Every kid should be allowed to grow up believing that they can be anything. Because that’s the first step to making something of yourself as an adult.
But many young people are convinced early on that their dreams are too big for them—that there’s a low ceiling on their potential, that their disadvantages define them.
Whether it’s because of their financial situation, a shoddy education system, or a lack of role models they can relate to, without this belief many students end up dropping out of school. And each time, society potentially misses out on another young mind, another pair of hands, that could contribute to shaping a better world.
The city of Detroit, Michigan, in particular, is a proud and hardworking place that’s fallen on some tough times due largely to the loss of a once-thriving automotive industry that took many jobs with it.
Combined with a history of high crime rates, and racial and income inequality, Detroit has one of the highest dropout rates in America, especially among students from lower income households.
These young people, many of whom are capable and driven, just don’t get the same opportunities to believe in themselves so that they can one day build up their communities.
The ones who end up dropping out are more likely to become products of their environment and unable to contribute to the fight to help Detroit bounce back.
It’s a cycle that can only be broken in the same place where it starts: Belief.
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For David Merritt, founder of both Merit and FATE, a two-part social enterprise that focuses on Detroit youth, that belief is his bottom line.
For-Profit and Non-Profit: Two Businesses, One Cause
David Merritt founded Merit in February of 2012 around a concept he calls a “cause by design”. It was born out of a desire to do good in his community by doing what he was good at: creating products and branding.
“We love clothing and product design,” David explains. “Not only are we really excited about getting to make things that represent who we are, and represent who our students are, but at the same time we know the product is making an impact. We call it a win-win. We get to do things that we're passionate about that are also making a sustainable impact in a community that needs solutions.”
For Merit, the mission is priority number one: helping underserved youth in Detroit realize the best version of themselves through mentorship and education.
The main metric they’re chasing? The number of students they can help successfully graduate and enter college.
To accomplish that, David did something most young entrepreneurs wouldn’t do—he started up two businesses at once:
- Merit: A for-profit apparel business that operates both online and offline, which was incorporated as an S-Corp.
- FATE: The social arm that raises money for and executes their youth programs as a 501c(3) non-profit organization.
Both models have the same goal, using the Shopify platform, but contribute through different means. The for-profit apparel store funnels 20% of every purchase toward a college tuition fund and the non-profit arm raises money through traditional non-profit strategies: individual and corporate donations, and grants.
But there’s more to it than that. David says he “didn't just want to raise money,” that the real question was: “How do we improve access to education and get more students involved?”
“We really wanted to use our time and our hands. And knowing how big an issue it is for a lot of our urban communities, what we found is that it's really a lot about relationships,” David says.
“You can't necessarily build relationships with young people by just giving money to something. When we came up with the idea of being able to help young people fund scholarships to go to college, well, what are we doing that really helps them get there? How do we get more students to that point? How do we improve high school graduation to then improve college access, and college retention, and college graduation?”
In the end, that’s why they formed their own non-profit, instead of simply partnering with an existing organization, launching the FATE program to test what kind of impact they could create through a sustained, hands-on approach.
The FATE Program: Small Scale, Big Impact
FATE isn’t just a scholarship–it’s a four-year education program made for underserved students in northwest Detroit.
The program accompanies these students throughout those formative four years of high school (grades 9 to 12), exposing them to business mentors, career opportunities, workshops, and offering them a $5000 college scholarship if they meet certain requirements regarding grades, community service, conduct, and attendance by the time they graduate.
In 2012, as part of the first run, they enrolled 22 ninth grade students from the Jalen Rose Leadership Academy who would develop close relationships with mentors, volunteers, and their community, over the course of their high school careers.
Here were the results:
- All 22 were accepted into college.
- 19 are currently fully enrolled in college.
- 14 of the students who met the scholarship promise received a $5000 dollar tuition scholarship entering college. And they’ve just, for the most part, finished their first semester.
Beyond just traffic to a website, how many visitors abandoned their shopping cart, and the number of sales made, this is what the most important “funnel” looks like for social enterprises like Merit that aim to grow their impact over time.
With the first round of the program complete, David says he is looking for ways to improve upon the current model for FATE 2.0.
“What's great is that a number of our students have come back and participated in workshops with the new group of students that we have—these 27 new ninth grade students.”
For David, the impact of his business needed to be hands-on because the problem he sought to solve was literally close to home.
The Question Every Social Entrepreneur Must Answer
As an entrepreneur whose bottom line is change, your “why”—the reason you’re doing what you’re doing— is the most important thing, David says. Not only does it carry through in the story you tell and inform the decisions you make, but it’s also what keeps you going through tough times (and there will be tough times).
David’s why comes from an intimate understanding of what ails the city of Detroit:
“I grew up in Detroit. My parents are pastors in the city and have been there for the last 38 years. They've been really a shining example for me on the importance of dedicating your life and who you are to the well-being of others. Growing up in the city I could definitely see it—I had friends and peers that weren't really receiving the same sort of opportunities that I was fortunate enough to receive."
“So many of our young people in the city of Detroit have to deal with crime and a pretty low performing school system. There are so many external factors that they have to deal with growing up. It kind of forces them to become adults before they normally should.”
David believes the solution to overcoming these external factors is to inspire greatness from within the minds of Detroit’s youth, to encourage them to aspire without limits.
“If we can get young people to dream, if we can get them to aspire and believe, chances are we can get them to contribute,” David explains. “That's sort of the mission behind what we do and why we're doing what we do.”
But that doesn't mean the products you sell are less important than the cause: "Even if you have a great cause, it's really the quality product that has satisfied a need in the market. It's about creating a 'product solution' that hasn't been seen in the marketplace. I think sometimes a product can be even more popular than the impact for customers."
Still, David stresses the importance of having a “why” you're passionate about when building a social enterprise: “That passion is going to speak through your marketing. It's going to speak through your website. It's going to speak through your videos. If it's just something that you don't really care about, I think over time that will show and correct itself. If people can see that it's real through your email newsletter, through your videos that you post, through your mission statements, I think for the most part they'll give you a shot."
"Branding comes with time. It's not a one-off thing; it's a continuous relationship that you're building with your consumer," David explains.
But it's not just the customer relationships that matter for this social enterprise. It's the business relationships that have resulted in valuable partnerships and opportunities for their students.
Building Relationships and The Power of the Cold Email
Throughout the four or so years that Merit has been working within their community, David has experienced a pretty wild journey, from partnering with other socially conscious businesses to helping FATE students experience some very cool things.
Some of these opportunities were happy coincidences. But some were the product of good old-fashioned networking.
David says he’s a huge proponent of the cold email and has sent countless messages, some of which have resulted in some great partnerships.
“I email so many people, it's ridiculous. If they don't respond, they don't respond. We're just always looking to build more relationships. I think the biggest thing that we're willing to do is learn from other people. It's not even just necessarily because you want something every time, but you just want to introduce yourself and say who that person is to you, or what they did that impacted you.”
Just introducing yourself and what you do, being out there—I think that's very important as you try to build any company.
Authenticity is one of the most important things in cold emailing, according to David. He’s come up with a great test to gauge the authenticity of your outreach: “If it doesn’t result in some benefit, or them helping you, would you still send that email?”
David is big on networking and building relationships with people and his approach of valuing the relationship—not the result—has led to, well, some great results.
They got Corey Fuller of the Detroit Lions to model for their Look Book.
And partnered with Shinola, a popular watchmaker in Detroit, to launch a Merit x Shinola notebook.
Tony Fadell, inventor of the iPod, also shared his wisdom with FATE students in a workshop.
And funny enough, a cold email is how David and I first connected, and why I’m sharing this story now despite him never asking.
Closing a Retail Store And Opening a Pop-Up
However David’s story isn’t a straight line to success.
“It's been a process,” David would say on more than one occasion about Merit’s journey.
“It's been a learning experience. I went to the University of Michigan for sports management, and so this wasn't necessarily the plan for me. I didn't have a great business background. I didn't go work at another company and learn skills. There was a lot of Googling, a lot of reading, a lot of going and talking to mentors and people that have been in business to really get some guidance on how you set something like this up.”
It’s part of every entrepreneur’s journey. And that means some things just don’t work out the way you’d hope.
“We opened up a store. It wasn't huge it was about 500 square feet of space,” David says of their first retail location.
“We were in a market that wasn't our main target, but thought with the amount of traffic that we would get, and the brand connecting with that demographic, that we would be successful and that we would be profitable. We'd be able to pay people and have workers. And it just never took off.”
If the “aha!” moment is when an entrepreneur first has an idea, then these “oh no...” moments are when you begin to experience real doubt for the first time.
“Two years of working night and day, and it just really didn't work out,” David says. “When you go through those moments you do begin to question whether or not what you're doing is number one, impactful, but also what people even want. Is it good enough? Is it remarkable enough? Is it the product? Is it the cause? What is it? Is it me? What is it?”
David says these moments allow you to get real with yourself: “You're never going to stop learning. That was a big sort of moment where you ask what perspective you should have when you work for two years in a store and you've got to close it. But you keep on fighting.”
He also found that being transparent with your customers—talking about the setbacks and your concerns in an email newsletter or Facebook post—doesn't disappoint them, but earns their loyalty.
David and the team are already bouncing back. "Our lease was up and so we are now just building out an operational space in the city of Detroit, where we're doing all of our programming with our students. It's a pretty sweet workshop area for our students. That's also where we want to get into some manufacturing, where we intend to be able to hire young people in the city, to teach them how to design and how to sew product."
And what they couldn't find in a retail location, they found in hosting a new pop-up shop at Twelve Oaks Mall in metro Detroit where they'll be for another six months or so.
David says the pop-up has done wonders from a brand awareness perspective.
"It's been absolutely amazing. I would say 90% to 95% of the people at the mall have never heard of us. We've really been able to meet a ton of people that dig what we do and got gifts for family members. What's really been cool is that we've had a number of customers continue to come back and either purchase something again, or bring friends and family back into the store to tell them about the cause, to tell them about the product and how cool they thought our concept was. It's been very successful for us."
What Makes It All Worth It In the End?
Though it’s standing on its own legs, David acknowledges that his business isn’t what anyone would call wildly successful yet. But after the first iteration of FATE, he’s only getting started. And what keeps him going is the experiences of the individual students who have already grown through and with the FATE program.
David recounts the story of one student in particular:
“She attends the University of Michigan, Flint Campus. She was driving down every Friday to participate in our workshops. We also had a pop up shop at a local mall here in the city, and we were able to hire her over the winter break. She got a chance to even work for us." David also says that some of the FATE alumni even use Merit and the program as part of their college projects.
"We have seen some of the full circle aspects of the program recently. Our first group of students are in their first year of college, and so we'll be continuing to provide them resources and opportunities while they're in college to see exactly what they end up doing."
Bettering the World Through Social Entrepreneurship
I speak with entrepreneurs on a regular basis. Sometimes I get to interview them, dig into their stories and unearth what makes them “entrepreneurs”.
David Merritt, and the work he and his crew do, embodies a specific type of entrepreneurship: social entrepreneurship.
For these entrepreneurs, building a business isn’t necessarily about making money, but about fixing something broken in the world.
And thanks to the era of entrepreneurship we live in now, they can address these problems on the other side of the planet or, like Merit, in their own backyard.