The Coronavirus Is Showing Us Which Entrepreneurs Matter

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Cox Gazette | By David Sax April 12, 2020, 03:49 AM

One sunny afternoon early in March, I hit the streets of my neighborhood, visiting local businesses. I was hustling up donations for the silent auction fund-raiser at my kids’ elementary school fair. Within the first two blocks, I had already secured half a dozen prizes from business owners.

“We will definitely think of something cool,” said a woman that owned a tattoo parlor. The elderly Portuguese ladies who run the tiny crochet shop lit up when they told me how their grandchildren attended the school. The owner of a Colombian takeout shop offered me 50 empanadas on the spot. A women’s clothing designer handed me a $100 gift certificate, adding to those from the pet store, nail salon, skateboard shop, record store, French restaurant and picture framing place. The owner of a Taiwanese restaurant called Chop Chop promised to come up with a donation that would be so outrageously tempting for parents, it would turn our little silent auction into a full-fledged Christie’s bidding war.

If a business was owned and operated by entrepreneurs, whether they were partners or individuals or families, they almost always offered their immediate support. Those that were owned by bigger corporations or outside investors almost never did. The entrepreneurs helped out because they are members of our community. They live here. They know the residents. They walk by my children’s school every morning.

That world seems lost now. Our school is closed, its playground locked. It is unlikely that the school’s fair and auction will happen. But what worries me most is the fate of the businesses that pledged their support, and the entrepreneurs behind them. Many have already closed by order of the government, which has deemed that all “nonessential” businesses will be shut for the foreseeable future. Those that remain open, like the restaurants or coffee shops offering takeout, are struggling to stay alive. Many won’t make it.

Even with the best intentioned and funded government grants, loans and aid programs targeting entrepreneurs, the pandemic and its countermeasures will force bankruptcy and closings on millions of businesses that cannot survive more than a few weeks without customers.

The sad irony is that this is happening at a moment when, as a culture, we have never been more obsessed with entrepreneurs. We have lionized them as daring dreamers and heroes over the past decade, for driving innovations and inventing the future. This is the bold, sexy entrepreneurship of Silicon Valley, led by the holy trinity of Jobs, Musk, and Zuckerberg; the high stakes gamblers and ruthless investors of “Shark Tank”; and the latest young Ivy League dropout to launch a “disruptive” start-up and land a fawning profile on the cover of business magazines, along with a few hundred million dollars in venture capital funding.

But all the hype around Silicon Valley start-ups has obscured a more troubling reality for entrepreneurs, because out in our communities, most entrepreneurs have been struggling. Over the past 40 years, the number of Americans who are self-employed and starting businesses has fallen by half. Look beyond the incubators of San Francisco and away from the stages at tech expos, and entrepreneurship has not been booming. Quite the opposite.

Many economists and policymakers believe that this is actually a sign of progress. They argue that since most small businesses employ only a handful of people, and that most of them are “lifestyle” businesses, without a desire to innovate boldly or pursue exponential growth, a gradual decrease in their numbers is positive news. The 99 percent of businesses that fall outside of Silicon Valley’s definition of a start-up are effectively pointless, they argue, if not utterly wasteful.

“The best way to boost productivity is to remove obstacles to the replacement of small-scale, labor-intensive, technologically stagnant mom-and-pop firms with dynamic, capital-intensive, technology-based businesses, which tend to be fewer and bigger,” wrote Michael Lind and Robert Atkinson in their book, “Big Is Beautiful: Debunking the Myth of Small Business.” “If government is to help any small firms, it should focus on the start-ups that have the desire and potential to get big, not on nurturing Ashley and Justin’s efforts to open a local pizza shop.”

“The entrepreneurship that matters,” Scott Shane, a professor at the Weatherhead School of Management at Case Western Reserve University, stated in “Is Entrepreneurship Dead?,” “is not the broad swath of employer or non-employer businesses but the high-potential start-ups that are backed by sophisticated investors.” Creating more venture capital and angel-backed companies, and fewer mom-and-pop retail shops, is ultimately positive, as “a few extra Facebooks and Googles are probably worth a lot of clothing shops on Main Street because they produce a lot more jobs and economic output.”

The thing that we tend to forget when we study entrepreneurs only as engines of job creation, profits or other quantifiable markers of economic growth is that every entrepreneur is a person, with hopes, dreams and feelings. Their businesses are intricately tied into the fabric of their communities in a way that numbers simply can’t capture.

In New Orleans, women in the Gentilly neighborhood now face losing a place like Friends, a hair salon that cuts and styles the hair of middle-age, professional African-American women, including the city’s mayor, LaToya Cantrell. Its owner, a soft-spoken woman named Tanya Blunt-Haynes, described Friends not as an investment or a source of income, but as a community center. Her customers will linger for hours, long past when their treatments are finished, catching up on neighborhood news with the staff or other customers, ordering in crawfish platters, or just sitting in a chair, quietly reading a book. Ms. Haynes plays soft jazz, gospel and R&B to create a relaxing mood. If someone doesn’t have the money to pay her that day, or a relative needs help with makeup for a wedding or funeral, Ms. Haynes will do the work for free, no questions asked.

Several years back, when her son Jared was murdered, Ms. Haynes returned to Friends, and was held by every single person who walked in the doors as she cried in their arms. “That’s an amazing thing: the love of women,” she told me two years ago, tearing up at the memory. “It’s not your grandmother, but it feels like Grandma. It’s not your aunt, but it feels like your aunt. It’s not your sister, but it feels like your sister.”

You see this same sense of community emerging in the entrepreneurs’ response to the pandemic. Fashion designers are sewing desperately needed face masks, craft distilleries are churning out hand sanitizer, restaurants are now donating meals to the homeless and isolated senior citizens. Entrepreneurs see where they can help their communities, and they step up.

Take my friend Andrew Badali, who usually teaches preschoolers music and is now offering his singalong classes on Instagram every weekday morning, for free, so that kids can get a dose of joy, and their parents can gain a precious hour of freedom. My friends Mike and Jaime, who own a bike shop in Toronto, are giving free tuneups to doctors, nurses and emergency medical workers so they can safely get to work. In Los Angeles, my friend Alex Grossman is directing, filming and editing commercials in his house (starring his family) for any small business that needs a boost.

In some cases, the most heroic thing an entrepreneur can do is to carry on. At New York’s Rockaway Beach Bakery, owner Tracy Obolsky still shows up each morning, mixing and stretching dough, baking her famous ham, cheese and everything bagel spice croissants (now takeout only), because her people need something to eat and, more important, someone to talk with from a safe distance. “I feel like people’s therapist,” she told me recently. “We are one of the only normal moments left in people’s lives. Even if it is just an egg sandwich.”

But the entrepreneur I think about the most is Joel Tietolman, who owns the Jewish delicatessen Mile End in Brooklyn. Even though Joel is desperately trying to keep his business alive and his staff employed, offering takeout and delivery, he is also spearheading a drive to provide free meals to hospital workers around New York. Joel’s wife, Dr. Sally Bogoch, an E.R. doctor who worked on the front lines at Maimonides Hospital until she was 38 weeks pregnant, told him that the doctors, nurses, paramedics and others who are facing the virus head-on would appreciate some matzo ball soup and a sandwich almost as much as masks and gloves. So far, Joel has donated more than 300 meals to health care workers, and he plans to keep feeding hospital staff as long as he can.

A lot of these entrepreneurs are still going to lose their businesses, and they will have to deal with the financial and emotional trauma of that for years to come.

These are the entrepreneurs who matter now, more than ever. Not the ones on the covers of magazines, not the billionaires and recipients of venture capital checks, whose products we may use, but whose lives are distant and entirely removed from the day-to-day of our communities. If Casper, WeWork or some celebrity’s makeup company doesn’t survive this crisis, the impact on our lives will be negligible. Elon Musk will be fine. But if we lose our barber, the fruit store on the corner or the plumber who saved us in a flood, we will have lost a piece of ourselves.

David Sax is the author of the forthcoming book, “The Soul of an Entrepreneur.”

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