Measure twice, and cut once. It’s an ancient wisdom that is often forgotten or ignored, sometimes at a steep price.
That seems to be what has happened to Allbirds, the New Zealand-inspired fashion startup that captured imaginations with its novel and eco-friendly product—a low-tech sneaker-loafer made of merino wool. (Allbirds because New Zealand’s wildlife is almost entirely birds. Wool because the country is home to some 30 million sheep.)
The shoe started showing up on fashion radar screens in 2017 when the New York Times reported that Allbirds had become part of the informal dress code of Silicon Valley. Industry news site TechCrunch reported, "The quintessential venture capitalist’s uniform consists of a pair of designer jeans, a Patagonia fleece vest, and $95 wool sneakers.” Celebrities like Google co-founder Larry Page were said to have been spotted wearing Allbirds.
Investors were charmed by the promise of a new, trendy sub-category—machine-washable, affordable footwear made entirely of wool, eucalyptus fiber, and sugarcane-based foam. What else could you make out of wool? It ticked all the boxes of feel-good venture capitalism. Allbirds seemed to be on the leading edge of the sustainable fashion movement and developed a cult-like following.
On Wall Street, a unicorn is a trendy startup company that investors are valuing at more than a billion dollars despite minimal assets and sales. Under those conditions, success is rare, almost as mythical as a unicorn.
Allbirds was losing money but booking actual revenue—$219 million in 2020 and $278 million in 2021. The company went public at the end of 2021. The forecast for 2022 was for another giant leap in sales to $355 million. The stock soared, and its market cap briefly breached $2 billion. But the scorching sales growth failed to materialize, and the stock collapsed within three months.
Among the problems, according to a recent Wall Street Journal report, was the company’s fumbled rush to expand its line to include other apparel like jackets, underwear, and leggings: “The company lost focus, unsure if it was selling to sneakerheads or soccer moms.”
Merino wool, it turns out, might be eco-friendly, but it wears out fast. Customers complained that the shoes quickly developed holes. Allbirds ordered thousands of pairs of wool blend leggings that proved unsuccessful.
Today, Allbirds shares trade at about 10% of the IPO price.
Does it mean the brand has lost its opportunity with consumers?
I don’t think so.
Many companies have had these (perhaps different but similar) challenges and succeeded in reconnecting to the core consumers that brought them to those heights when they first broke onto the scene. But to succeed in the future will require an unrelenting focus back onto the core customer while having the unique ability to learn more in parallel about the adjacent consumer they were trying to attract to the brand.
It is a difficult task indeed to execute. Still, with the correct strategy, unrelenting focus, and attention to detail and data, I believe they can navigate their way back into the consumers' hearts.
That said, good advice that never goes out of style…measure twice and cut once.
