July 26, 2012

[TOMs] -- Dude, What Happened to all the Socks?

When TOMs shoes first came out they were little more than a product extension of something you might find off the hemp rack in Whole Foods -and Blake Mycoski, for the most part, was just another name. The shoe, based off the design of the popular Argentine shoe, called the Alpargata, seemed like nothing more than an overly priced piece of oddly shaped canvas following in the footsteps of the Chuck Taylors and Vans before it, differentiated by this new Buy One Give One Model.  It wasn’t odd to see 1 out of every 200 people wearing a pair last summer. But then something happened recently, and like UGG's, everyone had a pair. And then there were 2 inch wedges (which I heart), then bling'ed out ones (which a friend wore to her wedding); to most teenagers, they have become what Doc Marten’s were to my generation (which I never had).

Blake first got attention with this unique buy-one-give-one model unheard of from previous for-profit companies; giving away product for free seems like the obvious way to bankrupt a business. Then he got attention from the business world for being a successful for-profit that actually carried out a non-profit mission. Call it a business model hybrid. It seemed Blake had unearthed the holy grail to business success - win consumer's over, be a humanitarian and still net a profit, and consumers were loving it.

As of recent, however, he’s been getting a lot of criticism claiming that his business model doesn’t even solve an economic problem with the argument being that the real issue is poverty, and his giving may, by virtue, prolongs the very thing he’s trying to prevent. I have mixed feelings when it comes to TOMs Shoes. On one hand, the part of me that isn’t a skeptic (and therefore a marketer) would like to believe that Blake is an altruistic, humanitarian seeking entrepreneur, whom, as a result of doing something good, has managed to profit – you know, that whole “Do what you love thing”. The other side of me, however, knowing that this is the sixth of Blake’s business endeavor’s (five if you don’t consider Amazing Race one), and that none of the predecessors had anything to do with “giving”, makes me thing that TOMs is nothing but cleverly packaged marketing backed by common capitalistic production practices (TOMs are produced in Ethiopia, China and Argentina).  From a business perspective, they both are tactics, but it would be wrong if Blake Mycoskie is the later, yet campaigning on the former -- that’s just downright dirty. And even though it seems like he's solving an economic problem, what if by way of giving, he's actually furthering the welfare driven state-of-mind for people of these small economies being taught that America is good for giving hand outs.

I’m torn on this one. I want to believe that for-profit companies are motivated beyond the balance sheet, just like I want to continue to believe in mass-produced “organic” products, and I fully support the idea of giving, especially to kids. But I also believe in clever marketing and know that cheap manufacturing is the difference between being a  6 gee’s  company to being a 7 gee’s kind of company. Whether he intended on riding the tailcoat of humanitarianism fueled by the juices of outsourcing, Blake's now caught in it, and some people don't like it.

Do I still want a pair of TOMs? Of course? Will I get one when they go down to $30? Probably. Do I think this giving is sustainable? Nope. And then what? Will TOMs be playing the price game? Will they have to sacrifice their model?

Thanks for reading!

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  1. FYI - the model you describe, typically, is called Social Entrepreneurship. Basically, the main tenet of this type of model is that the company's product/service/offering either directly addresses a social issue or a substantial % of profits (say 5%) goes towards addressing a social issue. The business and the social issue need to be tied together. TOM's, most would argue, is not technically this.


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