Joey Zwillinger, co-founder and CEO of Allbirds, joined the 20vc podcast to discuss the significant valuation drop of Allbirds since its 2021 IPO peak at $4.1 billion to a current market cap of $142 million. Zwillinger reflects on the company's rapid early growth, the impact of the pandemic on their strategy, and the importance of brand awareness, as Allbirds still has less than 15% brand recognition in the US. He emphasizes the brand's strength, consumer loyalty, and the potential for future growth. Zwillinger also addresses Wall Street's perception, the company's commitment to sustainability, and the balance between entrepreneurship and expertise within the team. Despite the challenges and market skepticism, he remains focused on over-delivering on expectations and is emboldened to regain and surpass Allbirds' initial market value.
"Now, Allbirds is an incredible story. A much-loved brand that went public in 2021 soared to a peak valuation of $4.1 billion, but just two years later now has a market cap of 142,000,000 today."
This quote outlines the impressive initial success and subsequent decline in Allbirds' market valuation, setting the stage for a discussion on the factors contributing to these changes.
"We have a mountain of cash. We have control of our destiny. The fact that Wall Street's written us off as a fickle beast, as it is, the markets are unforgiving. Our market cap is a reflection of the fact that we've essentially been written off by people."
The speaker indicates that despite having substantial financial resources and the ability to steer their own course, Wall Street's negative perception has heavily influenced the company's market capitalization.
"So Tim Brown's my co-founder. He was a professional athlete, but he happened to have a design background. [...] And just like most entrepreneurial journeys, it starts with a moment where there's a problem out there that's not being solved for you individually."
This quote provides context for the founding of Allbirds, highlighting Tim Brown's personal dissatisfaction with the options available in the footwear industry and his desire to create something new.
"We could blend his design and instinctual sense for the consumer with my material science background and experience in entrepreneurship. And we decided that this was a worthwhile endeavor for leadership, for business, and for a legacy that we thought our grandkids would be proud of."
The quote encapsulates the synergistic partnership between Zwillinger and Brown, combining their skills to create a brand with a lasting impact and legacy.
"Now, I'll just say valuation is something that I don't control. All we can control is how strong the business results are."
This quote emphasizes the focus on business performance over market valuation, acknowledging that while the latter is beyond their control, the former is where they can make a difference.
"And the balance of who you select, this balance of entrepreneurship and ambition, there's also an incredibly important element around bringing in people."
The speaker highlights the importance of team selection and the balance between entrepreneurial spirit and ambition, suggesting that personnel decisions are critical to the company's success or failures.
"And you can't change the perception of a brand overnight. That's for sure."
This quote acknowledges the challenge of shifting consumer perceptions and the strategic need to align product offerings with the brand's core identity.
"I often talk about with our leaders that what they bring in is deeply needed and deeply respected, but we need to think about it as a reference book, not a playbook."
This quote highlights the speaker's view on leadership, suggesting that leaders should provide knowledge and expertise without imposing inflexible strategies.
"We have a mountain of cash, we have control of our destiny. And the fact that Wall Street's written us off as a fickle beast as it is, the markets are unforgiving and our market cap is a reflection of the fact that we've essentially been written off by people."
This quote reflects the speaker's confidence in the company's financial position and acknowledges the harsh reality of market perception.
"We are a product company, first and foremost, and we happen to exist in a category where style and fashion is incredibly important."
The quote clarifies the company's focus on being a product-oriented entity that values style and fashion, while also leveraging technology.
"Every single thing that you're doing from that point, when you become a public company into the future, is exposed for all to see, the good and the bad."
This quote explains the transparency required from public companies and how it affects their operations and investor relations.
"We went public at $15 a share and now we're at like a dollar, dropping more than 90% of the value for shareholders that you orient the success of your business around."
The speaker expresses concern for the decrease in shareholder value and the sense of duty to improve the company's financial performance.
"We're a brand, we're not a channel. DTC is a way to do business."
This quote emphasizes that the company's identity is rooted in its brand, not just the direct-to-consumer sales model.
"We didn't have an athletic positioning at all, and we were 100% of a casual lifestyle shoe offering in 2019."
This quote reveals a strategic gap that prevented the company from capitalizing on market trends during the pandemic.
"You set out a set of expectations to a group of people that you say, I need this money, I'm going to invest it here, and it's going to generate these outcomes and these milestones."
This quote explains the rationale behind fundraising efforts and the commitment to meeting investor expectations through business milestones.
"You never know if an acquisition offer is a real acquisition offer until the piece of paper is in front of you and you have the opportunity to sign it."
This quote indicates that while there have been acquisition inquiries, none have progressed to a formal offer, and the company remains focused on its long-term vision.
If along that journey, the public markets don't see the value that we're creating, and there's a big gap between the value that we are creating and what the enterprise value is of the company, then I think it's prudent to consider all options.
This quote emphasizes the importance of aligning the company's intrinsic value with its market valuation and the board's role in evaluating strategic options when discrepancies arise.
Like, the diminishing return on that extra dollar is quite significant.
This quote discusses the principle that beyond a certain point, additional wealth does not significantly enhance one's quality of life, guiding the speaker's financial decisions.
Victory has a thousand fathers. Failure has only one.
The quote reflects on the tendency for success to have many claimants, while failure is often attributed to a single individual, underscoring the importance of accountability in leadership.
We got too fat with inventory, so we needed to clean that up.
This quote signifies the company's need to streamline its inventory to improve financial health and operational efficiency.
We're going to put up expectations and then wildly over deliver.
This quote conveys the company's strategy to set ambitious goals and surpass them as a way to build credibility and investor confidence.
We'll be cash flow and EBITDA profitable in 2025.
This quote provides a clear timeline for when the company expects to reach key financial milestones, signaling its path to profitability.
Being a good retailer's heart.
This quote acknowledges the complexities of retail strategy and the need to adapt to evolving consumer behaviors.
I really try to integrate my family into the work.
This quote highlights the speaker's approach to blending personal and professional life, allowing for a more holistic and fulfilling experience.
Having a focus on giving room, for myself included, to really express what people are thinking and what those anxieties are.
The quote emphasizes the importance of creating a supportive environment where team members can share and address their concerns openly.
"The consumer is in a more delicate and fragile situation than people understand. It's going to be more difficult and there's going to be less spending than people think in the coming six months."
This quote suggests an anticipation of economic challenges ahead and the importance of businesses preparing for a downturn in consumer spending.
"The average American consumer buys eight pairs of shoes a year. That's about two and a half billion pairs of shoes sold every year."
This quote highlights the size of the footwear market in the U.S. and implies the potential for customer retention and loyalty.
"There's going to be natural extensions for us to go."
This quote indicates Allbirds' strategy to expand its product offerings while staying true to its brand values and customer experience.
"Every single survey that comes back about social issues that consumers care about, environment's number one across almost every single one."
This quote emphasizes the importance of environmental concerns among consumers and suggests a potential shift in consumer behavior towards more sustainable products.
"I'd say a company that has done a really nice job in an area that I take a lot of inspiration from would probably be Tesla."
This quote reveals the admiration for Tesla's approach to product excellence combined with sustainability, serving as inspiration for Allbirds' own aspirations.
"We've done a great job of aligning what our impact objectives are with our financial objectives."
This quote indicates Allbirds' commitment to integrating sustainability with business success, aiming for significant growth without compromising on values.
"I always say, as a leader, when you get bored of telling the story and the mission you're just starting, it should be boring to embrace that."
This quote suggests that leaders should persevere in communicating the company's story and mission, recognizing its importance in shaping company culture and consumer perception.