How Toms made hundreds of millions of dollars by giving shoes away.
Social enterprise founder explains ‘one for one’ philosophy.
Blake Mycoskie is known as chief shoe giver within the social company he founded, Toms. Mycoskie, a university dropout, came up with the idea for Toms while travelling in Argentina and being overwhelmed at the number of children without shoes.
Through its ubiquitous ‘one for one’ campaign – Toms donates a pair of shoes for every pair purchased – the company has given away more than 35 million pairs of shoes since 2006. Its message has been a hit with youngsters, a crucial and difficult-to-reach market for any retailer, and the company has even trademarked its famous tagline.
Significantly, Toms has demonstrated that it’s possible to have a social purpose and operate as a successful business. Last year, private equity giant Bain Capital bought a 50pc stake in the Los Angeles-based company, which valued the firm at $625m (£410.2m).
“For many retailers, their profit margins are low. They spend lots of money on advertising – whether it’s paying celebrities to endorse your product or taking out significant billboards. Toms doesn’t have any ad spend. A big portion of our spend goes on giving. But by giving, we build a community and people recommend through word of mouth and on social media,” says Mycoskie.
Toms gives away shoes in 60 countries and works with 100 NGOs to distribute the donations.
‘One for one’ has inspired many other companies to consider their social footprint, and Toms has expanded the campaign beyond shoes and into other forms of welfare.
Toms Eyewear, which donates a pair glasses with every purchase of sunglasses and optical frames, has helped 300,000 people in need since its launch in 2011. Its newest campaign is to provide birth kits to expectant mothers in developing countries, in exchange for every handbag it sells.
“We always try to identify the biggest areas of needs in a country before we start giving,” says Mycoskie. “Since we started nine years ago, it’s great to see that many of the communities we’ve helped have really developed.”
Starting Toms was something of a career turnaround for 38-year-old Mycoskie, famous at one point a decade ago for narrowly missing out on winning $1m in US reality TV series The Amazing Race.
After dropping out of Southern Methodist University, Texas-born Mycoskie built a number of successful businesses including a laundry service and a billboard company, before he was inspired to start Toms after a trip to Argentina made him realise there were still many children whose families were too poor to afford shoes.
With the help of a local shoemaker, he designed a simple canvas espadrille and brought back 250 pairs to the US, with the original aim of selling the shoes to raise money to send back to the country. He used funds from the sale of a software company he owned to fund the business growth, and moved manufacturing to China to save money.
Within six months his shoes had been featured in Vogue, gaining the praise of legendary designer Karl Lagerfeld. Other high profile fans have since included Keira Knightley, model Miranda Kerr and members of One Direction.
Partnering with Bain Capital has allowed Toms to expand even more rapidly and create new fashion lines, Mycoskie says.
This week, Toms will open its first standalone store in the UK, in London’s trendy Carnaby cluster. Mycoskie says he doesn’t see the outlet as a traditional retail store, but instead describes it as a “community outpost” for “people to exchange ideas” while shopping for shoes, bags and other accessories.
The shop will have a coffee bar, and will also host speakers such as leaders of NGOs and other social entrepreneurs to inspire others to set up a business that gives back. There are plans to open more across Europe if the strategy is successful.
However, while Toms’ social message has largely been celebrated, it has attracted some criticism from people who say Toms is simply treating symptoms of poverty rather than looking at the deeper fundamental causes.
Mycoskie says he’s tackled this criticism by shifting some of its manufacturing from China and into developing countries to provide job creation. Its shoes are now manufactured in six countries, including Ethiopia, Kenya and Haiti. By the end of this year, he aims for 30pc of Toms to be made in the countries they are given away to.
“Consumers have more of an awareness now about what they’re buying and where it’s coming from. Since starting Toms, it’s been interesting to see how the landscape of business has changed. More people are including some method of giving into their business,” he says.
The journey from a customer buying a pair of shoes to delivery to a child in need takes about six months. Aside from the manufacturing , Mycoskie says it takes time for NGOs to then distribute the products. “Sometimes the frustrating stuff is dealing with border controls and customs. We’re bringing stuff to help people but it can still be a slow process – you get people trying to take advantage of you, although we’ve got better at dealing with that.”
Toms, which employs 500 people mainly based at its California HQ, is also keen for its workers to experience the reason behind the company’s mission. After working at Toms for a year, workers are offered the chance to go on a shoe-giving mission with an NGO.
The company is about to launch a new campaign for its annual ‘without shoes’ campaign, which encourages people to walk around in bare feet to draw attention to the fact that many are still forced to do this. However, for the first time the company will give away a pair of free shoes for everyone who posts a picture of their on Instagram.
“It’s really exciting – who knows how big it might get. The campaign will run for three weeks and we have up to one million pairs of shoes to give away. It’s pretty exciting.”
The above article by Elizabeth Anderson first published on telegraph.co.uk in May, 2015.