The Inner City: "Now They've Owned Something"

Howard Stubbs says when he first met Steve Mariotti, "I thought he was a big sucker." There was Mariotti, a 5'5" white guy with an innocent face and enthusiasm to match, telling the roughest kids in the South Bronx that he would make them presidents of their own companies. At 17, Stubbs already operated his own business—a hot dog stand—and he didn't think much of the entrepreneurial material in front of Mariotti.

"You should see some of these kids. These guys are sittin' there like, 'Yeah man, I'm having my own business,'" says Stubbs, 19, assuming their hostile posture and indifferent attitude. "Then he gives them money and stuff to start with. And they don't come back."

It's true—some of them don't. But Mariotti is relentless and relentlessly optimistic. After all, this is a guy who started teaching in inner-city schools after being mugged. "Look at the man," says Stubbs. "He gets robbed by some black boys. He goes, 'I wonder why they robbed me?' And then he turns around and takes that experience and comes back and helps us." Insulate, insulate, insulate is not Steve Mariotti's motto. "Every human being has a little company inside him" is.

Since 1985, he has helped inner-city kids set up more than 300 sole proprietorships. These microbusinesses sell everything from sneakers to watches to lingerie; some offer services—care for the elderly, car repair, manicures. Mariotti provides seed capital, gives business cards to the new company presidents, helps them write business plans, takes the kids to wholesalers, walks them through a host of government forms, and provides continuing advice. "The kid may make a sale a month for $18," he says. "But you see the kid trying to do it. In my mind, that's the company, that effort."

He started the program as a special-ed teacher at Jane Addams Vocational High School in the Fort Apache section of the South Bronx. After being bounced from school to school, he finally found a principal, Patricia Black, who would let him start a business curriculum within the special-ed department and let students sell their wares on campus. "The school exploded," with tiny businesses, he recalls. "Everybody started to have dreams."

For the first few years, Mariotti financed the startups out of his own pocket, with occasional grants of $50-100 from the Trickle Up Program, which usually assists Third World startups (see "Trickle Up Prosperity," Feb. 1987). In 1987, however, Mariotti's National Foundation for Teaching Entrepreneurship received tax-exempt status, allowing it to raise money from corporations, wealthy individuals, and foundations.

He has since left classroom teaching, although the foundation still works with students at Jane Addams. And the program has expanded to encompass other New York City schools, Riker's Island prison, home-bound students, and summer workshops in West Philadelphia and at Rider College in New Jersey. Its largest program is at Boys and Girls Club of Newark.

"I've found that inner-city children have many advantages in learning the craft of entrepreneurship, because they've had many obstacles to overcome in their lives," says the soft-spoken Mariotti. "They develop mental toughness. They develop initiative. I think they develop a true genius in being alert to business opportunities."

Sabriya Mitchell, 14, first identified her business opportunity when she was 10. She noticed that the other kids liked to buy candy at a store across the street from a candy factory. After scoping out which kinds of candy were most popular, she went directly to the source. "I bought it for a half-penny and sold it for a penny," she says.

After getting out of the candy business for several years, she recently started up again with the encouragement of the Newark club. Now she's president of "Sabriya Candy Is Dandy Shop," operated out of her Newark apartment. "In the future," she says in a soft voice, "I want to open my own franchise with my name all over it."

Getting kids to think about the future is perhaps the program's biggest success. "Any human being who goes to the wholesaler and has to spend two or three hours deciding what to purchase with $100 and then has to plan out where he's going to sell it has had their 'time preference' tripled," says Mariotti. 'They're not talking in terms of two or three hours. They're thinking now in terms of days." That change, he believes, helps explain why only one girl in the program has gotten pregnant as a teenager.

That young woman, Josephine Reneau, is still one of the program's superstars. She started selling lingerie when she was 16, first at school, then at parties and flea markets. She learned the ins and outs of the business from Mariotti's fiancée, Janet McKinstry, who had her own lingerie business.

"At first," recalls Reneau, now 20, "when she would take me to the wholesalers, I would pick what I would like. She showed me how to choose not for what I want but for the customer, to please the customer." That meant, for instance, buying "tacky" lace pants that sold out immediately.

Last year, she and McKinstry opened a small shop in New York. But after she had the baby, Reneau moved to Los Angeles. The business acumen she developed back in the Bronx moved with her.

She's planning to start selling lingerie again, beginning with parties and door-to-door sales. Eventually, she'd like to own a shop again. The baby's aunt is interested in becoming her business partner—providing startup capital with her income tax refund. Mariotti has agreed to send her $60 for the sales license that California requires.

These small businesses are bootstrap operations. Mariotti's program teaches people how to make money even if they don't have money. If Reneau could spend that $60 license fee on merchandise, for example, it would be enough to get into business again—she started out originally with a $50 grant from Trickle Up, buying a dozen teddies and then plowing her sales revenue back into the business.

And lingerie is the hottest product around, almost as profitable as selling drugs. The fanciest teddy will wholesale for about $4.00, but part of its sex appeal lies in its high price. A department store may sell it for $70–80; a teenage entrepreneur can offer it at a discount and still make a huge profit. At a party with a lot of customers, says Reneau, she can take home $700—most of which is profit. "Lingerie has helped me save a lot of inner-city children," says Mariotti, "because it's quick and easy money with an enormous markup."

Saving inner-city kids is what the program is about—and why Mariotti is willing to take a chance on being made a sucker. He knows most of these kids won't become business owners. "It's not that if you take 100 kids, you get 100 businesses. You may get 12," he says. "But then when they go to work in McDonald's, they understand. They understand why this man is saying we have to do this and why you can't steal. It's almost like a short course in the value of property. Because now they've owned something."

The stakes are high. These young people risk their lives every day just by living where they do. His own mugging, says Mariotti, is "like nothing compared to what happens all the time. I was in a special-ed class a year and a half ago. There's seven boys in there. And every boy but one had had a serious physical felony committed against him in the past six months. I had two kids in there who had been severely beaten in the past 10 days. One kid had 18 stitches on his head. It was like a little war zone."

Says foundation vice president Russell Kelly, "What we're trying to do is stand at the front of the gate to hell and say, Do not enter. Because we will help you. We'll help you go in another direction. We'll help you build something that is successful, something that is legal, something that you can be proud of."

Virginia I. Postrel is associate editor of REASON.