RSS feed
Andrew Warner: Hey there, Freedom Fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. When I started doing these interviews, people were like, Startup tech, huh? Will it work? And then it got into this, it’s gonna work for anybody.
Why does my mother have a startup? It’s so easy. Look at this SaaS company, direct to consumer. It’s all a win. And I have to be honest that, um, After COVID, a lot of I don’t know. A lot of us in this space started to feel like maybe we’re in an oversaturated market. Maybe SaaS is not going to work out because there are too many people and there are too many companies and there’s too much money and it’s not going to work out for us.
And maybe direct to consumer is not going to work out anymore because there are too many businesses and many of the ones who started out as direct to consumer online businesses are going into stores. And, ah, and I get it. I see it in the audience. I see it in entrepreneurs that I’m talking to. And I want to find out instead of Like where the limits are and where your, your sense of frustration is. I want to find out what’s working. And so I invited the founders of a company that I consider to be one of the heroes of direct to consumer space. They’re the founders of all birds. These people, um, somehow got their footwear. I don’t know why I’m calling it footwear. I think I’m trying to be a little more professional with you guys, Joey.
Um, you got your shoes on Larry Page, Ben Horowitz, Mary Meeker. Like it became like the in thing with the. The tech elite and then the in thing within tech. And then I saw it expand beyond. And then, um, I saw you guys go public. I saw you go into stores, but at the same time I’m reading the financial press and I see, well, this, the stock price is down and maybe it’s not a direct to consumer business anymore.
And I want to find out how you built this business, what’s working for you and how you’re dealing with what a lot of us are seeing, which is this sense that not everyone is optimistic about what we’re doing anyway. Let me introduce my, my two guests and then we’ll talk about all that. Uh, Joey is Willinger and Tim Brown, the two co founders of Allbirds, this fantastic company, and I’m going to get to talk to them.
Thanks to Gusto, which I’ll tell you later about. But first, Joey, how, how does this sit with you? The sense that what I described about this, uh, pessimism in the market right now and entrepreneurs, uh, minds.
Joey Zwillinger: I am. I can empathize with the with the feeling that you’re describing, Andrew. But I would I would urge a little bit of patience here. You know, we are in a cycle. And if you think back to 2019, we operated in a world where everything was like a taut rope. There was very high utilization of every system and That’s what, you know, capitalism tends to drive, whether it’s shipping or, demand and manufacturing and how those two things blend together on, on any consumer products industry.
And when the pandemic happened, we just had like this huge shock to the system. And I, I wrote a note on, on LinkedIn. That you can maybe post in footer of this podcast, but it just describing that I think, and you might be really sick of listening to someone say the word COVID and almost get repulsed by it, everything that we’re dealing with in the economy has to be considered through that lens right now, because it was like a, Absolute shock to the system that that just sent these huge waves into the economy and it needed some time to get back to normalcy and get back to what was probably before that the 10 or 20 year trend line.
And so, I think. in times of greatness, let’s not get too overzealous and plan for things to continue to go to the moon, and when times are very volatile or down, let’s also not give up hope and lose the forest for the trees. Because I think, you know, what we’ve faced has been a real testament to that.
we came out of the gates when we started. And I’d love to be able to get into, why Tim and I started, the brand. but we started in 2016 and had real meteoric growth. And, we always believed that the biggest and most important moat to, what we were doing was our innovation infrastructure.
That we were focused on really unique materials to bring differentiated experience to customers and our brand. And that, that, surpassed any distribution channel, whether it was DTC. on a digital side or stores or wholesale, we were always envisioned as a brand, first, not a distribution channel.
And, and as we started to build out the infrastructure for that, lo and behold, two years into it, north of 200 million in revenue. we were hit with what everyone was hit with in the economy, which was these giant shockwaves and being a young company, some things were very difficult to determine whether it was signal or noise in the system.
And so those speed bumps present a real challenge for us. but fortunately we fortified the business with every resource that we need to be successful. probably most importantly in that is, a really nice. pile of cash, that allows us to operate in a way that gives us control of our own destiny.
and that’s going to allow us to do the right things for the long term right now that will set us up for sustained and durable and profitable growth as we move forward. So that’s where we are and I would just. suggest that, reading into anything today, without taking into that context of the last four years is, is a trap that, that might, be worthwhile thinking about and regaining some conviction on where the world is actually going.
Andrew Warner: I don’t want to spend too much time on this, but the market cap was over 4 billion at one point, and then today it’s at under 200 million. But you’re saying that you have a pile of cash. How much cash do you have?
Joey Zwillinger: Uh, we ended the last quarter, above 130 million bucks in cash. and for the nine months preceding that, I think we used about 35 million. So we, we got plenty of room. Um, we’ve committed to the market that we’ll be making cash, cash flow positive in 2025. So, just simply doing the math on that.
we got plenty of cash to do what we need to do. And we’ve done an incredible amount of work this year to ensure that. we can shift our focus from some of the nasty stuff we had to do this year into a really smart and profitable growth model, in 2024 and beyond.
Andrew Warner: Okay, one final thing and then I’m gonna go to Tim to talk about the history of the company But to start us off with the history of the company and I’d like to spend more time thinking about how you got here What’s working what’s gonna work in the future, but you mentioned cash we talked about market cap debt how much?
Joey Zwillinger: Zero.
Andrew Warner: Zero debt. Wow, this is like Incredible opportunity that you’ve got here Tim. Let’s come back to the beginning. You had the original idea Where’d you come up with
the idea?
Tim Brown: Yeah. Hi, Andrew. I was in a, an apartment in Wellington, Cuba street. People know the city, playing at that time, professional football, soccer, depending on where you’re from, dreaming of going to a, world cup, with New Zealand, something that happened, hadn’t happened for 28 years.
And I was focused on that and, had started a very, very early entrepreneurial, path. That didn’t involve a strategy or a business plan, more born only from
curiosity
in shoes. one of the best things about playing professional sport is getting free gear. and I got lots of it from one of the large sportswear companies that shall not be named.
And it was largely made from plastic. I’d grown up in New Zealand, not as an environmentalist, but certainly with an empathy for natural materials and a mum that taught me to check the tags of all the clothes that I wore to make sure that they didn’t feature plastic.
Um, and so couple of things
Andrew Warner: I’m sorry to interrupt, but why do you care that it’s plastic? Why did you, why did you look at the labels? What was it about, about that?
Tim Brown: You know, I think, uh, I’d, I’d been taught, had been drilled into me, that natural was better. And obviously growing up in New Zealand, land of lots of sheep. Cue, cue, sheep jokes from Joey here shortly. Um, that, you started to understand that this is a very important, historical and cultural part of New Zealand’s economy and history, but it had been in decline.
Peak sheep in New Zealand was, 1982, I believe, north of 100 million, now there’s less than 25 million, and no one in a generation has grown up wanting to be a farmer. And you understand that really part of the cause of that has been the rise of the synthetic industry. cheap, materials derived from, barrels of oil, And, and I don’t think I understood that at the time, but I knew that there was an opportunity in wool.
And I was reading a magazine one day and it was about this decline of the wool industry. And, I, applied for a grant while I was still playing football to develop a, a textile made from wool to be used in shoes. so that was the starting point. And the second insight I’d like to say that Woolbirds was founded on three insights.
Quite simple ones. there was an opportunity in natural materials and, and then the second one in footwear. The shoes and the gear that I got tended to be, in my opinion, over designed and over logoed. and they changed all the time for no good reason and it was very, very hard to find simple.
Um, anyone who’s walked into a sort of a footwear shop and looked at the wall kind of knows what I’m talking about. It’s screaming at you. And there was an opportunity to maybe whisper and whisper something more meaningful. And I’d come to America on a soccer scholarship and actually studied design and had the principles of minimalism drilled into me, so.
The combination of the materiality and, uh, and so I set off to work out how to make a shoe.
Andrew Warner: And that’s where you met Joey. How’d you connect with him?
Tim Brown: Uh, I, managed to go to that World Cup in 2010, which was really special. Decided, um, that was, I’d taken this further than I ever thought possible and retired and went back to business school in London to study all the subjects I’d avoided in my educational career up until that point. and I had a professor who looked at my wool shoe idea in an entrepreneurship class.
Uh, and actually called it the worst idea he’d seen in, his teaching career. But encouraged me to put it on Kickstarter or something so it could fail and I could get on with my life. because I just seemed like one of those guys that was gonna try hard for a long time and possibly make myself unhappy.
So that was lovely. Of course, Andrew, who’s a friend and a mentor, actually spoke to him recently. but I called his bluff, went home for Christmas on a family friend’s farm in Pahatunui, just north of Wellington. 700. The help of my brother. Shot a Kickstarter video that that started it all. I had enough material, the special wool material that we’d created over a number of years.
Um, and bear in mind this is 2014, seven years after I started thinking about this, just to give some sense of the time. I put it on Kickstarter and, we sold a thousand pairs in, in four days. I had to stop it. It was 120, 000 and, it was the beginning and as it turned out, Joey was one of the first, first Kickstarter customers and, and that’s how we connected on the third insight, the third pillar of what make, what makes Allbirds.
Andrew Warner: was the third insight?
Tim Brown: um, first of all, I just want to go on the record and state he was a difficult customer and complained quite a lot about the, um, Kickstarter, uh, shoes, something about the sizing, which I’m sure he’ll have an alternative point of view on, but, um,
Joey Zwillinger: just add to that, that the customer service at the time was very poor.
Tim Brown:
Andrew Warner: this is before you even got this shoe you were starting to complain?
Joey Zwillinger: No, no, no, no. It was a fair complaint. He’d sent me a women’s ten when I’d ordered a men’s ten, and I was just curious if I could maybe swap out the size so it fit my foot. And his response was that I should take out the insole and see if that gave me enough room, to comfortably walk around in the shoes.
Which is, in the end, what I did. it turned out I think he was a little constrained with materials at the time, given that he’d sold through the campaign. Uh, and I, I walked away a, um, four, four star
Tim Brown: I
Joey Zwillinger: review customer,
Tim Brown: about how Joey handled that situation, Andrew, but, um, uh, yeah, So this was the beginning, and so I moved to London and spent a really difficult year trying to deliver on this. Making shoes, it turns out, is really hard. Making shoes with no experience is quite difficult.
And then doing it with a material that’s never been used in the footwear industry before, with at the time, no capital, was borderline crazy. And, Joey had, uh, our wives had been roommates at university. Um, he continued to be. In all seriousness, a supporter and a sounding board for this journey.
And then at some point we decided, that we should do it together. my father at the time was calling me a wool cobbler and, used to really get under my skin. I didn’t grow up on a sheep farm as good as that would have been for the story. And I didn’t grow up with a particular appreciation or interest in shoes.
And yet I found myself, pursuing this thing, that was very difficult. and then I met Joey and. In all the ways that I had a kind of a design and maybe material vision for the product, he had a vision which I’ll let him share about how the world was going to change and that we were on the cusp of a sustainable revolution and every product and service that we use was going to need to be rethought and reimagined and it was an opportunity to do that in the fashion industry and that this project that I was sitting on that I hadn’t really viewed through that lens had at its core, had at its heart, this extraordinary purpose and opportunity and I don’t want to say that it got easier from that point because it certainly didn’t, um, but I, I would like to say that’s the moment when I didn’t look back and I realised we had an idea or, something that you could, you could devote the rest of your career to trying to solve.
Andrew Warner: know, before we bring Joey back into the conversation, um, when you were making the shoes yourself, how did you even make them? Where’d you find the factory? How’d you get this up and running?
Tim Brown: I just, I jumped online and the first footwear factory I visited I just googled it and I visited in one of my off seasons of football and I, it was driven by just curiosity. And I walked into this world, the mass manufacturer of this object that we use every day and realized that it hasn’t changed and it’s incredibly antiquated.
And I had the power of just a little bit of time, and a little bit of space to ask the questions like, How does sizing work? To Joey’s earlier, what, how are these things made? And realized that there was an extraordinary opportunity to do it differently and that it was a It was an infrastructure that tended to have done one thing one way for the last 50 years just because it was how it was done.
And that it tended to default to using the cheapest materials and the lowest cost labor. And historically it actually chased that around the globe. and we saw an opportunity to do it differently. I think the other thing that was going on at the time was the The fashion industry was started to talk about the environment and people were becoming more cognizant.
but there was sort of a lack of understanding of exactly what that meant and how you might build that into a business that, that made better products. and so that’s where Joey came in.
Andrew Warner: So Joey, when you did meet up, how did you end up in partnership with Tim?
Joey Zwillinger: when Tim was working on the Kickstarter, I mean, I, I remember back when we first started talking and, I guess late 2014, he was, I think he undercooked some of the entrepreneurial zeal that he took to the effort there. he was happened to bump into someone in a suit store that he had played soccer with and that person introduced him to the owner of a, very fine, merino wool factory in Italy, who then introduced us to a, a last maker in the northern part of Italy.
we had a foundation there to start because of the entrepreneurial effort that, that Tim had. Really embraced and, and worked very hard against, but I think, what, when we started talking, um, to Tim alluded to it, but, my background was very different. like Tim, I didn’t grow up on a sheep farm.
Certainly. Uh, I also didn’t, uh, have a particular appreciation for the footwear industry, but what I did have was a view that, um, Climate change was going to be the existential threat for our species over the next 50 years and that was a problem that felt to me worthwhile spending a large chunk of my life fighting and the way that I thought would be intellectually rewarding and very productive was going to be through the private sector and particularly through entrepreneurship.
So, you know, dating back to just after I finished college, I started looking at, investing in what was at the time called clean tech companies, from a venture capital firm. I then ended up going to a operating company because I thought that was a better path to do this. And what we did, the company was called Solizyme.
we use biotechnology to manipulate microalgae and what we would be doing with the biotech tools is essentially programming these microbes to eat low carbon. Emission intensity sugars and spit out whatever we program that microbe to do and and because of what algae produces, which is like an oil, we were focusing that technology on replacing anything that petroleum could make, whether that was fuel, any kind of fuel to biodiesels for trucks or airplanes.
We were the first company to put fuel on a commercial airliner with United flying from Chicago to Houston. Uh, and then I ended up leading the, uh, The Green Chemicals Division. So we replaced anything that was a
Andrew Warner: to put fuel, to put what kind of fuel on the first
airliner?
Joey Zwillinger: Al Algae based jet fuel. On,
Andrew Warner: Meaning algae made jet fuel? Instead
of pulling oil out of the ground,
algae made the fuel that got an airplane up in the sky?
Joey Zwillinger: Correct. And it flew on a commercial flight. And, uh, in fact, when we did our, uh, public offering, and did the whole ceremony in the NASDAQ in, in New York, we actually asked United to fill the plane up with, with bio based aviation fuel to fly our team out there so that we are a low carbon emission flight out to New York.
the journey goes on with that technology. Uh, but what, where I was sitting in that business, you can
Andrew Warner: Sorry, I gotta, I gotta pause on that. I was gonna continue, but wait, what is the challenge with that? My assumption is it’s too expensive to make enough of it to compete with something that comes out of the ground without having
Joey Zwillinger: There’s, there’s, a number of challenges. Um, cost isn’t necessarily one of them. sometimes it is, sometimes it isn’t as commodities fluctuate, but the, one of the biggest challenges is actually in some of the infrastructure and the. Jet fuel, how you pass it through, a number of different tanks and pipes that need to pump it through, and there’s, it actually often boils down to the, a particular kind of seal that is used to allow jet fuel to, pump through and keep its viscosity and, and be temperature controlled.
That doesn’t work as well for the bio based version, but anyway, we’re, we’re down a technical rabbit hole, but infrastructure is really challenging in the transition to a green economy, not just for seals on aviation fuel, but also for batteries and transmission lines for electricity, all that stuff.
So I think this is the mountain that the world is left to climb right now is getting some conviction and betting in the infrastructure. and I will say that similar was what was happening to me in, in the chemical side. So, I, I ran the group that was responsible for making alternatives to petrochemicals, which is in absolutely everything around us, whether it’s, the paint on the wall behind you, or the wires that connect the, electrical cords in that light.
Everything there is plastic. And, and we, it’s, it’s hard to fathom even how much of the world around us is born from plastic. and the promise of this technology was that we could replace All of those by by tuning these microbes, but yet when I went into the customers that we were targeting, it was oftentimes, an unbelievable story that sounds incredible.
And then by the third conversation, it was like, Hey, you know what would be awesome if you just made that plastic a little bit cheaper. So we had a bigger bottom line. And, and that became such a repetitive cycle that for me, what I learned, and there was particular moments when the light bulb really was like firing, but That consumers wanted a no compromise offering no matter what the product was that they were using.
They wanted it to be high performance and they wanted it to not dent. The world and make an environmental impact. The technology existed, not just with the company I was working at, but all the competitors that we were playing with in the material space, there’s tons of opportunities to use the, the best innovator in the world, which is nature to unlock unbelievable differentiation and products and the brands we’re getting in the way.
And so it struck me that. While I was in this, really, repetitive and frustrating situation with the customers I was dealing with, if there was a brand that could curate all of these materials and build cultural relevance around an object or a set of, of products, there was a power in the emotional connection that could drive.
those consumers to get everything that they wanted from a performance perspective and an environmental perspective and that when Tim came in with this, with the Kickstarter, he had a real intuitive insight for this and if you look back to the Kickstarter campaign, which is still available online, you’ll see these elements and the kernels of what we became and Allbirds are all still there.
Tim’s shaking his head that you probably shouldn’t do that, but, I, I think it’s a great video and it really is the kernel for, for what we ended up doing and we still do today, which is, This is something better and it happens to be a free gift with purchases that it’s the most environmentally responsible product in the entire world in our industry, at least, and so that connection allowed when Tim and I got together in and now early 2015.
we came to my house and we really had this conversation where we decided that one plus one could equal three and my material science background, understanding of, of how to build manufacturing and, and entrepreneurship connected to this, natural materials underbelly that we use for the company connected with his consumer insight, intuitive marketing sense, and design ethos, that is something that could be special and could provoke an emotional response from consumers.
Thank you. Build something that was not only a leader in our industry, but also a business that had an incredible opportunity to do great for the world and, and great for whoever the financial stakeholders were gonna be.
Andrew Warner: All right, Tim, you’re, you’re not part of day to day now. Right?
Tim Brown: I’m, I am
Andrew Warner: Oh, you are.
You’re just not running as you’re not co CEO.
Tim Brown: we ran the business through the first seven years as co CEOs and, and then now I’m, Chief Innovation Officer, focused on, looking a little bit further or trying to look a little further ahead, about the future of what we create and, and having a great deal of fun doing it,
Andrew Warner: Okay. Here’s the thing that I was amazed by. The people who are wearing all birds. I mean, I mentioned people like Larry Page, which I don’t know if anyone had seen. I know that in the New York Times article that I read about it, I think one of you had told the New York Times reporter, but it’s, it feels right within the context of what was happening at the time that, uh, that you’d launched. I think, like, my wife worked for Marissa Meyer, I think she wore the shoes at the time. I’d seen them everywhere and they trickled down. What I want to know is, how did you make that happen? How did you get these people who are not very environmentally concerned to wear these, to wear your shoes? What was the process for doing that?
Tim Brown: I think it started with the product. just to zoom back, we launched, um, we moved to San Francisco from London where I was, started working out of Joey’s, mother in law’s house, in San Rafael with his dog Walter and a couple of our first employees. And we launched Allbirds on the 1st of March 2016.
And in the first week, Time Magazine called the shoes the most comfortable in the world, which was good. And, and really we realized The comfort was the number one reason why you buy shoes and natural materials, supported an extraordinary feeling, unlike anything else. and it was, it was a word of mouth based on, a unique design perspective and, and a feeling, you don’t plan for these things.
Uh,
Andrew Warner: Are you saying people just
picked up on it because, no, I, cause people, I lived in San Francisco at the time, people in San Francisco didn’t care about the Time Magazine, if anything they didn’t like whatever Time Magazine was picking because it felt old and too mainstream.
Tim Brown: Yeah, I look, they may or may not have read the article that I. I can’t remember the one that you’re talking about. The point being, like, there was an experience that people felt compelled to tell other people about. And it was simple, it was counterintuitive,
Andrew Warner: it wasn’t your team reaching out, sending out
Tim Brown: Yeah, of course. Yeah, of course.
Yeah, look, let’s give us some credit. That we have, and that we started a business, in fashion in San Francisco, and we were told many times that we couldn’t do it. And we launched with one shoe that Many people in the footwear industry seemingly were coming out of the woodwork to tell us would never work.
And we use natural materials in a way that we were reminded fairly regularly, had not been done successfully. And we launched it with a direct, to consumer business model. So these things have a little alchemy. and we worked extremely hard and let’s be clear when we launched that on in 2016, that we’re going on nine years of iteration, albeit.
In an amateur fashion of trying to make this shoe, uh, and bringing a new material to life and we found factories online and this was a true entrepreneurial kind of, journey. so the hard work had been done and I think we had a product, and a story and Joey touched on the importance of brand, and a true purpose and mission that attracted extraordinary talent.
and it went from there and I still remember when my mom called me and. Jacinda Ardern, the New Zealand Prime Minister, had just gotten a job and she met the Australian Prime Minister for the first time, which is a big deal in New Zealand politics. And the gift that she gave him was, was a pair of all birds.
And mum was like, as far as I’m concerned, this doesn’t get any better than this. these things, they have a habit of, a lot of different things come together. It’s a little bit like when you’re playing sport. It’s no one thing. You do a thousand little things really well and you do that with a group of people pointed towards something larger than themselves and you trust in the process.
And over time, you know, you start to make your own luck and we had a lot of it. Um,
Andrew Warner: Can you give me an
example of one of the things that helped get these celebrities in Silicon Valley to start wearing all birds?
Tim Brown: I think, um, we told the story and we had a vision and in all the ways that the product was really simple and counterintuitive because of that, um, coming in for some of those founding insights around a, a sort of a footwear industry that was loud and bold. We came in and we were simple and singular.
we also had a big vision for an industry that we felt needed to change. And on the back of, Joey’s story and also vision, we were able to slowly, over time, build confidence in the idea that we were different. and that we had, a purpose. that Had the basis of what we came to believe could be a hundred year brand.
And I think, people over time, they connected to that and saw that we were trying to do something different, particularly in San Francisco, sort of a bastion of innovation. And that this was counterintuitive I think it was a big part of our success. And look, we told that story to a lot of people.
And so that was, it, it, it
Andrew Warner: How did you tell
Joey Zwillinger: Yeah. Andrew May, maybe I’ll, I’ll just add, you know, I, I, as I reflect back on that time, um, and I do a lot because I think some of what we did great back in the very early days of Allbirds is. Something that, um, as you build a company and you scale and you add all this complexity, sometimes there’s some Really foundational aspects that are important there and when we started, we poured absolutely every dollar of resource that we had into building the best product that we possibly could.
This isn’t like a minimum viable product strategy that you have in technology in software where. you just iterate, iterate, iterate. Like we did iterate lots of times in the future, but we needed it to be very good when it came out of the gate. And then we needed to invest in, in getting the word out and making sure that the story was crisp and focused.
And, what we said 99 times, we would say no for every one thing we said yes to, and that kind of level of focus allowed us to say. Something very crisp and clear to the consumer when we launched and that message resonated and I think you know you’re coming from a world where you’re thinking about technology all the time and those people are incredibly notable people but don’t like for most of America and most of the world that was hearing about all birds back in 2016 it wasn’t from technology people it was you know we had Barack Obama wearing it to basketball games we had Oprah was in it.
We had Ashton Kutcher, like tons of celebrities in the entertainment industry were doing that. Technology was kind of something where similar to the entertainment industry, you’d be in an informal work environment. And so it fit really nicely with the lifestyle for what people were doing. That was true for entertainment.
It happened to also be true for, for people working in a fairly informal style environment, like the technology is. So it kind of fit for both and, and, and a narrative developed around the technology thing. But I would, I would point it all back to that. Focus and that crispness and clarity of message to the consumer, not trying to do everything and spread your bets across seven different things.
Put your bet on one thing. Make that message super clear. Some people are going to love it. Some people are going to hate it, but there’s going to be enough people that love it, that build a really special foundation for our
Andrew Warner: what I think. Tell me if, if I’m right as an outsider, what I was thinking was. You realize that at that time, tech celebrities were celebrities. They were starting to become influencers and that you had reached to, you had reached out to them, gave them, uh, samples of the shoes. They were more interested, I think, in function first and reasonable first than they were in design. And you’d courted them. They started wearing, uh, all birds. As a result, they were also heavy in social media. Maybe you encourage them to, to promote it or talk about it, but I just saw Tim Zai do something when I said encourage them. You didn’t encourage them. It was just let it be. If I’m
overthinking it
Joey Zwillinger: We, we honestly, we didn’t seed technology people. We didn’t like, we, we would seed like people in entertainment for sure, because that’s like, got a bigger megaphone. But no, I mean, we, this was something where the message just landed.
We had product market fit. You know, like the shoe, the shoe was something people wanted, the story, like you made the supposition that some of these people didn’t care about the environment. That’s not what they do for a living. I’m sure they care about the environment. Most people do. And, like, regardless of political ideology, like, people care about the world that they live in.
And I think, I think it just, it was a message that landed, like, really effectively for people.
Tim Brown: There’s a temptation, I think, with brands and new products to talk about the 27 things that you do well. And I think, for better or worse, over a period of time, we’d anchored on comfort is the number one reason why people buy shoes, and it’s often equated with ugliness. So, simplicity is hard.
Um, it takes a long time to understand that that was the, lane that we were gonna, we were gonna come into. And look, I mean We were obsessed about every, like, millimeter and strand of this product to deliver that, that promise. And then I think we brought a sense of humor to a fairly self serious category.
Um, and the, the cultivation of this brand, which is always a representation of, the founding story and the people that founded it. wanted to go after something really serious, Andrew, the problem of our generation. Um, but I think. And I’m proud of this New Zealand connection, but to do that without ever taking ourselves too seriously.
And I think it was something that drew people in. Um, and the courage to, be simple, the courage to, take a stand on one thing, the courage to edit. Um, yeah, and we, and we got lucky. what was also happening was there was this. Athleisure is a, is sort of a little bit overused word, but you know, this was, this was happening and it happened in apparel and the casualization of fashion, shifting workplace trends, which has only accelerated in COVID.
And there wasn’t really a lot of footwear solutions that were. aimed at this in between space and natural materials by virtue of their incredible properties allow this sort of multifunctional use. So there was a bunch of things that underpin this that, were deeply thought out. And then, you know, you make a little bit of luck, but I guess just to answer your question, there wasn’t like we, we had some sort of marketing agency that we went to and said, like, kind of hit these four people.
In fact. in many ways, this sort of narrative of Silicon Valley Shoe isn’t actually accurate. that we were adopted by a creative community across America and in New Zealand. and this was actually a part of the story that didn’t reflect how our business grew. But nonetheless, it’s quite frankly one that we’re proud of.
Andrew Warner: let me talk about, uh, gusto. It’s the company that I love for paying people because if they’re working for you, they want clarity on how much you’re getting paid and you want simplicity for how to do it. They want clarity on benefits and you want simplicity so that even if you have a last minute payment that you need to send to someone, you’re not dreading it.
You know, I can just go in, it’s super simple, it’s as easy as using Google. Joey, let’s be open. You used to use Gusto, my sponsor, you don’t anymore. Could you tell us what, do you remember what you guys liked about Gusto and why you’ve switched off?
Joey Zwillinger: Uh, yes, I can remember because I set up the
Andrew Warner: You did! Yourself!
Joey Zwillinger: Yeah,
Andrew Warner: Gusto? What do you remember about it?
Joey Zwillinger: we needed employees to do amazing work, and we needed to pay them. So, we had to do something. And Gusto was, super easy. And, uh, we enjoyed it. It never got anything wrong. it was a fantastic process for us.
And, and frankly, I wish we could have the simplicity today. But we, we expanded into, uh, Retail with a lot of payroll on hourly work. we expanded internationally and the system that we had built just got a little bit too complex, based on where Gusto was at the time. Remember we started in 2016.
I don’t think Gusto is a very old company at that time. So sometimes you find yourself adopting new technologies when, they’re developing a product roadmap themselves. And sometimes your needs get ahead of their product roadmap. Sometimes you’re right in sync. And, we’ve got lots of examples of like.
of technologies that we’ve adopted over the years, and, and Gusto was a fantastic one for where, where we were, um, at that time, and hey, I, I don’t know, maybe it’s great for
Andrew Warner: You know what? Truthfully, I think you’re probably at a stage where you’re too big and your employee base is too complex for Gusto and I’ll be open and say that it’s probably not for you but for companies like mine, for companies like many of the people who are listening to me if you’re just looking to pay your people Remote people in the office, 1099s. It’s dead simple. It just works, helps you handle payroll, handle benefits in a way that you’ll actually believe it or not, you’ll enjoy it. You’ll have clarity, especially at the end of the year when it comes to taxes. This is a time of year when a lot of people are thinking about switching away from their payroll software, do it.
And I’m going to make it easy and free for you. If you sign up using my link, I’ll get credit and I appreciate you all for doing that, but also you’re going to get three months for free. Not the payment is a big problem to be honest, the price is super low. It’s not going to be the thing that holds you back, but it might be the thing that pushes you over the edge to just go try it for free.
Just go to gusto. com slash mixergy.. You opened up, um, actually, you know what, instead of going into stores, COVID you’ve talked to me a lot, Joey, about, about COVID. I guess I didn’t realize how COVID impacted you both before, both during and after what happened during and what’s the lasting effect of COVID.
Joey Zwillinger: I think people’s memories are short. So I think the lasting effect, if I could, say something that might be, upsetting for some people is going to be very minimal. But the, the vicissitudes that happened during the five years, starting maybe in China in late 2019, but really in America in March of 2020, through the next five years, which we’re still living through.
are very significant, amounts of volatility in virtually every sector. And so, when it comes to the consumer product space and the brand space, you had issues where, companies with very high awareness, when every, when the world shut down in March of 2020, all the stores closed, they needed to keep selling all this mountain of inventory that they had.
So they shifted, what was like 30 percent of their marketing budget to a hundred percent. in digital and just flooded the digital ecosystem with ad dollars, which, which significantly increased the cost to acquire customers through digital. You had supply chain issues where factories shut down.
There was so much furniture coming in because mortgage rates were low and people needed a house that could actually work as an office. So furniture’s coming in, clogging up all the ships on the sea. There’s supply chain lead times went from 60 days to 120 days. Prices skyrocketed. So all, all of this sent a huge shock to a system that was normally operating at like 90 percent utilization and no system can handle a huge shock when it’s operating with that, that little slack in their capacity.
all of that kind of swung. And for footwear specifically, people who hadn’t run in 15 years decided the only sanctuary I have in this moment in time when I’m cooped up in my house is to go and try to go take a walker or take a run. So running shoes. Went through the roof and, and we had no running shoes at that time, uh, and, and weren’t at all a performance oriented company, really a lifestyle with a, with an athlete, athletic or athleisure kind of aesthetic to it.
So all of those things were, were incredibly difficult. And, you know, if you don’t have a large base of business with high awareness amongst consumers to face a period of time like that, the data is coming in from all sides and parsing out which one is signal and which one is noise is. incredibly difficult challenge.
I do think that, I do think that all of the economic volatility can be traced back to actions and consequences that relate to, what happened in the pandemic. Whether it’s like, you know, the Fed rate fund, the stimulus, the supply chain issues, and everything with consumer behavior and shopping behavior that we’re still dealing with today.
Andrew Warner: Well, has it gone back now to the way it was before you’re not seeing that people are going, well, I guess now, if anything, I would feel like if they’re working from home, they want comfortable shoes if we’re working from home or comfortable ordering online, it, has it gone back to the way it was before COVID for you yet?
Joey Zwillinger: no. I dont think anything has
come all the way back yet in most spaces. I think if you think about like a metronome, that was stable, got shocked to one side. Uh, we’re slowly coming back to the center now. Um, but I would say that people are starting to go back to work, maybe not in San Francisco, but pretty much everywhere else.
And, that, that is driving back to a behavior of both, consumption and shopping that is a little bit more. pre pandemic I also think that during the period of time of COVID, in the midst of the pandemic, there was this maximalist expression that happened where, it was really, what you were wearing was a lot louder, particularly in, in the footwear category.
It was like everything that Tim loathed back when he was playing soccer was in vogue again for a minute. And I think, the quiet luxury phase, which has been coming back for the last, like, six, six months or so, I think is the future and that’s what we were on. this versatility in the blurring of work and play and requiring to, uh, Requiring that people wear items that allow that blurring of the lines.
That was what was going on pre pandemic and was a significant trend that we were really focused on attacking because that’s the way we thought the world was heading. and there’s been a little bit of a break and a hiatus in that and I think now we’re uh, optimistic that the trends and the fashion and what people are going to be using uh, clothes and apparel and how they want to express themselves is really coming back to that quiet luxury.
with a, uh, an appreciation for something that’s a bit austere and allows you to have versatility in your style, uh, not just in the physical aspect of comfort or longevity or whatever you’re looking for in a shoe.
Andrew Warner: What do you think about, um, direct to consumer online? Just online purchases versus in store it feels Like it’s mature like it’s less exciting less novel less growth. What are you experiencing? I know you do both in store and online
Joey Zwillinger: Yeah, our, our digital business is performing really well. Um, I, I think that, uh, so first of all,
a DTC company is that, that is like if you’re a brand that’s selling a, a product that you manufacture. that is your company and you need to win based on that. You’re not going to win based on a distribution channel like selling through an e commerce infrastructure. Now, if you’re a business model take Chewy dot com, where you’ve identified some kind of a, uh, an opportunity in supply chain to exploit a supply chain.
difference in the market where you can uniquely solve a supply chain problem and connect a host of brands into serving consumers needs and you have lots of whatever the widget you’re selling is and you can match that to lots of consumers and use data. That’s a DTC company. what we are is a brand that sells an amazing differentiated product, and that needs to transcend any single distribution channel.
So just, you know, digital, we’ve always believed digital, acquiring customers on a, in a digital led. infrastructure or, marketplace that will get more expensive over time, more difficult and you’re going to run out of new consumers to reach. So really early on in 2017, we, we started to build stores.
Those stores were the most immersive experience and we found that people who shopped in our stores and online spent over 50 percent more than someone who was a repeat customer that was just a digital customer. So we knew that omni channel customer was better. As we built out the segmentation of our assortment, we wanted to go into into the wholesale infrastructure and that system and build the muscle to meet that buying cycle, which is really difficult.
And we’ve always envisioned like, you know, call it like 30 percent of our business would be wholesale. The rest of it would be direct and, you maybe split that, and, some kind of proportion between stores and digital, but, but that wholesale was going to be really important to meet new consumers.
And we always thought about it as profitable brand awareness building, and, and that was what we anticipated embarking upon as we, met the unfortunate, news of a pandemic. So we pulled back on that for a couple of years. Now we’re starting to embrace that and we’re starting to grow that.
That part of our business and we see that as something that’s going to be incredibly important to meet new consumers and build our awareness from something that is less than 15 percent in America of people know about us. Have you ever heard of Allbirds? 85 out of 100 will say I’ve never heard of that company.
So I hope some of you 85 people are listening here today because you got to go to allbirds. com and try it because it’s an incredible product and you’ll start buying lots of them instead of all the other crap that’s out there.
Andrew Warner: I want to talk about, moonshot. both environmentally friendly, but also the design is unique. Can you tell me about the environmental part of the component? And then how do you know whether people are actually going to like this shoe? It’s so different from the others that, that you’re selling and that other people are selling.
Tim Brown: just to sort of zoom back quickly, sustainability is a word that people use all the time, but it means a hundred different things to a hundred different people. It’s about recyclability, end of life, natural materials, free trade, air quality, land quality, animal welfare. And you could go on and you go on and you get so confused that you don’t want to get out of bed in the morning.
and we’ve latched on to the idea of carbon as the North Star for how we, focus our innovation and measure the impact of our products and it allows us to, print a score effectively on every product that we make. and much like calories on food, it’s not the total answer to a healthy diet, but it’s a really important North Star metric That connects me to you, New Zealand to America, the footwear industry to the automotive industry, and ladders up to a number that we all need to work to reduce.
And we believe firmly that’s the future of how we’ll evaluate our environmental impact and we were one of the first in the fashion industry, to label every product that we made with a carbon footprint, and that led to a lot of really interesting, partnerships with Adidas and I think the realization for us from an innovation perspective is that normally when you think about making a product, you think about three things.
You think about the aesthetic. The utility, the cost, and now all of a sudden there’s this fourth pillar of carbon that is, like anything else, it’s a lever that you push and pull that will impact, um, the future of how the products that we use look, and how they feel, and, much like a, an electric car is freed from the constraints of a combustion engine, it will necessitate a new design code and a new design language, and I think we sit here at the moment a little bit on the cusp of The second chapter of the conversation around sustainability, and the first one was a rush to understand, a commitment to engage with the topic.
It involved a lot of science, necessarily so, and a lot of pledges from corporations for 2030, 2040, 2050 and below. Really important. Second chapter of this is, OK, what does that mean? And how does that kind of change the things that we make and not just some tiny percentage of our business, but everything and, so I like to say it’s a little bit of a shift from the science to the storytelling and from PDFs to product and, and that’s all of a sudden this becomes a creative exercise and for me has been one of the most fascinating parts of this journey with Allbirds as a designer.
And Moonshot was just our pithy way of saying, This stuff’s hard, and making a net zero carbon product effectively with no impact, is a little bit like going to the moon. Not easy, but possible. And, and so we set out to try and do that, and, and, but then at the end of the day, Andrew, this is a really important point.
People don’t buy sustainable products, they buy great ones. This is about, um, this is about design, this is about comfort, this is about feeling. I just don’t know that you can lay claim to a product being great today unless it’s also
Andrew Warner: So then it does look different. Do you do market research? Do you take it out to your customers and say, do you like this? I like that you just gave me a look when I said that, like, no, we’re not. How do you know that this is going to, this is going to feel right to your customers.
Tim Brown: we do a lot of thinking about that and a lot of research and obviously within the ecosystem of Allbirds and now, you know, give or take eight years of being in business. a lot of information on our customer. And then there’s also, there is also the artistic act of creating something.
and certainly in the context of this particular product and in the context of innovation, people don’t know always what they want. they, and so you have to start to shape that vision and again through these levers of pillars of a number of years of thinking deeply about this, um, you start to understand a new design code and you understand the products of the future are going to necessarily, if they’re designed through this lens, they’re going to look a little different and that can be a little jarring at first and then it can be exciting and I’d like to think that we’re, you know, we’re pushing that conversation and, and doing it in a really, really meaningful
Andrew Warner: you help me understand where art and market research merge? Like how much market research goes into art without ruining your sensibility?
Tim Brown: I don’t know that there’s an easy answer for that. I just don’t think that you put into, analytics and, is incredibly important, but it’s Inherently retroactive and historic and looking about patterns of behavior that already happened. It’s a little harder. You have to read the tea leaves a little bit to see the future and anticipate what the next chapter is of the story.
and so I don’t think there’s one, one answer. and sometimes you want to look at, you know, data at scale across your entire consumer base. And then other times you want to get in a room with one or two people or go into someone’s bedroom and you want to ask them like, what’s the problem?
What’s missing here?
Andrew Warner: You literally go into people’s bedrooms and you say, take me through, show me what you have, what’s missing?
Tim Brown: Yeah, how are you using these products? And where’s it
Andrew Warner: Can you, make it more concrete in relation to this product? Like, we’re looking at, um, a high top that doesn’t have laces. What is it about seeing people and talking to them that led you to feel like this is going to be okay, this is going to be exciting for them?
Tim Brown: Well, these things are a little bit different. In that particular case, we’re maximizing and optimizing of those four levers for carbon. And to do that, we need to use more of some of the materials that are net negative. In this case, wool, regenerative wool that we’ve spent a number of years kind of cultivating and working with the growers to create.
And so we need to use more of some materials to actually hit this particular number. This is an extreme creative exercise. To amplify one of those, one of those, pillars more broadly when we’re creating product, it’s, across our entire range, you know, going in and asking people and observing, people often won’t tell you what they need, but they’ll identify and articulate problems.
Um, and that observation and triangulating around, analytical assessment and market research, but also your own first person. Observation and design thinking processes to mine those insights is really important. And you’ve got to, you’ve got to toggle between them. And then sometimes you’ve got to do what the hell you want, because you feel like the world needs it.
And it’s an artistic, creative act. And I think, if I look back to the founding of Allbirds, I don’t think we would have sat in a room and seen a market trend report that said like, a merino wool shoe was a great place to start and you should only do one of them. And you should sell that only in America and New Zealand.
It was a blend of, a little bit of luck and some smart thinking and some, a lot of experimentation over a long period of time and Joey’s considerable experience and in the space around material. So I, I think you’ve just got to be, you’ve got to be confident to toggle between the two.
And Andrew, if you’re not seeking feedback, in any aspect of your life. whether it be personally or professionally, I think you’re dumb. and equally, if you’re listening to it at all, you’re even more dumb. You have to develop some sort of filter, um, for the world around you that, um, And you know, interestingly enough, the most criticism we got in the early days of Allbirds were from people that knew the footwear industry really well.
I mean, you remember those folks, Joey? They come in the office and say, you guys have got not a chance. Because we were breaking rules. We were doing things that were counter intuitive and we didn’t know better. And so this is always an exercise in triangulation and it’s always an exercise in bouncing between the art and the creative act and the really analytical assessment of what makes
Andrew Warner: And so a moonshot is more like you saying, I’m going to have more artistic freedom and I’m also going to prioritize for this, for carbon neutrality. Even if it means we’re going to put the smiley face with the two zeros to emphasize right on the front that this, Oh, actually I noticed it right behind you.
I don’t, can’t believe I didn’t see it this whole time. The logo of the zero carbon footprint, right? Is behind you.
Tim Brown: I think when people hear the word sustainability or net zero carbon, if that was the topic that you suggested for catching up with a friend for a beer on, at the end of a hard week on a Friday night, they wouldn’t come, right? if you talk to them about the creative act of trying to solve, the creation of the next generation of footwear that has no impact on the planet and allows us to move past the conversation around sustainability, uh, and that is actually, as much as anything else, it’s a design, question as much as it is a scientific one.
Yeah. I, maybe I’ll come and talk to you about that. I think, the scientists in many ways have done their job. I think it’s the, there’s a second act here that, that needs a lot of help from the storytellers, the poets and the creatives to actually make sense of this and turn it into objects of desire that become part of the future of how we move forward from this
Andrew Warner: Well, I do feel you’ve done that, not just with these, but with others. I like, I could see, we didn’t get to talk about the, the tree loungers, for example, I can understand how there you might go into somebody’s closet and you realize that, you know, they need a slip on if it’s well with this, this situation, maybe with jeans on weekends. And then that makes sense. And now I understand also the artistic side of the business. I’m excited to see where you are. I feel like, um, I think in some ways I’ve taken your company on as like my team for some reason. And maybe it’s because I did feel like it was born in Silicon Valley. It was a really intellectual experience that happened to look good, you know, intellectual.
Like for me, I love that you could just put it in the washing machine, right? That’s just, it makes sense. But I, I hear you’re saying, look, it’s not as big as Andrew thinks it is. Everyone doesn’t yet know about it. And it’s not as Silicon Valley as Andrew thinks it is. Not everyone wakes up every day and checks out tech meme and the tech news sites, but it’s starting in this, in a few worlds and it’s grown from there.
And I’m excited to watch you grow it. Thanks for being on here.
Tim Brown: thank you for the kind words and for having us on. Really enjoyed the conversation.
Joey Zwillinger: Yeah. Thanks, Andrew. Appreciate it.
Andrew Warner: And thanks everyone.
