Comfy Shoes Helped Allbirds Become a $1.4 Billion Company, but It’s Never Been Just About Shoes
It has been a ‘fairy tale’ start for San Francisco shoe startup Allbirds–and the story’s not over yet. This story originally appeared on Inc.com.
Editor’s note: Inc. magazine’s 2018 Company of the Year is Bird. Here, we spotlight a contender for the title.
If you started a company that was valued at $1.4 billion after just two years, you’d probably be pretty proud–of the valuation, your product, and yourself. Allbirds co-founders and co-CEOs Tim Brown and Joey Zwillinger are most proud of a piece of foam.
It’s not just any type of foam, of course. It’s made from sugarcane, and as a result, it’s carbon-negative–sugarcane actually sucks carbon from the air. It took two years, a partnership with Brazilian plastic manufacturer Braskem, multiple trips to São Paulo, and millions of dollars to create. Brown and Zwillinger call it “SweetFoam.” It was, in their minds, a huge deal, but they never meant for it to be a trade secret.
This past August, they published the recipe for their SweetFoam for everyone to see. Releasing their formula was equal parts altruistic and pragmatic, Zwillinger says: “The altruism is that if everyone uses this, it’s going to be great for the environment. The pragmatism is that if everyone uses it, the cost is going to go down.”
That’s the Allbirds ethos in a nutshell. The San Francisco-based footwear company launched in March 2016 with a direct-to-consumer model and quickly gained a reputation for quality–online reviewers rave about the comfort of the shoes–and commitment to environmental sustainability. That turned into growth: Allbirds racked up $100 million in total revenue over its first two years, and already employs nearly 150 full-time staffers.
An October fund raise of $50 million led by T. Rowe Price brought its reported valuation to the aforementioned $1.4 billion, all from only three product lines. Other investors include firms like Lerer Hippeau and Elephant, and celebrities like Leonardo DiCaprio and Scooter Braun.
Impressive as those numbers are, they pale in comparison with the rest of the global footwear industry, which is worth $208.2 billion, according to IBISWorld market analyst Devin Savaskan. Nike and Adidas lead the way with $22.3 billion and $11 billion, respectively, in 2017 revenue. Nike’s ad expenditure alone last year, Savaskan notes, was nearly triple Allbirds’s current valuation.
“We’re clearly on a great trajectory, so we’re really happy about that–but we’re also such a drop in the bucket,” says Zwillinger. “It feels like we’re just getting started.”
Brown, a New Zealander born in England, played professional soccer in Australia for more than a decade before retiring in 2012. His career gifted him plenty of free shoes, and he was constantly surprised at the cheap materials used to make footwear that he considered pointlessly overdesigned. He thought about how nobody used merino wool–a luxury fabric heavily sourced from Australia and New Zealand–instead.
In 2014, he brought those ideas to a Kickstarter campaign. The campaign raised almost $120,000, surpassing its goal of $100,000 in just five days. Zwillinger, whose wife was college roommates with Brown’s wife, was one of the first investors. It resurfaced Zwillinger’s entrepreneurial itch–nearly a decade prior, at Wharton, he’d become friends with the founders of Warby Parker, and had even beaten them at a 2009 pitch competition with a educational toy for kids learning to code called CuddleBots.
Zwillinger and Brown started talking. And soon, Zwillinger would quit his job as a vice president at a biotech firm to join Brown full time.
Neither had any industry experience, and both quickly found that shoes are really hard to make.
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