It doesn’t take an economics professor to understand that profitability is the No. 1 priority for any business. But once companies start seeing profits, what should they do with them? What’s the business strategy for that money? Should they put it back into the business? Is it just the spoils of their hard work and wise decision-making?
Love Your Melon, a growing apparel company founded by Zachary Quinn and Brian Keller during their sophomore years at the University of St. Thomas in Minnesota, has no trouble determining what to do with their profits. They give half of them away to pediatric cancer research and support.
You could say they are surviving despite this generosity, but that might not be the most accurate way of framing it. Some might say they are thriving because of it.
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Quinn and Keller met in 2012 on the second day of classes outside of an entrepreneurship course they had enrolled in. It just so happened it was the same day that students were supposed to pick their partners for a “lemonade stand” project. The assignment was to start a business and turn a profit by the end of the semester. They chose each other, and they’ve been running that same business ever since.
“We wanted to do something during that semester that would also make a difference in the life of somebody else,” says Quinn, now 25. “We didn’t want to focus on just making money off of this. It couldn’t just be about that for us.”
In Minnesota, where Quinn and Keller were living, winter temperatures can sink so far below zero that you’d be foolish to leave the house without some sort of headwear to cover your ears. The two students noticed a void in the market for a fashionable beanie—a void they believed they could fill.
The tie-in to helping others seemed fairly obvious. Young cancer patients going through chemotherapy treatments needed beanies, “because hospitals—no matter where they are in the country—are cold,” Quinn says.
COURTESY OF LOVE YOUR MELON
The pitch was simple: For every hat purchased, they would donate another hat to a child with cancer. Quinn says they always thought of the endeavor as a business. “We didn’t want to raise money,” he says. They had a product they were selling and they believed in that product, even if their college professors did not share their confidence.
They borrowed $3,500 from friends and family for the cost of manufacturing 400 hats. The plan was to sell 200 and give away the other 200. “Our teachers didn’t think we could sell out of the hats in the whole semester,” Quinn says. “They were worried about how much we spent on them.”
They sold out in two days during Thanksgiving break. The success was enough to see a future in the company. Quinn, now the CEO of Love Your Melon, dropped out of college shortly after to focus full-time on the business.
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When a mutual friend introduced the president of Minnesota Knitting Mills, Patrick Hickey, to a college student named Zachary Quinn who had started a business, it wasn’t that Hickey didn’t admire Quinn’s vision. He did, but it was like when a high school valedictorian tells you he or she is going to hold office someday. Someday isn’t today. Quinn wanted to work with Minnesota Knitting Mills, but Hickey wasn’t sure he could help him. So that was that. Quinn left school, Love Your Melon found a small manufacturer in Oregon, and life went on.
But Quinn didn’t lose Hickey’s number, and when the order size went up, he reached out again. “We sat down to talk,” Hickey says. “Zach is a true entrepreneur. He had a vision in mind, and he wanted the hats made here in Minnesota.”
It was an interesting stance for a young CEO to take. It’s easy to think that a company giving away half of its profit margin would be looking for any reasonable opportunity to keep overhead low. In the 21st century, outsourcing manufacturing responsibilities to foreign factories is one of the first steps many retailers take to reduce costs.
Quinn learned how to run a business on the fly, and without much education or experience, he was left to rely on his own guiding principles for big decisions.
“We’re now contributing to more than 120 U.S. jobs,” Quinn says. “We’re giving our employees good wages. We’re taking care of people.”
Minnesota Knitting Mills is a perfect example of a homegrown company. They’ve been in business for more than 100 years and have been family-run for most of that time. The partnership has been a boon for the knitting mill. “Our business has grown in proportion with [Quinn’s] business,” Hickey says. “Minnesota Knitting Mills has been a beneficiary.”
This isn’t just blind patronage, though. Love Your Melon offers fashionable products in varying styles with new promotions popping up often. In-person collaboration and creative oversight is important. It isn’t difficult for Quinn to get a meeting with his manufacturing partner. “I look at it as more of a partnership between the two companies,” Hickey says. “Minnesota Knitting and Love Your Melon are working hand in hand.”
That partnership exists only because both sides were willing to gamble on each other. “It’s a mutual respect [between] the two companies—the leaders of the two companies, really,” Hickey says.
Cool, stylish, chic and fashionable are the kinds of buzzwords that every retailer wants to embody. Love Your Melon is no different. Although capturing that cachet is difficult enough, holding onto it is almost impossible because today’s style is rarely tomorrow’s.
COURTESY OF LOVE YOUR MELON
That’s where Love Your Melon has an advantage. Compassion is one of the few qualities that transcends the cyclical nature of cool. Its appeal is evergreen. When Quinn and Keller set a goal to sell and subsequently donate enough hats to put one on every child with cancer in America it connected with people. After accomplishing that goal, they raised the stakes, and that’s when, in 2015, they decided to donate half of their profits to childhood cancer research and support.
Compassion is one of the few qualities that transcends the cyclical nature of cool. Its appeal is evergreen.
They used social media to tell inspiring stories about children battling cancer and organized events to surprise young patients with beanies and activities. They set up the Love Your Melon Campus Crews Program in which college students dress up like superheroes and personally donate hats to children with cancer while raising money to support their families. The program is active on 840 campuses and includes more than 13,000 students. The students organize and lead their own campus chapters and are provided the hats by Love Your Melon. It’s a cause for young adults to commit to and promotion for a small company. Love Your Melon’s top demographic is college students, and they essentially have unpaid marketing teams all over the country.
Tender narratives featuring adorable children have a better chance of going viral, but cancer research might have the largest impact. One of Love Your Melon’s partners, CureSearch is dedicated to finding a cure to pediatric cancer through accelerated research.
Love Your Melon fully funded the grant for one of CureSearch’s young investigators, Kara Davis, Ph.D., at Stanford University, who is experimenting with new ways to treat acute lymphoblastic leukemia. The $225,000 grant represents about a third of what Love Your Melon has donated to CureSearch, which is only one of their 16 nonprofit partners. “It’s not one of those partnerships where we get a donation and don’t hear from them for a year,” says Kelli Wright, CureSearch’s national director of business development. The research dollars aren’t just a tax write-off for Quinn; they are part of the company’s identity.
Conscious capitalism isn’t new, but the men behind Love Your Melon believe it’s still in its infancy.
“[The 50 percent model] is a significant part of our story,” Quinn admits. “What I would argue is that it should be a part of more companies’ stories.”
Quinn’s instincts don’t separate business and moral responsibility, and they’ve served him well. Making children smile, funding cancer research, sharing inspiring stories, contributing to U.S. manufacturing; these things are all capital-G Good, but they are also respectable, responsible business decisions that have benefited the company in tangible ways.
The company grew by more than 344 percent in 2016 alone. It employs 22 people. It has given more than 110,000 beanies to children battling cancer and donated just under $3 million to nonprofit partners.
Love Your Melon traffics in altruism, and the partners don’t get distracted. It might seem like they leave themselves a low-margin of error, but history will show a larger track record of companies meeting their downfall due to greed and rash decisions than from compassion.
“Companies are learning that they have to have more of what Love Your Melon is doing,” Wright says, citing research that employees and consumers gravitate toward products associated with a cause. “[Companies] need to have more corporate social responsibility.”
Failing to use profit in a way that helps people outside of the company is a failure of business in 2017, according to Quinn, and it’s not something that he wants to be associated with.
“Taking 100 percent of the profit at the end of the day is not something that I think any company should be doing at this point.”
This article originally appeared in the November 2017 issue of SUCCESS magazine.