FOUNDED IN 2006 BY BLAKE MYCOSKIE, TOMS Shoes was an American footwear company
based in Santa Monica, California. Although TOMS Shoes was a for-profit business, its mission
was more like that of a not-for-profit organization. The firm’s reason for existence was
to donate to children in need one new pair of shoes for every pair of shoes sold. Blake Mycoskie
referred to it as the company’s “One for One” business model.
While vacationing in Argentina during 2006, Mycoskie befriended children who had
no shoes to protect them during long walks to obtain food and water, as well as attend
school. Going barefoot was a common practice in rural farming regions of developing countries,
where many subsistence farmers could not afford even a single pair of shoes. Mycoskie
learned that going barefoot could lead to some serious health problems. Podoconiosis was
one such disease in which feet and legs swelled, formed ulcers, emitted a foul smell, and
caused intense pain. It affected millions of people across 10 countries in tropical Africa, Central
America, and northern India. For millions, not wearing shoes could deepen the cycle of
poverty and ruin lives. Upset that such a simple need was being unmet, Mycoskie founded
TOMS Shoes in order to provide them the shoes they needed. “I was so overwhelmed by the
spirit of the South American people, especially those who had so little,” Mycoskie said. “I
was instantly struck with the desire—the responsibility—to do more.” The name of his new
venture was TOMS Shoes.
History
Blake Mycoskie started his entrepreneurial career by creating a college laundry service in 1997
when he was a student at Southern Methodist University. In his words, “After we expanded EZ
Laundry to four colleges, I sold my share. I moved to Nashville to start an outdoor media
company that Clear Channel scooped up three years later.” In 2002, Blake and his sister Paige
formed a team to compete on the CBS reality show The Amazing Race, coming in second. One
of the places that they visited during the filming was Argentina. Fascinated by South America. Blake returned to Argentina in 2006 for a vacation. “On my visit I saw lots of kids with no shoes
who were suffering from injuries to their feet. I decided a business would be the most sustainable
way to help, so I founded TOMS, which is short for a ‘better tomorrow,’” explained Mycoskie.
While in Argentina, Mycoskie had taken to wearing alpargatas—resilient, light-weight,
slip-on shoes with a breathable canvas top and soft leather insole traditionally worn by
Argentine workers, but worn casually by most people in that country. Mycoskie spent two
months meeting with shoe and fabric makers in Argentina. Although he modeled his shoe
after the espadrille-like alpargata, he used brighter colors and different materials. “No one
looked twice at alpargatas, but I thought they had a really cool style,” said Mycoskie. “I’m a
fan of Vans, but they can be clunky and sweaty. These aren’t. They fit your foot like a glove
but are sturdy enough for a hike, the beach, or the city.”
Founding his new company that year in Santa Monica, California, the 30-year-old Blake
Mycoskie began his third entrepreneurial venture. With a staff of seven full-time employees
(including former Trovata clothing line designer John Whitledge), six sales representatives,
and eight interns, TOMS Shoes introduced 15 styles of men’s and women’s shoes plus
limited-edition artist versions in June 2006. The shoes were quickly selected for distribution
by stores like American Bag and Fred Segal in Los Angeles and Scoop in New York City. By
Fall 2006, the company had sold 10,000 pairs of shoes, averaging $38 each, online and
through 40 retail stores.
As promised, Mycoskie returned to Argentina in October 2006 with two dozen volunteers
to give away 10,000 pairs of shoes along 2,200 miles of countryside. Mycoskie wryly
explained what he learned from this experience. “I always thought that I’d spend the first half
of my life making money and the second half giving it away. I never thought I could do both
at the same time.” The next year, TOMS Shoes gave away 50,000 pairs of shoes in “shoe
drops” to children in Argentina plus shoe drops to South Africa. More countries were added
to the list over the next three years.
Business Model
Realizing that a not-for-profit organization would be heavily dependent upon sponsors and
constant fundraising, Mycoskie chose to create an innovative for-profit business model to
achieve a charitable purpose. For every pair of shoes that the company sold, it would
donate one pair to a child in need. Mycoskie felt that this model would be more economically
sustainable than a charity because sales would be used to achieve the company’s mission. He
saw this to be a form of social entrepreneurship in which a new business venture acted to improve
society through product donations at the same time it lived off society through its sales.
Mycoskie believed that the firm’s One-for-One model would be self-sustaining because
the company could make and sell shoes at a price similar to other shoe companies, but with
lower costs. “Selling online (www.toms.com) has allowed us to grow pretty rapidly, but we’re
not going to make as much as another shoe company, and the margins are definitely lower,”
he admits. “But what we do helps us to get publicity. Lots of companies give a percentage of
their revenue to charity, but we can’t find anyone who matches one for one.”hhh