It seems as though the dial is shifting in California, with Los Angeles starting to build the type of rapid-growth tech businesses that you might expect to pop up in Silicon Valley. However, many of the entrepreneurs based in the city believe its real strengths lie in the for-purpose sector…
Think of social entrepreneurship and, more likely than not, the footwear giant TOMS and its founder Blake Mycoskie will pop into your head. While we can trace a history of philanthropic entrepreneurs right back to trailblazers such as Andrew Carnegie and John D. Rockefeller, the 'one for one' model Mycoskie chose to use for TOMs was just as revolutionary. It may not receive universal praise, or have been widely replicated, but it has undoubtedly shifted the perception of what a modern business is for and the impact it can have on wider society.
Since TOMS was founded in 2006 a whole host of other for-purpose businesses have followed suit in LA, all looking to change people’s lives as well as serve up great products. Stone and cloth (backpacks), TiesForCharity.com (ties), Falling Whistles (whistles) and Novica (marketplace) are all fine examples of thriving for-purpose LA-based companies. As is LSTN, whose own history can be traced back to the early days of TOMS.
LSTN is an audio product company, with the aim of using the proceeds from their sales of headphones, earbuds and speakers to provide hearing aids for people around the world. In partnership with Starkey Hearing Foundation they have been able to give the gift of sound to over 20,000 people, in a little under three years.
We sat down with founder, Birdget Hilton, and Director of Positivity, Joe Huff, to get their take on the current crop of LA businesses and the secrets behind making a for-purpose model work.
"I started a clothing company, which accidently turned into a logistics company, that was helping other companies ship their products," recalls Huff. "We wound up building a really successful warehouse business and one of the brands we helped launched was TOMS. I got to see first-hand what someone could do in terms of helping people all around the world through their work.
"TOMS ended up outgrowing us and leaving, then one day I received an email from the founder saying they had donated their one millionth pair of shoes. I was like 'wow, why aren’t we all doing this? They started with a few pairs of shoes and now they have helped a million people'. I wanted to help people like that but in an area I was more passionate about, I asked around and ended up meeting Bridget."
"I moved to LA in 2007 and was working in the music industry, but I always wanted to do my own thing. I was seeing start-ups, like TOMS and Warby Parker, doing all these really cool things with causes and it was something I’d always wanted to do but never had the money to give to charities," explains Hilton.
"I actually saw a video of this woman hearing for the first time around the time I was thinking of leaving the music industry, it inspired me to get into the hearing business. The biggest charity in the sector was the Starkey Hearing Foundation, so I got in touch with them to see how I could help. Around the time I saw the video I met Joe and we ended up starting a headphone company that would give the proceeds to Starkey."
LA and social entrepreneurs
The pair come across as incredibly passionate about what they do, sharing an optimism that seems to be wrap itself around so many of the entrepreneurs you’ll come across in LA. But do they view the location of their business as an important part of their success?
"LA has always been the place to go and follow your dreams, it used to be reserved for people like actors but now you get entrepreneurs moving here to do the same," notes Hilton. "There’s a really big social entrepreneurship scene here, it’s a really big part of the city."
So what are the hallmarks of this scene? "I think LA really is the hottest place in the world for this type of business right now, everyone seems to be moving here to build these types of businesses," enthuses Huff.
"Once you’re in circles with other entrepreneurs and dreamers in the city then you quickly find yourself spending time with people who have an 'I can' or 'I’m going to' type mentality, whereas in other places the atmosphere is a lot more stifling."
Finding a model that works
Historically, for-purpose businesses have struggled to gain access to the same levels of funding as their more conventional competitors. And while that approach has significantly changed over time, Hilton and Huff have had to rely on some strict rules to make LSTN, first and foremost, a viable business.
"If the product you’re selling is no good then you’re really asking people for a pity donation, which is a whole different thing. We put ourselves under pressure to deliver a great product at a great price, so people don’t have the chance to say anything negative about what we’re doing," explains Huff. "We want people to say 'wow, these headphones are amazing and the company does a lot of good as well'. Or the other way around, so wherever you come at it from you are excited to learn the second part of the story."
While the LSTN team may have had zero knowledge of the product they were creating when starting out "we didn’t even bother to go down to Target and look at the other headphones," laughs Hilton. "Oh yeah, neither of us actually wore headphones at the time either," recalls Huff.
What they did do was realise the importance of ensuring the product and their purpose were not separate entities, with the two inextricably linked. A point which is underlined by Hilton's explanation of the product's unique wooden aesthetic.
"We don’t have a great amount to spend on marketing, so it’s really important that the product stands out. By using wood we created a product that looks different and gets people talking, someone will ask you where the headphones are from and the story about the purpose behind them soon follows."
Yet Hilton’s best advice is reserved for those people who find themselves, like she once was, yearning to be their own boss and improve people’s lives. "You get a lot of people saying 'oh, I wish I could do that'. Or 'you’re so lucky to be doing that'. It’s not luck, it’s hardwork can you can make it happen."