Blake Mycoskie: Sole trader to serial philanthropist
Catalog model, soap opera walk-on and seafood restaurant waiter are all jobs that Toms shoes founder and now multimillionaire Blake Mycoskie did growing up, but it was tennis that gave him skills for life as well as earning him hundreds of dollars an hour.
Raised in Arlington, Texas, his mom enrolled him in an agency that put him in a Kmart ad, as well as a couple of episodes of “Dallas,” where he featured as a playmate of JR’s son. But after his freshman year at college back in the mid-1990s, he needed a summer job. He’d won a partial tennis scholarship to SMU (Southern Methodist University) in Dallas and his father had a word with him, Mycoskie told CNBC’s “The Brave Ones.”
“’Tennis is great, but I don't think you're going be the next Andre Agassi’,” his father had said. “’You've got to … learn some work ethic beyond this incredible work ethic as an athlete.’”
Born to a cookery writer mother and doctor father, Mycoskie’s start in life was pretty traditional: “Everyone in my family had very, kind of, specific careers based on their education,” Mycoskie said.
Mycoskie, now 42, figured that waiting tables at a mid-level restaurant could be a job that made the most amount of money in the least amount of time. “High enough checks that you get good tips, but also tables that turn fast enough that you're not, like, at a fine dining where you're there all night,” he said. But memorizing menus at the local Pappadeaux seafood restaurant wasn’t for him.
A chance conversation took him to the first job that would make him good money: tennis coaching, which he would carry out on the family’s court. He delivered flyers to a three-mile radius. “Within the next week, I was fully booked up, and I was making like, you know, hundreds of dollars an hour, because I had multiple kids paying $25 each.”
“I had this discussion with my dad that night at dinner. And he couldn't argue with it. I think that's when he first realized, like, I was going to look at things a little bit differently than the traditional path.”
But back at college, an Achilles tendon injury stopped him playing tennis for the rest of the season and crutches plus a leg cast meant he couldn’t carry a basket of laundry down the stairs to wash his clothes. Then a conversation over Thanksgiving with a friend’s father sparked off his second business idea. “’You guys should start a laundry business. There’s probably a lot of kids at SMU that don’t want to do their laundry,’” he said.
It was 1996 and Mycoskie was 19. “We bought an old truck from a FedEx junkyard for, like, 1,600 bucks. And I had money, that was my money from teaching tennis the summer before.” At first, no-one trusted them with their clothes.
“We had to create kind of this illusion that there were more customers, because no one wanted to be first … We only had maybe like 10 or 15 customers that first semester. And we basically, every time we had to deliver their laundry, delivered it, like, six times. So people would just see the truck moving around the campus, and us going forward and backward all the time.”
Getting those initial customers was a great business lesson, Mycoskie said. “If you provide a great service, then they'll become the evangelists that will tell so many people. And that's how you can grow your business … And that was very much the case (with) Toms.”
He ended up dropping out of college when EZ Laundry got successful, eventually selling his part of the business a few years later. He got that work ethic his dad wanted him to.
“Because I dropped out of school at such a young age and because I was running a business at 19, I grew up really fast. People used to say I was, like, the oldest 20-year-old or oldest 25-year-old they ever met, because all I did was work. I mean, literally I was just as focused as I was as a 15-year-old playing tennis,” Mycoskie said.
Visiting a friend in Los Angeles, Mycoskie noticed huge billboards promoting TV shows and movie stars and wondered how much the ad companies charged for them. So he called one. “I kind of pretended to have a start-up … And they were saying something like, you know, $70,000 a month or something just crazy. And I thought: ‘How does this make sense?’ And the only way I could understand it … was it was all ego-driven.”
He thought about where else there were stars with egos and realized that Nashville could be a good spot. He spent a year getting the city council to give the adverts the go ahead. “The only way they approved it was (if) I called it ‘Country Music Art.’ It was never advertising … You basically had to convince them that we would only put, like, the covers of new albums. So we put like the Dixie Chicks, then Shania Twain and Garth Brooks, but never like, ‘Buy for $12.99 at Best Buy’.” The business made “great” money, Mycoskie said.
“It was kind of a great one trick pony in Nashville, because you had a very specific industry, (a) very specific audience, didn't require a bunch of wholesale staff, and all the stuff that would take away some of the margin.” Mycoskie expanded to Dallas before eventually selling to Clear Channel, but not before he’d made his name as a reality TV star.
Mycoskie and his sister Paige had applied for island castaway show “Survivor.” They didn’t make it on, but CBS called them about another series, “The Amazing Race,” on which, in 2002 they competed as a team, traveling around the world for a month taking on physical and mental challenges in an attempt to win $1 million in prize money.
They lost by four minutes. “It kind of opened my eyes not only to … some of the challenges of the world and poverty and things that I saw that I'd never seen before, but it also, kind of introduced me to Hollywood and Los Angeles and all these areas that I hadn't really spent time in,” Mycoskie said.
He made some contacts, moved to LA and set up a reality TV channel, where he’d take stars of shows like “Survivor,” and create behind-the-scenes content around it. “My idea was pretty simple. It was like, OK, let's take these people who were loving their 15 minutes of fame. Let's extend it.” He was 25.
“(I) just started hustling. I ended up getting a bunch of the winners of reality shows to invest in it, which was pretty awesome. So, you know, the people who won ‘Survivor’ and the guys who beat me in ‘The Amazing Race’ were writing me checks for hundreds of thousands of dollars to try to launch this thing.”
For around three years, Mycoskie worked on the business, figuring he had a young audience who loved reality stars and advertisers who wanted to reach it. But he had a distribution problem.
“Ultimately, Fox just started their own reality channel, because they kind of saw what we were doing … So they leap frogged us because they had all the content, they had the distribution, they owned satellite direct TV at the time.” Mycoskie didn’t meet Fox founder Rupert Murdoch, but he felt like he was his “nemesis.” “It’s funny to think back now, like, how personal of a battle that felt like as a 25-year-old against Rupert Murdoch,” he said.
The reality business didn’t work out for Mycoskie, and he had to let around 25 people go, with the company losing “millions” of dollars. But at a barbecue to honor the end of the firm, he got talking to a colleague’s son who was bored with his driver’s education classes.
“We recognized that one of the biggest problems with driver’s ed is that the teachers were not the most inspiring people in the world. And that the teenagers did not want to listen to these old, kind of retired people who were teaching drivers ed,” Mycoskie said. So he started Drivers Ed Direct, teaching online and using Prius cars for instruction, which he thought would be more appealing and would get him publicity. He owned around a third of the business and partnered with industry experts.
After starting four businesses and selling three of them, aged just 29 Mycoskie was thinking about the rest of his life. “I had done, like, outdoor advertising, drivers education, laundry, (and a) TV network. I mean there's no consistent theme to what I was doing except each of them were kind of these spontaneous ideas that I thought, you know, ‘What if this would work?’ So, I decided just to take some time off.”
Mycoskie had visited Argentina during “The Amazing Race” and had an interest in polo, having been in an LA league. Googling “Polo camp, cheap” he found a place outside Buenos Aires and used air miles to fly there. A chance meeting in a bar and a conversation with his polo tutor led to the founding of the business that would change his life.
Mycoskie spent around a month in Argentina, hanging out, visiting vineyards and playing polo. He noticed on his travels that some of the children he saw had no shoes, and then a couple of weeks later he had a conversation in a bar with some English-speaking women.
“They had finished up this shoe drive they'd been doing for a couple weeks, where they were going around to … the wealthier parts of Buenos Aires, collecting shoes from people, you know. And they were taking them to this area outside of Buenos Aires where many of the kids needed shoes.” Mycoskie joined them on their next distribution trip.
Mycoskie’s parents were pretty charitable, making donations to charities around Arlington. “We had done some things around Thanksgiving and Christmas where we adopted a family and delivered a turkey and these types of things. But I had never been on my hands and knees and faced some pretty intense poverty and also seen the joy in that poverty from something simple like a pair of shoes,” he said.
Back on the polo ranch, his teacher Alejo Nitti asked him a question of the shoe drop. “I say to him: ‘You know, the problem is, who's going to give them the next pair?’ I mean, that was the concern. So what (do) we have to do to continue doing this,” Nitti told “The Brave Ones.”
Mycoskie had noticed Argentine city dwellers and polo players wearing alpargatas, rope-soled espadrille-style shoes, and had an idea. “What if I sold these really cool shoes that I had only seen in Argentina to my friends back in California, and every time I sold a pair, I would also make another pair to give to one of these kids?” he wrote in a February 2006 journal entry.
On that trip, Mycoskie tapped Nitti’s contacts and together they made 250 pairs of shoes, initially calling them “Tomorrow’s shoes,” but shortening it to “Toms” to better fit on a label. Mycoskie tried to sell them to five or six stores around LA, being thrown out of one “Pretty Woman”-style, before a buyer at American Rag showed interest and bought around 80 pairs.
“I started telling her the story before I even pulled out the shoe. And she was so amazed. She's like, ‘You're going to give away a pair of shoes every time you (sell one), like, what are these shoes?’ And that lesson actually stuck with me for the last 12 years, I think. You know, 90 percent of what we try to do at Toms has become, is a storytelling company, and to lead with the impact and the story and what we do,” Mycoskie said.
The next lucky break was a short write-up in the LA Times, which led to 2,200 orders when Mycoskie only had around 100 pairs left in his apartment. “Most entrepreneurs, part of our life is just spinning in just pure panic and fear. And that's what drives us to kind of figure it out. And so I did what I think a lot of entrepreneurs do is I start putting ads for interns on Craig's List,” Mycoskie said. The interns would call people to reassure them that the shoes they paid for would be on their way – in eight weeks’ time. Meanwhile, he headed back to Argentina.
“I was in pure panic mode. And so I spent about another six or eight weeks down there, finding a few other people that could make shoes, kind of cobbling together enough people to where we could start actually having some form of an assembly line, right? And so then we got to where we can make about 1,000 pairs a week. So I felt comfortable to go back (to LA).”
His next break was something all fledgling fashion designers dream of: a write-up in Vogue. At the time Toms was still run out of Mycoskie’s apartment and had no staff. “And Vogue, if you see the article, I mean it really looks like I know what I'm doing. I'm, you know, splayed out in this beautiful suit. And I got my Toms on. I'm leaning next to this, like, 1956 Porsche. And it just looks like I'm totally in control and like we're a real company.”
Calls from the likes of Bloomingdales, Macy’s and Barney’s followed and that summer the company sold 10,000 pairs – meaning that it was time to head back to Argentina to start giving shoes away. Mycoskie and Nitti rounded up friends and family and drove from village to village dropping off shoes, in “probably the best trip of my life.”
In the early days of Toms, much of Mycoskie’s time was spent traveling in the U.S., telling the story at universities, stores and on TV. During one 2008 interview, he was talking about how his BlackBerry let him approve designs and orders and email instructions to his team from anywhere in the world. An AT&T advertising executive picked up on it (luckily Mycoskie used the network) and he agreed for the company to film a shoe donation trip in Uruguay. AT&T ran the commercial during U.S. Masters coverage, and on major shows such as “American Idol,” and “Big Brother,” and it also produced a commercial celebrating Toms 10-year anniversary in 2016.
By 2011, the Toms had become the “one-for-one company,” expanding into eyewear and providing medical treatment to people with sight problems. In 2014 coffee brand Toms Roasting Co was launched, with the firm partnering with organizations to provide clean water to those who need it. In 2016, the business turned over around $400 million and since it was founded, the company has given away more than 86 million pairs of shoes.
Critics of the business have suggested that creating employment would be more helpful than donating goods, and in 2012, the company committed to making at least 30 percent of all its “giving” shoes in the countries where they were donated.
“Sometimes you can have criticism and you can either fight it or ignore it. But often times, if you try to have some empathy and understand where it’s coming from … you can directionally make decisions that will influence the way that you're viewed. Today, you know, there's probably still lots of critics of Toms, but I think a lot of those early critics — some of them I've met at conferences … — have actually come up to me and said, it was pretty amazing that we as a brand kind of pivoted on something as big as a supply chain in response,” Mycoskie said.
The company added winter boots to its donations in 2012 and sports shoes in 2013, as well as continuing to provide its original alpargatas.
The young entrepreneur inspired by Blake Mycoskie
During a trip to Ethiopia in 2009, Mycoskie visited a school in Ambaras in the north of the country. He played soccer with a group of children and got into conversation with Wubetu Shimelash, then 14, who was keen to practice his English. Mycoskie, who has since described him as “incredibly curious and incredibly positive,” gave Shimelash his business card and said: “If you need help with your education, you can reach out to me.”
Months later, Shimelash found an internet café, a 12-hour walk away in the town of Debark. “(I had) no idea of what electricity is, what a computer is or what email is,” he told CNBC by phone.
Mycoskie replied, and with the blessing of Shimelash’s parents, he enrolled in Addis Ababa’s School of Tomorrow, (a name strikingly similar to Toms’ original name, “Tomorrow’s Shoes”), followed by high school in Cedar County, Iowa. Now 23, Shimelash is a student at Wake Forest University in Winston-Salem, North Carolina, and says he has a similar entrepreneurial drive to Mycoskie, running tour company Simien Eco Trek, based in Ethiopia’s Simien Mountains close to where he grew up.
“When you're an entrepreneur, you've got to be a hustler and I think I learned that from Blake as well…you know (he was) running several businesses before starting Toms,” he said. He also advocates doing well by doing good, with the tour company hiring people locally and donating 10 percent of its profits to support education.
“I'm really eager to help in my community and just put whatever resource I have to build this school so that other kids who did not have the opportunity I had, will have resources like books,” he said.
As a child, Shimelash would make and sell hats from wool from the sheep grazing near his home, and help carry tourists’ bags for tips, as well as learning a few words of English from them. He made his own shoes from old car tires to help him walk the five-hour round trip to and from school. Now as well as studying, he is an ambassador for the One Young World summit (rather like a young person’s World Economic Forum) and is involved with several organizations including refugee advocacy group SAFAR, children’s charity Unforgotten Faces and the humanitarian non-profit Rotary International.
Lke many entrepreneurs, Mycoskie loves the building part of a business. Mac Todd, who runs upscale LA golf coaching center UGP, met Mycoskie in 2015 when he’d been using the facility for around a year.
“He saw me one time in the parking lot getting his clubs out of his car and he said, ‘It's really been awesome, I've been (coming here) for a year … and it really has an ownership mentality, what are you doing? And I can really see entrepreneur written all over this.’,” Todd told “The Brave Ones.”
Mycoskie invited Todd to the Toms office. “And Blake just said: ‘Pour your heart,’ And so for two hours, I just explained my story… He essentially goes, ‘I like the way you think.’ And he goes, ‘Let's explore this further,’.” But with that, Mycoskie grabbed his surfboard and was off on a surf trip, leaving his team to further vet the golf business, for a potential investment. Todd had already had around 100 people interested in investing but chose Mycoskie because “he truly is an entrepreneur.”
Todd and his team were grilled ahead of the deal being done. “I was getting audited and due diligence and it was just a very taxing process for a young entrepreneur that has never done that before. I mean, they were digging into everything we've ever done,” he said. Then two weeks later, Mycoskie called him to arrange a coffee, which Todd thought might mean bad news.
“He goes: ‘I just want you to know that all of my principle investment and all future returns are going to the First Tee nonprofit.’ And we both started crying.” The First Tee is a high-profile organization that teaches young people life skills and values as well as golf and has produced PGA tour players. Nearly 40 percent of UGP’s profits will go to it.
“He actually likes to get his hands dirty. There’s nothing more than he likes to do than come to our staff meetings where it's 25 employees and have us … all talk about what we're excited about,” Todd told “The Brave Ones.”
Mycoskie’s best advice for handling the stress of running a start-up? “’Workout every day,’” Todd said. “He’s big on fitness, he’s big on meditation, wellness, all that stuff.”
with purpose
Having a higher purpose than simply making sales ends up leading to better commercial results according to business leader Ariana Huffington, who met Mycoskie through a mutual friend. “There's no question that when you're a go-giver rather than just a go-getter, you actually achieve real business results,” she told “The Brave Ones.”
“I think we need to stop thinking of giving as just something nice that you do for the community and be very clear-eyed about the business results,” she added.
Having a buy-one, give-one business model has also helped Toms with marketing, according to Huffington. “One-for-one is simple, it works. And as Blake has said, what it does is it turns your customers into your marketers. So you don't ever have to do a big Super Bowl ad or spend a lot of time and money in advertising and marketing, because your customers are also your evangelists.”
The Toms Social Entrepreneurship Fund invests in for-profit companies that also aim to make the world a better place. “The tradition has been that you build a company, you make a lot of money, and then you give back. And that's being changed. Now, more and more entrepreneurs want to integrate giving into their original business plan,” Huffington said.
Mycoskie is also a graduate of the Hoffman Institute, a personal transformation retreat where in 2016, he identified a cycle of accomplishment and burnout that contributed occasions when Toms had lost its way, such as a 2012 focus on sales and price over the overall buy-one, give-one purpose, he told Inc.com. During a sabbatical that year, he told the online publication, “I looked at all the things the Toms brand can do, and I could see that our mission is much bigger. It's about using business to improve lives.”
By 2014, the pressure of running what had become a multimillion-dollar business was getting to him, owning 100 percent of the company and not having had any investment or external advice.
“And business was getting tougher. I mean 2013, 2014, 2012, we were a rocket ship. And you can't be a rocket ship forever. And then you have to address all things that you, you know, maybe didn't do as well as you did on your rise up. And you have to really get processes and systems and the right supply chains,” he told “The Brave Ones.”
“I kind of woke up in early 2014 and largely just felt overwhelmed, lonely and super stressed, because now it went from being (a) super fun start-up environment, to we have a half a billion-dollar business that's giving away tens of millions of shoes away. People were depending on us now. And, I mean, I can't mess this up.”
He met 14 potential investors. “It was, like, the most exhausting two weeks of my life. We got 11 offers, which just blew me away. And for crazy amounts of money.” He whittled it down to four, after spending the summer going to dinner, meeting families and even asking investors to take psychological profile tests. Josh Bekenstein, co-chair at Bain Capital which ended up investing into the business, told him: “I don't think we've ever had anyone do more diligence on us than you did.”
Mycoskie earned around $300 million from Bain’s investment. “I talked to my wife and I was like, ‘Look, we're never going to spend all this money. And there's a lot of people who write checks as philanthropists. So, let's take half of it and dedicate it to investing in social entrepreneurs. And if we make good investments, then that fund will get bigger and bigger, and then long after we're gone this will exist,” he said. The Toms Social Entrepreneurship Fund was set up in 2015.
He’s tempted to tell founders directly what to do with their businesses, “Investing's very different than running a business. (It) can be very frustrating at times ... You're like, ‘Just do this,’ but you can’t say that to the founder. So I’ve learned to try to be kind of a quiet investor and a cheerleader and help when I can, but not get in the weeds,” he said.
Companies the fund has invested in include Ava, a speech-to-text app that helps deaf and hard of hearing people follow group conversations and Lxmi, a skincare company that uses a rare nilotica nut oil from Uganda in its products that are made with a fairtrade cooperative.
Mycoskie wants his family to get involved in future. “It’s been amazing. It’s kind of been like the beginning (of Toms). And I think it'll even become more and more a part of my kind of day-to-day life as I get older too, and as my kids get old enough to help me with (and) think about these investments and hopefully take interest in investing in companies that are making a difference in the world.”
Correction: This story has been updated to correct the name and title of Josh Bekenstein, who is the co-chair at Bain Capital.
Design and code: Bryn Bache
Editor: Matt Clinch
Executive Producer, The Brave Ones: Betsy Alexander
Producers, The Brave Ones: Kevin Kane
Images: CNBC, Getty Images and Wubetu Shimelash