Blake Mycoskie, founder of ethical shoe giant TOMS, on his new investment fund, tech for good & his growing ranks of socially-minded entrepreneurs.
You probably already know TOMS, the ethical shoe company, that give away a pair of shoes every time you buy a pair.
In the past 10 years the charitable company has given away almost 50m shoes around the world, as well as funding sight-saving surgeries, safe drinking water, and creating jobs in disadvantaged communities.
What you might have missed however, is that its founder Blake Mycoskie is now on a new, even bigger mission. A Robin Hood of investment he’s creating a merry band of new socially-minded businesses.
First founded in 2006, TOMS grew to become a $625m business in 2014. That year, Mycoskie sold half of TOMS to investment bankers Bain Capital, making him personally worth around $300m.
“I never had investors,” Mycoskie told The Memo. “I was really fortunate I was able to fund the growth of TOMS in the early days. It was a lot of stress to not have partners and people to really rely on to make big decisions.”
“But I got to a point that I really wanted to have partners and other people to help and make decisions to take TOMS to the next level,” he said of the sale. “It was hard to attract a world class CEO if you own 100% of the company.”
“Bain believed in our One for One business model and was committed to supporting the impact of our social mission. They want to ensure that TOMS continues to be equipped to give in more impactful ways and make a difference in people’s lives through philanthropy.”
There are many ways your typical businessman will spend a $300m windfall; investing in property, creating a family trust, funnelling cash into stocks. But as Mycoskie’s proved with his unusual charitable business model, he’s not one for conformity.
“I wanted to put the money to good use,” Mycoskie said.
“When the Bain transaction happened, I woke up. It was like I was in a dream. All of a sudden, I had all this wealth that I never thought I’d have.”
“I thought, what can we do differently? So I took half of the proceeds from the sale to support socially minded entrepreneurship.”
This became the TOMS Social Entrepreneurship Fund, an investment pot that’s also been supported by Bain funding.
“We feel it’s our responsibility to make sure there are other great companies emerging that will create a positive impact and unlock new ways business can be a force for good,” said Mycoskie.
Mycoskie is not new to nurturing socially-minded talent: In 2013, he launched the TOMS Marketplace, a curated collection of over 200 socially conscious products. But what makes the ideal investment opportunity for Mycoskie?
“I am agnostic about the exact nature of the startups I am funding,” the businessman confessed. “As long as it has a core social mission as opposed to a corporate responsibility arm and the founders are crazy about what they’re doing.”
“Some of characteristics we look for include; innovative business models that create meaningful change; purpose-driven companies that unleash a groundswell of support & action; iconic, culture-shifting brands built-to-last; value impact as a competitive advantage.”
“We’re finding great reward in knowing even just a small amount can make a big difference in a new project,” he explained.
The TOMS Social Entrepreneurship Fund already has 13 investments in its portfolio ranging from $25,000 to $1m.
“Some are tiny, like ArtLifting, a website that sells artwork created by homeless and disabled people or the petition site Change.org,” says Mycoskie, “but also we are also now supporting Rubicon Global, a data-driven garbage hauler that has been called ‘Uber for trash’.”
Mycoskie has also backed Cotopaxi, an e-commerce adventure brand with a commitment to alleviate global poverty through health, education, and job skills and Owlet, a company that makes smart baby sock to measure and alerts parents to their child’s heart rate and oxygen levels. Other investments like Back To The Roots make of organic, sustainable ready-to-eat and ready-to-grow products; while Thrive Market, is a healthy online food marketplace that give a free membership to a low income family for every paid member who join.
There’s also the soon-to-be-released Ava, an mobile app that uses a device’s microphone to offer real-time conversation transcription services for people who are deaf and hard of hearing, Andela recruitment, Kairos Society networking, and more.
Many of Mycoskie’s investments are online platforms, and all use technology in innovative ways to solve social problems. This is no coincidence, says Mycoskie.
“At TOMS we saw first hand the benefits of the web and social media,” he said.
“When we launched 10 years ago we were essentially digital natives. Faced with tiny marketing budgets, platforms like Facebook were essential in growing our movement and building our brand – some of our best ideas came from our online community, like One Day Without Shoes.”
“Last year, for example, we integrated virtual reality kits into our retail spaces to take customers on a virtual shoe giving trip to Peru, allowing them to experience what happens on the give side of One for One.”
“Technology creates new opportunities for connecting people, ideas, and experiences in ways we never could before, while at the same time becoming more and more accessible to everyone,” he said.
“My hope is to inspire entrepreneurs to think differently, connect more, and take advantage of new technology where purposeful as a means to drive positive change in the world.”
The TOMS-backed businesses will be supported in their growth and benefit from the halo effect of the brand, says Mycoskie. The pioneers will also benefit from being part of a community in their own right, explains the entrepreneur.
“We make connections between the TOMS SE Fund portfolio companies and with others when it makes sense and can be helpful to the entrepreneurs,” he says.
“Most important is listening and learning how we can be most helpful. We’re aiming to bring them together in an annual gathering starting in 2017, creating a platform for them to stay connected and maybe even inspire new ideas.”
Mycoskie’s mission to bring together and support new companies who bring about positive is certainly something we support.
“The aim is to continue to reinvest so we can help more and more social entrepreneurs grow and make a positive impact in the world.”
We hope this ethical approach inspires other business to change for the better.