The rise and fall of Allbirds: How Silicon Valley's favorite sneaker lost its edge — and how its plan to save itself includes removing a key part of your shoe
Allbirds last month announced disappointing earnings. It's hoping a string of new products can reignite the brand.
Spencer Platt/Getty Images
Allbirds was founded in 2015 and soared to prominence with an iconic wool sneaker.
The company went public in November 2021. Shares rose 90% on the opening day of trading.
Sales have slowed, but the company has released a string of well received new products.
Tim Brown and Joey Zwillinger cofounded Allbirds in 2015 as a sustainable footwear company with a mission to "make better things in a better way, through nature." Tim Brown and Joey Zwillinger, cofounders and co-CEOs of Allbirds.
Allbirds
Source: Allbirds S-1
Zwillinger previously worked as a vice president of industrial products at a biotechnology company. Brown's background included serving as vice captain of New Zealand's soccer team. Allbirds' Joey Zwillinger, left, and Tim Brown.
Allbirds
Source: Allbirds S-1
Allbirds roared to life in 2016 with a Kickstarter campaign that maxed out in five days, raising nearly $120,000 to make a wool running shoe designed to make a lighter environmental impact than traditional athletic shoes.
Kickstarter
Source: Kickstarter
In 2016, Allbirds received B Corp certification, a designation given to companies that work to advance environmental and social causes, as well as shareholder concerns.
Allbirds
For Allbirds, the designation codified, "how we take into account the impact our actions have on all of our stakeholders, including the environment, our flock of employees, communities, consumers, and investors."
Sources: Harvard Business Review, Allbirds S-1
In only its second year in business, Time magazine called Allbirds' hero product, the Wool Runner, the "World's Most Comfortable Shoes."
Allbirds
Source: Time
By 2017, Allbirds, Warby Parker, and Casper were considered among the "DTC pioneers" shaking up industries ranging from sneakers to eyeglasses to mattresses. Warby Parker and Allbirds were among the DTC pioneers.
Interim Archives/Getty Images
By 2018, direct-to-consumer business plans proliferated. In 2018, Inc. reported more than 400 startups were trying to "become the next Warby Parker."
Sources: ModernRetail, Inc.
In August 2017, The New York Times described the Wool Runner as part of the Silicon Valley uniform, giving the company another shot of national publicity.
New York Times
Source: New York Times
A month later, Allbirds opened its first store, a 1,450-square-foot location in New York City's Soho neighborhood. The company operates 58 stores today. The first Allbirds store was in NYC's Soho neighborhood.
Business Insider/Jessica Tyler
Sources: Insider, Allbirds 10-K
By 2020, Allbirds' popularity had spread well beyond Silicon Valley. President Barack Obama was spotted wearing the Wool Runner repeatedly. Former President Barack Obama, who's worn Allbirds repeatedly, spoke during a rally for Democratic Sen. Raphael Warnock before the 2022 Georgia runoff.
Brynn Anderson/AP
But the shoe started to fall out of favor with the trendsetters and the press, with GQ even lamenting the sight of Obama wearing them. "Can't someone send him a pair of Jordans?" the magazine wrote.
Source: GQ
With the success of the Wool Runner waning, Allbirds launched its first performance running shoe, called the Dasher, in May 2020. Gear Patrol called it "shockingly good."
Allbirds
Source: Gear Patrol
Also in 2020, Allbirds partnered with Adidas to make a low-carbon shoe, another sign of the company's willingness to disrupt industry norms.
Allbirds
Large footwear brands are typically reluctant to partner with one another. Called the Adizero x Allbirds 2.94 kg CO2e, the shoe had the lowest carbon footprint of any Adidas or Allbirds sneaker.
Source: Business Insider
In August 2021, ahead of a public offering, Allbirds disclosed growing annual sales, but also mounting losses. People shopping inside an Allbirds store in NYC in 2021.
Spencer Platt/Getty Images
Sales increased from $193.7 million in 2019 to $219.3 million in 2020, but losses also increased, growing from $14.5 million in 2019 to $25.9 million in 2020.
Source: Business Insider, Allbirds S-1
A little more than 2,100 days after it launched its Kickstarter campaign, Allbirds went public on November 3, 2021. Shares soared 90% on the opening day of trading, a sign of Wall Street’s bullish outlook for the company.
Getty Images
Source: CNBC
After the Securities and Exchange Commission objected, Allbirds dropped claims about being the first "sustainable" IPO, the Financial Times reported in November 2021. The Allbirds store in Soho.
Business Insider/Jessica Tyler
Source: Financial Times
Although launched as a direct-to-consumer company, in May 2022, Allbirds announced its first wholesale partners, first Zalando and Public Lands, then Nordstrom, a signal that DTC sales would not be enough to get the company to profitability.
Jeff Greenberg/Contributor/Universal Images Group Editorial via Getty
Source: Retail Dive
As Allbirds started to add wholesale partners, the backlash started to build against DTC companies. Allbirds has announced plans to slow store openings and increase wholesale partnerships.
Allbirds
"It's the de-DTC era," said Simeon Siegel, the managing director for equity research at BMO Capital Markets. Analysts, such as Siegel, said the benefits of direct sales were often overstated.
Source: Business Insider
As DTC companies started to fall out of favor, and investors started to pay more attention to profitability, Allbirds stock started to drop.
Allbirds; Insider
Shares, which hit $28.64 on the company's first day of trading, had fallen to under $5 less than eight months later. Stock pickers said the company needed to expand beyond the Wool Runner.
Source: Business Insider
Roughly five years after the New York Times christened the Wool Runner part of the Silicon Valley uniform, the Wall Street Journal in December 2022 reported "tech bros" had moved on.
Wall Street Journal
Source: Wall Street Journal
In March 2023, Allbirds shares plummeted 47% after a disastrous earnings report that included a $101 million annual loss. Allbird's Tree Flyer
Allbirds
On a call with stock analysts, executives announced a sweeping four-part reorganization, including slowing the pace of store openings, adding more wholesale partners, and working to "reignite product and brand." Co-CEO Joey Zwillinger also said some of the company's marketing veered too far away from what Allbirds consumers want, including marketing for the Flyer, above, which focused on its technical performance attributes.
Source: Business Insider
As part of the reorganization plan, Zwillinger said the company was considering adding more wholesale partners. By then, the company's wholesale partners included Nordstrom, REI, Scheels, and Dick's.
Reuters
Source: Business Insider
While still based in San Francisco, in 2022, Allbirds quietly opened a Portland, Oregon office to take advantage of the city's talented footwear workforce. Nike is based in a Portland suburb. Adidas has its North American headquarters in the city. Allbirds in 2022 opened an office in Portland, Oregon.
Matthew Kish/Business Insider
Allbirds hired several Nike and Adidas veterans to run the office, including Ashley Comeaux, who spent more than 10 years at Nike before becoming Allbirds' vice president of product design.
Source: Business Insider
In early 2023, Allbirds released a string of products designed and developed by Comeaux and her team, including the Riser, Pacer, and the SuperLight, which lacks a Strobel board, a manufacturing innovation designed to reduce carbon emissions and improve comfort. The SuperLight, the latest shoe from Allbirds, doesn't have a Strobel board, which makes the shoe lighter and more comfortable.
Courtesy Allbirds
The Riser and Pacer have already gotten strong reviews from Insider. The company also released what it calls the world's first carbon-negative shoe, which it calls the M0.0NSHOT. Although the new products have been well received, shares of the company remain way down, trading for $1.23, well below the $15 IPO price.
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By: [email protected] (Matthew Kish) Title: The rise and fall of Allbirds: How Silicon Valley's favorite sneaker lost its edge — and how its plan to save itself includes removing a key part of your shoe Sourced From: www.businessinsider.com/what-happened-to-allbirds-rise-fall-2023-4 Published Date: Wed, 19 Apr 2023 13:25:19 +0000
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