TOMS Shoes, the company often credited for making the one-for-one socially conscious business model take off, decided earlier this summer it wanted to expand even faster since its founding in 2006. Such ambitious goals, of course, require money, so the company’s founder, Blake Mycoskie, started shopping the company around. This week he found a partner in Bain Capital, which has agreed to purchase a 50 percent ownership stake of TOMS. Mykoskie will continue to own the other half of the company; financial terms of the transaction were not disclosed.
The news elicits mixed emotions across the board: The socially responsible business crowd will shudder, no doubt in part because of how Bain Capital was eviscerated by the Democrats during Mitt Romney’s 2012 presidential campaign. Much of that criticism was exaggerated and unfair, but employees of some companies that became part of Bain’s portfolio, such as Ampad, have had plenty to say about the company’s approach to investment. Then again, Bain Capital found success with other firms such as Staples and Gartner. So could this help TOMS in the long run, expand the one-for-one business model, and benefit more people across the globe?
Why not? This story is analogous to the 2001 purchase of Ben & Jerry’s by Unilever. Critics of the deal howled at the thought of the Anglo-Dutch consumer packaged goods giant taking over the quirky and irreverent ice cream outfit with a social conscious, but for the most part, the deal has benefited both parent company and its now 13-year-old division. The same goes for Bain and TOMS: The Boston-based investment firm has no reason to alter the company’s mission, unless it wants to completely destroy the brand. The MBA types will bristle at the thought of the company giving so many shoes and other products away, which would eat away at profits. But that is exactly why TOMS has taken off and its shoes are now easily found just about everywhere.
TOMS has taken its share of lumps and criticisms, but overall has had a net positive effect. Responding to critics that the company really was not addressing poverty (as if conventional international aid organizations were successful), TOMS launched initiatives with the aim to spur more job creation in the countries desperate for it most. The company claims it has given away over 25 million pairs of shoes, has moved into eyewear, opened up an online marketplace that gives opportunities to other socially conscious brands and if imitation is the sincerest form of flattery — has inspired other social entrepreneurs to open similar businesses.
The fact is, companies such as TOMS, and their cousins that have made up the “B Corporation” movement, are here to stay. The way to conduct business is no longer the aims pinstripes versus do-gooders. A company can be a blend of both, have a social mission and be profitable — benefiting everyone in the process.
Image credit: TOMS Shoes Google+ Page