This article originally appeared on hbr.org
Photo credit: listclist.com
By Blake Mycoskie
In the fall of 2012 I did something I never thought I’d do: I took a sabbatical from TOMS. It was not your typical travel-the-world sabbatical. My wife, Heather, and I moved to Austin, Texas, where I’d grown up, and I used the physical and psychological separation from the company to do some soul-searching.
In the six years since I’d founded TOMS, it had grown from a start-up based in my Venice, California, apartment to a global company with more than $300 million in revenue. I still owned 100% of it, and we were still delivering on our promise to give a pair of shoes to someone in need for every pair sold, but I felt disillusioned. My days were monotonous, and I had lost my connection to many of the executives who were running daily operations. What had once been my reason for being now felt like a job.
During my months away, I did a lot of thinking about my personal “why.” I knew why I had started the company, and why people joined me in the early days. And I still believed in our mission and the impact we were making. But I was no longer sure why I wanted—or even if I did want—to continue driving the business forward.
Eventually I came to a surprising conclusion: I felt lost because TOMS had become more focused on process than on purpose. We were concentrating so hard on the “what” and “how” of scaling up that we’d forgotten our overarching mission, which is to use business to improve lives. That is our greatest competitive advantage: It allows us to build an emotional bond with customers and motivate employees, because they know they are shopping and working for a movement bigger than themselves.
After my time away from the business, I returned with renewed energy. My mission was clear: Make TOMS a movement again.
The Company’s Genesis
I got the idea for TOMS on something like a sabbatical. After founding and selling several companies (a door-to-door laundry business, an outdoor advertising company, an online driver’s education service) and making a brief detour into reality TV (I competed on The Amazing Race with my sister and created an all-reality cable channel), I decided to take some time off in 2006 to learn to play polo in Argentina. I know that sounds like a strange mix of pursuits, but I’ve always been happiest chasing my latest interest.
While in Buenos Aires, I met a woman who worked for a nonprofit, delivering shoes to children in poor rural areas. She invited me to accompany her, and the experience was truly life-changing. In every town we were greeted with cheers and tears. I met a pair of brothers, ages 10 and 12, who had been sharing a single pair of adult-size shoes. Because the local schools required footwear, they had to take turns going to class. Their mother wept when I handed her shoes that actually fit her boys’ feet. I couldn’t believe that such a simple act could have such an enormous impact on people’s lives.
I decided to do something more. Rather than go home and ask my friends to donate their hand-me-downs or make financial contributions, I would start a for-profit company based on the buy-one, give-one idea. I named it Shoes for Tomorrow, later shortened to Tomorrow’s Shoes, and finally to TOMS so that the name would fit on the little tag on our shoes. (To this day, some people are puzzled when they meet me, because they’re expecting a guy named Tom.)
My polo instructor, Alejo, and I persuaded a local shoemaker to help us make a more fashionable version of the alpargata, a canvas shoe worn by Argentines for a century. To borrow a term from Eric Ries’s The Lean Startup, our first shoes were a “minimum viable product.” They had glue stains on them, were in Argentine rather than U.S. sizes, and didn’t always fit the same from pair to pair; but they were just good enough to test the concept among my friends in Los Angeles. My goal was to sell 250 pairs so that I could give away 250 pairs in Argentina.
Back home, I hosted a dinner party for some women friends to get their advice. They loved the shoes and were even more excited when I shared my vision of helping children in need. They suggested a number of local boutiques that might serve as retail outlets, so I went to one of them, American Rag, and asked to speak with the shoe buyer. I knew my shoes couldn’t compete on quality or price alone, so I told the buyer why I wanted to sell them and give them away. The store became our first retail account.
On a Saturday morning soon after that, I woke up to find my BlackBerry vibrating. At the time, the TOMS website was set to e-mail my phone every time we made a sale. Usually it was just family and friends placing orders, and the occasional buzzing was a nice surprise. But on this day the phone kept buzzing…and buzzing…and buzzing. At brunch I started flipping through the Los Angeles Times and saw that what I’d expected would be a short piece by its fashion writer on TOMS had landed on the front page of the Calendar section. By the end of the day we had sold 2,200 pairs of shoes. This was incredible—but it was also the company’s first supply-chain management challenge. We had fewer than 200 pairs in my apartment.
Over the next six months I worked with a team of interns to turn my “shoe project” into a real company. We received a flood of additional press from Vogue, People, Time, Elle. Soon celebrities such as Tobey Maguire, Keira Knightley, and Scarlett Johansson were being photographed wearing TOMS. Nordstrom insisted on carrying our shoes. By the end of the summer we had sold 10,000 pairs. The “why” of TOMS was clearly resonating.
By 2011 TOMS had an annual growth rate (for five years running) of 300%, and we’d recently given away our 10 millionth pair of shoes. The one-for-one model—initially dismissed by traditional businesspeople as nice but not financially sustainable—was clearly a success, and we’d decided to extend it to eyewear, giving away pairs of glasses or medical treatments to restore sight for pairs sold. We had set ourselves apart in other ways, too: A third of our revenue was coming from direct-to-consumer sales via our website, and we spent virtually nothing on traditional advertising, relying instead on our 5 million social media followers to create word-of-mouth buzz.
In September 2012 Heather and I got married. I’d brought in an experienced team of executives to manage the day-to-day operations, and for the first time since founding the business, I felt I could take a break from it. I was relieved, but also deeply unsettled. The excitement and camaraderie of our start-up was beginning to be replaced by a more hierarchical culture. The leadership team was bogged down in personality conflicts and bickering, with key members insisting that we implement processes and systems similar to those used at their previous companies. As an organization, we were so focused on protecting what we’d already built that no one was thinking about new possibilities. I noticed that longtime employees were starting to leave for more-entrepreneurial organizations, and I realized that, secretly, I wanted to follow them.
I’d started and sold companies before—but TOMS was different. It was more than a company to me: It was my life. So this period of uncertainty felt like having problems in a marriage. You thought you’d found your business soul mate, but you’re not in love anymore. What do you do? For me, the sabbatical was like going into couples counseling. I wasn’t walking away; I was putting in the work to see if TOMS and I could reconcile. If it had been a pure business problem, I would have organized a strategic offsite. But this was both corporate and personal. I needed to figure out the future course of the company and my role in it. And I tend to do my best thinking alone.
When I left for Austin, I was careful not to make a big deal of it—I told people the break was an extended honeymoon with Heather. But once there, I dedicated a lot of time to private contemplation. I also started talking to anyone I thought might offer good advice and inspire me. I spoke regularly with my executive coach, entrepreneur friends, and business and nonprofit leaders I admire. I traveled to conferences around the country to learn from experts in social enterprise and international development.
It was during this time that I read Simon Sinek’s fantastic book Start with Why, which looks at leaders who inspire action, such as Dr. Martin Luther King Jr., and companies that create products so compelling that fans will line up to buy them, such as Apple. Sinek argues that one can build and sustain these movements only when leading with the “why.” People follow you, buy from you, when they believe what you believe.
The more I thought about this idea, the more I realized that TOMS had veered away from its “why.” In the early days we always led with our story: We weren’t selling shoes; we were selling the promise that each purchase would directly and tangibly benefit a child who needed shoes. But our desire to sustain the company’s hypergrowth had pushed us away from that mission and into competing on the “what” and “how,” just as every other shoe company does. In an effort to meet aggressive sales goals, we had begun promoting deals and discounts on our website—something we’d never done before. Our marketing increasingly felt product-focused rather than purpose-focused. And as the leader of TOMS, I was ultimately accountable for those mistakes. That was a tough pill to swallow.
Another breakthrough came during a Dallas Cowboys game. I was introduced to a man named Joe Ford, who told me that his son, Scott, was also using business to improve lives, but through the coffee trade in Rwanda. Joe explained the importance of water in the coffee supply chain. When beans are processed with clean as opposed to dirty water, they are transformed from a commodity to a specialty and can be sold at dramatically higher prices. Scott’s company, Westrock Coffee, was helping Rwandan growers build community-owned washing stations to increase the value of their product and to prevent the spread of waterborne disease. It was also buying direct from growers, helping to break up unfair industry price controls, and offering low-interest loans as an alternative to those from predatory lenders. Best of all, Westrock was a profitable business that sold fantastic coffee.
After meeting Scott, I realized that a TOMS coffee venture could have a real impact—and maybe lift me out of the funk I was in. Like most entrepreneurs, I get a high from starting things and doing the unexpected. No one doubted our shoe business anymore, but few people would imagine that we could also sell coffee. And the expansion could pave the way for a new TOMS retail experience, something I had long wanted to try. We could create cafés and use them as community gathering places to share ideas, get inspired, and connect guests with the “why” of TOMS. The vision—and the challenge—pumped new life into me.
I told our senior executives about my idea. Like TOMS Shoes, TOMS Roasting would have a one-for-one model: For every bag of coffee we sold, we would provide a week’s worth of water to a person in need. When they gave me the green light, I quickly assembled a small team of TOMS employees to get the project (code-named “Burlap”) off the ground. I was still living in Austin, but the more I discussed my plans with Heather (an early TOMS employee who knew the business—and me—better than most people), the more she realized it was time for my sabbatical to end. We’d just bought a house, and we had a great group of friends, but in early 2013 she said to me, “Blake, we need to move back to L.A.” If I was going to fully recommit to TOMS, it couldn’t happen from afar.
Coming back was great, but I quickly made some of the classic mistakes that founders do upon rejoining their companies. First, when I outlined my vision for using the coffee business to reinspire the “why” of TOMS, I did so without a fully thought-out plan. That made some of my coworkers anxious. Second, I asked the company’s CMO to step down so that I could take over brand marketing and communications, which I considered to be key pieces of our new direction—not only for integrating the new business but also for reigniting the passion of our customers. But I quickly realized that I’m better in the founder’s role—setting the vision and traveling the country to communicate it, not running marketing or any other department.
Despite these hiccups, by the end of 2013 we had launched the coffee business nationally in Whole Foods stores, opened up three of our own cafés, and started exploring international expansion. To date we have provided more than 175,000 weeks of clean drinking water to people in need around the world. The new product generated a ton of PR and got our customers excited about TOMS again. But most important, I believe, it gave our employees permission to think bigger, to challenge the status quo, and to reconnect with the mission of the business.
It also got me thinking bigger. I realized that my ultimate aim was to create the most influential, inspirational company in the world, which would be possible only with more help. I decided to meet with private equity firms that had a track record of helping entrepreneurial companies into the next stage of growth, and after a thorough search, I sold 50% of TOMS to Bain Capital in mid-2014. We clearly defined my role and responsibilities and agreed to hire a world-class CEO.
The man we found, Jim Alling, embodies the core values of TOMS. Although he scratched his head a bit over the “coffee decision” (he spent much of his career in senior roles at Starbucks), he understood what the move represented. Creating TOMS Roasting wasn’t an attempt to compete with big chains but, rather, a bold move to reengage with the community and help more people. Over the past year Jim has brought great stability and strategic thinking to the business. We now also sell bags, to fund safe births for mothers and babies in need, and backpacks, to support anti-bullying programs.
As TOMS approaches its 10th anniversary, I feel more energized and committed than ever. As far as we’ve come, I still see tremendous opportunities to grow our movement. The “why” of TOMS—using business to improve lives—is bigger than myself, the shoes we sell, or any future products we might launch. It took going on a sabbatical to realize the power of what we’ve created—and the best way for me to move it forward. Now that I have a clear purpose and amazing partners supporting me, I’m ready for the company’s next 10 years and the many adventures ahead.
A version of this article appeared in the January–February 2016 issue (pp.41–44) of Harvard Business Review.
Blake Mycoskie is the founder and Chief Shoe Giver of TOMS.
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