Inc.

NEW BLOOD

“Shirtsleeves to shirtsleeves in three generations” is the classic curse of an entrepreneurial family, meaning that wealth rarely survives much past the founding generation. These families plan on defying the odds
IT’S A FAMILY AFFAIR Million Dollar Baby’s warehouses, in Montebello, California, hold inventory of its $7,500 Gradient crib, along with sofas from its new startup, Capsule Home.

The Tribe

When Daniel Fong’s kids got involved in his crıb company, they turned a simple wholesale business into a powerhouse–with its own startup

BY LINDSAY BLAKELY

IN 2013, TEDDY FONG was roaming the showroom of a factory in Shenzhen, China, when a stylish, modern sectional caught his eye. He asked the factory owner how much it cost to make. About $200 to $300, the owner replied. Fong was astonished. It was the kind of sofa that might sell for thousands at a Room & Board. “There are crazy margins in the sofa business,” Teddy thought.

At the time, Teddy was in the crib business—but this was enough to make him think maybe he ought to be in the sofa business, too. Teddy runs Million Dollar Baby, a $70 million children’s furniture wholesaler his parents, Daniel and Maryann Fong, started in 1990. (Since then, MDB has made six appearances on the annual Inc. 5000 list of America’s fastest-growing private companies.) It produces six brands of cribs, at nearly every price point and style, and sells them through almost every major online retailer, including Amazon, Walmart, and Target, and at many specialty retailers. Heard of the best-selling $379 minimalist Babyletto Hudson crib? That’s MDB. Beyoncé’s $4,500 translucent acrylic Vetro crib? That’s MDB, too.

But MDB didn’t always have Beyoncé-caliber customers. Almost three decades ago, Daniel Fong was a venture capitalist with an urge to start a company. He did some research and bought and then merged two baby-furniture wholesalers, which had low overhead and were profitable.

One innovation that set the company apart in its early days was its distribution. Most crib vendors required retailers to place their orders twice a year and then hold the inventory themselves. Daniel made the contrarian move of setting up shop in a 30,000-square-foot warehouse in the L.A. suburb of Montebello, an industrial area close to the retailers he served.

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