Toms Shoes: The Big Business of Being Good

Bad boys are no longer in style, and it looks like being good is the new black. Many companies are now incorporating feel good, do good deeds directly into the culture of their business models. It’s not an afterthought. It’s the core foundation built right into the structure of the business from the get-go. Businesses obviously have been “giving back” for years – that’s not new. But what is new is the trend of making the giving back itself the business model, in some cases superseding the importance of product that is being sold. This is called Social Entrepreneurship.

Deeds that were once left in the hands of the non-profit sector, now have spread their wings and landed in the for-profit arena. Some savvy entrepreneurs are now realizing that harnessing the power of doing good can make for a nice profit, an undeniably positive brand image, a loyal customer base, unlimited PR opportunities, and last but not least, charity.

Companies like Terracycle and are following this basic model, but one company that seems to be mastering it is Toms Shoes. Toms is a company founded by Blake Mycoskie in 2006. Blake is in the business of making and selling shoes, but ironically, the product that his company produces and sells is secondary to what his company does.

While traveling on a polo vacation in Argentina, he noticed that the impoverished village adjacent to the polo field was filled with children who were all running around barefoot. Because these children did not have shoes, they were not allowed to attend school and they were susceptible to various diseases that could be picked up from the ground. On his way flying back home from his vacation, Blake decided that he would start a company that would make shoes, sell shoes and give one pair away to needy children for every pair sold. He calls it the “One for One Movement.” This is all very good. He is doing a good thing by helping needy children, I will definitely not argue with that. But don’t forget, he is in the business of making money too.

I’ve been in the shoe business, so I have a pretty good sense about the cost of shoes. Toms Shoes retail for $48. Knowing approximately what shoes of this type would cost to manufacture, I would estimate that in a typical retail scenario, these shoes should retail for about 1/2 of what Toms is charging. These are basic shoes, known as alpargatas or espadrilles. They are simply constructed out of inexpensive materials by low cost labor in Argentina, China and Ethiopia. There are other similarly constructed shoes on the market selling for about $20 – $24.

My point is that Toms charges about twice what would be expected for a shoe of this type in order for the consumer to pay for the additional pair that Toms gives away. Toms is technically giving shoes away, but seems to be passing on the cost of giving them away to the consumer, and even making a profit on the giveaway pair as well. The consumer really is the benefactor in this scenario, not Toms. Another way to look at it is that rather than Toms selling one pair and giving one away, the consumer is paying for two pair and getting one, so Toms can give a pair away at no cost to the company, and at a nice profit. Toms has also set up a non-profit wing of the company, not for the manufacturing of the shoes, but for soliciting and managing volunteers to distribute the shoes to the needy. The giveaway shoes are paid for by the consumer and distributed to the needy by volunteers. Toms Shoes is a for-profit business, so it seems to me that the distribution of the shoes should be paid for out of Toms’ pocket, not by the donated time of volunteers.

It’s a marketing thing, really. He’s doing some good, helping people, making a nice profit, and making consumers feel good by knowing they are helping shoeless children, and in turn doing some serious brand building. It is a win-win situation for everyone as long as the consumer doesn’t mind footing the bill for what Toms markets to be their own generosity. Don’t get me wrong, I have no problem with a business making a profit at all, and donating goods or services to the needy is absolutely a good thing, but Toms should acknowledge their consumers more directly as partners in their business model and in their generosity, rather than taking the sole credit for the giving. Blake does refer to himself as the Chief Shoe Giver, but it’s Toms’ consumers who are making the sacrifice out of their wallets, not him.

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Who Is Afraid Of The Big Bad Lawyer?

There was a recent discussion on Copyblogger, about the importance of spreading the word when you have an idea. The point of the article basically was that instead of hoarding your great ideas in a file on your computer, you should share them with anyone who will listen to spread the word. An argument arose when I piped in that BEFORE you let anyone in on your idea (assuming it is in actuality, a great one) you should protect it with a patent application, a trademark, a copyright, or at least a nondisclosure agreement. It quickly became clear to me that that the distrust of lawyers is so strong in some people that they would rather risk making their ideas vulnerable to thieves out in the marketplace than trust a lawyer to protect them. I am going to put myself out on a limb here and jump on the lawyers bandwagon for a change and suggest that exposing your ideas without any protection is a dangerous road to travel. I know, I’ve been there.

I have a great deal of gratitude to and respect for several lawyers that I have had the pleasure to work with. In my previous business venture, which involved products with unique patentable features, trademarkable names and slogans, and numerous negotiations and contracts, our company would have been left extremely vulnerable had we had not protected the IP assets that we created. On more than one occasion, the legal protection that we had the wherewithal to put in place thwarted would-be thieves.

Intellectual property is a key asset that adds tremendous value to a company’s worth. Protecting it, therefore can be essential to a company’s success or failure. Here’s why:

Try getting backers to invest in your company if you don’t hold or own trademarks or patents on the products that you produce or on your business model. A business that holds intellectual property is a much more enticing investment proposition than a business that doesn’t hold any IP.

Try attempting to confront another company that is knocking off your idea without any IP ownership. There is nothing worse than having a unique idea, watching it being ripped off, and having no legal recourse to prevent or remedy it, because you neglected to protect it.

Try selling something that is not unique in the marketplace.The lack of proper IP protection also has the potential to devalue your brand in the consumer’s eye. Having a patentable idea which turns into a unique product is a lot easier to sell in the marketplace than something that offers no innovation. Holding a patent or trademark on something instantly adds value because it says that your product, business method, name, idea, or slogan was unique enough to achieve protection. Innovation sells.

Try pitching your idea to an existing business to invite collaboration or licensing. Most reputable businesses don’t want to hear your ideas unless they are protected for fear that they might already have something in their pipeline that is similar. Other not-so-reputable businesses are on the lookout for eager suckers who will unwittingly hand over their ideas. Invent it, protect it, then go talk to people. (A great movie on this subject is Flash of Genius)

I am a true believer and practitioner of the power of word of mouth marketing, creative collaboration and brainstorming, but I always proceed with caution before letting the cat out of the bag. I fear potential thievery in marketplace (and spiders) much more than I fear lawyers.

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Social Media And The New Age Of Accountability

Mommy, There’s A Caterpillar In My Pickle Jar!

When I was a kid, I can recall one day finding a pickled caterpillar floating in the brine in a jar of pickles from which I was eating. The little creature was about the same size as the gherkins in the jar and it had been pickled to that same unnatural yellowish green hue. After I finished screaming out of disgust from the realization that I almost ate the thing, my mother quickly typed (yes, on a typewriter) a carefully crafted letter of complaint to the company. She put the letter in an envelope and sent it off in the mail along with the jar containing the caterpillar. A few weeks later, my mother received a lovely letter of apology along with a slew of coupons for free pickles and other products from this company. She felt acknowledged and satisfied with the response and that was that. It was a matter between my mother and the pickle company.

Today, if that same scenario popped up, a modern mother might run right over to her laptop and tweet about the disgusting experience to her 3,000 followers on Twitter and maybe blog about it with a close up picture of the pickled caterpillar and a YouTube video of the thing floating around in the brine. Maybe some of her followers and readers would re-tweet or re-blog about the experience and before you know it, that one tiny caterpillar in the pickle jar could cause quite a big PR and QC problem for the pickle manufacturer.

Consumer Responsibility

As consumers, we need to know that what we say in our online communities can be very powerful, both in a positive way and a negative way. I think sometimes it’s easy to forget that what we say online is there forever. Once done, in most instances, it’s pretty hard to retract. Consumers now have ethical responsibilities that were never on the table before the onset of the Internet, and were previously reserved just for businesses. Consumers now have unprecedented power to make or break a brand.

Corporate Responsibility

As businesses, we have the responsibility to make sure our practices are above board and our products and services are the best they can be. People are watching and listening, and if our products are not what we say they are or as they should be, then everyone will know about it within a few instants. If we are entrusting our products to the power of social media, then we must be willing to take what comes and deal with it, good or bad. Businesses can no longer keep problems quiet, most often they have to deal with them out in the open forum of social media.

The Changing Landscape Of Business

Social media has changed a lot of things. It has changed the way we communicate. It has changed the speed at which we can disseminate, find and devour information. It has also drastically changed the way we do business from researching, selling, and promoting, to communicating with our customers and colleagues and monitoring the marketplace and our own businesses. Social media has thrust a new age of power, responsibility and accountability onto businesses, consumers and anyone with an Internet connection. No longer can businesses hide behind carefully crafted copy and corporate speak when one customer could potentially create a brand’s name as a trending topic on Twitter for good, bad or evil. We all have an awesome responsibility here to be fair, honest, responsive to both consumers and businesses. Suddenly we are all swimming in the same pool, and we all have to take that responsibility seriously.

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Is Social Media Spookier Than a Vampire?

435_draculaI think one of the spookiest things some companies could imagine knocking on their door this Halloween is a social media specialist: Standing there at a company’s door, laptop in hand, surrounded by an army of Twitter followers and blog subscribers with their goody bags open,  asking for engagement, community, transparency and humanness. The company thinks: Trick or Treat? This image is more frightening to some companies than a vampire lunging in for a bite. There are many companies that want to be involved with social media, or think they should be involved, but at the same time they are deathly afraid of it.

I was contacted the other day by a children’s product company interested in engaging my services to “legitimately” (their quotes) populate their company’s website with positive reviews and photos of people using their products by tapping into my network of bloggers, providing them with free products and asking them to post accolades.  Apparently the company feels they don’t have enough reviews for their products on their site and many of them that have been posted legitimately (no quotes) have turned out to be negative because of ongoing QC problems that the company has been having. Her response was that “there are always QC problems in manufacturing, that’s just how it is.” She also wanted me to screen the product reviews before they were posted and intervene if anything negative arose. I explained the new FTC regulations  and that I thought this method of “legitimate” population might be considered questionable without a disclosure. I also offered other methods that could authentically populate their site’s reviews, but the conversation ended and I haven’t heard from them since.

I think in this case, there were missed opportunities. Instead of trying to drown out the bad reviews with manufactured good reviews, they could have embraced them, thanking the consumer for pointing out a problem and actually addressing the problem in a public way with a vow to fix it at the source and follow up with proof that it was fixed, instead of saying, well everyone has QC problems, that’s just how it is. That’s not how you engage your consumers. I know nothing is perfect in business, but when you put product out there to consumers, especially if you are inviting them to respond publicly on your company site, then you better make darn sure the product is as good as it can be, and if it isn’t and your consumers care enough to let you know, then you should respond with thankfulness, action and implementation to make sure it never happens again. To try to drown out negative comments with crafted positives just defeats the whole purpose of engaging people. It’s like inviting consumers to offer their opinions, and when they open their mouths occasionally saying something you don’t like, you cover your ears and say: “I’m not listening, LA, LA, LA.” This is what is meant by companies being human. To acknowledge mistakes or problems, apologize, promise to fix them and then actually fix them is the kind of thing that will gain a company respect in the marketplace with their consumers.

The thing about social media is that it can’t be completely controlled the way that advertising can. That is a very spooky thing for many companies.  There is some control, like determining the right person to manage your social media strategy and what to put out there to the public, but as far as trying to control what the public will perceive and say and do and manipulating things to look legitimate when really they aren’t, that is not what social media is all about.  That’s what advertising is about.

Here lies the problem for a lot of companies.  They know all this social media stuff is important, but don’t fully understand how to use it or why and how it’s different from advertising. They try hard to turn social media into just another controlled venue for advertising, and in my opinion, that is simply a waste.  Use your advertising for the crafted, controlled message, and use your social media for really listening to and engaging with real people.  If you are not ready for what may happen when you let go and start talking publicly with your customers, then maybe stay out of it for a while until you feel confident that what your company offers will be well received, or until known problems are fixed, or until you can respond to negative feedback with positive action. It can also be started in small ways. Start with a blog, talk about new products coming up or things in the industry. You don’t have to do a full-blown blitz to be involved in social media.  Start where you are comfortable, but understand that there is a certain amount of letting go of fear that needs to happen.

So if a social media specialist comes knocking at your door this Halloween, don’t be afraid, just drop a little humanness in his or her goody bag.

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5 Lessons In Life And Business From The Great Philosopher, Dr. Seuss

I truly believe that Dr. Seuss was a genius. He was a creative genius, writing stories full of rhyme and rhythm and when, if what he was trying to say wouldn’t naturally rhyme, he’d just make up a word that did. He broke all the rules of illustration, language, and content for children’s literature at a time when the standard fare in children’s books was Fun with Dick and Jane. His books are beyond just funny children’s stories; they always offer insights into human nature and society.

A fine example of this is Yertle the Turtle and Other Stories. This book was first published in 1950 and is still completely relevant today, not just as a children’s story, by as a philosophical and ethical guide for business and life. I’d even suggest that Yertle the Turtle should be required reading for all business school students and aspiring CEOs. If you haven’t read it or haven’t read it since you were 6, go out and buy a copy. It is a series of 3 stories that address the deadliest sins of life and business: greed, power, vanity, arrogance and ignorance. I think any of us in business know a couple of people that might benefit from reading this book. Here are a few things that we can learn from Seussian Philosophy:

1. Fear not. Stand up for yourself and your ideals. Speak up if you are being taken advantage of. Express yourself.
2. Respect and listen to those around you. I mean deep respect, not just saying please and thank you. Sometimes the best ideas and solutions come from unexpected sources. (Like a children’s book.)
3. Don’t let greed make you hungry for too much too fast. Strive to be driven by great ideas, great products or services, not just by fast money. Trying to grow too fast on the backs of others or before you are ready is a recipe for disaster. Let your business build naturally.
4. Don’t be seduced by visions of fame, notoriety or delusions of grandeur. Let your business speak for itself. True and honest promotion is so much more powerful than false endorsements by famous people (maybe with the one exception of Oprah).
5. Don’t be ignorant, or if you are, admit it. If there’s something you don’t know, don’t pretend you do. Don’t be let arrogance get in the way of seeking help. When in doubt, seek the advice or direction of an expert.

Creativity and ideas have driven me to take risks and do things that most cubicle dwellers wouldn’t dare dream about. I am a risk taker, as most entrepreneurs are. Sometimes it works and sometimes it doesn’t. But in the process, it’s important to stay true to who you are, where you’re going and what you hope to accomplish while doing some good along the way. There ARE good and decent business people out there. We should all strive to be one of them.

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