Sagging economy can't quell optimism of entrepreneurs

Neon-green glow-stick necklaces, some neatly tucked under Brooks Brothers collars, glittered like fluorescent pearls inside the Mr. Bustonian party bus. Some riders consulted iPhones for the latest stock prices, while others stole sips of Budweiser in between potholes. Loafers had been traded for flip-flops as some 200 entrepreneurs left the conference rooms of Boston's InterContinental Hotel one night last week, heading for Quincy's Marina Bay Beach Club.

No one seemed worried about the lagging economy. "It's never been better, baby!" Scott Farmelant shouted over Rihanna's "Don't Stop the Music."

The boisterous group was in town for Entrepreneurs' Organization University, an annual conference held by the 21-year-old group. Despite a year marked by waves of negative economic news about energy and food prices, consumer confidence, and mortgage industry meltdown, conference-goers still managed to exhibit a sense of high-fiving optimism.

The Entrepreneurs' Organization boasts about 6,600 members in 38 countries and is only open to those with businesses exceeding $1 million in yearly revenue. Admission to the conference was a hefty $3,000. The unofficial motto was "Learn all day, drink all night," according to Farmelant, president of the Boston-based communications firm Mills & Company and a member of the group's accelerator program for smaller companies.

Based on the mood, hope springs eternal for the organization's members. The conference stacked 15-hour itineraries with motivational speakers, off-site tours, and even a session called "Be the Great Lover You Want to Be." Most events were held at the InterContinental, with after-hours festivities at hotspots like the Liberty Hotel. The average member's age is 39, about 10 percent of all attendants were women, and all present displayed a zealotry befitting an organization with a magazine called Octane. Members run start-up businesses that range from European art dealerships to 1-800-GOT-JUNK? franchises to kegerator converters, which promise to make an ordinary refrigerator keg-friendly.

Michael Manove, a Boston University economics professor, said successful entrepreneurs often project a seemingly perpetual sense of springtime.

"Under certain circumstances, the optimistic effect could even over-dominate the realistic effect," he cautioned. "The lack of realism could become a more important factor when the firms get bigger."

But Kenneth P. Morse, managing director of the MIT Entrepreneurship Center, said entrepreneurs are not oblivious to the sour news about economic growth - they just don't let it affect their ambitions. Still, Morse held a session at the conference in which he stressed the need for start-up founders to remain alert, and not to rely only on the US economy.

Entrepreneurs must "sell overseas in part to compensate for the toughened environment of home and in part because if they don't go global, somebody [overseas] will get momentum, come here, and eat their lunch," he said this week.

At the Quincy beach club, however, it was the conference attendees doing the eating - lobster was on the menu.

"What's really great about this recession is that it's forcing people to focus on who they are," said Caroline Allison, founder of the six-week-old Viscape, a website she describes as "Facebook plus eBay for vacation homes," based in Washington, D.C.

Allison was one of many at the conference who have chosen to start a new company in a flagging market, citing the advantages of cheaper labor and more readily available resources.

Others saw the string of downbeat news from Washington as fiscal hypochondria.

"There are some indicators that the economy is bad, but it's also a state of mind," said Simon Sinek, a motivational speaker from New York. As if to prove his point, Sinek was the first to tear up the dance floor, jogging in place to Devo's "Whip It."

For some American entrepreneurs, their businesses' niche markets have cushioned them from the economic downturn. But even in the Quincy nightclub, there were reminders of the slumping dollar and its worldwide effects. Member Daniel Joyce, who runs a chain of DVD vending machines in Australia, said he was "living like a king" while stateside.

"$10 cocktails! That's really cheap!" Joyce said.

That's not to say that some US entrepreneurs haven't actually benefited from the recession.

Adam Glickman, for instance, said his business has posted better returns of late because of the economy's effect on the national mood. Glickman started his condom business at Tufts University in the 1980s. Now, he says, Condomania is a multimillion-dollar online enterprise based in Los Angeles.

"In today's uncertain times, people are craving intimacy," he said.

The side pockets of Glickman's cargo pants ballooned with complimentary condoms, even some political prophylactics featuring stenciled, smiling portraits of Barack Obama, John McCain, or Bill Clinton on the packaging. Obama has been the big seller.

How many John McCain condoms has he sold?

"Not a one," Glickman said.

So much for the free market.