Entrepreneurs Reflect on Wall Street's Scary Week
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From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
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And I'm Michele Norris.
On Wall Street today, stocks lost ground, but things were relatively calm. A stark contrast to the last week of big drops and dramatic recoveries. We spent a lot of time lately talking with economists and analysts who follow the markets closely. But today, we thought we'd review the week from the business trenches. That's where NPR's Adam Davidson found a couple of guys from New Jersey. Entrepreneurs who say it was a pretty scary week.
ADAM DAVIDSON: J.B. Blanchard can tell you where he was on Monday the moment he first heard that stock prices all over Asia and Europe were falling ridiculously fast.
BLANCHARD: I was driving into the city when I heard that. I got back out as quickly as possible.
DAVIDSON: Did you feel a thing in your chest? What were you thinking?
BLANCHARD: Chest, sphincter, all kinds of - kinds of ways that that stuff hits you on a visceral level, absolutely.
DAVIDSON: Is Blanchard some high-powered investor with huge exposure to Asian stocks or Euro bonds? No. He's a small businessman. He owns StoneDeck Northeast. They put in high-end roof decks in New York penthouses. He did Jon Stewart's, Bette Midler's, Tyra Banks'. In fact, his clientele is so exclusive, no one would give him permission to show me any of the decks.
BLANCHARD: The one I wanted to show you does have a hot tub that cascades into a pool that has a skylight coming up from the kitchen. So it's really astounding stuff.
DAVIDSON: In Manhattan?
BLANCHARD: In Manhattan. In Manhattan. People are absolutely trying to escape the feel of Manhattan on their little rooftop.
DAVIDSON: So the question still stands. Why does a New York roof deck installer care so much about stock prices in Asia?
BLANCHARD: There's absolutely no reason on Earth why you would have to have a roof deck outside your house. And my, my initial concern when this market started getting scary was that we would become an excess expenditure.
DAVIDSON: Now, Blanchard's business probably wouldn't exist, except for the fact that money from all over the world has been pouring into New York in recent years - to Wall Street investment bankers and global media stars. A tiny bit of that money was filtering down to the New York roof deck business. Blanchard says he has a sense that he's part of the global economy, but he doesn't understand many of the details. That's not his job. So on Monday, he was thinking...
BLANCHARD: What the heck is going on? Holy smokes. What's going on and why?
DAVIDSON: What was going on is that those investors selling all their stocks in Shanghai and Tokyo and London, the guys Blanchard was worried about, well, they were worried about him - small businesses, entrepreneurs like Blanchard are a big part of what moves the U.S. economy.
Take Blanchard. He had this idea for a business and it worked. Now, he buys roofing materials from Latin America and Europe. He hired four employees. They use their salary to buy TV's and T-shirts from China. It's a global feedback loop. Blanchard depends on those investors for his business. Those investors depend on Blanchard and every other American entrepreneur. And this applies just as much to small business people far away from globally connected New York.
Mike Michalowicz runs Obsidian Launch.
MIKE MICHALOWICZ: I literally got a call Monday night, I think it was 2:00 a.m., saying, oh my God, we're going to collapse.
DAVIDSON: Michalowicz is an investor and adviser to Blanchard and others. Like the guy in Missouri who woke him up late Monday night. The owner of Hedgehog Leatherworks.
MICHALOWICZ: They make sheaths for survivalists. These are guys that live out off the woods for weeks and it's just them and their knife. And they learn how to kind of blend in and work with nature. He makes the sheaths that carry those type of knives.
DAVIDSON: There's enough of those guys to make a living doing that?
MICHALOWICZ: Absolutely, absolutely. It's surprising. It's not just those guys. Then you have people that want to be like them. So you have the hunters and the fishermen and so forth.
DAVIDSON: Those sheaths costs around 180 bucks. A small luxury for the core customer in the Midwest. The past few years, plenty of Midwesterners were feeling flush enough to treat themselves. Home values were going up in part because of cheap mortgages funded by investors in Asia and Europe. Now, global investors are nervous, pulling back. Credit is tightening. Housing prices are falling. A fancy knife sheath may start looking superfluous. Until a week ago, Michalowicz says, some of his clients were still hoping they could avoid this economic downturn they've heard pundits talk about. Now, they're not so sure.
MICHALOWICZ: I can say it's like a schoolyard fight. There's all that nasty talk going on six months ago. This was the first punch, dead center in the gut. And now, the crowd's coming around looking. Is there going to be a fight? And some people are chanting fight. Some people are calling for the teachers. But the bloody noses and the broken bones haven't happened yet.
DAVIDSON: This week, Michalowicz says, none of his clients lost money. The loss was psychological. They lost confidence. They felt, in their guts, just how chaotic and vulnerable the global economy can be. That feeling didn't go away even when the market started recovering. Everyone feels more cautious, including him. Michalowicz is telling all his clients to save money, to put off making big purchases for their businesses just in case bad times are coming. But of course, if small business people in the U.S. stop spending, maybe some layoff a few workers who also stop spending, then Asia and Europe will be hurt. It's that global feedback loop again.
All these people in Shanghai and Frankfurt and Missouri and a rooftop garden in Greenwich Village are looking at each other nervously. Everyone is afraid that someone else somewhere in the world will stop spending or investing and the economy will slow down. And everyone's fear feeds everyone else's.
Adam Davidson, NPR News, New York.