Toms’ Blake Mycoskie On Virtual Reality, Investing In Others & Going Public
Neil Weilheimer
Managing Editor
With trumpets blaring, the mariachi band serenades a crowd of mostly twenty- and thirtysomethings. People are drinking and feeling festive here at the Toms Shoes headquarters in Los Angeles. Not because it was Cinco de Mayo. In fact, they were celebrating May 5, 2006, the date Blake Mycoskie and a band of unpaid interns launched the company from his tiny apartment.
Minutes later, Mycoskie, wearing a captain’s cap and multicolored pants, steps onstage to address the roughly 250 employees. While he’s spoken thousands of times about Toms and its one-for-one mission in the past decade, today’s talk is different. It’s emotional. It’s thankful.
“The experiences and things we’ve done over the last 10 years changed people’s lives,” he says in a tearful speech.
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Indeed, Toms has. And Toms has also changed Mycoskie’s life. It’s made him a star in the business and social-entrepreneur worlds. It’s given him the financial clout to invest in other like-minded companies. And it’s challenged him, at times, in ways he said he never imagined — from a grueling speaking circuit and management turnover to running a massive company and eventually finding a partner to buy half of it.
While Toms has endured explosive growth since 2006, the past few years have been the most pivotal for Mycoskie. In that time, he took a brief sabbatical and then returned to the business with renewed vigor. He steered the company into other categories such as coffee and bags. What’s more, Mycoskie sold 50 percent of the firm to Bain Capital and installed a new CEO.
At 39, Mycoskie, married and father to an 18-month-old boy, is working harder than ever before. But he’s also in a mood to reflect on some of the company’s successes and mistakes.
“I started five companies before Toms,” he told FN during a Sugarfish sushi dinner in his office. “None of them were that financially successful. Some made money and some I lost money. But their entrepreneurial purpose was to make money.
“With Toms, it was this cool idea: We could help these kids we’d met on a trip to Argentina and it would be fun. We were focused on that aspect of it. We weren’t thinking it could make money. Then it became the biggest business I could ever start and will ever start. I go back to the karma behind it.
“You can look at all these things that have happened to me — the AT&T commercial [in 2009] or retailers putting Toms in their window the first holiday season, the favorable press coverage — maybe it’s all luck, and therefore I’m the luckiest guy in the history of the shoe business. Or because we were so focused on helping others, the universe gave us the karma that attracted all these amazing things.”
While karma is a central theme to Mycoskie’s story, on the eve of the big 10th-anniversary celebration, the founder weighs in on everything from great storytelling and product focus to the personal lessons he’s learned along the way.
When you launched Toms in 2006, why was the timing right?
One of the biggest things, culturally, about 2006 is it was the year Facebook went off campus. You had to be a student to use Facebook before then. It was also the year YouTube got big, and then shortly thereafter, Twitter came. If you think about it, we were born at the exact time social media became a communication vehicle from business to consumer. Before that, social media was only consumer to consumer, and Facebook was on campus.
We didn’t know that at the time or time it to that, but every conversation we had with our customers was on Facebook. We were talking to people for hours, getting them excited. The greatest asset we had in the beginning, and to this day, is our story — and back then we suddenly had all these tools for people to share our story themselves.
Could Toms launch today?
It never could have started before social media. And today, I don’t think it could launch to the success we’ve had because media is so saturated with people doing good, which is something we feel like we played a part in and we are proud of. What made it unique [in 2006] is that you had a vehicle — social media — that people were using for the first time, and you had a story that was so radical that no one had ever thought about. It was the perfect content with the perfect distribution channel for that content. And that’s what caused it to explode.
Now there are lots of businesses with a social mission. Do you take credit for that?
We had a research study done by Mission Measurement. It shows that since we launched, more than 100 companies have created one-for-one type businesses or something similar. Not all of them because of us, but certainly a good group of them saw this is working and tried it in socks or food. We by no means take credit for all them, but we know there is a strong correlation because there were few if any before 2006. It’s something we are excited about, and that’s one of the reasons why I’m personally investing so much in new social entrepreneurs.
When thinking about your success, what are you most proud of?
Our impact on culture. The fact that when we started it was the most radical idea to be giving something every time you sell something — not just in the footwear space but in business in general. Now that major companies like Procter & Gamble, Walgreens and Starbucks are doing one-for-one giving, and other companies that maybe aren’t giving but have other forms of social missions built into their business, is exciting. So is the fact that business schools are launching social entrepreneur schools within their schools and using my book as part of the curriculum.
At what point did you know you had a hit on your hands?
When I got back from our first giving trip. I had seen the impact, met the people and was with my parents — that’s when I realized this was a massive opportunity to do something important. But I knew it was going to be a really big business after the AT&T commercial in 2009. From 2006 to 2007, it was fun, it was cool. We weren’t making any money. But we grew organically in 2008, and then in 2009, when that commercial came out and gave us our first national media exposure, sales started to explode.
How is Bain guiding you?
They have helped us think about things that I didn’t even know I needed to be thinking about. Most of their investments in private equity are three to five years. They said this is going to be a longer-term hold, more like seven to 10 or five to seven, depending on business decisions. They questioned why we were doing things like off-price and flash sales. Long term, they said that wasn’t the best thing for the brand and our relationships with retailers.They are helping us think about the brand and our equity value.
Some of the steps point toward taking Toms public. Is that in the cards?
It’s definitely the most probable outcome. Brands that are successful with IPOs have a couple of characteristics. Consumer brands do well because people like to buy stock in something they know. People are also investing more in their values. People want to not only make money on the investment they make, but it’s an even better thing to invest in companies you feel are providing a real social value. Through our international expansion, our retail expansion, our expanding of distribution in our existing accounts, hopefully, when the time comes, we will be able to show a very good predictable growth strategy that is key to going public. If you look at the characteristics of Toms and what our global growth strategy is, it’s a very high possibility. No one at Toms or Bain is talking about going public today. We have a lot of work still to do before we have the foundation we need to really accelerate the growth, and that’s what we are doing.
You’re investing half your personal proceeds from the sale to Bain, about $150 million, in other like-minded businesses. How’s that going so far?
I want to have the biggest impact on culture. That’s why I took half of what I’d gained from the sale and am reinvesting in social entrepreneurs. If I help seed hundreds of companies and, if only a small part of them become companies like Toms, then that’s going to affect culture.
You’re also trying to change retail. Tell us about the new virtual reality push.
A big thing with retail is you’ve got to have something more than a transaction. Virtual reality is the greatest technology that could have the biggest impact on our business that I know of. We’re in the business of creating empathy with customers and a connection from their purchases to their values and what they want to do. It’s one thing to talk about one-for-one as an intellectual proposition. It’s another to show them beautiful images of kids getting shoes or videos. But to take someone on a giving trip in Peru or elsewhere through our newly launched virtual reality experience with AT&T, to show them how the purchase of shoes by a skateboarder in Venice, Calif., is connected to a soccer kid in Colombia is an amazing thing.
Toms recently launched its first commercial. And it didn’t star you. How important was that?
That spot was our best example of showing our product and giving at the same time. As for me not being in it, I only have so much time. I’m a dad, and I have other hobbies and passions besides just Toms. You can’t have it depend on me. We don’t need me to be the face of it. It’s as powerful without me, so that can really scale. Part of what made Toms work so well in the beginning, both within the industry and with our end customer, was our relatability. I didn’t have any experience in footwear, retail or fashion, and people could relate to a guy doing something he’s passionate about.
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