|Headquarters||Playa Del Rey, California, United States|
(CEO / Founder)
|Products||Shoes, clothing, eyewear, coffee|
Toms (stylized as TOMS) is a for-profit company based in Playa Del Rey, California, that operated the now defunct non-profit subsidiary, Friends of Toms. 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.
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. The shoes have been worn by Argentine farmers for hundreds of years and were the inspiration for the classic style of Toms shoes. They are made from canvas or cotton fabric and are now manufactured in many styles including a cordones, botas, wedges, stitchouts, and wrap boots. The sole is constructed of rubber. Later in the trip, 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. After discovering that a lack of shoes was a wider problem in Argentina and other developing countries than just this one community, he decided that he wanted to develop a kind of alpargata for the North American market, with the caveat that for every pair sold he would provide a new pair of shoes free of charge to the shoeless youth of Argentina and other developing nations. Mycoskie had learned that the lack of shoes was a problem that had a serious impact upon these youth, threatening the ability of the children to go to school, prevent infection, and so forth.
He took the idea to Argentine shoe manufacturers and began building the company based on this idea, and initially made 250 pairs of shoes. The company first officially began selling its shoes 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 free shoes were distributed in October 2006 to Argentine children; the number was equivalent to the amount of stock sold: ten thousand. The company was self-financed, as 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."
In 2007 the company launched an annual "One Day Without Shoes" event where adherents do not wear shoes throughout the day in order to raise awareness for Toms' mission for clothing impoverished children. The day to raise awareness has had partners such as AOL, Flickr, and the Discovery Channel that help to promote the event. 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 "a for-profit business with a philanthropic component".
In June 2014, the company announced that founder Blake Mycoskie was looking to sell part of his stake in the company to investment partners in a move to help grow and expand faster and meet the long-term goals of the company.
On August 20, 2014 it was announced that Bain Capital had acquired 50% of Toms. Reuters reported that the transaction valued the company at $625 million. Mycoskie retained 50% ownership of Toms, as well as his role as Chief Shoe Giver, and said that the goal of the sale was to build the company's global impact. Mycoskie will use half of the proceeds from the sale to start a new fund to support socially minded entrepreneurship, and Bain will 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, 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.
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."
Toms’ marketing has involved fashion shows, high profile events, university campus marketing, social media, and temporary pop-up stores. Products have been created to fit with different environmental ideals as well, including the creation of shoes that adhere to vegan product restrictions in their product lines. The popular ideals of the company have led the company to becoming involved in cross-company advertising campaigns, including a commercial with AT&T that filmed one of Toms' shoe drops in Uruguay.
The canvas shoes have been given to children in 40 countries worldwide, including the United States, Argentina, Ethiopia, Rwanda, Swaziland, Guatemala, Haiti, 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.
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. A Warby Parker, launched in 2010, give a pair of glasses, to someone in need, for every pair sold. Also, the social business Ruby Cup uses a 'Buy One Give One' model for their menstrual cup venture, for every menstrual cup sold, one is given to a girl in Kenya. Furthermore, a Bristol chiropractic company influenced by reading Blake Mycoskie's 'Start something that matters' book started donating £1 to Cherish Uganda for every appointment attended.
Criticism of 'Buy One, Give One' Model
Toms has received criticism from the International Development community. who have charged that Toms' model is designed to make consumers feel good rather than address underlying causes of poverty. Criticisms have also included whether or not the shoe donation is as effective as a monetary one to other charities. Tom's founder Blake 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 it plans to have one-third of all its shoes produced in countries receiving aid by 2015.
- 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 and has been noted as a successful model of social entrepreneurship.
- In 2009, Mycoskie was invited to participate at the Opening Plenary of the Second Annual CGI U Meeting.
- On March 6, 2009 Mycoskie attended a meeting with President Obama's senior administration along with other business leaders to present solutions and ideas regarding U.S. economic policy.
- Mycoskie was featured along with the owner of Frontera Foods, Rick Bayless in a CNBC segment "The Entrepreneurs". that highlighted the innovators' profiles and the stories behind their companies.
- In February 2010, FastCompany named Toms #6 on their list of Top Ten Most Innovative Retail Companies.
- At the 2011 South by Southwest conference, Blake gave the keynote address.
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.
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