She opened a few furniture stores called Lost & Found. Now the internet has arrived | Founders Speak

Li Ruofan's story will sound familiar: everyone dreams of opening a shop exactly to their own liking. The shop opens, capital comes knocking — then what?

You have probably heard the story before: someone can't find what they want, so they make it themselves, for themselves or for people they like, and they stress individuality, independence, being unlike everyone else. Then they find plenty of kindred spirits, and the business grows in front of their eyes.

That is roughly how it went when Li Ruofan started Lost & Found eight years ago. The furniture market of 2008 had little to recommend it. IKEA took 14% of the Beijing market that year; Tiantan Furniture, an old Beijing manufacturer, had 12%. The rest were brands that looked like IKEA or looked like Tiantan and were hard to remember — in China many furniture makers last only five years on average, so in those cavernous furniture malls you never had to spend much effort learning the names.

In the years after it opened, the brand — Lost & Found in English, Shiwu Zhaoling in Chinese — satisfied Li Ruofan on both reputation and sales. But "growing the business" meant no more than roughly 3 million yuan of revenue a month. Besides the first store, on Guozijian Street in Beijing, they opened three more. Back then, Li Ruofan says, she was confident: they were the best independent home-furnishings brand in China.

Plenty of businesses start this way.

Then the internet arrived and the small circle suddenly got much larger — it turned out that far more people liked your products than you knew. Then capital came knocking. It wanted you faster. It wanted you bigger.

When we met Li Ruofan at Lost & Found's Beijing store, this was exactly what was troubling her.

No. 57 Guozijian Street, Beijing — the first Lost & Found storefront — is still the style and size it always was. The entryway opens straight into a living room; fabrics and clothing in muted colors hang on the walls; a wooden table stands in the middle with porcelain on it; sunlight comes down through the skylight, and a white bathtub sits in a patch of green grass. A long narrow corridor is lined on both sides with wooden shelves, again holding handmade tea bowls, plates and dishes; the corridor leads to a staircase up to a miniature sitting room on the second floor. The place looks like a home.

When it opened in 2008, the storefront still looked unusual on Guozijian Street. The street lies in central Beijing, inside the East Second Ring Road, a small east-west lane at the southern end of the Guozijian scenic area, 699 meters long and only 11 meters wide. In 2008 it was all small shops serving tourists — incense sellers, fortune-tellers' stalls, steamed-bun shops, vegetarian restaurants, tea houses — and Lost & Found stood head and shoulders above every one of them.

Capitalists, who come and go in a hurry, would have no reason to dislike that style.

But Li Ruofan does not actually know what the investors see in it. "Investors are all insanely busy," she said; they won't sit for an afternoon talking through details that fine. "I said, all right, let's talk, and that's where it is. But I think I have to get myself ready first. We aren't in that much of a hurry — you have to get the thing clear in your own head first."

What really left Li Ruofan a little rattled was the DOD (Design of Designers) forum she attended last September at the China International Home Furnishings Expo in Shanghai.

The forum gathered the homegrown Chinese furniture and home-goods designer brands that have emerged in recent years, among them Fanji, Shanxing, Juye, Muzhi Gongfang, Bentu Chuangzao, Zhiyin and Benlai Sheji. It was the first time Li Ruofan had looked straight at how her domestic peers were doing.

"It was all similar things, and we could even say we were the oldest brand there. I came back thinking, have we fallen behind?"

What has happened to Guozijian Street since says the same thing: Lost & Found, at least, is no longer so "special." The street now holds several furniture and home-goods designer storefronts in a similar style — Fanji Living Room, Fusheng, Haobai and others.

The street's change also reflects, in part, an important shift in China's building-materials and home-furnishings industry in recent years: independent furniture-designer brands still hold a small share, but their scale and their output are both growing fast.

That change is probably what makes investors feel an opportunity is arriving.

Many people dream of opening a small shop. Li Ruofan is one of the ones who pulled it off

A business like Li Ruofan's may simply never have been meant for the internet or for capitalists.

Li Ruofan's husband founded Sculpting in Time, a coffee-shop chain. While its stores were going up she looked at, and collected, a great deal of furniture. Lost & Found was meant to be nothing more than a small shop to hold what she had collected, and a way to find a few people who shared her taste.

"Originally I thought, I want to open a shop, a good-looking shop, a beautiful shop. But what it was actually for, there's a lot in that," Li Ruofan told QDaily. She has told the origin story to many outlets before; these days there are far too many brands like hers for the press to interview. The barrier to entry for solid-wood furniture is low and the demand is plainly there; with patience and polish, doing it well is not that hard.

"By then Japan already had examples that we found genuinely moving. We thought, why can't we do this? We had to translate it into a language that suits China, to make furniture for Chinese life. But we weren't positioning it for anywhere as big as China then — we defined it as Beijing: living in a Beijing hutong, what furniture do I need? We positioned ourselves around that, which is why the prototypes for a lot of our furniture came out of Beijing demolition sites."

Drawing on old furniture gave Lost & Found the distinctive style it had then, and also left its production rough. The factories Li Ruofan dealt with early on were mainly in the repair business and had experience with neither mass production nor custom work. So in 2008 and for a while after, the cycle from design to prototype at Lost & Found was long, and sales were no faster: a piece would often sit for a month or two before it drew any attention or sold.

In a sense, Li Ruofan's demands on her products stretched the process further. Because she wanted them close to real life, there was no ready-made template to follow. Japanese furniture and old furniture each have things about them that are, to some degree, impractical.

Lost & Found once launched a writing desk that sold well. The first question the team asked itself early in the design was: why do you need a writing desk at all? They handed it to a young man on the team who often sat bent over drawing illustrations. The solid-wood desk he came up with borrowed the raisable design common to architects' drafting tables, on the grounds that long hours of drawing leave your back aching; and because women users have less arm strength, the lifting panel went through repeated revisions to make it as thin and light as possible.

That style, and the small-workshop feeling that goes with it, brought Lost & Found a lot of core customers. Narrowing the positioning all the way down to "Beijing hutongs" also gave it a sharp character.

"Life used to be comfortable. I probably had ideas a few years before other people did, and then I went and did them. Once I'd done it, I found this idea could actually grow a small company."

Counting Li Ruofan, Lost & Found began with three employees in total — and it already felt like a proper company.

"I don't have that confidence anymore"

Investors turn up with a pile of concepts, and that makes Li Ruofan "a little afraid."

Demand, scenarios, user personas, experiential, solutions — all these words come running out together now. Eight years of selling have given Lost & Found a clear picture of its customers. At first they were the people living in Beijing's diplomatic apartment compounds — "sometimes a whole building's worth had bought from us." After 2009 they were replaced by local buyers, as foreigners' postings ended or the air pollution drove them out of China, and the people buying from Lost & Found became consumers aged 30 to 45, "with money to spend and no taste for showing off."

The internet has also pushed the brand's name steadily further. Lost & Found is hardly absent from social media: on Weibo its Beijing and Shanghai accounts have 75,000 followers between them. Under the Zhihu question "What other options are there in China for buying well-designed, high-quality furniture?", the most upvoted answer, from @TopicTerminator, put Lost & Found fourth on its list of recommendations and credited the brand with "a different kind of sense of history" and "the sediment of time."

What rattles Li Ruofan is how to face demand that could turn out to be enormous.

"At this stage in China it's easy to fall into a myth, which is that I have to make a hit product. That's actually a later step. You have to get the thing right first; the demand you're catching has to be the right one, and I think that has to come out of life. Design with no life in it is talk on paper."

Spotting demand is easy — isn't aggregating demand exactly what the internet does? Investors take it as obvious: "Then just — grab — it!"

What Li Ruofan has in mind is probably a bit more complicated. Besides spending power, one thing she cares about particularly is how much young people matter to lifting Chinese people's sense of aesthetics. "What furniture you buy stands for what kind of life you're choosing; it's the same as the clothes you wear. But about being 'appropriate,' most people think very little."

Another thing Li Ruofan is not ready for is how to face knockoffs. About the Lost & Found copies all over Taobao she seems rather helpless. Bringing it up, she turned to a colleague and said: "We need to push the things that have our DNA in them" — as though a product distinctive enough could cancel out part of the damage.

But she can also faintly feel that this may not help much. Against an original piece costing more than 10,000 yuan, a copy at a few thousand that looks about the same will probably sell better. In Li Ruofan's own words, this is the harm done by the boom, after China joined the WTO in 2001, in "export-surplus originals" and goods "redirected from export to the domestic market": the illusion of cheap-and-good manufactured by policy breaks "spoiled" Chinese consumers' habits, so the first thing anyone says about anything is "it's cheap," with no clear sense of brands or copyright.

Luckily, everyone loves young people.

Late last year QDaily put together a survey of furniture's turn toward the young. After a fairly long education in furniture, young people have started to want pieces with more design to them and better quality, and to not mind paying somewhat more. A taste for solid wood is blowing through them.

But Lost & Found appeals more to that core group aged 30 to 45. Most of them are financially strong and they contribute the bulk of sales, but their tastes are already set. When Li Ruofan talks about young people, the phrase "small fresh" — the soft, whimsical aesthetic of a certain young crowd — also comes to mind, and her tone is not as confident as when she talks about Beijing hutongs.

"People go on about small fresh, and of course that crowd has its problems, but in fact I think we should thank these people for the rise in living standards. Why? Because they're the ones who most love to show things off. They put every meal and every piece of furniture on display, and that pulls attention to everything around it, and in that you can see a lot of demand and a lot of change."

And yet Lost & Found is known for how little it changes. It has five stores in all, across Beijing, Shanghai and Wuxi; Taobao is its only online sales channel; and it adds just 30 new original furniture SKUs a year.

Finally starting to talk about "productizing"

The internet is not unfamiliar to Li Ruofan. Lost & Found has had its own website from the beginning, and in 2012 it opened a Taobao store as well, to serve customers outside Beijing; only recently have online sales risen to a third of the total.

But Li Ruofan still resists Taobao. She only wants to solve the problem of out-of-town customers: "We have a limited number of shops, so for a lot of the online side we do still have to find some kind of access point." A furniture store on Taobao, as she sees it, sells the products that suit online selling: "able to guarantee consistent quality, can be stocked in batches, and preferably flat-packed." Lost & Found made furniture for physical stores from the start, so from product design to packaging it is less friendly to long-distance shipping than brands built for Taobao by nature.

Investors see it differently. They want Lost & Found to be able to work "in volume" too.

"When they come to you, what do they usually want to do?" we asked Li Ruofan.

"The last few have all said they're paying attention to home furnishings now, and they want to look at physical retail too. They're probably not only looking at us, probably looking at a lot of companies. The ones I've dealt with are all still at the sizing-up stage, because they can't predict it either. But I think they must be sensitive — they've already sensed that something is going to change inside this industry."

"What is going to change in this industry?"

"If money comes in, there'll be a lot of new brands, I think. A lot of people will go after the market IKEA has, because even IKEA has to go online now — it never needed to in other countries."

"If you do get the money, what are your own plans? What's the next step?"

"If we're talking about what to do, we'd still hope, first, to improve the supply chain, and then the internet-facing side. Those two."

"Do you think a small home-furnishings brand like yours can influence anything?"

"It's very simple to say and very hard to carry out: what kind of life Chinese people themselves need."

Li Ruofan is now moving into a new frame of reference.

"Japan has one flaw, which is that individual makers can only make small things, because there's no room. Our advantage is actually that we have the supporting factories and a very large consumer market, which can solve a lot of problems. But how you get from something as big as furniture — the large vessels of living — down to small vessels, that needs the whole supply chain working together."

In fact, for many independent design brands, finding the right factory is a headache. Plenty of Chinese factories are used to working on export orders and would rather take orders that are technically simple, large in volume and high in margin. Even when a factory does take a designer's order, lead times, cost control and the rest still take a lot of talking.

"Opening one mold costs tens of thousands of yuan. By the time you spread that over each consumer, you need someone willing to chase the order through. If nobody does, and it comes out costing more than an export-trade product, you wouldn't buy it yourself either. For China, the opportunity the industry missed is that it never nurtured any small brands at all. You can't make anything. You have no volume." One report noted earlier that Huang Guodong of Unexpected Design, in his brand's fourth year, had to buy a stake in a factory to secure production.

All of this is preparation for "productizing" later on.

In the middle of this rush, "New Chinese Style" has become a hot phrase. But Li Ruofan feels a little hard done by when the term is stuck onto Lost & Found. "Right now, with furniture like this, we don't have any need to put a label on it so people know what it is, because we just sell it as it is. But as we were just saying, if we're going to turn it into an internet product, we have to extract something out of it, maybe one sentence that sums up where our design sits."

She realizes a "concept" may be useful for the tangle of internet promotion — and she feels quite contradictory about it. "We don't want it to get really too conceptual. But take bedding: with that we can put a concept out, because it's simple, it isn't that complicated, it doesn't ask you to feel your way into it so finely. It's simple, it's direct, it's a linen sheet, it breathes, it's comfortable, the color looks good — and then we give it a concept that moves people: just wanting to experience the feel of linen."

She said it several times: "I'm full of contradictions inside too. I'm still a little afraid of the internet."

Eight years ago, Li Ruofan wandered onto Guozijian Street near Andingmen in Beijing, saw a steamed-bun shop up for rent, and decided to "open a beautiful shop" there. By then she had been running a company called Shenghuo Shiji ("Life Furnishings Collection") for five years, making plenty of small things like bowls and enamel mugs, but she always felt it "still didn't stand up; there was no one thing that moved you at first sight." As it happened, while the couple were renovating the Sculpting in Time coffee shop, they found a good deal of handsome Beijing furniture from the 1950s and 1960s. And so Lost & Found was born, in the form of remade old furniture.

Now, as capital pours in, there is more and more discussion of where Lost & Found and other emerging independent designer brands will go and what they will do to the market. Whether or not she takes the investors' money, Li Ruofan's dream of running a small shop is over.

Cover and body images courtesy of Lost & Found.