Allbirds: Not just a shoe company
Sometimes innovation can be about taking things away, it can be whispering when everyone else is screaming
This week let’s get into the A2Z of how this brand entered the market just 8 years ago and has made itself a seat amongst the high ranks of Nike, Puma and Adidas. It has done this with no discounts, no fancy logos, just some fine shoes made of wool, trees and eucalyptus, taking over the world slowly and sustainably with its mission & vision.
Allbirds founder, Tim brown played football for New Zealand and was consistently disappointed with all his shoes
For over a decade, Tim Brown was a midfielder (and eventually vice-captain) in the NZ football team. He obviously used and saw a lot of shoes throughout his career. The cheap material quality and unnecessary design additions always disappointed him.
He retired from football in 2012 but had been mulling over the idea of making shoes from wool since 2008. NZ is home to more than 27 million sheep. He had grown up in awe of woollen socks and sweaters.
Wool is breathable, regulates temperature and wicks moisture, all properties ideal for a shoe while being natural and sustainable. Until then all the shoes in the industry were made with synthetic materials.
The incumbent players were selling shoes with a lot of customizations and branding which turned something functional into a collectable. Tim wanted something that just worked without all these frills.
“Sometimes, the assumption with innovation is about adding lots of things — bells and whistles. Sometimes innovation can be about taking things away. It can be whispering when everyone else is screaming.” - Tim brown
Brown had to literally start from scratch to develop the first shoe in the world made of wool
When Brown went to factories to help build his “wool shoe”, he was mocked outright. They told him a wool shoe could never have adequate tensile strength for casual use, much less for performance.
Brown knew that wool could be strong. Undeterred, Brown decided to roll up his sleeves and get into material research to find the right mix for his shoe. He even got the NZ wool industry research group to fund his research with $200K.
With a kickass Kickstarter campaign and co-founder, Brown started the journey of Allbirds
Brown developed the first prototype of Allbirds with the help of his brother. He knew that traditional VCs won’t be keen on this business and took a campaign live on Kickstarter to raise some money.
The pitch raised $120K against a goal of $30K in just 5 days selling 1064 pairs of “Wool runners”
“If you wear shoes without socks for a month - would they smell - of course, they would, but these don’t. The reason is wool. You can’t grow up a kiwi and not know how good wool is. It’s strong, wicks away moisture, regulates temperature and is sustainable and biodegradable
My brother and I set out to create a shoe for sockless wear, fashionable, as comfortable as with jeans, a beautiful, simple, minimalist shoe and the Wool runners were born ” - excerpt from Brown’s intro video on Kickstarter.
Zwilinger (co-founder of Allbirds) was an early investor in this Kickstarter campaign. Coincidentally, their wives were roommates in college. That’s how Zwilinger and Brown had met years back. He was passionate about the environment and worked at a Biotech firm. When Brown flew down to the US to meet him, he got so excited that he quit his stable job and joined Brown in building Allbirds.
Allbirds name is a tribute to New Zealand as it is known for not having any mammals and only birds by its first settlers. NZ is also home to 27 Mn sheep and a major supply source for Allbirds
“World’s most comfortable shoes” - TIME magazine
It wasn’t easy to earn the title of the “world’s most comfortable shoes”. Neither of the founders had any industry experience and it took them two years to develop and launch their first product: the wool runners. Even after launching, the product went through almost 30 iterations/improvements according to customer feedback and comments.
“It feels like you’re walking on clouds” - A customer sharing experience with wool runners
All the materials used to make the shoe are ethically sourced and manufactured. They mainly use natural and sustainable materials to create all parts of the shoe and the little that’s left they offset their carbon footprint making Allbirds a carbon-neutral company.
“Consumers don't want to compromise looking good, feeling good, and doing good—they should be able to have all three”
The company is deeply committed to sustainability and creating a community of conscious consumers. They are even registered as a B Corp and filed for an IPO as a public benefit corporation. Their mission to “do good” is the priority and to prove that, they have open-sourced their material research to any manufacturer who asks for it. Their recent announcement of a partnership with Adidas is a step further in that direction.
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Silicon Valley became an Allbirds cult, unlocking strong word of mouth growth
Allbirds became the go-to pair of sneakers for startup and VC folks in Silicon Valley as a part of their casual uniform. Customers include Larry Page (founder of Google), Dick Costolo (former Twitter CEO) and Ben Horowitz (a16z founder)
“I think [Silicon Valley] is a group that is naturally attracted to the idea of innovation and of doing things differently in old-fashioned categories, which I think in many ways is what Allbirds stands for,” Brown
Other celebs like Leonardo (also an investor in Allbirds), Mila Kunis, Ashton Kutcher, Emma Robberts, Peter Kavinsky and Barack Obama etc. started sporting Allbirds organically, giving it an even stronger cred in the footwear scene.
Their clear product-market fit reflects in their numbers too
Allbirds sell 99% of their stock at their original price. This is unseen in the consumer world. They have grown consistently like a rocketship (even during the COVID period). Most of their sales come from Direct to consumer channels (primarily their website and stores)
The world is their oyster, opening up a massive $1.8 Tn (1.5 in apparel and 0.3 in shoes) TAM for them as a global brand
The brand launched simultaneously in New Zealand and the US which gave them a foundation of a global operation and since then they kept expanding into new territories every year.
Not just a shoe company anymore
High NPS has allowed them to comfortably expand from Shoes to apparel and from performance wear to casual wear. Apart from creating amazing products, this happened because they are a mission-driven company. Their customers are not just buying their products but are adopting a sustainable lifestyle.
They are starting to also explore going lower in the price spectrum to further expand their addressable consumer base.
“That’s the goal here—not to be a niche player selling premium products to rich people who care about the environment,” Zwillinger said. “We have sustainability for the masses.”
Allbirds went public in 2021 with a great listing but with tumbling prices after
They went public on Nov 21 with ticker $BIRD at $15 valuing the company at $2.2 Bn. However since the IPO, the stock has reduced to $6-7 due to concerns on growth, competitive intensity and profitability.
They operate in a very large global market and have a strong NPS brand. Their revenues and profitability are consistently growing at a healthy pace. According to their recent internal survey, only 11% of the US consumers know about Allbirds. There is a huge headroom for them to expand. It will be exciting to see how they prove their mettle to the public markets.