By Dr Jana Matthews | 8 min read
When my step-daughter Lisa joined Allbirds as employee #13, she couldn’t imagine the company would go from $0 to US$4.7B Market Cap in 5 years, and experience a 93% surge in the initial listing price on NASDAQ! Here are some lessons we can learn from this unicorn – and its endurance athlete co-founders.
THE ALLBIRDS RETAIL STORE IN MANHATTAN’S SOHO DISTRICT. SOURCE: ANTHONY BEHAR/SIPA USA.
An edited version of this article first appeared at SmartCompany Plus
On 3 November 2021, footwear company Allbirds listed on NASDAQ and hit a US$4 Billion market cap – just 60 months after being founded. A month before the float, the investment bankers thought this stock might list at $12 a share. However, a wave of interest led them to price the NASDAQ offering at $15. Within minutes of listing, the price rose to $21 a share and by day’s end had surged 93% to $28.89. A week later, the price was still stabilising between $21 and $24, a respectable 45% – 66+% increase over the listing price.
Let’s look at the story behind the fairy-tale success of Allbirds and discover some secrets of success.
The Allbirds Origin Story
Kiwi professional athlete Tim Brown had played football (soccer) for the Newcastle Knights in AU and returned to New Zealand to play and then captain the All Whites. He received many pairs of socks and shoes to “test” and found them cheaply made of plastic, surprisingly uncomfortable, and plastered with logos. When he retired from sport in 2012, he began thinking seriously about making a logo-less, understated, uber comfortable shoe from sustainably harvested, New Zealand merino wool. He was, after all, living in a country that had seven times as many sheep as people!
In 2014 he received support and a $200,000 development grant from the New Zealand Wool Industry and Grow Wellington to create a wool sneaker. He launched a Kickstarter campaign for Wool Runners, hoping to sell a few hundred pairs and raise $30,000. A few days later, after selling more than 1,000 pairs of wool runners and raising almost $120,000, he had to shut down the campaign because he didn’t have enough material to make any more runners.
Secret 1: Test the concept, early on, with customers. Be guided by their response.
Meanwhile, Joe Zwillinger was running a chemicals business unit of a biotech company in San Francisco. Tim and Joe had been introduced by their wives who were roommates at Dartmouth, and Joe was one of the 970 Kickstarter backers for Brown’s Wool Runners.
While in San Francisco Tim spent a long weekend with Joe, talking through how to build a company that made better shoes in a better way. They were well matched to co-found a business. Tim had experience leading winning teams and had the product vision, while Joe had more experience managing company growth, as well as consulting and investment banking. Tim had a BS in Design (University of Cincinnati) and a Masters in Management with honours from the London School of Economics. Joe had a BS in Industrial Engineering (UC Berkeley) and an MBA with Honours from Wharton. In short, they had contrasting yet synergistic traits.
And they clearly shared the same mission – build a footwear company that would tread lightly on Mother Earth, using natural, recycled and renewable materials. They set up the company in San Francisco, raised $2.7M in seed funding, soon thereafter raised $7.25M from venture capitalists, and began to execute on their vision of building a sustainable company making shoes from sustainable materials.
Secret 2: Find people who know more than you, have complementary skills, and share your mission, values, and vision, then create philosophical and financial ties that bind.
In 2016, they officially launched Allbirds. Two years later, the business had sold its one millionth pair and was valued at $1B – one of the quickest companies in Silicon Valley to achieve Unicorn status. In 2016 Time Magazine said Allbirds runners were “the world’s most comfortable shoe” and in 2018 identified Allbirds Sweetfoam as one of the best inventions of the year. Since then, Allbirds has introduced new products including runners, hightops, boat shoes, skimmer flats, and recently branched into clothing – all made of eucalyptus bark, organic cotton and/or wool. The style mode is understated comfort, rigid adherence to quality, minimalist design, and anonymous luxury.
Secret 3: Focus on the mission, market the product as the manifestation of the mission.
The company sells direct to customers and has recently begun to open its own stores. It has cut out the middleman and has a direct connection to – and gets direct feedback from – its customers, millions of whom have become raving fans.
Secret 4: Control the distribution channel, get qualitative and quantitative feedback from customers, and use that data to measure how well the company is achieving its mission.
The Right People with a Shared Mission
One of the first things Tim and Joe did was recruit an experienced team of people who shared their mission. My stepdaughter Lisa, employee #13, was recruited to head up product development. She had held a similar senior role at Reebok but became disillusioned with the excesses and waste of the footwear industry, had stepped away for several years to be a mum, but still did a bit of freelance work in the footwear space. She spoke with her dad and me about her dream of doing footwear better, designing minimalist shoes that could be disassembled, and even recycled.
When she heard about Allbirds and met Tim and Joe, she realised she could achieve her personal vision by helping Allbird’s achieve its corporate mission. Five years later, on the day Allbirds went public, she wrote me that she was so happy that she had found a way to achieve her personal vision of showing the industry that footwear can be done in a better way. “More than anything, I’m proud of that.”
Lisa was an example of the senior leadership that Tim and Joe hired. She’d had extensive experience in industrial design, product development, and manufacturing at two leading global footwear corporations. She knew what to do and what not to do when growing a company. She knew how to lead teams of people, and how to select and manage partner suppliers and factories all over the world. This experience meant she could “hit the ground running” – which gave the company a fast start. After joining Allbirds, Lisa travelled to other countries, as Allbirds set up its manufacturing facilities around the world. She had done this at Reebok and was experienced in building cross-functional, cross-cultural teams, supply chain management, and identifying and managing partner/subcontractor companies.
Secret 5: Identify your mission and values, then recruit the best people you can find who share your mission and your values. People will work remotely, commute – even move – in order to work for a company that syncs up with their personal mission and values.
As Allbirds continued its rapid growth, the company continued to differentiate its offering, expanding both the product line and the materials used in its products. In addition to wool, Allbird’s also produces shoes made from eucalyptus bark, sugar cane, recycled plastic, and bio-based materials. All are environmentally friendly and can be washed in a machine. Early employees like Lisa helped develop the company’s considerable IP as they designed and developed the product line.
But instead of keeping their patents secret, like the rest of the footwear industry, Allbirds has open-sourced many of the sustainable material innovations to the world. When Amazon began selling a wool runner that looked like Allbird’s, Joe Zwellinger wrote an open letter to Jeff Bezos, offering to share information about Allbird’s sustainable materials, and closed with “Please steal our approach to sustainability.”
Allbirds, so named because early settler said New Zealand was “all birds and no animals”, is not only intent on selling high-quality and comfortable shoes but is also reinventing the footwear business model by reducing the industry’s carbon impact at scale. The founders believe that a purpose-driven company is now “table stakes”, i.e., if you are going to start a business, it should have a purpose and be better for society. For these reasons Allbirds is a certified B Corp, uses recycled packaging, includes the carbon count on every product, and sends lightly used shoes as donations to non-profit organisation Soles4Souls.
Secret 6: Identify who you are and define your values, then make decisions in accordance with those values. Authenticity translates to a brand people can trust.
Allbirds is now 350 people with a market cap of US$4.7B. The day it launched on NASDAQ, it sent an e-mail to all customers:
We’re writing to let you know we might be in the news today because we’ve gone public – which is a really exciting milestone for us. But it’s even more exciting because we’ve been working tirelessly to make our company about so much more than financial buzzwords and market trends.
Today we’re introducing the world to the SPO framework. That stands for Sustainability, Principles, and Objectives framework. It means we’ve applied a new framework developed by a team of leading experts designed to hold our business accountable to the planet, not just the bottom line.
To be totally honest, it would have been much easier for us not to do any of this. to just roll through operations as usual. But at the core of our brand is a belief that we can build a Better Business – one that puts the planet right up there next to profit.
Before we wrap up, we’d like to focus on you for a second. Today and all the days leading up to today wouldn’t have been possible without you – your support. encouragement, and push to get better. It’s what got us here, and we promise that in this next chapter of Allbirds you’ll see more products, for more people – all built in the spirit of doing better for you and the planet. Thanks for everything – we can’t wait for what’s next.
Secret 7: Allbirds is actually a sustainable materials innovation company that happens to make shoes, has expanded to clothes – but in the future could offer a multitude of other products made of its sustainable materials. Its timing is perfect: increasing numbers of people who are concerned about the planet are aligning with Allbirds’ mission and choosing to buy products that give Mother Nature a chance!
Like this article? Check out more articles by Dr Jana Matthews. Read 10 steps to big, fast growth.