A year in, Allbirds expands product line and opens a retail store

Allbirds, the direct-to-consumer brand for sustainable shoes made out of merino wool, had a big first year following its March 2016 launch.

The company raised $10 million in venture capital, reached 50,000 followers on Instagram, grew its company size from two to 30, and received positive press from publications like Fast Company and Fashionista. Its $95 sneakers, devoid of a logo, have particularly resonated with Silicon Valley’s tech nerds, where the shoes’ minimalist silhouette and comfortable design blend in easily with the go-to uniform of hoodies and jeans. It’s also drawn comparisons to Everlane, with its sustainable and direct-to-consumer model and San Francisco roots.

Now, co-founders Tim Brown and Joey Zwillinger and their team are tasked with maintaining that momentum. Two new developments mark the beginning of Allbirds’ second phase. On Monday, the brand opened its first physical retail concept store in its San Francisco headquarters, in order to double down on its direct connection with customers by offering an opportunity for face time and real-life product try-ons. Today, the brand launched its second product collection, a line of slip-ons made in the same merino wool material as its sneakers, released on its website.

Brown, a former professional soccer player in New Zealand, and Zwillinger, an engineer specializing in the renewable resource field, didn’t have experience in the footwear industry when they teamed up to work on a line of mid-market casual footwear. The “non-negotiable” features for Allbirds shoes, Brown said, were his inspiration for starting the company: sneakers that were designed free of logos, made with sustainable materials.

Slate on slate. #weareallbirds

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“In the $80 billion footwear industry, you have athletic performance shoes, high-fashion shoes and casual shoes,” said Zwillinger. “The market for casual shoes, stuck in the middle, sees a very small amount of innovation and zero thought of sustainability. We saw an opportunity to do things differently in this space, and we’ve been validated.”

Allbirds has gained a loyal following, particularly in the Silicon Valley tech scene and among celebrities. On Instagram, the hashtag #allbirds is used in 6,000 posts.

“They had a big first year,” said Brett Jackson, managing director at VC firm V1, who was an early investor in Allbirds and an employee during the early days of Crocs. “The shoes have universal appeal with people of all ages all over the country, and if you look at how they executed over the past 12 months — they didn’t expect such a big year. When that happens, you have to move a lot more quickly to move product.”

The company’s strategy: Go direct-to-consumer with a close-knit network of factories, and start small. The brand made the decision to start its footwear line with just one shoe style at the time, despite hesitation from its investors, which include firms Lerer Hippeau Ventures and Great Oaks Venture Capital. But Brown pointed to the saturation of the footwear market and how overwhelming shopping somewhere like Zappos can be, to back up their decision.

“Investors told us it was too risky to launch with just one style, but a big part of what we saw, and didn’t like, in the footwear space was more, more, more of everything,” said Brown. “Colors, stitches — it’s too much. We liked the idea of dialing back and going in the opposite direction.”

For a new consumer brand, early days — especially those funded by a lot of venture capital dollars — set the tone for the brand’s future. Allbirds doesn’t disclose revenue or how many shoes were sold, but Zwillinger said it expects to see sales grow another five times over what they did in 2016.

Jackson said the brand’s first year sets it up for international expansion, if the company continues to invest in employees who understand supply chain distribution and product.

“We had a pretty clear framework for how to hire: Fill in the gaps of our experience,” said Zwillinger. “That covers brand marketing and supply chain distribution. On the VC side, we only work with VCs who understand our brand and know that they can’t expect to cash out in five years with a $1 billion sale.”

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