Six Steps to Emulate TOMS Business Model Review

Blake Mycoskie is nothing but inspirational in Start Something That Matters  and in line of my goal of reading one book a week in 2012 (inspired by a Julien Smith post), here’s the mindmap summary of Start Something That Matters.
1. TOMS Story
Origins of TOMS
Blake Mycoskie, a serial entrepreneur and Amazing Race finalist got the idea for TOMS (Tomorrows Shoes) during a vacation in Argentina. He discovered the comfy alpargatas (the national shoe of Argentina) as well as the need for shoes for underprivileged kids. His first instinct was to start a shoe charity but he aborted the idea as not being feasible. His entrepreneurial brain kicked in and the idea for a for-profit business TOMS was born. It was a simple but untested business model where the company would donate a pair of shoes for each pair sold. One-for-one.

First Retail Customer for TOMS
Excited by the idea, he enlisted the help of his friend and polo teacher Alejo Nitti to help source for a local shoemaker who would make modified version of the alpargatas designed by Blake for the American market. They finally found a local shoemaker who made 250 pairs with which Blake returned to Los Angeles. Back home, Blake started inviting his friends to try out the shoes and share the TOMS vision. The response was great as each of his friends insisted on buying a pair off him. However, Blake was still working in his start-up which educated teen drivers and it was hard for him to find time to market the shoes. Getting nowhere, he just turned up at American Rag one day and as luck would have it the buyer was in the store. He shared the TOMS story and the buyer loved the shoes as well as the story. American Rag became TOMs first retail customer.

Tipping Point for TOMS
The story of TOMS got covered by Beth Moore of the LA Times, that day the website sold 2,200 pairs but there was no way they could fulfill the orders. So Blake got on Craigslist to recruit interns to call all the customers to explain that they could not deliver their orders in time and they had to wait for about 8 weeks. Amazingly, there was only one cancellation. The LA Times story triggered massive coverage for TOMS in other publications like Vogue, Time, O, Elle and Teen Vogue. Celebrities like Kiera Knightley, Scarlett Johansson and Toby Maguire were spotted wearing TOMS triggering another wave of orders. Blake had to rush to Argentina to order an additional 4,000 pairs. First TOMS Shoe Drop
That summer they sold 10,000 pairs and the first ever Shoe Drop of 10,000 pairs was scheduled. It was a very emotionally moving experience for Blake who shed tears of joy. He came back from the Shoe Drop, a different person who was motivated and determined to make it work.  Check out Start Something That Matters

2. Find Your Own Story (Step 1)
The method Story
Founders Adam Lowry & Eric Ryan of method were horrified by cleaning products’ label warnings. This formed their motivation to create a product that was safe and environmentally friendly. After much experimentation in their kitchen, the launched their first product in 2000 and what made their launch successful was their compelling story of two guys on a quest to make safer cleaning products and save the earth while they were at it. Their story got them unprecedented press coverage which in turn made customers ardent fans who identified with their story. Some achievements of method are:

  • Largest eco-friendly cleaning brand
  • 16th most innovative company in 2006
  • Exponential sales rise
  • $900,000 in 2001
  • $100 million in 2010
  • Eric & Adam PETA Persons of the Year 2006
  • Time magazine “Who’s Who Eco Guide” feature
  • Power of Stories

Stories are one of the most powerful forms of communication. It stirs emotions and cements bonds. Therefore, it is vital to have a memorable story for yourself and your company’s mission. A 2009 Carnegie Mellon study uncovered that a concrete story always trumps abstract facts. An example would be Subway’s Seven-Under-Six campaign which went nowhere until news broke out of a guy by the name of Jared who had lost lots of weight on a Subway diet. Using Jared in their advertisements, Subway sales went up 18% in the first year and 16% in the second year.

Unlike Facts, Stories Resonate
Blake struck up a conversation with a woman wearing TOMS in JFK airport. The woman got so excited and started sharing the vision of TOMS and Blake’s life story with him. The power of stories dawned upon Blake and ever since that encounter, TOMS has been carefully managing its story. Having a story worth supporting can not only win you customers but also deep-pocketed partners for a win-win alliance. This happened to TOMS when AT&T found out the TOMS story and that Blake used their service. They created an advertisement featuring Blake and the story of TOMS. It give free worldwide publicity to TOMS and AT&T benefited from the emotional connection.

Assignment: Find Your Own Story
Passion What would you do with your time if money was a non-issue? What work you want to do? What cause would you support? Focus on telling your story Spread your story Share it with everyone Find story partners Manage online story Find and nurture influencers Be specific Books Mentioned in this Chapter Super Simple Storytelling: A Can-Do Guide for Every Classroom, Every Day (aff link) Meatball Sundae: Is Your Marketing out of Sync? (aff link) The Tipping Point: How Little Things Can Make a Big Difference (aff link) 3. Face Your Fears (Step 2)

Pam’s Story
Pam got married to Mike and had three kids. A fitness buff who got a health scare when her cholesterol shot up so she started a diet. As reward, Mike gifted Pam “Shape” magazine camp in California. She loved the connections she formed with other women and how inspiring others was her calling in life. This motivation fueled her desire to write a cookbook. The next year was spent writing her book Butter Busters: The Cookbook (aff link) and her family took a loan of $30,000 to self-publish the book. However, the printers were incompetent and the family lost their money and this drove Pam towards depression. Mike believed in his wife and they took another loan to fulfill her dream of becoming an author and inspiration to others. This time the book got published and quickly sold out the initial run of 5,000 prints. It became a self-published legend when it sold 450,000 copies prompting a New York publisher to approach Pam. Ultimately, 1.4 million copies of Butter Busters: The Cookbook (aff link) were sold. Who is Pam? The last name Mycoskie ought to give you an idea. Pam is Blake’s mom.

FEAR and How to Deal with Fear
Fear will never go away so the smart thing to do is face it and the first step to facing fear is to understand fear. Fear is meant to be a biological warning that triggers a fight-or-flight response. Always keep in mind that business fears are hardly fatal and face the fear with a plan to overcome the fear. Never focus on your fears which you can’t control but focus on your actions which you can control.

Some tips to bust fears:
Be authentic and that will remove the fear of you being exposed as a phony. Surround yourself with interns who are enthusiastic, young and confident. It’ll rub off on you. Surround yourself with positive quotes. Read related biographies for inspiration. Think big but start small. Improve daily and use the principle of Kaizen (see Monk Who Sold His Ferrari for more Kaizen information). Make fear lists of pros and cons using worst and best case scenarios. Reach out to people Always remember timing is never perfect so don’t wait. Books Mentioned in this Chapter Butter Busters: The Cookbook (aff link) The 4-Hour Workweek, Expanded and Updated (aff link) 4. Be Resourceful Without Resources (Step 3) TOMS had no choice but to cut corners in the beginning by hiring interns, paying them with fun and to this date, frugality is a big part of the culture.

Office Space is Waste
Start wherever you can, a garage, a dorm room, a basement or in your car. Ruth & Elliot Handler started Mattel in a garage and Berry Gordy Jr. started Motown Records at the bottom floor and expanded to the garage. Check out Start Something That Matters

Lack of Resources Can Be a Blessing-in-disguise
Certainly in TOMS case, the lack of resources were a blessing-in-disguise and for you as well it can foster creativity, allow for improvisation, make you frugal and efficient so never ever let lack of resources be a barrier to chasing your dreams. Historically, companies that have started frugally like Microsoft, Google, Facebook, Digg etc have fared than lavishly funded but defunct companies like Pets.com, Webvan and eToys.

Good Karma
It is good karma to not fear sharing and to stand for something bigger than yourself or your company. It compensates the lack of resources by like-minded people helping you and standing with you. Here are some ways to amplify your resources: Make the most of what you have Tap on social media Try to get everything free Drop official titles as its better to have unconventional titles that external parties have no clue about. Another tip is not to call yourself Founder or CEO but instead call yourself VP. It automatically makes the company look bigger. Two things you should never cut corners on are business cards and rewards for employees. List of Free Resources 4-Hour Work Week (free in libraries) http://www.lifehacker.com sethgodin.typepad.com Twitter Website related www.compete.com www.quantcast.com www.spyfu.com Travel www.kayak.com orbitz.com CheapTickets.com Hip Munk Books Project Gutenburg LibriVox (Audiobooks) Photos & Videos iStockPhoto (low cost photos) Footage Firm (low cost videos) SXC.Hu (free photos – not mentioned in the book) Business tools Doodle (meetings) FreeConferenceCall.com LegalZoom (inexpensive legal stuff) Weebly (free websites like WordPress) 99designs (low cost logo and graphic design) Books Mentioned in this Chapter Thinking Inside the Box: The 12 Timeless Rules for Managing a Successful Business (aff link) 5. Keep It Simple (Step 4)

Meet Michele Sipolt Kaputska
Michele is a snail mail aficionado and one day in 2000, while buying a greeting card (what else) she noticed a bunch of brightly colored balls. She bought a ball instead, wrote a message on it and mailed it. As time passed by, people started requesting this service and so www.SendaBall.com was born. It is a simple but very unique service with sales over $1 million projected for 2011.

Simplicity ROCKS
Learn from TOMS Philosophy which is focused on simplicity in product design and simplicity of business model. Many successful ventures are dead simple – Surgeons OverSeas (SOS), In-N-Out Burger, Levis, craigslist, Chipotle, Daily Candy, DonorsChoose.org – so stripping it down to the bare essential is a good idea. Use simple ideas, goals and mission. Simplify life as the most happiest people on earth are some of the most simplest. Some ideas to simplify life: Simplify workspace Declutter your brain by putting thoughts on paper or electronic device Own as little needed without sacrificing too much comfort Schedule to avoid chaos so you can be fully present for the task at hand Combine things to simplify into one Don’t be a slave to technology Declutter physical space 4 times a year Simple Plans The questions below should be answered in one sentence.
What is your business about? How do you want to be remembered? Why anyone would hire you? What is your social cause? Your product or service, can it be stripped without main function being compromised Books Mentioned in this Chapter Inside Larry and Sergey’s Brain (aff link) Fast Food Nation: The Dark Side of the All-American Meal (aff link) 6. Build Trust (Step 5)

Success Secrets of Zappos
The two secrets behind the success of Zappos are its awesome culture and trust. It is trust that fuels their culture and trust was built right from the start between employees, customers and vendors. This chapter talks about building trust internally within the organization as well as externally outside of the organization.

Internal Trust
Internal trust depends a lot on the leader. In the past, leaders used to be authoritative and distrustful of employees but increasingly we see servant leadership principles being practiced. Some traits of a good leader: Has empathy Fosters co-operation Gives credit Trusts employees Brings out their potential Takes responsibility External Trust It is vital to grow, build and maintain trust with customers, vendors and donors. It can be through a powerful promise to customers like lifetime guarantees which companies like Tumi and Orvis offer and honor. Trust can also be built by open philanthropy like the charity: water makes it crystal clear that 100% of the donations go to its project. Administrative and other indirect costs are raised and accounted for separately. Another example of trust built by open philanthropy is TOMS Shoe Drops where others can join the shoe drops and the experience is shared through video and pictures.

Ways to Build Trust
Be open with staff Praise publicly and reprimand privately Address mistakes with honest & constructive criticism Show emotions Trust and empower employees Zero-tolerance for breaking trust Proactive customer service Empathy Treat them as you want yourself treated Make them feel special Be open with your donors and customers Use your own products Books Mentioned in this Chapter The Principles of Scientific Management (aff link) The SPEED of Trust: The One Thing That Changes Everything (aff link) Customers for Life: How to Turn That One-Time Buyer Into a Lifetime Customer (aff link) The Nordstrom Way: The Inside Story of America’s #1 Customer Service Company (aff link) 7. Giving is Good Business (Step 6)

Meet Lauren Bush
Lauren Bush, a model and volunteer was the honorary spokesperson for United Nations World Food Programme. After her visits to various third world countries, she was left with a feeling of helplessness and overwhelm. During this time, she noticed the trend of eco-friendly reusable bags and she had an epiphany. She went on to create FEED Projects where every reusable bag sold feeds a child for a year. So far, more than 500,000 bags have been sold and over 6 million lunches provided. How awesome. Giving is GOOD
Several reasons why giving is good for business and humanity. Helps people Makes money Customers become partners Attract and retain awesome talent Other companies (usually bigger and with more clout) want to partner Ways to Give Create giving initiative at work without starting a business of your own Give what resonates Give your skills and talents Give early, don’t wait till you retire Give without overwhelm Listen to your receivers’ needs 8. The Final Step Blake’s current goal is to influence others to start something that matters. Just don’t have ideas. Act. Even if you make a difference to ONE person, it will all be worthwhile. Take the leap. Don’t make excuses. Lack of resources, money or experience are invalid excuses. Really there are no valid excuses. Go for it, start something that matters. If you have enjoyed the summary, check out Start Something That Matters