When Blake Mycoskie started Toms, the shoe company that donates a pair of shoes for every pair purchased, "'socially conscious company' was not even a phrase," he told the audience at Inc.'s Growco Conference in Las Vegas on Tuesday. Ten years later, Mycoskie might well serve as a social enterprise poster child: He not only pioneered the "buy one, give one" model that other companies like Warby Parker have employed; he's also proved that doing good and doing well can go hand in hand. Two years ago, Mycoskie sold half of Toms, which has given away almost 50 million pair of shoes, to Bain Capital at a valuation of $625 million. As part of the deal, Bain and Mycoskie launched a $13 million Social Entrepreneurship Fund to invest in companies with a wide variety of social missions. He had a few words of advice for aspiring social entrepreneurs:

1. Take it one step at a time. "When we first started, it was never our idea to be a big business," says Mycoskie. Good ideas, he says, often never see the light of day because people get overwhelmed thinking about what the business will need when it becomes big. "If I had thought we would grow to even half the scale we are today, I probably never would have done it," he says. But he started with a small goal: to produce 250 pairs of shoes and give away the same amount. "You should focus on the small steps that it takes to get something launched," he says.

2. Passionate customers are your best secret weapon. "The thing that was so remarkable to me was that every customer became an evangelist," says Mykoskie. He recalled a chance meeting in an airport with a stranger wearing Toms shoes. When he complimented her on her footwear, she immediately launched into a monologue about the brand. "She was telling me my life story," he says. "When a company has a mission first, your customers will tell that story."

3. Respect your partners' margins. Mykoskie said that one of the biggest mistakes social entrepreneurs make is asking their retail or wholesale partners to give them preferential treatment on margin structure simply because the company has a social mission. "It's a mistake, because it's not sustainable," he says. "They may do it initially, but eventually it's going to be a problem" if retailers are making less money on your product. The best thing social entrepreneurs can do, he says, is "build a real margin into your business."

4. Know when to compromise. When Mycoskie first launched Toms, he was hellbent on taking shoeboxes out of the equation. "I thought it was a huge environmental waste," he says. So he packaged the shoes in recyclable bags. However, department stores hated the bags, he says, because they became "a tangled mess in the stockroom." Salespeople, who work on commission, had to spend too much time fussing with the shoes, and so the product languished in the stockroom. "They had to kick us out of the stores, and it took us two years to get back in," he recalls. And when he was welcomed back, the shoes were in boxes.

5. Don't make assumptions about your customer base. Mycoskie just assumed that his most enthusiastic customers would be surf shops and other Southern California lifestyle shops. He was shocked that it was the high-fashion demographic that first put Toms on the map. "Our first article was in Vogue," he says. And it was high-end department stores such as Neiman Marcus that first starting carrying Toms. The surf shops followed. The lesson: "Don't be adamant about who your customer is," says Mycoskie. "Put it out there and see who gravitates toward it."

Editor's note: This post has been edited to better characterize the nature of Warby Parker's "Buy a pair, give a pair" model. 

Published on: May 18, 2016