as its artistic integrity. When I first learned about the laws of supply and demand, for example, I could finally show empirical reasons for why I was never paid to make theatre in New York – understanding what was driving down the cost of labor gave me the tools to think about how I could create unique value and thus demand a better price for my services.
How has the financial side of the creative industry changed throughout your career?
I think the biggest change has been the growing awareness that creatives are also serial entrepreneurs and that we therefore must all at least have some general knowledge about how finances work. Seeing some artistic ventures land large investments or watching creative companies be acquired for high valuations has proven that any artist can create a new venture and raise investment capital beyond traditional donations – we just need to frame our work in financial terms and articulate its value clearly.
What is an example of a creative company being really smart about its approach to economics?
I recently met the founder of a unique company that provides creative strategy and application design services for clients and can also make direct equity investments in those clients. This in itself is smart because it gives the company a chance to work with growing clients that may have less cash now but big potential, and the company can thus participate in that future growth. This company also has a smart way of paying its developers and designers – instead of just paying these creatives for the specific client project they work on, the company pays its designers and developers a portion of their compensation based on their specific project along with another portion from a sort of “endowment” pool containing equity investments it has made in the clients. This approach means all of the developers and designers benefit if any of the projects become really successful instead of just getting a bonus tied to the individual success or failure of a specific project.
What has been the most surprising lesson you’ve learned about economics in the arts?
I think the lesson that surprised me the most was that I could actually enjoy economics! When I was an undergraduate theatre major at Northwestern, the last thing I ever wanted to take was an economics or finance class – and now I teach both! I guess it just proves that economics and the arts can peacefully coexist, even in the same person, and that each can actually make the other stronger.
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