Why I Started Toms
by Blake Mycoskie
I got labeled as a “young entrepreneur” when I started a laundry business at Southern Methodist University in Dallas and I dropped out of college. Later, I started an outdoor advertising channel that I sold to Clear Channel. I lost millions in a TV network venture. And I started an online education company, which had some success.
In 2006 I went to Argentina on a vacation to learn polo. While there I met some women in a café who talked about how they were collecting used shoes to give to children who needed them just to meet the dress code in school. I had not been involved in philanthropy up to that time.
After talking to these women, I wanted to help. I wanted to give shoes in a sustainable way. My spontaneous desire to give—it was so much fun; it was joyful; I loved it. So, I came up with the idea that I’d start a company that sold shoes, and for every pair we sold, we would give a pair to a kid in Argentina.
The desire to do the model as one-for-one was that it would be easy to keep track of. In hindsight, this simple model is what has made us successful at TOMS. Consumers can clearly understand that there is a direct impact from their purchase.
Why Giving Is an Effective Business Strategy
I think our model is captured well in John Mackey’s and Raj Sisodia’s book Conscious Capitalism. After reading their book I saw that conscious capitalism is our model at TOMS, so much so that I almost could have written this book myself. All of these tenets have been integral to the success of TOMS. While giving feels really good, it is also an effective business strategy. It makes a lot of sense, the same way conscious capitalism makes a lot of sense. Let me describe three ways we built the business at TOMS through giving and why it allowed us to outperform most startups in the past six years.
First, when you incorporate giving into your business, your customers become your marketers. Case in point: We spend very little money on advertising and marketing. In fact, since we started, we’ve done only a little online marketing and we have never done any traditional advertising at all.
So, let your customers be your evangelists; they have a great desire to tell your story. Millions of customers have done this for us, (whether it’s to a spouse, a work colleague or a friend).
We have also put videos on YouTube where millions of views happen, and that’s much more effective than a Super Bowl advertisement. And it didn’t cost us anything but shooting the video. When giving is at the core of what you do, your customers become your marketers.
Second, you attract and retain some of the most amazing talent in the world. In the early days of TOMS we had very little money for executive salaries, yet we were able to attract people from blue-chip companies, individuals who were extremely talented, typically at the later stage of their careers. They left those corner offices and high paychecks to come join us in a warehouse office to be part of something. People want to be part of something when giving is at the core of what you’re doing, especially in such a simple way as one-for-one.
The other thing about giving is that when you’re giving and serving with your co-workers, you very quickly realize that your own stresses and pet peeves with each other kind of dissolve. When you start serving with one another, you don’t worry about all the things that typically stress people out, cause lack of productivity in the company, or cause passive aggressiveness. All those things just kind of melt away when you see these incredible needs you’re serving.
So, giving is really good for attracting and retaining talented individuals, as well as for employee morale.
The third thing that I’ve recognized—and this has been a key to our growth and our success—has been that when you incorporate giving into what you’re doing, you attract amazing partners. People want to see you be successful. We’ve had more companies, fashion designers, and people voluntarily help us get to the next level. I think that’s the way that we’ve been able to grow and get to where we are today. I’ll use an example.
In 2009 I got a call from AT&T, who heard that I was an AT&T customer. “Look, we want to go on a giving trip with you so we can film how you are using your device in Ethiopia, Uganda, wherever. And show you an authentic experience of how our technology is helping to do good things in the world.”
So they hired a documentary filmmaker and came to Uruguay with me. AT&T spent 40 million dollars making the largest commercial they had done in years. They’ve had better results with it than any focus-group commercial they had tested in ten years. They played it at the Masters; they played it at American Idol; they played it at Survivor. It was so successful that they took a 30-second spot and made it a minute spot to premiere at the Final Four. And our business literally went like this (Mycoskie points up).
When I met the Chairman of AT&T, I couldn’t contain myself at how thankful I was for what his company had done. And he turned around and thanked me because it allowed his company to show how it was helping a small company like ours help people around the world. So, you can attract amazing partners when giving is at the core.
Giving always feels good. But the message I always like to share with people is that it is also a really good business strategy. I think more and more companies are incorporating giving. It’s also a good personal life strategy. If you’re a person who is seen as a giver, more people want to see you be successful.
Vision for the Future
What I’m so encouraged about today….if you look at what the cool kids are doing today—and many of your kids are probably in that group—they are recycling, they are buying TOMS. They are giving up their birthday to raise money for water projects in Ethiopia.
I think the one-for-one model has incredible potential to help people in many more ways. My hope and dream and vision for TOMS is that I can continue to use the one-for-one model to positively affect many things, whether it’s food, water, or something else. Some of my inspiration comes from Virgin, a company that I mirror off of for very different reasons. In the history of their business, I can’t think of another company that took a brand and added to it and was able to go into so many industries and have a positive effect as them. There is no other brand I can think of in the world that has done that.
Just as in the 60s and 70s when Richard Branson was building this amazing brand in all these different industries, I think the cool thing happening today is with the generation that is buying a lot of TOMS’ products.
The one-for-one model I have found is really effective in allowing a consumer to know exactly what’s going to happen. There is no ambiguity; there’s no crazy accounting. You buy a pair of shoes; we give a pair of new shoes to a child in need.
Now we’re doing sunglasses. We are doing eye exams and cataract surgeries. You buy a pair of sunglasses; we give someone their sight back.