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Bain Capital Buys 50 Percent Stake in TOMS Shoes

Leon Kaye | Thursday August 21st, 2014 | 2 Comments
TOMS shoes, Bain Capital, Mitt Romney, one-for-one business model, Leon Kaye, social entrepreneurs, socially responsible business

TOMS Shoes is now 50 percent owned by Bain Capital.

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

Leon Kaye has lived in Abu Dhabi for the past year and is currently spending some time in Uruguay. Follow him on Instagram and Twitter. Other thoughts of his are on his site, greengopost.com.


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  • David @ NCP

    It’s funny, but you never see figures on Tom’s profits. That’s one problem I have with this “commercial charity”. And there’s there’s the model itself–playing on consumerism to “help” shoeless neighbors. Let’s say it take $5 to manufacture a pair of Tom’s shoes in China. So you buy one and get one to send to a shoeless neighbor, spending $40-$60. Why not donate this same amount to an organization working to empower and build relationships with the poor rather than give them handouts? And as the director of a nonprofit working at these same issues, I am always chagrined at a program that has the materially wealthy being the magnanimous donors to the poor–and that’s the end of the exchange. It’s all about who has the ability to give material things. It’s not in any way built on a relationship in which even the poor have things to give–spirit, resilience, faith, a sense of community. Thus this give-to-the-poor model does nothing to transform the giver–it leaves them feeling good about giving a made-in-china pair of shoes to some poor little child (while getting a pair for themselves too!). And person I know who’d been to one of the communities receiving Tom’s shoes found boxes of them stacked in the corner of the school–the kids vastly preferred locally-available sandals.

  • djglasco

    My issue with Tom’s Shoes, glasses, etc. is their is not much transparency about the good they do. We have to rely upon their word. Even if what they say is accurate, how has giving away 25 million pairs of shoes helped people? What proof is there that Tom’s Shoes actually gave away 25 million pairs of shoes? Was Tom’s motivation to help the poor or use helping the poor as a marketing tool to differentiate themselves in order to build a company. After the investment from Bain Capital, will Tom’s shoes continue to give away shoes or phase it out gradually like the original selling point of cable TV not having any commercials – now they have as many commercials as broadcast TV?

    As far as Bain Capital being eviscerated by the Democrats, I believe the Democrats did not go far enough in discussing how their business model exploits people. The basis of their model is to provide their shareholders or limited partners with maximum returns – it is not about hiring people, providing a living wage, helping communities or building good companies that benefit humanity. As a matter of fact they do not create companies, they just leverage capital (see the law of rents). While some of Bain Capital’s shareholders (or limited partners) are pension funds who will receive some financial benefits, the harm they do by laying people off, reducing their salaries, polluting the air and water (sometimes legally and sometimes not), etc. does not offset the negative they do. In essence they take more than they will ever give back.

    This brings into question for people who care about the environment and solving poverty, and their health, about energy consumption, communities, transportation and consumerism, how do we find companies that are true to these values and that are not scamming us?