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4 Hot Los Angeles Retail Startups to Watch…

Founders:

DW Ferrell

Year founded:

2011

Location:

Long Beach, Calif.

What does your business do and what problem does it solve?

Localism Inc. is a social enterprise focused on accelerating the local marketplace. We have a retail incubator called MADE in Long Beach that features fair trade products from over 120 local entrepreneurs.

“We’re working to make the winning strategies typically reserved for major chains very accessible to a network of independent merchants, makers and manufacturers. Our staff is building a platform to accelerate the local marketplace. When we choose independent businesses, three times more money stays in the local economy, and even more when products are also produced by local makers. What we do is empower local entrepreneurs so they can collectively keep more money local.”

What inspired you to start your company?

“In my previous career, I’d worked as a marketing and technology strategist for some of the largest international brands and shopping centers. I understood the winning strategies that helped the ‘1 percent’ make their money. At the time, Occupy Wall Street was gaining momentum, and I knew I had to do something constructive.

“As the son of an entrepreneur, I knew exactly how hard it was for independent businesses to compete. I realized that if local businesses were linked in the right way, Metcalfe’s Law would kick in and they could have a collective edge in their marketplace. I filed a patent in 2008 around some innovative concepts, and started speaking with makers and merchants about their needs and limitations. Around 2012, benefit corporations were gaining steam, and the ‘profit and purpose’ model of a social enterprise really resonated with me. In 2013, I found our first investors. We launched at We Labs, a coworking space in downtown Long Beach, and now we have our own 12,500-square-foot retail facility.”

What is the key to succeeding in the retail industry?

“The key is to find a ‘market fit’ quickly. Put a rough version of your product in front of customers as soon as possible and write down everything they don’t like about it. Then revise, tweak and iterate again until real customers are ecstatic about your product and can’t wait to use it.”

What’s is the biggest mistake you’ve made — and what did you learn from it?

“Trying to wear too many hats. It doesn’t work. Initially, I didn’t have a dime, so I bootstrapped and tried to do all aspects of the business. After banging my head against a series of walls, I really found my limits.

“These days, I am relieved when we hire someone who is highly skilled — or better yet when we cultivate local talent and train them — and I can take a hat off my head and empower them to do what they do best.”

What are some common pitfalls to avoid when starting up in the retail space?

“Number one: Don’t try to compete on cost. It is a never ending downward spiral. Instead, compete on quality. If you make something exceptional, you can build a brand around it, and people will want your brand, even if there ends up being knock offs of your product later on.

“Number two: Maintain channel control by carefully selecting where your product can be purchased. Retailers who curate excellent products do not need to compete on cost, and customers who want quality stay loyal to them. But as soon as you sell your products through a discount store or Amazon it will be hard to get it into quality-focused retailers who don’t need to compete with discount merchants.

“Number three: Don’t try to tackle the ton of legal and tax sand traps out there. I probably fell into all of them trying to handle them myself. Do yourself a favor and hire professionals to take care of those matters. They’ll save you more than you spend on their fees.

“Number four: It is really essential early on to find loyal and trustworthy partners who see your vision and will help you achieve it.”

What’s your best advice to entrepreneurs looking to break into retail?

“Work in the retail sector for an established company and develop your acumen, knowledge and connections. Then, when you’re ready to launch, make sure you’re not in a position to get sued by your former employer for releasing a similar product.

“Or, on the flipside, find out if your former employer would be interested in supporting your new venture. Next, build connections quickly, for everything from material sourcing to marketing. Develop good connections that will become strong assets, and you need to protect them just like financial assets. Then you can start to cultivate the graceful art of social leverage, as I call it, which is to always offer value to those you need to help you, rather than just ‘using your connections.'”

What surprises you the most on your entrepreneurial journey?

“I used to say ‘yes’ to nearly every opportunity and everyone, thinking there’s some virtue in the power of ‘yes.’ But people begin to expect too much of you, and it’s impossible to please everyone. Power can be found in limits, and being laser-focused on what we can say ‘yes’ to makes it easier to say ‘no’ to everything that will distract from that focus. And I’m still in therapy to really learn this point.”

Why did you choose to base your company out of Los Angeles?

“Where we are based in the Greater L.A. area, in Long Beach, is that it is a perfect ‘beta’ city to really see if our grand ideas will fly. This is partly because Long Beach is extremely diverse and provides a rich backdrop of culture to engage with and represent. And, with downtown Los Angeles just a short commuter rail trip away, our local entrepreneurs have access to the manufacturing capital of the country. What’s more, I fell in love with how bikeable and unique each of the districts in Long Beach are.”

Related: Why Every Entrepreneur Should Focus on Local SEO


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