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Photo: Allbirds

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How Does Allbirds Get Bigger? Kids Shoes and More Stores

With a new round of funding, Allbirds sets its sights beyond Silicon Valley.

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Silicon Valley fashion is defined by simple, almost austere, uniforms. There are Mark Zuckerberg’s hoodies, Jack Dorsey’s leather jackets, and of course Steve Jobs’s iconic black turtlenecks — all worn with jeans. These uniforms are statements of efficiency and are copied by wannabe tech moguls all over the Bay Area.

This is something San Francisco-based footwear brand Allbirds understands, and why its sleek sneakers have taken over the Valley. The logoless, unisex merino wool shoes come in one athletic style (plus a newer slipper-like iteration) and sell for $95. They’ve been seen on everyone from Larry Page to Marissa Mayer.

But the 18-month-old company is ready to venture outside the tech bubble. Today the company is announcing $17.5 million in Series B funding, led by Tiger Global Management, bringing its total equity funding to $27.5 million. With this newest infusion of capital, Allbirds will open a store in New York City, the company’s most popular market, on September 14th, with plans to open more locations across the country in 2018; its first store opened in San Francisco in May. It will also begin shipping internationally, and by the end of this year, Allbirds will expand into the kids’ market by launching a version of its wool sneakers for children.

The US athletic shoe market is lucrative, worth $17.5 billion as of 2016, but it’s also highly competitive, with giant players like Nike and Adidas dominating the space and smaller brands like Under Armour, New Balance, Reebok, and Converse still playing a significant role. But Allbirds is banking on both its influential backers (Starbucks founder Howard Schultz is an investor through his venture capital firm, Maveron, as are both Warby Parker founders and Brett Jackson, an early Crocs employee) and its reputation for making “the world’s most comfortable shoe” to propel its already rapid and impressive success.

Photo: Allbirds

“I think we're attacking a very old-fashioned industry with new ideas,” Allbirds co-founder Tim Brown told Racked earlier this summer at the company’s San Francisco headquarters. “We don't know what we're doing in the sense that we've haven’t been making shoes for our entire lives, so we've been able to ask simple questions and innovate.”

Brown, originally from New Zealand, came up with the idea for a streamlined wool shoe about a decade ago. A professional soccer player who went to the 2010 World Cup, Brown knew he couldn’t play the sport forever and was looking for his next act. Sneakers made sense: He was familiar with the athletic footwear space, but felt there was a void.

“I used to get sponsored by Nike and I got a ton of free gear, and one of my huge frustrations was that everything had a logo on it,” he said. “The insight that kicked this whole journey off was, ‘Could you make a very, very simple sneaker that wasn't adorned with branding?’ It felt like it was very, very hard to find.”

Brown began brainstorming, looking to his home country, where wool is a popular export: “New Zealand's got 30-odd million sheep. I thought, ‘Wouldn't wool be an amazing material to use in footwear? Why has the footwear industry ignored natural materials?’ The short answer is, when you’re making shoes cheaply and making them largely in Asia, anything that's more expensive is kind of ruled out.’”

After Brown retired from soccer in 2012, he studied management at the London School of Economics in an effort to get his sneaker idea off the ground. His professors were discouraging, telling him the footwear industry was way too difficult to penetrate, but he began building prototypes anyway.

“I think there’s a bunch of things that are done the way that they're done because they've always been done that way,” he said. “I developed a perspective on things that could be improved, and one of those was the use of natural materials. Everything is largely made out of leather and synthetics, and the idea of using natural materials occurred to me as an interesting opportunity.”

Brown received a grant from New Zealand’s national wool association and launched a Kickstarter campaign in March 2014, complete with a goofy video of him chasing sheep on a family friend’s farm. The company name came from early settlers’ observations that New Zealand was “all birds.”

His Kickstarter raised $120,000 in four days, and he was almost immediately approached by people looking to invest, and in some cases buy, his company. Brown sought the council of Joey Zwillinger, who was married to his wife’s college roommate, since Zwillinger worked at a young biotech company and was familiar with the Silicon Valley startup scene.

The duo decided to go into business together, with Brown moving to San Francisco, and the pair officially launched Allbirds in March 2016. Since then, it has sold sneakers, which are meant to be worn without socks and can be thrown in the washing machine, to customers in every state. In April, Allbirds introduced its slip-on Lounger, and it now employs a staff of 50; Allbirds declined to share sales figures or revenue with Racked.

Not unlike many of today’s hottest retail startups, Allbirds has found success by selling directly to customers via its website, with those customers finding out about the company thanks to Facebook’s “Lookalike Audiences” advertising tool, which allows brands to reach potential customers who are similar to existing customers. Julie Channing, Allbirds’ vice president of marketing, says the brand has been dogged about targeting a very specific demographic on social media.

“As a company, we appeal to customers in their mid-20s and 30s who tend to live in urban areas,” says Channing. “They have lives defined by experiences and a love for travel, and also care about where the product is coming from. We study what we see in terms of who’s responding, and then create content and stories to cater to those nuances.”

Zoli Honig, the co-founder and CTO of an electric car-sharing company called WaiveCar, says he caved and bought a pair of Allbirds after seeing its ads relentlessly pop up in his social media feeds.

“Their targeting campaign was unlike anything I have ever seen,” says Honig, who lives in New York. “They spent a lot to market to me, so I figured I would give them a shot. Worst case I would return them.”

He now owns two pairs in different colors and “absolutely loves them.”

Honig says that last summer, a few months after he bought his first pair, he began seeing “a lot of more random people” — as in, not tech bros — in Allbirds: “I rarely get on a flight to Los Angeles or San Francisco without seeing someone else wearing them.” For him, the biggest appeal beyond comfort is the simplicity of the design. “It’s a lot easier to make a decision when you have little choice — like Apple,” he says. “If you go to Nike’s website, there are hundreds of options. I don’t know what I want. I’m not a sneakerhead. I just want something that feels and looks good at a reasonable price.”

The San Francisco store that opened this past spring is attached to its headquarters. Other than glass cake stands that display piles of its proprietary wool fabric, there’s just a handful of shoes — one of each of Allbirds’ two styles in a limited number of colorways — on view. In this way, the Apple analogy extends to the store experience as well.

Allbirds’ store in San Francisco.
Allbirds’ store in San Francisco.
Photo: Allbirds

It may seem odd that a brand would launch a retail concept with just two products, but Brown believes this reflects how customers prefer a shopping experience to be today. Several visits to the San Francisco store in July and August seemed to prove his point: It was packed each and every time. Allbirds’ entire strategy banks on lack of choice.

“There have been a number of brands that having success with this type of strategy, like Casper, where they’ve come into very crowded, established markets, offering one solution,” says Brown. “It’s curating choice effectively. These large organizations are producing thousands of SKUs. It’s confusing to people. There’s too many choices.”

Soon, however, there will be more choices. Brown says the company is heavily invested in exploring other types of natural materials and will invest some of its most recent funding into research.

“When Joey and I came together on this, we realized that shoes was the starting point, but really there was going to be a revolution in sustainable manufacturing,” he says. “The fashion industry is a horrible performer in terms of taking natural materials and finding new ways to make products out of them. Sustainability is a term that gets thrown around a lot, and I think there’s an ongoing developing conversation around this topic. But there’s a mistake where people feel that to buy something sustainably means there’s a trade-off of some kind in terms of quality or in terms of cost. We believe that doesn’t need to be the case.”

Brown says his sneaker has been tweaked 27 times, based off customer feedback; there’s still room for improvement, though. Mordy Greenspan, a digital media executive in New York, says his Allbirds shoes fell apart after nine months, and when he contacted the company, was told that’s to be expected for a shoe worn for that amount of time. It’s not the type of response he was looking for, but nothing can last forever, not even a painstakingly crafted wool sneaker from Silicon Valley.


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