Try as we might, when something matters to us — really matters — it is hard to separate our hearts and our minds. Our brain, or perhaps it’s our gut, sends out a warning signal. Be practical. Proceed with extreme caution. Whatever you do, don’t spend a lot of money. While our heart tells us to go for it. Chase what you love. Follow your dream. Your dream job, in this instance. Say you want to be an actress, a chef or open a flower shop. It’s not just about determination and grit, although there’s a lot of that. It takes time and a whole lot of cash. You should also know that things may not end exactly as you’d hoped. Like in the case of fashion writer Michelle Dalton Tyree.
When I visited her, she answered the door wearing a fluorescent pink blazer, and electric blue shoes.
“I did realize today when I looked what I had on that I had stepped back into the ’80s for just a brief fluorescent moment,” she said.
Fluorescent’s en vogue, I’m told. Which would make sense because Michelle’s been all about fashion since she was young, working retail as a teenager and eventually becoming west coast retail editor for “Women’s Wear Daily” as a grown-up.
“Fashion and retail were my dreams,” said Dalton Tyree. “I always knew that I wanted to be a fashion editor and the little side dream was one day I’m going to open my own store.
The store’s name was Iconology. And it was perfect. She and her sister opened it near an up-scale area in Los Angeles in 2006. It was custom-designed chic. It had white walls, black trim, refurbished Louis XVI Bergere Chairs in hot pink. And the clothes, I’m told, were to die for. Designers like Oscar de la Renta, Zac Posen and Karl Lagerfeld.
“It was only us and Fred Segal. We were the only ones to carry [Lagerfeld’s] collecion,” said Dalton Tyree. “We had a few coups. We had a few tricks up our sleeve that we were very excited about.”
Michelle’s taste was immaculate. Her timing, not so much. The store opened just before the Great Recession of 2008 started to bite. A writer’s strike in Hollywood didn’t help, as actors and TV stylists cut way back on their spending. But Michelle didn’t go down without a fight. She threw parties at the store with celebrities like Jessica Alba. She partnered with fashion brands to promote the store. She stocked more inventory. Iconology got plenty of press, but not much in the way of sales. After just two years, the store closed its doors.
“There is a a piece of you that says uh-oh, your gut inside says this could be a problem, but your head overrides it because you have just put in this huge investment to this business,” she said.
Six months before the store closed, Dalton Tyree said she had a moment where she thought it wasn’t going to work. “We were still hanging on ’til the end just hoping because you put so much into it,” she said.
Mind Games &Money — Browse other stories in our collaboration with the New York Times. Plus, take our quiz to see how much emotions impact your personal finances, see the 15 happiest and saddest U.S. cities based on tweets, watch a video explainer about “goodwill,” and learn lots of good facts about money and emotions. Explore now.
Richard Peterson, a psychiatrist and director of a financial consultancy called Market Psych in New York, says that for most people the response is to hang on when they are in a losing position and even more than that — they tend to double down to take more risk. He explains that when we are losing money — not to mention face — humans being rationalize investing more; that if they put in just a little bit more things will turn around.
Craig Fox, who teaches decision making in the business school at UCLA, says there is another issue at work — “sunk costs.” Basically when anyone has “sunk” a whole lot of money into something — be it a small business, an education or stocks — and it is not coming back, it’s almost impossible to walk away.
“Part of it is cognitive dissonance. Part of it is [people] don’t want to know their investment was in vain,” said Fox.
Donna Harris Earle knows about dreams. Hers came true the day she opened Oregon’s Grand Salon and Spa. Armed with her esthetician’s license and a skill for applying permanent makeup, she took out a small business loan for $230,000 in 2007. She borrowed another $100,000 from her 401(k) and spent it all to turn an old bank in Beaverton, Ore., into a 7,000 square foot salon with 27 employees and offering every beauty service from facials to hair removal.
“Yeah, I know. Big mistake,” said Harris Earle. “I look at myself when I play Monopoly, I go all out. I am in it to win it.”
And it looked like she was winning — for a time. Then the 2008 financial crisis hit. And her customers disappeared. She tried to reinvent, advertise differently, but it didn’t work. Donna had to lay off employees, downsize her space, sell her furniture. She even lost her house just so she could keep the business going.
“I really was that committed and emotionally involved. I was going to go full board on this. Even if it took me down it didn’t matter because I had already made up my mind — I was going to make it work,” said Harris Earle.
Fox calls that positive illusion.
“We overestimate our ability to control outcomes that have some element of chance. Overconfidence. Optimistic bias that we tend to overestimate the extent to which good things are going to happen, especially to us,” said Fox.
And so people plan poorly “because we imagine the scenario of things going perfect. And so we don’t build some slack into our budgets for time and for money for the inevitable ways in which things can go wrong,” he said.
But Donna Harris Earle did manage to rescue a little piece of her dream. She still has the spa, but today it’s a lot smaller — just 850 square feet. And she employs only a handful of people.
Back in Los Angeles, Michelle Dalton Tyree declared bankruptcy when her store closed — a financial bloodbath she said she just emerged from in December. But Michelle said it didn’t take long to come to terms with her loss.
“There was a moment when we went to our attorney’s office to officially file bankruptcy,” she recalled. “There we were quaking, tears welling up, and he looked at us — he was this fabulous Ari Goldish character — and he said ‘Michelle, let me tell you something. Some of these companies I work with are on their fifth and sixth bankruptcies. You haven’t seen anything yet.’ I thought, god let this be the last one that I ever do. But it put it into perspective at that moment. I thought, OK, this is not over for me, this was one piece that failed.”
And Michelle did salvage something from Iconology’s demise. The skills she developed getting press for her store, she’s parlayed them into a new venture — a marketing firm for retail outlets. She’s got a blog, too — FashionTrendsDaily.com. She’s happy with what’s she is doing now.
“It is such a fabulous vehicle for so many different directions. I’m not looking at it as will it fail or will it succeed? It really has so many legs,” she said.
As for the retail business, she says you couldn’t pay her to try that again — dream or no dream.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.