Ed (01:54): Tim and Joey, welcome to Scaling Up. My own personal love affair with Allbirds probably started back in 2018. I was visiting the Bay Area in the States, and I don’t think a consumer brand has ever drawn me in like the one that you have created. I feel so deeply connected to it. So, the founding story and early hustle is, it’s a pretty well told story, and I’ll put some links in the show notes for those that are, are more deeply interested. And I really want to narrow the focus today to the scaling journey that you two have been on. But this founding story is pretty incredible, and it is worth touching on briefly. It’s a story intertwined over many years. Joey, the biotech and renewables expert, Tim, the international soccer player, serendipitously brought together through none other than your girlfriends at the time, having shared a college room over to you. Maybe we can pick it up from Tim’s Kickstarter campaign, that’s probably a good moment in time to, to get the story rolling.
Tim (03:20): Yeah, I, it’s great to be here. Thanks for having us taking us back in time now. But I was back in a previous life playing professional sport and as you know, the coolest thing about playing sport for a living is all the free gear that you get. And I was getting lots of it from a giant sportswear brand that shall not be named. And it was over logoed changed all the time and was largely, almost entirely made from synthetic materials derived from barrels of oil and with no idea of what it would become or could become set off to solve that personal problem. And it took me on this wild and wonderful journey that has us now chatting with you circa a decade later in San Francisco with it will take 900 employees in a brand that I think has all the potential in the world to continue to drive forward a purpose driven conversation around sustainability and shift a category. You’re so happy to reflect on some of those early days for sure.
Joey (04:15): The Kickstarter was also my first introduction to Tim, and as you mentioned, are now wives are responsible for bringing us together. They were also responsible for getting me and my wife Liz on the email distribution list. So, I was one of the first ever customers of what was three over seven at the time later to become Allbirds. And Tim sent me a women’s 10 instead of a men’s 10 and had the worst customer service ever. So, I knew that there was still some opportunity despite the fact that the shoe and the product itself, and Tim’s really to be serious for a moment, a very instinctive and attuned consumer intuition on where things are headed in the world and how that was going to change the way that people dressed, including importantly the sneaker market. So, you know, I fortunately got a taste of it early and was initially drawn in just as a consumer, and it was probably a, a year later of some torturous time that Tim was going through and also a crossroads where I was at on my journey. And fortunately, we saw a really aligned vision on the way the world was headed, and the consumer was headed and the opportunity for leadership around this idea that we could bring incredible materials derived from nature to make much better products and what the industry was, was producing at the time. And, and still to this day, of course given it’s only six years later. And that was a fortuitous moment for, for both of us. And yes, we can, we can thank our wives for that.
Ed (05:47): It’s an insane scaling journey from Kickstarter to being a publicly listed company in just over six years. It’s one of the fastest growing brands in history, zero to 300 million in five years. It was just insane product market fit of that hero product. The Merino Wool runner, that was your first product that you brought to market, but it got labeled at the time the most comfortable shoe in the world, Barack Obama, Leonardo de Caprio, but around it was you trying to build a brand intentionally from day one. So, I do want to dig into what the brand stands for from your eyes.
Tim (06:26): So yeah, there was product market fit and it started really with three pillars of the brand that still exists today, and three foundational insights. The first one was a design one that there was a lot of noise in the design space. You, you know, everyone’s felt that you walk into a shoe store and there’s thousand things on the wall and they’re all bright and they’re heavily logoed. And so, a deeper, more thoughtful design philosophy focused on products that sort of shift or transcend across categories like bringing incredibly thoughtful and style centric design point of view to the running shoe market, for example, sounds in of itself, not revolutionary. There’s certain formula for how these objects and products are made and created and to do it differently with an unbranded approach that’s predicated on a deep, deep, deep understanding of materials was really where we started. So, there’s one design and style insight.
The second one is around materials. And Joey touched on it and I’m sure we’ll expound on it further in this conversation. The majority of shoes are made from synthetic plastic oil derived materials, and that’s been the default standard across footwear and mostly apparel industry. For the better part of 30 or 40 years we’ve been innovating in synthetic materials, which has some great qualities, but it also left an opportunity to innovate a natural material. So that was the beginning, the starting point install the engine that drives our product creation and our, our brand. And then the final one was around comfort. This feeling of these materials against just skin created a better experience. This wasn’t about just creating products that were better for the environment and living a purpose. It was actually about creating a better experience that nature was not just the right thing to do, but it was also the best source of innovation that we’ve had.
But it’s been on the shelf, so to speak for a little while. And there was an opportunity to kind of connect those three insights around comfort, sustainability, and natural material innovation and design. And at the intersection of those were the products that we were going to create. And within the footwear category, call it 25 billion pairs of shoes, something like that I made every year there’s this enormous category that’s done something one way for a long period of time. And, and we saw an opportunity to do it differently with a different type of business model all wrapped up and a brand that stood for something different that would bring a sense of humor to a category that has traditionally been quite self-serious. And that’s what we’ve tried to do, albeit very early on with six years. I like to sort of say five or six years in, you know, on a journey to create a hundred-year brand. And I think that’s the opportunity that sits before us.
Joey (08:54): You know, Tim just said that really well and how you couch the question, even the speed of the growth of the brand, it has surpassed our expectations by quite a lot, frankly. And if you look back at our original business plan and maybe even a couple of the subsequent ones, were multiples ahead of where we it to be from a revenue perspective. But I would also say that we’ve turned down so much revenue opportunity in the growth of this business and we’ve really linked that into the brand and what we stand for. And if you could wrap all those three things around comfort, sustainability and, and design into something we would call it kind of supernatural comfort. And that supernatural comfort relies on quite deep research and development around, you know, novel materials that we’re bringing into an industry that has a long tradition of using synthetics as Tim described.
And that just takes time. And so, we, we knew that we didn’t want to go too fast. We didn’t want to have a bunch of distribution with retail partners and have the risk of really eroding the brand and what we stood for and pushing ourselves into a corner where we might have to cut corners and take shortcuts rather than do that. We, you know, very politely said no because eventually we knew once we had a much more expansive assortment that we would want to work with retailers and meet a whole bunch of people that we otherwise wouldn’t be able to meet from a brand awareness and just introduction of the products to people. So, we knew that in the fullness of time we wanted to do that. Originally, we kind of thought it was like a four- or five-year journey until we introduced some, some things into the wholesale market, ended up being about six years until we started, which is I’d say pretty on the nose for two guys and a dog and a business plan.
But we, through that period of time, it’s allowed us to not cut these corners, do the hard work on, on materials innovation. We, we just launched a new soul that’s called sweet foam with plant derived technology embedded into a new manufacturing process. And it’s taken us two and a half years. You think about that, we’ve been all around for six years, so it’s like 40% of our life as a company goes into one sole material that’s, you know, very disruptive and, and leading edge for the industry, but it takes so much time. And so, we wanted to respect that and make sure that we had the right distribution model to make sure that when we had just a few products, we really controlled the experience, we really got to know our consumer. And we did that through just a, a direct-to-consumer brand using digital and physical stores now that we’re more expansive in our assortment and the technologies that we’re using and, and inventing based on natural innovation, we have the opportunity to expand that.
And it’s this incredibly exciting juncture where now I think we’re at the foundation of a company that is giving Tim and I the most energy we’ve ever had for this business. So, despite the fact that it’s been a really good early chapter here maybe a first chapter, you’d call it this next chapter as we go into both public company life, but really this new world of an omnichannel distribution matched with the best product we’ve ever made and the best suite of innovations that we’ve ever had to, to manifest amazing products. Now that’s a, that’s a really exciting moment for us. So that’s where, that’s where you find us today.
Ed (12:14): It’s an amazing story. As you say, chapter one might only just be closing and, and really the growth opportunity is decades from here. So much to unpack, let’s start with material innovation because in many ways you guys are a materials innovation company that happen to make shoes and amazing apparel at the moment. And this is what actually kickstart this purpose driven, virtuous cycle of flywheel, if you will. You know, the best and brightest who are working on these bold material innovations, they come to Allbirds first and foremost now.
You are the absolute gold standard in material innovation. So, you get the first protocol, this attracts the best and most mission driven employees who want to be at the forefront of sustainability, get to sell wonderful products that many consumers love. And your MPS speaks to that, and you reinvest and go again. And, and this flywheel can really grow a brand into orbit. And that’s the feeling that I get. And you can, of course, correct me if I’m wrong, but just around the material innovation, have there been any clear tradeoffs that you’ve had to make from a design or product point of view building this company for the long term around the innovation piece?
Joey (13:24): I think absolutely the constraint that we put around both our research process and our design process is that it needs to be low carbon intensity. It needs to be both good for the consumer and good for the earth. And within that constraint unlocks the best creativity that you could possibly find. So, wherever there’s a tradeoff, there’s also an opportunity. And the fact that we have constrained our design and R&D processes to be better for the planet is very unique for the industry. And, and I can attest to this having been on the other side, trying to sell in components that were kind of met our standards that we keep at Allbirds for the, for the components that we buy and use or innovate on. I was selling them into big footwear and other companies and other industries, and I could see very clearly, they were saying the right things to consumers, but they were doing very few of them, if any.
And so, this big greenwashing effect that you see prolifically throughout our industry and other industries left an opportunity that Tim and I really saw and thought that we could systematically use that to create a great business that also stood for something important. And so, yeah, I mean, along the way it’s very challenging, but that’s what brand building is. If you stick true to your core values and you constantly innovate without cutting corners, consumers are incredibly smart and over time they appreciate what you stand for because you’re hitting them with the same message time and time again. And, and your products live up to the promise that you’re espousing in your communications with those consumers. And that’s what we’ve done. So of course, it’s hard and of course we make tradeoffs, but in the end, those tradeoffs are always worth it. And that that really aligns our, our benefit as a company. So, we make more money and at the same time we’re doing something positive to the earth. That alignment of financial output and environmental impact is essential to how we’ve built this business. And I think what makes what we’re doing quite unique, and I think over time really attractive to both, you know, shareholders and consumers and of course to our other stakeholders, namely the environment.
Ed (15:31): Tim, can you talk to this first principal’s thinking this for purpose DNA that is built from day one into the business. I’m sure there have been conflicts at times in decision making and you talk to this long-term lens that you have on scaling this wonderful consumer business that you are, but sometimes you’ve had to optimize for the for-purpose bucket and I’m sure at sometimes you’ve had to have that competing interest of scaling a business for profit. How has that been intertwined in the view of creating a long-term sustainable business?
Tim (16:06): It’s really interesting. I think therein lies the opportunity but also the potential sort of pitfalls particularly around a topic like sustainability. And I, I think even when we founded the business, launched All Birds on the 1st of March 2016, had a little bit of money to do it came here to San Francisco with Joe’s dog Walter working out of his mother-in-law’s house. That’s really nice. But I, I think if we were deep down, really honest, the wave and the transformation in the last sort of five or six years around sustainability, people’s awareness of climate change has accelerated in a way. I mean that I, I don’t think even we could have imagined, I mean Joey had this vision about how the world was going to change, and we were going to need to fundamentally rethink products and services that we use every day that was foundational.
And I had a similar one around product and, and what it was going to look like. And on some level, those two things came together and one of our foundational sort of principles was the idea. As much as we felt that, and as important as it was to us, it was the driving kind of x factor deep down that I’d needed even on this entrepreneurial journey to unlock. And Joey helped me do it that stood for more than just making a product and selling it and building a profitable business. This was something we were going to tell our grandkids about. We were going to come into the fashion industry, give or take 10% of global emissions, and we were going to show that you could build a different type of business. But one of the foundational principles there was that people don’t buy sustainable products, they buy great ones.
We were never going to lead with our story about sustainability. We were never going to make that the reason why we made the product was always going to be anchored in, in a consumer benefit. The materials we were using weren’t just going to be good for the environment. They were going to be better for the consumer. And that constraint has forced us to be patient at times because as much as we wanted to improve something or introduce a new material to market or make a kind of a big jump in the sustainability of our products, we’ve always had to be patient and ask ourselves like, was that actually improving the consumer experience? Fast forward five years, I, I think we’ve had to edit that statement for a product to be truly great today, it must also be sustainable or on the journey to be sustainable. And so, we’ve sort of evolved that tightening what we are prepared to put our name to in our brand to, but we’ve always been about the compromise between the consumer experience and that’s really how this thing progresses.
Cliche example, it’s not an electric car, it’s a fast and beautiful one, right? And similarly, here, this is where real progress is made is when you get into the hearts and minds of consumers, not just into their brains about what’s right and wrong. If you did a survey on the street in Sydney and San Francisco and you ask people, do they care about sustainability? Give or take, most people would say, Yeah, I do. But then if you audited the purchases you’ve made in the last 24 hours in the last week or in the last year, how you think about the things you buy on a daily basis is very, very difficult to reconcile those feelings and the way that you consume. And that’s the opportunity. And as a brand, I feel like we’re trying to bridge that gap and not only do that in the way that we make products, but also how we explain that to our consumers along the way.
Ed (19:06): Yeah, and it’s the little signals that matter are stand here in my Allbirds sweater and, and my shoes and the carbon footprint is attached to each of them. And it’s a signal that you have created for me that I care. And I love that as a consumer, but what you just talk to is much to the competitive advantage as what you are building the counter position to the incumbents of being for purpose from day one. You can’t just flick the switch on sustainability. You can’t just rewire your processes; you can’t rewire your materials to one day move to be sustainable. And so, it’s this counter position that I think holds you in great stead to build an enduring business.
Maybe the next topic we can move to, and you touched on it, Joey, is the business model itself, the director consumer retailer that you once were is no longer, but it did allow you to scale very quickly to have a global reach from day one. And there’s lots of pros and cons to just being an eCommerce player course. One of the cons is you’re beholden to big technology companies to advertise and that can obviously erode margins. What have you learnt as you’ve moved from eTailing to still being direct, but with your own stores to now some wholesale and truly multi-channel? There are lots of founders that listen to this podcast that are probably in that eCommerce experience thinking about this. Are there are any lessons along the way that you can really call out?
Joey (20:30): Well, I’d say the most important one, and you know, I I’m a student of retail and a student of business generally, and I listen to podcasts from people who are experts in the industry. And sometimes there’s a temptation to use a broad-brush stroke to paint across all industries and all products to talk about what the correct model is. And I would just say that in building a business, there isn’t one answer. And that what I’ve learned is that tailoring it to your product line and to what your purpose of a company is, is incredibly important in this. What I mean by that is we chose to go direct early for a lot of reasons. One, we could do it effectively at the time we started the business, we had interesting channels where we could get the word out. We also had technologies like Shopify that enabled really great integration for reaching consumers effectively and transacting seamlessly without us having to spend much engineering time to develop the technology that that was all well and good, but the primary reason for doing it was because we had a long-term vision of what we were trying to accomplish.
And if we just went as fast as we could and took every opportunity that we could from distribution, we would lose what was core to the brand. Not because our brand is a distribution channel, but because the interaction between product assortment for us was incredibly important and that you run the risk. And, and we’ve looked back over brands that have done this wrong over the last few decades and you can crush an entire company by just being a little bit over distributed. And so, we chose to go fairly pure, and we did, we built the business for the first five years on digital and brick and mortar that we owned and operated. We didn’t discount the product. I think we had like 97% full price sell through on our product in 2021. And so, we’ve done this in this like very pure way and yet we’ve always known that the omnichannel customer is the one that’s the most valuable when you serve them best where they want to shop.
And then you get this interplay between, even if it’s a wholesale acquisition where let’s say our partner Nordstrom introduces our brand to a consumer, which we would expect to happen quite significantly given their scale, we can then get them back onto our digital platform or the next time they walk by one of our physical brick and mortar stores, they come in, they experience the full brand that way, not just kind of shorter time horizon that you have to engage a customer inside of the walls of, of a retailer and they get immersed in it and we find that the NPS score or that the experience score, would you recommend it to a friend kind of a thing that’s the best indicator of future purchase intent. And love for a brand is the strongest in our own brick and mortar stores. And we see that when those customers come in, they very often come back and transact with as a second time, and they do that on the digital channel.
And when we see those customers, we see them spending at this point 60% more than a repeat customer that’s only through a digital channel or, or a single channel. And so, the data’s super clear, these omnichannel customers, that is I think, a generalization that goes beyond our industry and beyond our company. But again, I go back to the fact that it needs to be deliberate and bespoke to your company and how you expect to give freshness and newness to the consumer. That’s been my biggest learning here is that you can take in a whole bunch of information from a lot of people who are commenting on industries and looking at trends across businesses, but it really does boil down to a, a bespoke strategy that you need to be very deliberate and thoughtful and have a keen eye understanding for what’s happening. As you say in the advertising landscape, all of these things have tailwinds and headwinds, and you need to really parse those out and make it a bespoke strategy for your business.
Ed (24:41): It’s certainly been a deliberate step out of the distribution model that is playing out in your favor. And obviously there’s been a whole range of different factors over the last couple of years, but still you’ve had the opportunity to continue to grow, you’ve always done things differently. I think the listeners would be able to work that out by now. But for you, Tim, from a product strategy point of view, you’ve really upended the thought process of moving from the typical playbook, which is from performance to Athleisure and apparel. You’ve gone the other way from athleisure to performance and the performance shoe holds up against any running shoe on the market. I can attest to that. So, you’ve seen brands succeed the other way around, but the way you are doing it seems harder, but probably more defensible. Can you talk to the strategic nature of the product evolution?
Tim (25:30): It’s interesting. I mean, I, I think in the, in the beginning there was an aspect of performance that was a part of the founding essence. You know, we called it the Wool runner. I think I just come off a professional sporting background and saw this emerging white space in people that wanted to exercise and be healthy and well, but not go to the Olympics. And that all the brands in the performance space were tailored to, you know, winning a gold medal or winning a world cup. And that actually exercise for so many more people was different. And you know, it took us a little bit of time and capability and innovation to actually release a performance product, but it was in the DNA of the brand from the beginning. And so, I think that for us, it, it hasn’t really been a case of stepping from one and going to the other.
We’ve always been, I think at our best with material innovation that offered these consumer benefits for the in between moments. In the case of the, you know, Merino wall, wick way, moisture regulates, temperature, does all of these things for you, gives you all these things for free. So, it was kind of a natural logical extension of where we were, why we start and what we were doing. So, I don’t quite think about it exactly that way. The other thing I would sort of say, and Joey alluded to it in the case of the business model, one of the strategic decisions we did make was that the vertical ecosystem was full of feedback. And through the first however many years, I think as a founder, the ability to listen, understand, tweak, and improve is so fundamental to success. You talked about product market fit, it’s a sort of a fancy way of saying like, is the stuff you’re making resonating?
What we found within a vertical ecosystem is that we learnt and found out straightaway you’d launch a shoe with an email or a color you knew straightaway. And then we launched our first retail store. It was literally physically underneath our office, and we used to go down there and work there. And we still spend a lot of time in the stores because that kind of obsession with the consumer and how they were reacting. Our store leaders are incredible. You want to know what’s really going on, you call them, they’ll tell you in an instant kind of how things are really working on the shop floor. So that business model supported our addiction to consumer feedback, and it was a big part of our strategy. And what we sort of found is people loved that we’ll run, but they wanted to go further. They wanted to go out into nature, they wanted to walk, they wanted to in some cases run.
So, in many ways they sort of led us there and it was a natural evolution of the things that we were doing. And we actually found that some of the design inserts that I mentioned, you know, were as true even more true in the performance space. And that everyone kind of had a pretty simple playbook, Fluro yellow with a bold logo, and there was actually a, it was a different way of doing it. So, the best strategies that you obviously step back and zoom back label out, I think you also listen and intuitively sort of evolved from where you started.
Joey (28:18): Just also to add, you know, like I, I think Tim described that really well. , one of the stats that I like to think about when he’s talking like that is marathon times have been reduced by, for something like 45 minutes over the last couple decades and the winners of these marathons are running faster than ever. What that stat indicates is that the participation in things like marathon running is ballooned like crazy. So, we’re not necessarily trying to serve the people who are, are winning the race, but there’s this enormous amount of the fitness enthusiast and this group of people’s the fastest growing category that want to feel good, look good and do good all at the same time. And that’s who we’re serving. And I think that’s why you asked about going from more athleisure to athletic versus athletic to athleisure. And I think the world has changed since that playbook was, was originally written. And, and so I think we’re, we’re taking advantage of some of those disruptions and changes in the world.
Tim (29:13): The irony is too, you know, that we’re trying to test the limits of human performance and, you know, run a marathon and under a couple of hours. , but there’s also another race going on around sustainability and environmental impact that is, you could argue just as if not more important. So, the natural competitors and us as a brand, I think have found a home in this space. And I think there’s a big gap in, in the market for this growing segment of people that want to move and be active, but also care deeply about the providence of the things that they wear and buy and don’t actually oftentimes don’t have a brand that’s sort of serving that purpose in the market. And we like to think that we can, we can grab that over time.
Ed (29:54): It’s a wonderful ability to see where the trends are and move towards them with wind in your sales. The topic that is close to my heart as I know it is to yours is scaling people and culture. And I don’t think I’ll ever be able to interview a founder and a CEO like you two that have played professional sport. And so, while this might seem a little banal to draw the threads of high-performance sport and people in culture and business, I’m going to try my best here. And Joey, I’m keen for you to kind of leap in and give your views from the other side of the table because Tim’s background is unique, but there’s light and shade to every leadership style.
So, I’ll start with you Tim, though. How has sport impacted your views as to what it takes to grow a great team in a business sense? And you’ve gone from star player to now a role that is akin to a coach and I’m sure you’ve had to transition a lot of your skills around that and your leadership style, but I, I’m interested just to start there and, and see what we can draw out.
Tim (30:52): Star player stretch, but I’ll take it. , certainly there was a lot of lessons from my sport and some things that were difficult and some things that were really powerful for me personally. And, and in many ways all goods was my first job coming out of sport. So I had no choice but to lean back on that experience and what I did know, what I was absolutely certain about, what had been unlocked in the early days of spending time with Joey, and that really was a mirror to some of the things that I reflected on and was most proud of, of my time playing sport was that addiction, and I’ll, I’ll use that word profoundly, to being part of a group of people pointed towards a clear set of goals, powered by a purpose that was larger than anyone individual. There is no better feeling I don’t think professionally and in the context of playing for New Zealand and trying to go to a World Cup, we found that, and it didn’t make it easy, it made it harder in some ways, but the level of connection to being a part of a group like that was profound.
And I hoped, I dreamed that in the context of business you might be able to do the same thing. And yet, when I started on this journey with the Kickstarter, even before Joey, and he was the first and we didn’t really touch on this difficult early customer, very, very difficult early customer. You know, at this stage I was making shoes from Merina Wool. And, and that was a, a journey I was on, and it was a lot of curiosity, and I had some core insights, but I fundamentally didn’t know why I was doing it. I knew what I was doing, I didn’t know why. And then I meet this character who’s got this vision, found the world was going to change, and at that point I haven’t looked back. Not that it got easy from that point and far from it, but it was very, very clear that there was an opportunity to do something that we’d tell our grandkids about. And we talked about that openly and we crafted a culture and a set of values and a vision and a mission statement all around that, that feeling. If you can unlock that and then bring complimentary different diverse set of talents towards that, it, it doesn’t get any better than that.
Ed (32:52): What about from your side of the table, Joey, the attributes that Tim brought both positive and negative to a leadership style to Allbirds as it’s grown
Tim (33:03): Distinct lack of footwear experience, or any business experience? I just want to kind of get out in front of this one Ed.
Joey (33:10): That’s pretty good. Yeah, I do, I remember one of the first ones where I was like, whoa, I think we had a Word document that we were using Microsoft Word document and I was like, hey, can you just like throw your recommendations and track changes? He’s like, I like to use, Adobe Illustrator only. I was like, oh my God, this is going to be tough.
Tim (33:30): Also, what is, what is a track change?
Joey (33:31): Yeah, what is a track change? , so anyway, in that kind of joke is also what I’ve just come to appreciate the most is this idea of getting better every day. And that it’s, it’s about this resilient attribute of constant improvement is the mind of an athlete. And I think Tim has the most incredible capacity to learn and take on information more than anything I’ve ever experienced. You know, somebody who was good in high school, pretty good in college and actually like came into his own in his professional career, I think is indicative and emblematic of that approach to self-improvement that we’ve embraced in this business. Whereas, you know, I was pretty good in high school, mediocre in college and got injured and quit two years into it. So that shows you, my trajectory. So, what I hope at least I can complement Tim’s leadership style from those sets of experiences is, you know, I I’ve gotten to live in, in a few different cultures now and I do think the idea of having purpose at the heart of what you do sounds cliche, but if you orchestrate your entire business on that principle, very methodically is incredibly powerful.
And looking at some of the failures that I’ve had in, in business prior to Allbirds, we were able to be very deliberate. And Tim mentioned we had a mission, we had a vision, we had some values. The values are live curiously, act intentionally, and simplify naturally. And one I’ll just pick on for right now given the, the kind of topic we’re on is, is this act intentionally and acting intentionally. You can hear that there’s been a whole bunch of things we’ve done quite deliberately in our business, sometimes almost to a fault. And every, every great core value has if taken to an extreme, has negatives and downsides. But this one in particular, if, if you don’t proactively build a culture, it doesn’t mean you don’t have a culture. It just means you have one that you didn’t deliberately construct. It’s at an accidental culture, which sure, maybe you can get lucky, but that’s not the way I live my life.
I try to plan for what the successes are and, and work towards those things and hopefully you make your luck along the way. And so that was the, at the root of what we’ve tried to build here at Allbirds. And, and we’ve written it down, it’s a three-page document that we share with every final round interview candidate. And these candidates get to self-select whether they’re inspired by it or whether they think it’s, you know, couple of guys in San Francisco with flowers in their hair. And it’s a way to separate the wheat from the chaff. And, and that is a powerful thing to get an incredibly aligned group of people who happen to be very diverse of skillset, diverse of background, and bring that diversity of thought with an aligned set of values and mission into something that is focused and, and that can be very powerful. And I think that’s been that’s been our approach to culture and of course we haven’t been perfect and when we lose sight of, of where we are and when we’re not living our values perfectly, reaching back to that document, reaching back to those ideas is, is a powerful weapon for us to fall back on.
Ed (36:29): Yeah, those foundational documents that can be guiding lights to hard decisions and how they’re made can be so powerful for business of all sizes. Tim, we’ve had many conversations in regards to the parallels of sport and business. So, I’m going to ask you a fresh question that I don’t think I’ve ever asked you before. And that’s around talent density. You know, in a sports team there’s a set number of players, soccer team, 11 players from a pool of potential candidates and in New Zealand great success of really bringing people through high performance systems. But in business you can pull people from anywhere, there’s no set amount of employees. That’s a perfect number. How have you thought about creating talent density, having come from a world in a finite pool to now a large open-ended world of employee opportunity?
Tim (37:18): Joey touched on it, the values is a filter, super important, right? Like in theory you can bring anyone in but however good they may be in whatever vertical that you’re searching for, unless they fundamentally connect to where you’re going and what you stand for, let’s not waste each other’s time. So that one’s been a big part of our screening. I think the other thing is a lot of people say they want an entrepreneurial experience. If I look back through the history of, of our hiring, if there’s one thing that you need to really get right, it’s that connection to the scaling and the entrepreneurial experience. Yeah, I totally want to do that and oh that sounds awesome that you don’t have a desk for me and I’m going to sit on the ground and you know, but then when actually on the ground and you’ve come from maybe a large organization where things were siloed and separated and you have to kind of do it all yourself, get your own metaphorical cup of coffee, that’s a unique kind of makeup of a person that truly wants to go through that.
So, I think that one’s become a quite important part of our screening process and now we’re at a slightly different stage, right? So, it shifted again. We’ve always tried to have the confidence in the belief to hire people that are further ahead on the trajectory, and I think it served us really well. Connected to that is a clear vision, a belief, and a confidence in what you’re doing, but also a clarity in the skill sets that we’re missing. So, I think, think we’ve had the confidence to bring in really strong and experienced leaders and I think that’s come from a, a starting point with Joey and I where we’re very, very transparent about things we do well and where the gaps are. And I think that that’s allowed us to bring in category experts, big personalities, people with experience far beyond even where we are today. And the ability to be really clear about what you do well and what you don’t, I think is foundational to kind of how we’ve evaluated talent. So, values scaling, and stage fit, super important. And then clarity add on what are the gaps in the team and what are the bits that the leaders don’t do well, you need to be really honest about that.
Ed (39:10): One thing that’s really topical for CEOs and boards at the moment around attracting and retaining the best and brightest is stock based comp. And from a personal point of view, I’m a huge fan of LTIs and, and how it can align interests and encouraging employees to think like owners, but it can become a little bit of a headache in markets that we see ourselves at the moment. And so, it is very topical because many companies have these large stock-based compensation plans and when share prices fall, you know, companies have a decision to make, do they make no adjustments and employees essentially receive less comp? Do they double the amount of stock but that can create dilution issues, or do you just change how you compensate people as it comes to cash payment? And of course, there are different options in and amongst all of those. How do you think about making sure that you are compensating the best appropriately when in times like this it can be hard?
Joey (40:04): It is tricky and it’s something we’ve spent a lot of time thinking about. I would summarize it by saying that there’s a marketplace for talent out there and plus or minus you could be creative but you, you know, you generally have to be competitive with the market for payment of in compensation of people. Despite the fact that we think we’re an incredibly attractive employer from a whole bunch of reasons outside of compensation, compensation still matters, and we need to be competitive. So regardless of what a stock price is having compensation that is competitive is important. And so, I think there’s a basic level of cash, there’s a basic level of equity that our expectations that has been set by the marketplace, not by us as individual companies or leaders. And so, I think doing dramatic changes to your stock-based compensation to react to the market is, you know, if you trim it back to manage dilution, you could really put yourself in a bind and lose the talent that you need to be long term.
So I think the best way I would put it is in market downturns, you don’t want to overreact to the downside and, and get too defensive. , but you might need to move into some kind of a defensive posture on the good times. You don’t want to overreact and chase all the opportunity because you’ll find yourself in a situation where you’ve either spent too much or not as measured as you need to be. I would say the same thing applies here. And what we’ve tried to do is look at stock-based comp and then proactive dilution management in the future and just understand when is the moment that we can start to use some of the proceeds that the company generates from profits to buy back stock or do other kind of dilution management for shareholders and just make sure that that timeframe is palatable. And that as we ride out what is a, a very punitive stock market for growth companies at the moment. We ride that out, but we ride that out with a deliberate approach to when we can pull that back and make sure that there’s, there’s both profit and prosperity for shareholders as we scale this business.
Ed (42:03): It’s a great answer. Of course, the other lever that you can pull is to really lean into the for-purpose angle. The best and brightest that want to work on changing the world are going to gravitate to Allbirds. And so, it becomes a, in some ways a, a null and void conversation. But thanks for answering so thoughtfully. Last question I want to hear from both of you. Just crystal boiling, what does this brand look like, if you could have a perfect crystal ball in 10, 15, 20 years’ time?
Tim (42:33): You know, aside from continuing to have fun, continuing to be a part of it, all that sort of stuff. When I had my last professional game, I had a friend of mine whose, an all-black called Conrad Smith, an amazing guy, smart, thoughtful, amazing player. And he came in and spoke to the team and , he told the story about life and life being a series of opportunities and a handful of sort of inflection points that come along, sometimes you know, sometimes you don’t, but you got to you got to grab them because if you win that moment, it can transform and push you to the next sort of chapter or, or potential achievement. And he just urged us in that particular game and more broadly in our sporting career, not to let that go, not to waste it. And he dimensionalised the opportunity beyond just the game and won one result, but actually being about all the different people you might meet.
And if I go forward 10 years echoing some of Conrad’s sentiment, it would be that we, we’ve taken advantage of the opportunity that we have here. It’s enormous and full of potential, not just to build big business, but to also push a category in a different direction. You don’t get those very often. We’ve had to work very, very hard. Joey alluded to it a little earlier in between saying lots of nice things about me, which I appreciate, you know, that we’re sitting in a place that’s very, very exciting and I kind of feel it. So, if I fast forward in 10 years, I might, I really hope we haven’t let that opportunity go to waste. And I don’t think we will. But I, I hope that we don’t,
Joey (44:04): I’d like to make products that resemble the benefits of trees more than a traditional product, meaning, you know, it’s sucking carbon dioxide out of the atmosphere and spitting out oxygen. So, it’s really net positive for the earth. And in, in doing so, we unlock magical customer experiences that allows our business to be incredibly large and successful from both a size and profitability perspective. And if we can prove that to the world that, that you, you can be a great business because you’re a sustainable business, I think will be a beacon of what we hope all consumer product companies aspire to become and in doing so have an impact on how humans interact with the earth. And that that would be a pretty profound impact that we can have. And I’m humbled at the opportunity that we now have to, to go tackle that because of the foundation we’ve built.
Ed (44:54): Profound and inspiring and I’m sure all that have been listening are inspired by the journey today and are cheering you on as we all are. Tim and Joey, an absolute treat to have an hour with you all to myself.
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