Nov 6, 2023 · 52m · news
Joey Zwillinger: From $4.1BN to $142M Market Cap;Why Public Markets Have Written Allbirds Off |E1078 · 20VC with Harry Stebbings
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Allbirds Co-Founder Joey Zwillinger joins Harry Stebbings to discuss the brand's rapid rise to a $3.75 billion IPO, its subsequent steep valuation decline, and the intense operational restructuring and leadership resilience required to rebuild the sustainable footwear giant.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 15.8% of the talking time here. How this is scored →
Harry as informed peer 2.3 Guest teaching 2.9 Guest disagreement 1.7 Harry pushing back 3.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 17:47 Rejection of DTC Label
Joey rejects Harry question about DTC flaws, forcefully arguing that DTC is merely a distribution channel rather than a brand definition.
Hardest push from Harry ▶ 9:20 Challenging Running ExpansionHarry directly challenges Allbirds product expansion into athletics, expressing doubt as a consumer and citing Nike as his preferred running shoe brand.
Biggest teaching moment ▶ 26:31 Correcting Investor RumorsJoey firmly shuts down Harry rumor about forced Series A secondary sales, correcting the host on facts regarding investor relations.
Harry holds his own ▶ 4:27 Pressing on Valuation CollapseHarry confronts Joey with brutal market numbers, contrasting the peak 3.75 billion valuation against its 127 million market cap.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcome and the Genesis of Allbirds | 1 | 2 | 0 | 0 | Harry opens with warm greetings and invites Joey to share Allbirds founding story. Joey provides an extensive background on co-founder Tim Brown and his own material science background at Solazyme. | |
| The Valuation Slide: Analyzing Post-IPO Challenges | 3 | 2 | 1 | 5 | Harry confronts Joey directly with exact stock metrics, noting the valuation collapse from 3.75 billion to 127 million. Joey takes accountability while framing the decline around exogenous market conditions and operational missteps. | |
| Brand Campaign: Natural Run Collection | 3 | 3 | 2 | 6 | Harry pushes back on Allbirds expansion into running shoes, citing his own preference as a consumer to buy running shoes from Nike instead. Joey reframes the brand strategy as targeting active lifestyle crossover rather than pure performance. | |
| The Leadership Equation: Reference Books vs. Playbooks | 2 | 3 | 2 | 4 | Harry asks if product missteps were the core mistake and inquires whether Joey regrets going public. Joey explains leadership dynamics and insists Wall Street current view does not diminish cash reserves or long-term brand equity. | |
| Defining Allbirds: Fashion, Technology, or Product? | 2 | 3 | 2 | 3 | Harry probes whether Allbirds is a fashion or technology company and asks about the main differences of being public. Joey redefines Allbirds as a product-first company and discusses quarterly reporting discipline. | |
| A Humbling Market Cap Decline and Interest Rate Shocks | 3 | 4 | 6 | 6 | Harry asks if the market write-off angers Joey and questions whether DTC unit economics are inherently flawed. Joey forcefully rejects being grouped into a generic DTC bucket, arguing that DTC is merely a channel while Allbirds is a product brand. | |
| Brand Campaign: Sustainable Eucalyptus Shoes | 4 | 3 | 2 | 5 | Harry challenges Joey on whether Allbirds effectively markets its product technology compared to competitors like On Running. Joey acknowledges branding nuances during the pandemic while reasserting the tactile quality of their natural materials. | |
| The Omnichannel Delay: COVID-19 and Wholesale Strategy | 2 | 3 | 1 | 2 | Harry asks what would have enabled Allbirds to capitalize on pandemic trends. Joey explains the strategic shift toward an omnichannel model and wholesale distribution delay. | |
| Capital Allocation: Was Raising Excess Capital a Mistake? | 2 | 5 | 3 | 5 | Harry questions capital allocation and brings up a rumor that Series A investors were pressured to sell. Joey corrects Harry premise, stating he never asked anyone to sell and explaining his capital deployment logic. | |
| The Option to Go Private: Evaluating Market Gaps | 3 | 3 | 2 | 5 | Harry asks bluntly if taking the company private or selling secondary shares was considered given the depressed valuation. Joey details his personal approach to financial security and board oversight regarding taking the company private. | |
| Leadership Resiliency: Growing Through Hard Times | 2 | 3 | 1 | 3 | Harry asks how Joey has evolved as a leader during downturns and where spending was cut. Joey outlines specific pullbacks in marketing, store expansion, and inventory cleanup. | |
| Wall Street Mindset and Market Doubters | 2 | 4 | 1 | 3 | Harry asks when Allbirds will achieve profitability and admits ignorance on financial terminology. Joey educates the host on EBITDA and cash flow profitability target for 2025. | |
| Challenges in Retail and Post-Pandemic Consumer Shifting | 3 | 3 | 2 | 3 | Harry inquires about retail learnings and contrasts Joey office policy discussion by highlighting his own mandatory five-day in-office policy. Joey outlines post-pandemic urban consumer shifts. | |
| Integrating Family and Managing Public CEO Anxiety | 1 | 2 | 0 | 1 | Harry sympathetically asks about personal work-life balance and executive stress since going public. Joey shares how he integrates his wife input and stays present with his children. | |
| A Shift in Coping: Team Vulnerability and Stress Management | 3 | 2 | 2 | 2 | Harry references luxury sector weakness like LVMH numbers to ask if macro conditions worry Joey. Joey outlines his realistic expectation of consumer delicacy and defensive positioning. | |
| Willingness to Try: Consumer Loyalty in Footwear | 4 | 3 | 2 | 5 | Harry challenges consumer footwear loyalty by sharing his personal brand allegiance to Nike and price comparison with Sunspel. Joey explains high consumer purchase frequency and product expansion opportunities. | |
| The Quick-Fire Round: The Sustainability Say-Do Gap | 1 | 4 | 1 | 1 | In the quickfire round, Joey explains the say-do gap in consumer behavior regarding sustainability vs purchasing cheap fast fashion. Harry listens as Joey describes the future market unlock. | |
| Quick Fire: Historical Leadership and Nelson Mandela | 1 | 1 | 0 | 0 | Harry finishes the quickfire round asking about historical figures, favorite brands, and a 10-year outlook. Joey reflects on Nelson Mandela and expresses optimism for Allbirds. |
Statements from this episode (35)
Stebbings: Allbirds went public at $3.75B and dropped to $127M
“Company went public at 3.75 billion. Today it's sitting at 127.”
Zwillinger: Stock market moves are largely driven by trading algorithms
“A large part of it is just algorithms.”
Allbirds co-founder Tim Brown captained the New Zealand World Cup team
“Tim Brown's my co-founder. He was a professional athlete, but he happened to have a design background. He's from New Zealand. He became the captain of the New Zealand national soccer team all the way through the 2010 world cup.”
Zwillinger: Incumbent brands couldn't effectively position green technology products
“And so it was a Sisyphean exercise for me where I realized that while the technology existed, the consumers wanted it. It was, there's no compromise offering was there for the taking and brands could not position it correctly.”
Zwillinger: Allbirds generates close to $300 million in annual revenue
“We now have a brand that's, you know, close to three hundred million dollars in revenue.”
Zwillinger: Less than 15% of Americans know Allbirds exists
“We still have less than 15% aided brand awareness, meaning only 15% of the US population knows that all birds exist.”
Zwillinger: Quiet luxury trend will be a tailwind for Allbirds
“And I think if you think about what's happened from over the last couple of years with this, like maximal build in the trends of how shoe companies have been coming to the consumer marketplace and the fact that now quiet luxury is really coming back and people…”
Joey Zwillinger: Allbirds will refocus on its core active lifestyle category
“And so that is the core of where we started the brand. And that's where we're going to bring everything back to with a really sharp clarity for the consumer. And the potential when we do that is going to be pretty significant. So I think in, in, in part, you'r…”
Zwillinger: Domain expertise should be a reference book, not a playbook
“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.”
Zwillinger: Allbirds is a product company first, not tech or fashion
“We are a product company first and foremost, and we need to tell amazing stories around those products. That, that is what we are. And we happen to exist In a category where style and fashion is incredibly important. That, that is how I think about the company…”
Zwillinger: Allbirds leads multi-billion-dollar competitors in tech infrastructure
“Something that we have in spades relative to our competition, no matter what their size, even if they're many, many billion dollars in size, we have we are leading in terms of the infrastructure and the tech enablement that we've been able to bring into the bu…”
Zwillinger: Business cycles do not align with public quarterly reporting
“Businesses don't happen on quarterly cycles, but financial reporting and public markets do.”
Joey Zwillinger: Direct-to-consumer is a distribution channel, not a brand identity
“DTC is a way to do business. There's been great retailers who started this in our industry. If you broaden it beyond footwear into apparel, like the gap in the nineties and Lululemon has done a really wonderful job of being a great DTC company. But they're a p…”
Joey Zwillinger: Allbirds' wholesale expansion will drive consumer awareness and adoption
“As we brought in now into the wholesale marketplace in the U S and eventually in, in the international geos that we serve, we're going to grow awareness. We're going to reach a lot more consumers and They're going to fall in love just like the early, early gro…”
Zwillinger: Footwear industry was 70-80% wholesale before Allbirds
“Because the whole industry is structured like this before we started was, you know, 70, sometimes 80% wholesale distributed.”
Zwillinger: Allbirds was not structured to capitalize on pandemic demand
“And I think we were in the unfortunate position of not being structured in a way that, that could capitalize exactly on the dramatic change that had happened in that world.”
Zwillinger: Allbirds footwear lineup was 100% casual lifestyle shoes in 2019
“We didn't have an athletic positioning at all at that time. And, you know, we were a hundred percent of a casual lifestyle shoe offering in 2019.”
Zwillinger denies ever asking Allbirds investors to sell their shares
“We've, I've never told someone to sell or not sell.”
Zwillinger: An acquisition offer isn't real until paper is in front of you
“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.”
Zwillinger: Multiple footwear and apparel companies asked to acquire Allbirds
“We've had a number of companies in the footwear space and the kind of ecosystem of apparel and footwear more broadly come to us and ask us if we were interested in selling.”
Zwillinger: Allbirds will consider going private if market valuation gap persists
“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. And we have a boa…”
Zwillinger: Wealth Beyond Family Financial Security Has Steep Diminishing Returns
“If you're interested in making sure that you can have financial security for yourself and your family, that more than that is not going to be particularly useful to you. Like the diminishing return on that extra dollar is quite, quite significant.”
Joey Zwillinger Sold Zero Shares at Allbirds IPO and Minimal Shares Since
“So I've sold extraordinarily little at the IPO. I sold nothing. And then after that I've sold incredibly little.”
Zwillinger: Allbirds sales declined in 2023 for first time ever
“And as a result, the sales have declined this year for the first time in the history of the company.”
Zwillinger: Allbirds halted retail expansion and cut marketing spending
“So we stopped all store growth. We pulled back on some of the wholesale expansion and we then pulled back Probably, I don't know exactly the exact number, but high teens marketing in terms of year over year comparisons on the dollars we spent.”
Zwillinger: Allbirds will be cash flow and EBITDA profitable in 2025
“What we've said to the market, we've got to be pretty consistent with that on your podcast as well. Is, is that will be cashflow and EBITDA profitable in 20, 25.”
Stebbings: All 20VC Portfolio Companies Work Five Days In-Office
“All my companies, five days a week.”
Zwillinger: Remote Work Is Impossible for Physical Product Companies
“The conception of what productivity means is far too narrow. And particularly in an industry like mine, where Creativity and physical products are central to what we do that not being together is is impossible.”
Allbirds Requires Core Product and Marketing Teams In-Office Four Days
“And most of the people who are closest to the central aspects of product creation and design and marketing are coming in for four days a week.”
Joey Zwillinger: Leading Allbirds post-IPO brought unprecedented anxiety and stress
“Over the last two years has been a layer of anxiety and stress that has been much more than previous in my life.”
Joey Zwillinger predicts drop in consumer spending over next six months
“The consumer is in a more delicate and fragile situation than people understand and that it's going to be more difficult and there's going to be less spending than people think in the coming six months.”
Zwillinger: The Average American Buys Eight Pairs of Shoes Annually
“Yeah, I mean, I think, look, the average American consumer buys eight pairs of shoes a year. That's men, women, and child. And so that's about two and a half billion pairs of shoes sold every year.”
Zwillinger: Allbirds can achieve $1B+ in sales by focusing on core shoes
“And if we just get really good, really, really good at just a few shoes, we can be a billion dollars in sales and go well beyond that.”
Zwillinger: Employees tire of brand narrative much faster than consumers do
“Not getting tired of the story that you're telling to consumers before they do, which it takes a long time for consumers to get tired. It's much quicker for employees to get tired.”
Zwillinger: Allbirds aspires to Tesla's strategy of product performance over sustainability
“I'd say a company that, that is done a really nice job in an area that I take a lot of inspiration from, would probably be Tesla. Which is around performance and quality of a product and an aesthetic and a beauty that delivers in and of itself. And the free gi…”
Shorts cut from this episode
▶ CEO explains Allbirds stock drop from $15 to $1 per share 📉 (@15:59)
▶ Crazy stat about Americans 🇺🇸🤯 · 20VC with Harry Stebbing (@0:20)
▶ When Will Allbirds Be Profitable? 💰 · 20VC with Harry Stebb (@35:13)
▶ Allbirds CEO: I don't regret going public 😯 · 20VC with Har (@12:35)
▶ Allbirds CEO: Why We Lost 97% of Our Market Cap 📉 · 20VC wi (@0:08)