Founded May 2006
|Area served Worldwide|
Founder Blake Mycoskie
|Founders Blake Mycoskie
Key people Blake Mycoskie (CEO / Founder) Alejo Nitti (Co-Founder)
Products Shoes, clothing, eyewear, coffee, shirts
Headquarters Los Angeles, California, United States
CEO Blake Mycoskie (May 2006–)
Parent organization TOMS Shoes Holdings II, LLC
Toms shoes business model
Toms (stylized as TOMS) is a for-profit company based in Playa Del Rey, California. The company was founded in 2006 by Blake Mycoskie, an entrepreneur from Arlington, Texas. The company designs and sells shoes based on the Argentine alpargata design as well as eyewear. When Toms sells a pair of shoes, a new pair of shoes is given to an impoverished child, and when Toms sells a pair of eyewear, part of the profit is used to save or restore the eyesight for people in developing countries. Similarly, the company launched TOMS Roasting Co. in 2014. With each purchase of TOMS Roasting Co. coffee, the company works with other organizations that they refer to as "giving partners" to provide 140 liters of safe water (a one-week supply) to a person in need. In 2015, TOMS Bag Collection was launched to help address the need for advancements in maternal health. Purchases of TOMS Bags help provide training for skilled birth attendants and distribute birth kits containing items that help a woman safely deliver her baby.
- Toms shoes business model
- Company history
- Focuses for corporate responsibility
- Shoe drops
- Campus Clubs
- Economic criticism
- Focus on the Family
- Working conditions
Blake Mycoskie first visited Argentina while competing in the second season of The Amazing Race with his sister in 2002. He returned there on vacation in January 2006, and noticed that the local polo players were wearing a form of shoes called alpargatas, a simple canvas slip-on shoe that he himself began to wear. Alpargatas were the model for the original line of Toms Shoes. They are made from canvas or cotton fabric with rubber soles, and are manufactured in several styles. According to Mycoskie, when he was doing some volunteer work in the outskirts of Buenos Aires, he noticed that many of the children were running through the streets barefooted, and he decided that he wanted to develop a kind of alpargata for the North American market, with the goal that for every pair sold he would provide a new pair of shoes free of charge to youth of Argentina and other developing nations. According to Mycoskie, Bill Gates encouraged him, saying that the lack of shoes was a major contributor to diseases in children.
Mycoskie sold his online driver education company for $500,000 to fund the shoe company. The company name (TOMS) is derived from the word "tomorrow", and evolved from the original concept, "Shoes for Tomorrow Project". Mycoskie initially commissioned Argentine shoe manufacturers to make 250 pairs of shoes. Sales officially began in May 2006. After an article ran in the Los Angeles Times, the company received order requests for nine times the available stock online, and 10,000 pairs were sold in the first six months. The first batch of 10,000 free shoes were distributed in October 2006 to Argentine children.
In 2007 the company launched an annual "One Day Without Shoes" event where people are encouraged not to wear shoes throughout the day in order to raise awareness for clothing impoverished children. The event has had corporate sponsors such as AOL, Flickr, and the Discovery Channel.
By 2011 over 500 retailers were carrying the brand globally; that year it also launched its eyewear line. By 2012 over two million pairs of new shoes had been given to children in developing countries around the world. The Daniels Fund Ethics Initiative at the University of New Mexico describes the company as an example of social entrepreneurship.
In June 2014, the company announced that Mycoskie was looking to sell part of his stake in the company to help it grow faster and meet its long-term goals. On August 20, 2014 Bain Capital acquired 50% of Toms. Reuters reported that the transaction valued the company at $625 million; Mycoskie's personal wealth following the deal was reported at $300 million. Mycoskie retained 50% ownership of Toms, as well as his role as "Chief Shoe Giver". Mycoskie said he would use half of the proceeds from the sale to start a new fund to support socially minded entrepreneurship, and Bain would match his investment and continue the company's one-for-one policy.
"One for One"
Toms' business model has been referred to as the "one for one concept" business model, referring to the company's promise to deliver a pair of free, new shoes to a child in need for every sale of their retail product. The countries to which the free products are sent have included Argentina, Ethiopia, Guatemala, Haiti, Mexico, Rwanda, South Africa, and the United States. The business has grown beyond producing shoes and has included eyewear and apparel in Toms product lines. The company uses word-of-mouth advocacy for much of its sales, centering its business focus on corporate social responsibility. Part of this model originally involved a non-profit arm called "Friends of Toms" that recruited volunteers to help in the shoe distributions in foreign countries. Toms trademarked the phrase "One for One" to describe its own business model.
In October 2007, Toms Shoes received the People's Design Award, as determined by an online popularity contest by the Cooper-Hewitt, National Design Museum
Focuses for corporate responsibility
Author Daniel H. Pink described the company's business model as "expressly built for purpose maximization", whereby Toms is both selling shoes and selling its ideal; creating consumers that are purchasing shoes and also making a purchase that transforms them into benefactors—a company goal if it is not a consumer goal. Another phrase used to try to describe the unique business model has been "caring capitalism". Part of how the firm has developed this description is by incorporating the giving into its business model before it turned a profit, making it as integral to the business model as its revenue generating aspects. Business tycoon and Virgin Group founder Richard Branson wrote of the company's business model in his book Screw Business as Usual saying, "They look for communities that will benefit most from TOMS based on their economic, health and education needs while taking into account local business so as not to create a correlating negative effect." He also commented on Toms' expansion into eyewear, in order to target the nearly 300 million people who are visually impaired in developing nations.
The company's shoe distribution partners have focused on distributing shoes in areas where the health and social benefits of the shoes would be the highest. For example, in Ethiopia the shoes are intended to help prevent a soil-borne disease that attacks the lymphatic system and which largely affected women and children. Toms sunglasses are sold with the One for One model, however it does not necessarily provide glasses only to citizens of developing countries. The One for One model includes putting money towards medical treatment and eye surgeries, in addition to prescription glasses. Toms works with the Seva Foundation among other partners. The first countries that Toms implemented its program were Nepal, Cambodia, and Tibet. The original three designs, according to Leigh Grogan, were ones with "The stripe on the temples represents the buyer; the stripe on the tips represents the person whose sight is being helped, and the middle stripe represents TOMS, which brings the two together."
The canvas shoes have been given to children in 70 countries worldwide, including the United States, Argentina, Ethiopia, Rwanda, Swaziland, Guatemala, Haiti, and South Africa. Toms are sold at more than 500 stores nationwide and internationally, including Neiman Marcus, Nordstrom, and Whole Foods Market, which include shoes made from recycled materials.
Volunteers on shoe distribution trips are able to hand-deliver shoes to children. In 2006, Toms distributed 10,000 pairs of shoes in Argentina. In November 2007, the company distributed 50,000 pairs of shoes to children in South Africa. As of April 2009, Toms had distributed 140,000 pairs of shoes to children in Argentina, Ethiopia, South Africa as well as children in the United States. As of 2012, Toms has given away over one million pairs of shoes in 40 countries.
Students attending colleges across the United States have created TOMS campus clubs. As of March 20, 2014, 281 campus clubs existed in the United States with another dozen located in Canada. By comparison, another nonprofit organization, Lions Club International that was established in 1917 and known for working to end causes of blindness around the world, reports 400 Lions’ campus clubs in 42 countries.
In 2009 Toms partnered with the Charlize Theron Africa Outreach Project to create limited edition shoes, using the profits to benefit education and medical support to remote areas of Africa suffering from AIDS outbreaks. Toms has also produced shoes with a handlebar mustache symbol in place of the traditional Toms symbol in support of the Movember Foundation. Toms is also a supporter of the charity charity: water, with which it partnered with over several years, including its WaterForward project, aiming to bring clean water to underdeveloped countries through giving on behalf of one's friends. An additional partner charity is FEED, whereby when a consumer purchased a pair of shoes the company would donate twelve meals to poor schools in addition to a pair of shoes for impoverished children.
The major thrust of the mission of Toms is that a business rather than a charity would help their impact last longer. In his speech at the Second Annual Clinton Global Initiative Mycoskie states that his initial motivation was a disease called podoconiosis, a debilitating and disfiguring disease which causes one's feet to swell along with many other health implications. Also known as "Mossy Foot", podoconiosis is a form of elephantiasis that affects the lymphatic system of the lower legs. The disease is a soil-transmitted disease caused by walking in silica-rich soil. Toms currently works with factories nearby where they perform some of their shoe drops, including in Ethiopia.
The Tom's 'One for One' model has inspired many different companies to adopt similar concepts. Warby Parker, launched in 2010, donates a pair of glasses to someone in need for every pair of glasses it sells. The social business Ruby Cup uses a 'Buy One Give One' model for their menstrual cup venture, benefiting girls in Kenya. A Bristol chiropractic center influenced by Mycoskie's Start Something That Matters book started donating £1 to Cherish Uganda for every appointment attended.
Toms has received criticism from the International Development community who have charged that Toms' model is designed to make consumers feel good rather than addressing the underlying causes of poverty. Criticisms have also included whether or not the shoe donation is as effective as a monetary one to other charities. Mycoskie responded to these criticisms in November 2013, saying "If you really are serious about poverty alleviation, our critics said, then you need to create jobs. At first I took that personally, but then I realized that they were right... using our model to create jobs is the next level." The company has announced its plans to have one-third of all its shoes produced in countries receiving aid by 2015.
A story by LA Weekly priced the manufacturing cost of a pair of Toms Shoes at (US)$3.50-$5.00, and noted that the children's shoes given out by the company were among the cheapest to make, which is not necessarily apparent to consumers. According to garment-industry author Kelsey Timmerman, many people he spoke to in Ethiopia were critical of the company, saying that they felt it exploited the idea of Ethiopian poverty as a marketing tool. An Argentina-based shoemaker agreed, saying that the imagery used by the company was manipulative.
A 2014 paper in the Journal of Development Effectiveness studied the effect of Toms Shoes on local shoe markets, and did not find any statistically significant effect, although analysts and the paper's authors noted the study was limited in scope and time-scale.
Philosopher Slavoj Žižek cited Toms Shoes (along with Starbucks) as "an almost absurd example" of the postmodern trend towards the rationalization of consumerism, saying that such efforts only delay necessary systemic changes.
Focus on the Family
In July 2011, Toms founder Blake Mycoskie participated in an event sponsored by the group Focus on the Family. After being criticized for supporting a socially conservative non-profit, Mycoskie posted an apology on his website stating that he and his handlers had not heard of Focus on the Family before participating in the event and decided it was a mistake. He also stated that he and the company support equal human and civil rights.
Despite their mission to donate shoes to children in need, Toms has been criticized for being vague about measures it's taken to uphold fair labor standards in China, Ethiopia and Argentina, where it makes the majority of its products.