What Happened to TOMS Shoes: The Death of the Buy-One-Give-One Model

Business as a Force for Good or Just Feeling Good?

TOMS shoes was among the earliest pioneers of the better business movement. As you are already probably aware, TOMS became popular for its charitable buy-one-give-one model, where for every pair of shoes purchased at TOMS, the company gave another pair to someone in need.

Blake Mycoskie founded TOMS in 2006. Before TOMS, Mycoskie already had a couple of successful business ventures. He started EZ Laundry, an on-campus dry cleaning service he sold to his business partner just a few years after starting. He then founded Mycoskie Media, which sold billboards marketing country music. This company was bought by Clear Channel just nine months after its founding.

Blake got the idea for TOMS after vacationing in Argentina in 2006. During his vacation, he witnessed levels of poverty that shocked him. He noticed something consistent among the children living in the villages he visited while accompanying a local nonprofit: they didn’t have shoes.

Comfortable with business and new to impact, Blake sought to blend the two. TOMS and the buy-one-give-one model were born.

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In 2010, TOMS took action to solicit outside analysis from researchers on the impacts of their “buy-one give-one” shoe donation program. Markedly, TOMS wanted researchers to help answer two questions that were becoming points of criticism towards the budding ‘do-good’ brand. 

First was whether or not TOMS shoe donations were negatively impacting local markets. The hypothesis was that locals had less need to buy shoes from local vendors if they could just get them for free. Researchers came to find the donations made a very small negative impact, for roughly every 20 shoes donated into a community that meant one less pair of shoes a local vendor could sell. Not as severely impactful as had been hypothesized.  

The second question was more broad, questioning, what were the impacts of the shoe donations on the kids that received them? While looking specifically at some 1,500 children in El Salvador, the researchers found the impact of the contributions not as life-changing as they were sold. 

To quote Bruce Wydick, Professor of Economics at the University of San Francisco and head of the research team contracted by TOMS to complete this evaluation, “There was good news and bad news for TOMS in the results.”¹ The good news, Wydick explained, was that the overwhelming majority of the kids who received donations loved and wore the shoes frequently.

The bad news was that “there is no evidence that the shoes exhibit any kind of life-changing impact, except for potentially making them [the kids] feel somewhat more reliant on external aid.” To further quote Wydick in his write-up of the experience, he said, “The most negative finding was that the children receiving the shoes were significantly more likely to agree with the statement that “others should provide for my family’s needs” and less likely to say that “my family should provide for its own needs.”

Again, to be fair, TOMS took the initiative to seek outside evaluation (although maybe fueled by criticism). But, as well, despite having the opportunity to do so, TOMS made a point not to make themselves anonymous on the study. As Wydick stated himself, many, many organizations in the sector of developmental aid wouldn’t do the same. 

However, this research was conducted after TOMS had given away some 20 million shoes (again, the company was founded in 2006). And while Bruce Wydick wrote, “it doesn’t appear to warrant mobilizing the national guard to prevent shoe donations,” given the near negligible negative findings. Still using the researchers’ estimates, 20 million shoe donations meant 1 million fewer shoes sold by local vendors trying to make a living in highly impoverished areas. That seems significant, no? 

To me, all this isn’t just bad news, it’s catastrophic. We cannot shake off negligible (truly negative) outcomes and still give each other a round of applause as if this was an elementary school fundraiser organized by fourth graders for lightly used shoe donations.

Like many other businesses in this better business circle, TOMS predicated their business on this promise of improving the world. And often, as consumers of these various products, we might feel like, for that moment of purchase, we’re in lockstep with that mission, too. 

What’s the story everyone told their friends, families, or colleagues when they asked, “Are those a pair of TOMS?” Like any business aligning itself with the “force for good” mission, TOMS benefits greatly from building its identity around changing the world for the better. 

Now, TOMS has since had a litany of financial troubles, the company was valued at $625 million, and Bain acquired a 50% stake in TOMS in 2014, but in late 2019, reports broke that announced TOMS wouldn’t be able to pay its debts and creditors would be taking over the company.

The financial conclusion of this “buy-one-give-one” story aside, what we’re focusing on here is the illegitimacy of its promise. By buying THESE shoes, you, the consumer, are making the world better. 

What does it matter if you aren’t? 

Research conducted by McKinsey and NielsenIQ suggests, consumers are not only seeking out allegedly more sustainable and ethical purchasing options, but they claim they are willing to pay more for those options. 

And so, what does it matter if we come to find these various initiatives and give-back schemes aren’t truly the force for good they are advertised to be, but rather just make us (and others) feel better about buying more stuff? What happens if TOMS is making a bold and ambitious promise that together, with us (provided we buy their shoes), we are “changing the world,” but in reality, we aren’t? Arguably, we could be changing the world for the worse? 

It runs the risk of undermining the entire push to make business better. 

To me, this is an example of fitting “doing good” to business (as I call it Better Business 1.0), versus seeking to do good, and using business to do so (as I call it Better Business 2.0).

The fact that Blake Mycoskie, TOMS Founder, wanted to do something he thought might help others less fortunate than himself is commendable. TOMS certainly played a critical role in influencing the wave of ‘give back’ companies (e.g. Bombas, Warby Parker, Cotopaxi, and many more). 

What I’m saying, though, those part of this Better Business 2.0 movement to come, are those doing their research from day one. They are reluctant to participate in charity for the sake of charity, worse, the “business opportunity.” As we can see, some charity is not necessarily better than no charity. What if all those resources TOMS invested in executing on and telling the story of their “buy-one-give-one model” just went to running the best possible business they could? 

And when I say best, I mean a business that makes their products well, to last, to be useful all while doing the least possible damage they can to both people and the planet. 

I mean a business that operates with complete transparency and integrity, that ensures no one is hidden throughout their supply chain or going without a living wage. 

Charity or some give-back scheme might be a useful marketing and branding strategy, but does it deliver on the mission, stated by TOMS and many companies like them, to use business to serve people (us) and the planet, not the other way around?

What’s might be the impact of a whole generation of children in an impoverished community feeling dependent on external aid? 

Better Business 2.0 means we must test our own assumptions for what’s “doing good” in the first place and take it every bit as seriously as building our business because it is our business. 

That is if we’re truly committed to it. 

We must be cautious to assume the needs of communities outside our own. We must understand that what’s needed of us might not be to “feed the world,” but perhaps to feed our own community and do it in the best-damned way possible. 

The effects of a negligibly impactful aid program aren’t zero. People are living in poverty as a result of rampant global inequality at this moment right now. Time is and always will be of some essence. While none of us are perfect, if we claim to be using business as a force for good, we must use our resources, time, and attention as effectively and efficiently as possible. 

Doing the work of changing the world for the better is incredibly serious, complicated work. It’s why researchers, like those TOMS contracted years into their business, dedicate their lives to understanding and studying how that’s best done. 

And so, doing business (truly) better means we approach making business better with incredible humility. We must accept that what’s advanced the movement of ethical, sustainable, and impact-driven business here might not be enough to take the movement where it needs to go. 

And so for TOMS, that was a lot of shoes made, resources expended, time spent, and branding dollars invested into spreading this message: 

“We’re in business to improve lives.”

I’m not here to trash the wave of better businesses that have already established themselves. Mycoskie’s book, Start Something That Matters, was a major inspiration to me (and I’m sure many others) as I went through an existential crisis about what to do with my life in my early 20s. 

But I’m here to challenge the business community of today and tomorrow to be better. To focus first on what’s better, not first on what’s better for business. Period. 

It’s one thing to say we’re in business to better the world; it’s another thing to do it and be humble enough to acknowledge that we may not have all the answers to do so.  

Building a business that betters the world is not about making you or your customers feel “less bad” about their purchases and your profits by kicking a little back to a feel-good initiative. 

It’s about bettering the world…seriously and measurably. 

And bettering the world isn’t about us and our businesses—it’s about everyone (probably starting with those who need help first). But it’s wrong to assume that our better is everyone’s better. It’s hard to assume your neighbor’s better is your better. 

I understand the impulse to visit whatever community Mycoskie did in Argentina on his vacation and see children without shoes and want to act. To do something. Or, as Mycoskie would say himself, “Start Something that Matters.” 

But the world is an incredibly complicated place. To make things better is admirable, and we must seek to appropriately channel and encourage our and others’ desires to do so. But, we must also have the discipline, seriousness, humility, and courage to go deep to even figure out what’s “better” in the first place. 

So, to better the world and use business as a force for good, we have to be serious about what that means and, therefore, what that means for business.

A mission statement can’t just be good marketing or branding; it has to be a commitment. We must remain humble not to be attached to what “better” might look like, especially for communities outside our own.  

For “better business” to indeed be better, we need to change the metrics we use to measure business success. 

We need to change our approach to business and the position and role of business in our local and global communities, we need to change and evolve the purpose of business so that, yes, we can deliver on doing all our parts to make things truly better.

Footnotes

¹  Wydick wrote up a brief summary of his experience working with TOMS, here. He explained he and his team were contracted with answering two questions 1) did giving away free shoes negatively affect local markets? 2) did the children who received the shoes actually experience positive outcomes? While I referenced the answer to question #2 in the text, Wydick and his team found the impacts of the donations on the local shoe market to be marginally negative. He shared, “Local shoe vendors sell about one fewer pair of shoes for about every 20 pairs of shoes donated into a local community.”