Giving as Cultural Glue and Smart Business: Blake Mycoskie, Founder TOMS Shoes

Giving as Smart Business: Blake Mycoskie, Founder TOMS Shoes is a fantastic story and a smart business idea. Blake Mycoskie is a gifted storyteller in his own right, and, in this South by Southwest 2011 keynote, he entertained the audience with the story of TOMS Shoes while imparting a simple but profound principle of 21st century business: discovering the meaning and potential of giving. Here are the highlights of TOMS story, which will help you appreciate the context of the blockbuster business idea.

• Mycoskie was co-founder of DriversEdDirect, a start-up that was putting California driver’s education online. He had been to Argentina the first time during the Amazing Race, which lasts 31 days; he and his partner (his sister Page) lost by four minutes because he didn’t want to ask for directions, so they lost the $1 million prize.
• Burned out from starting up in 2006, he decided to return to Argentina to take a break; this time, he spent time to see the country; tango lessons, polo and Malbec vineyeard tours; at the latter, he ran into some volunteers on a shoe drive; they were canvassing wealthy people to donate slightly used shoes to poor people in the country. He agreed when they asked him to join them.
• He had never been involved in a shoe drive before and had done minimal volunteer work.
• However, he felt “elated” when he gave shoes to kids and families whose children had often had to share shoes; he implied that shoes had profound meaning beyond footwear.
• While journalling, he started thinking, “What happens when these kids grow out of their shoes? Why depend on charity, why not use entrepreneurship instead?” He hit on the idea of “Buy one, give one” (pair of shoes).
• He talked to his polo teacher, Allejo, about the idea, and Allejo said they had to do it, so he asked his partners to stay another month in Argentina.
• They cobbled together some local shoemakers to make 250 pairs using local materials, and he took them home to Los Angeles.
• Held a “creative dinner” with six girlfriends (predictable laughs from the audience.. “No, not like that, female friends”). He asked them what they thought of the shoes without telling them anything else. Got very positive reaction. Then he told them his idea, and they got excited and suggested boutiques that might be interested in selling them. This set off an amazing chain reaction and led to the birth of TOMS.
  • One retailer ordered 80 pair, and one of their customers was Booth Moore, the Los Angeles Times fashion editor. She promised to do an article after talking with Mycoskie. She didn’t prepare him for what would happen next.
  • It ran on the cover of the (pullout) fashion calendar. He had configured the (e-commerce) website to email him whenever a pair sold. He woke up, turned on his Blackberry and completely lost control of the machine because it wouldn’t stop buzzing long enough for him to turn off the notifications. They sold 2,200 pair that morning.
  • Frantically he started placing ads for interns in Craigslist. Worked with Allejo to increase production, but they could only manage to make 800 pair a week after a month of tweaking.
  • In July 2006, “The Devil Wears Prada” came out (implied that TOMS Shoes were referenced in the film), which sparked a call from Vogue Magazine and an article on Mycoskie that made it appear that he “knew what he was doing,” rather than showing TOMS as a very entrepreneurial operation that was run out of his apartment and a warehouse with no heat or air conditioning.
  • Retailers in London, Paris, New York and many other cities placed orders, notably department stores like Saks.
  • Humorous anecdote about Nordstrom’s assistant buyer insisting on ordering shoes TOMS didn’t have, one of Blake’s interns knew how to calm the buyer down when he got testy after being told that there were none available. They sold 10,000 pair that summer.
• But what really drives home the magic is “placing” shoes on the feet of the children. On their hands and knees, TOMS team members clean the children’s feet and place the shoes on their feet. The reactions of the children and their families are incredible; Mycoskie was visibly moved when telling the story. He said that he’d started crying uncontrollably when seeing his mother doing placing shoes on one trip; she had not previously been out of the country (the U.S.).
• One story suggests how shoes can be transformative. While preparing to wrap up a shoe placing mission in Argentina, he was approached by a mother and three boys who was crying for joy. She said that, for years, her sons had had to share one pair of shoes, so they could only go to school one day out of three (presumably the school requires shoes). Now they can go to school together for the first time.

Why Giving is Good for Business

Mycoskie’s main message was that many businesses could incorporate giving into their businesses, and they should explore it because it makes good business sense. Here are some powerful advantages that TOMS has that other businesses could create.

• Giving confers another channel of meaning to your “product” beyond its utility (something to put on your feet). You give people the chance to get involved in something bigger than themselves. This results in much more stickiness and repeat business.
• Your customers do your marketing for you. He ran into a young woman in an airport, who was wearing TOMS. He asked her about them without saying who he was. She got very excited and told him the whole story, gesticulating wildly while beseeching Mycoskie to get some, too. He felt guilty but fessed up to being the founder. Her eyes widened, “Why did you cut your hair?!!” (he’d gone short that summer).
• You get and retain passionate employees who love to be a part of a cause (cause elevates people, gives their lives meaning). You can create a culture of service in your company. You don’t have to go as far as TOMS, but he strongly recommends giving employees a chance to serve together in some way.
• Business partners want to do business with you because they want to be part of it, too. For example, Ralph Lauren asked if he could design some shoes for his Rugby line. He had never designed for any company except his own. AT&T did an ad featuring TOMS (which had long used AT&T) story of giving.
• In a dramatic finish, he revealed that there was no “Tom.” Originally, he had wanted to call the company “tomorrow’s” shoes, but that wouldn’t fit on the tag, so it was shortened to TOMS. “Buy shoes today, give shoes tomorrow.”
• Secondly, on June 6, 2011, TOMS will cease to be a shoe company. They will introduce another “one for one” product for people (I’ll wager cell phones).

Analysis and Conclusions

• It was clear that TOMS is so powerful because the value proposition is serving people, and feeling the impact. Mycoskie was able to get that across to the audience, and it was easy to imagine him explaining it effectively to employees or any other business partner.
• TOMS is serving its employees and partners by giving them a chance to elevate themselves through service. It’s a new channel of value. When it is authentic, it is very powerful. It can only be authentic when you give into it, allow it to move you. It can’t be a ploy.
• I’ll wager there is another “law” here: the more your company is committed to the cause, the stronger the signal and the virality. But you have to give first and be committed without caring about the business angle. Mycoskie implied this but he didn’t address it explicitly.
• I agree with him that “giving” will become a significant part of company culture at many companies and other organizations. People need meaning in their lives, but they don’t often know about how to find it and create it. If your company can do that, you will become very important to people. Material wealth confers comfort and status, but these are less important than meaning to people in affluent societies.

Updates/Additional Coverage

• The Future of Location: Josh Williams, CEO Gowalla
• Understanding Web 3.0 as (Pervasive) Data: Reid Hoffman, Founder LinkedIn
• Review: South by Southwest Interactive 2011