Entrepreneurs, Bubbles, “I Know what I’m Doing,” Frugal Dad

“The time is out of joint”: so says Hamlet, lamenting, "O cursèd spite,/That ever I was born to set it right!" (1.5). Luckily, unlike Hamlet, I don’t have the responsibility to set anything right, outside of my own very limited sphere of influence.

But, in honor of our out-of-joint time, I present a disjointed series of thoughts economic, entrepreneurial, and other, ending, as Hamlet begins, with the ghost of a father.

Shabby Chic: while noodling around the blogosphere, I came across a notice of a fabulous sale at Shabby Chic, the super expensive furniture and accessories store. Why the sale? Because the business is in chapter 11. Founder Rachel Ashwell’s blog entry on the financial troubles of her company is heartrending, truly poignant: she refers to herself as a “flea market girl” with a dream caught up in a complex business in difficult times. I read some of her books (library copies!) back in the day: I was impressed by the coherence of her vision. Then I read some comments on the blog Apartment Therapy. There were a few acerbic ones, noting that for a flea market aesthetic, her stuff was awfully expensive (true dat!). Also noted was the fact that her business, born in affluent Santa Monica 20 years ago, perhaps rode the housing market, expanded out of control, and then burst, like the rest of the bubble.

My Dinner with Andre: Andre is someone I knew slightly. Our chat dates to the late 1990s, as will be obvious. Andre’s husband was the scion of a New Orleans family known for a chain of furniture stores, then recently defunct. I’m not sure if he had a job or lived on the proceeds of the business. Andre said, “I know I should get a job, but I make more money playing the stock market than in any job.” I, envious, since the mutual funds in my retirement accounts never achieved spectacular returns, said, “Ooh, could you tell me what you do?”

She said, “I just know what I’m doing.”

Bubble, anyone?

The House Down the Street: A nice but shabby house down the street sold a few years ago to serial flippers. They fixed it up and decorated it in shabby chic style, as it happens. My son worked on the house for a while, in the company of two high school friends who had been hired by the flippers. One of the boys explained that the couple bought houses and sold them for huge profits, which they used to live on and to buy the next house.

He said, “They really know what they’re doing.”

The house was put up for sale at a huge price, now reduced by a third. Need I say it remains unsold?



EBay: My experience with EBay is strictly anecdotal. About seven years ago, I had a pair of Birkenstocks that hurt my feet. A student said, “I’ll sell them for you on Ebay!” At that time, listing was difficult, you had to have a digital camera, you had to find a hosting site for your pictures, and you had to take checks. So, selling was very challenging. The shoes sold for $70.00! I spite of the difficulties, I sold a few other items, and was always amazed that my several year old clothes generally sold for what I had paid for them. Cool. I really felt that I knew what I was doing.

Now the selling is easy: EBay hosts pictures, everyone owns a digital camera, EBay owns Paypal, etc, etc. A few years later, I found at a thrift store the same Birkenstocks I had previously sold—same style, size, everything. With visions of $70.00 dancing in my head, I put them up for auction. I got $7.00. The buyer left me a positive rating and said, “Thanks for the great deal.”

Interestingly, my anecdote is quite in line with the business fortunes of EBay and its sellers as recounted in the financial news. Sellers are angered by the huge fees EBay levies and by the low prices that most items command. From my perspective, I’d say the problem is that listing is easy now, hence an oversupply of goods. For buyers, why bother paying a lot, since hundreds of identical items will be listed later. Did the sellers know what they were doing? A bubble, once more.

My frugal Dad: It’s fitting that I began with Hamlet, which is concerned with that “common theme" of "nature,” the death of one’s father(1.2). My frugal Dad died suddenly in November. Perhaps one reason that I have always been skeptical of people who say they “know what they’re doing,” is because he was always skeptical. He was a very intelligent man, one of whose greatest points of pride is that he attended the famous magnet school in New York, Peter Stuyvesant. But he was always very modest about his own intelligence, always pointing admiringly to the intelligence of others. This is, as most of us know, an unusual attribute.

My father was an entrepreneur for a while. First he owned a business with a partner. Later, after working for a company in Philadelphia for a year, he started his own business (market research) in around 1965. He had an office in New York. The employees consisted of my father and a secretary, plus, after a bit, my mother. Occasionally he had temporary workers. He paid very well, and I and many of my high school friends reaped the benefits of a $4.50 hourly wage.

After about 12 years, my father decided to close his business. He had had some very bad years. A few of the people who had passed work on to him had opened competing businesses. There was a recession. I asked why they were closing, and my mother said, “We don’t want to lose our savings.” What savings?

Little did I know that they had had a few very good years. The reason I didn’t know that was because our visible standard of living did not change. They saved.

I’ve been thinking about this because of all the stories about people in their 20s and 30s who have gone from making high salaries to hard times. Many of these sad stories feature mortgage brokers and people otherwise in the real estate or banking business. (“I worked hard! I knew what I was doing!”) This does not even include the upscale tales of the now-unemployed MBAs who worked in investment banking, and, supposedly knew what they were doing. (Which is why there is a shriek of pain at Obama’s proposed pay caps for executives: “But we’re worth it. We know what we’re doing!”)

My father, I now see, had the gift of modesty; he never thought he knew what he was doing. He saved during the good times. Thanks for the fine example.