Allbirds, the sustainable footwear maker co-founded by ex-All White Tim Brown, says it has sold its 'intellectual property and certain other assets' for $68 million.
The process is expected to be completed by April 24, followed by a distribution to shareholders.
Its fourth-quarter earnings call was cancelled and no financials will be released for the period.
Massey University marketing professor Bodo Lang unpacks what went wrong with Allbirds - after the company began with such a strong start.
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Speaker 1 (00:09):
You're listening to a podcast from News Talks be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
As we've been discussing All Birds, the once high flying,
eco friendly shoe brand that reached evaluation of around seven
billion dollars, has agreed to sell its assets for a
fraction of that value, around sixty eight million dollars and
plans to wind down the company. So to analyze what happened,
we are joined by marketing expert doctor Bodo Lang. Bodo,
very good afternoon to you.
Speaker 3 (00:35):
Good afternoon, hey.
Speaker 4 (00:37):
From your perspective, what did All Birds get right early
marketing wise and when did it start going wrong?
Speaker 3 (00:45):
Look, I think the initial value proposition was excellent, and
developer position was that they're differentiating their shoes based on sustainability,
so shoes that are made out of wool or FTC
certified fabrics that are not harmful. So that I think
was an excellent initial position of because it was really
a wide space in the shoe market. But after that
(01:08):
what happened is, of course competitors copied pretty quickly what
they were doing and they really just failed to differentiate
themselves meaningful you And so I think as a result,
consumers just failed to see value in buying the brand.
Speaker 4 (01:21):
So was it great looking, great shoes they were selling
or was it just the sustainability story. Did people not
really fall in love with the design and the brand
just the sustainability? Is that for you?
Speaker 3 (01:37):
I think that's fair to say. I think they always
give people a compelling reason to believe, but just not
a sufficiently strong reason to buy repeatedly at scale. It
just didn't appeal to enough consumers. There will be a
segment of die hard sustainability, you know, heroes. They will
buy product at market markets itself that way, But for
(01:59):
most consumers, sustainability is really a secondary kind of product attribute.
We all like to buy a sustainable product, but there
are other product attributes that are more important to us.
So performance, aesthetics, of identity when you think of sneakers
and all birds, just didn't perform well on those more
important product attributes.
Speaker 4 (02:21):
Was the seven billion dollar well that's seven billion dollar
New zealand four point one billion dollar US valuation. Part
of the problem You're suddenly having to make a lot
of compromises to be a company that's that's a huge company.
So essentially, did they expand too fast before the brand
was strong enough globally to justify being that big a business.
Speaker 3 (02:41):
Yeah, I think that's part of the problem. I think
it's a typical, you know, sort of b area hype brand,
you know, a great valued proposition at the start, but
I think it was completely overvalued when you look at
earnings and you know what the market valuation was, so
share price times the number of shares. It was really overvalued.
And you can get away with it if you can
(03:03):
really high growth and strong margins. But they just didn't
have that strong growth. There was a really you know,
there was excitement about the brand early on, but it
just didn't carry on. And that was linked to you know,
some people felt that the sneakers even looked ugly. They
were too plain. And that's a really important, basic sounding,
but really important attribute for people when they buy shoes.
They have to look smart because they're part of what
(03:26):
we call you extend itself, and so you don't want
to have sustainable but ugly looking snakes.
Speaker 4 (03:31):
Yeah.
Speaker 2 (03:32):
What about the New Zealand story part of it? We
you know, in New Zealand we hear that there's a
lot of value attached that internationally is that true when
you look at the likes of All Birds. Was that
part of their initial success that internationally it's a brand
that comes from New Zealand and we've got a good name,
or do we read too much into that value?
Speaker 3 (03:50):
I think that's part of a really nice brand narrative
to have that you know, this brand comes from a
different place, and you know that place is renowned for something.
But I don't think that is enough by itself to
sustain you know, sales at scale to a mass market,
and let's not forget you know, a shoe in fashion,
which she was a part of, is a super competitive market.
(04:12):
There are global competitors that you're taking head on, and
initially there were in a protected white space, but that
sort of molt didn't last very long because it could
be copied by other competitives.
Speaker 4 (04:24):
Cultural relevance is a really hard thing to keep going.
I was just telling before a story about one of
my younger sons put on my All Birds and wore
them out, and my elder son seat, you can't be
going out in those, you cannot be seen in them.
That was actually a sort of discussed at All Birds,
which blew my mind. Why do they care so much,
But how do you keep cultural relevance going for a brand,
(04:48):
especially with younger, younger buyers. I guess it's the big
seven billion dollar question, isn't it.
Speaker 3 (04:54):
Yeah? Absolutely, I think cultural irrelevance is really important. You
need to have cultural license to operate in the first place,
and then ideally you're seen as a brand to be desirable,
and so how do you do that? I mean the
traditional answer to that is sharp produ design and really
good marketing communication, particularly advertising online and offline. You want
to associate yourself with essentially good looking models, you know,
(05:19):
being seen to do fun things that are worthwhile. And
so when you think of you know, really big brands
in the market, you think of Coca Cola or Nike.
You know, a shoe and a soft drink, relatively interchangeable really,
you know, but where the value is is the brand.
And so those brands have been created over decades and
with really deep pockets, and so that's just always just
(05:41):
didn't have that ability to create that sort of following
and that sort of brand identity.
Speaker 4 (05:46):
How's Crocs done it? That's that's something that really confuses
ma Crocs. At one point we're a joke, but now
they are you know, four quadrants Shore, They're everywhere.
Speaker 3 (05:59):
Yes, they are. They It's a good example. I think
it's a really that to me is a product that
is uniquely different. And so when you look at Crocs,
particularly the base model, it is uniquely different from anything
else I can buy. Sure there are cheap knockoffs from
other places, but it's not a sneaker or a shoe
that you would look at and go, oh, I wonder
(06:20):
who that is, you know, made by And so when
you look at an all Bird and you take the
label away and you show it to people, they can't
tell you what that is versus a. Crocs has a
really strong identity.
Speaker 4 (06:33):
So as All Birds a great idea that got badly
executed and hit a bit of bad luck, you know,
COVID and various other things, the tariffs out of Vietnam
and stuff, or proof that the idea was just never
that strong to begin with.
Speaker 3 (06:48):
This failure. Look, I think the base idea is excellent.
I think positioning yourself on sustainability is really good. But
I think sustainability is always a multiply It's not your
core reason for buying a product, particularly not chols. You know,
if you lined up one hundred New Zealanders or US
customers right now and said, look to tell me, what
(07:09):
are the main reasons why you'd buy a shoe. Virtually
nobody would say sustainability. They would say comfort, performance, identity,
all these sorts of other things. And so you can
have sustainability as a multiplier, but you've got to perform
really really well on other important product attributes. And I
think that's just a really hard thing to do in
the shoewear market. So I think the base idea was excellent,
(07:32):
but I think they just failed to evolve and didn't
have deep enough pockets to write a compelling brand narrative
around the brand.
Speaker 2 (07:39):
It's an interesting and fascinating story and a sad ends
to what was a very hyped company. But really appreciate
your time this afternoon, doctor Bodo Lang, and hopefully we'll
catch up against sowon my pleasure That is marketing expert
from Massi University, doctor Bodo Lang.
Speaker 1 (07:55):
For more from news Talks that'd be listen live on
air or online and keep our shows with you wherever
you go with our podcasts on iHeartRadio
You're listening to a podcast from News Talks be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
As we've been discussing All Birds, the once high flying,
eco friendly shoe brand that reached evaluation of around seven
billion dollars, has agreed to sell its assets for a
fraction of that value, around sixty eight million dollars and
plans to wind down the company. So to analyze what happened,
we are joined by marketing expert doctor Bodo Lang. Bodo,
very good afternoon to you.
Speaker 3 (00:35):
Good afternoon, hey.
Speaker 4 (00:37):
From your perspective, what did All Birds get right early
marketing wise and when did it start going wrong?
Speaker 3 (00:45):
Look, I think the initial value proposition was excellent, and
developer position was that they're differentiating their shoes based on sustainability,
so shoes that are made out of wool or FTC
certified fabrics that are not harmful. So that I think
was an excellent initial position of because it was really
a wide space in the shoe market. But after that
(01:08):
what happened is, of course competitors copied pretty quickly what
they were doing and they really just failed to differentiate
themselves meaningful you And so I think as a result,
consumers just failed to see value in buying the brand.
Speaker 4 (01:21):
So was it great looking, great shoes they were selling
or was it just the sustainability story. Did people not
really fall in love with the design and the brand
just the sustainability? Is that for you?
Speaker 3 (01:37):
I think that's fair to say. I think they always
give people a compelling reason to believe, but just not
a sufficiently strong reason to buy repeatedly at scale. It
just didn't appeal to enough consumers. There will be a
segment of die hard sustainability, you know, heroes. They will
buy product at market markets itself that way, But for
(01:59):
most consumers, sustainability is really a secondary kind of product attribute.
We all like to buy a sustainable product, but there
are other product attributes that are more important to us.
So performance, aesthetics, of identity when you think of sneakers
and all birds, just didn't perform well on those more
important product attributes.
Speaker 4 (02:21):
Was the seven billion dollar well that's seven billion dollar
New zealand four point one billion dollar US valuation. Part
of the problem You're suddenly having to make a lot
of compromises to be a company that's that's a huge company.
So essentially, did they expand too fast before the brand
was strong enough globally to justify being that big a business.
Speaker 3 (02:41):
Yeah, I think that's part of the problem. I think
it's a typical, you know, sort of b area hype brand,
you know, a great valued proposition at the start, but
I think it was completely overvalued when you look at
earnings and you know what the market valuation was, so
share price times the number of shares. It was really overvalued.
And you can get away with it if you can
(03:03):
really high growth and strong margins. But they just didn't
have that strong growth. There was a really you know,
there was excitement about the brand early on, but it
just didn't carry on. And that was linked to you know,
some people felt that the sneakers even looked ugly. They
were too plain. And that's a really important, basic sounding,
but really important attribute for people when they buy shoes.
They have to look smart because they're part of what
(03:26):
we call you extend itself, and so you don't want
to have sustainable but ugly looking snakes.
Speaker 4 (03:31):
Yeah.
Speaker 2 (03:32):
What about the New Zealand story part of it? We
you know, in New Zealand we hear that there's a
lot of value attached that internationally is that true when
you look at the likes of All Birds. Was that
part of their initial success that internationally it's a brand
that comes from New Zealand and we've got a good name,
or do we read too much into that value?
Speaker 3 (03:50):
I think that's part of a really nice brand narrative
to have that you know, this brand comes from a
different place, and you know that place is renowned for something.
But I don't think that is enough by itself to
sustain you know, sales at scale to a mass market,
and let's not forget you know, a shoe in fashion,
which she was a part of, is a super competitive market.
(04:12):
There are global competitors that you're taking head on, and
initially there were in a protected white space, but that
sort of molt didn't last very long because it could
be copied by other competitives.
Speaker 4 (04:24):
Cultural relevance is a really hard thing to keep going.
I was just telling before a story about one of
my younger sons put on my All Birds and wore
them out, and my elder son seat, you can't be
going out in those, you cannot be seen in them.
That was actually a sort of discussed at All Birds,
which blew my mind. Why do they care so much,
But how do you keep cultural relevance going for a brand,
(04:48):
especially with younger, younger buyers. I guess it's the big
seven billion dollar question, isn't it.
Speaker 3 (04:54):
Yeah? Absolutely, I think cultural irrelevance is really important. You
need to have cultural license to operate in the first place,
and then ideally you're seen as a brand to be desirable,
and so how do you do that? I mean the
traditional answer to that is sharp produ design and really
good marketing communication, particularly advertising online and offline. You want
to associate yourself with essentially good looking models, you know,
(05:19):
being seen to do fun things that are worthwhile. And
so when you think of you know, really big brands
in the market, you think of Coca Cola or Nike.
You know, a shoe and a soft drink, relatively interchangeable really,
you know, but where the value is is the brand.
And so those brands have been created over decades and
with really deep pockets, and so that's just always just
(05:41):
didn't have that ability to create that sort of following
and that sort of brand identity.
Speaker 4 (05:46):
How's Crocs done it? That's that's something that really confuses
ma Crocs. At one point we're a joke, but now
they are you know, four quadrants Shore, They're everywhere.
Speaker 3 (05:59):
Yes, they are. They It's a good example. I think
it's a really that to me is a product that
is uniquely different. And so when you look at Crocs,
particularly the base model, it is uniquely different from anything
else I can buy. Sure there are cheap knockoffs from
other places, but it's not a sneaker or a shoe
that you would look at and go, oh, I wonder
(06:20):
who that is, you know, made by And so when
you look at an all Bird and you take the
label away and you show it to people, they can't
tell you what that is versus a. Crocs has a
really strong identity.
Speaker 4 (06:33):
So as All Birds a great idea that got badly
executed and hit a bit of bad luck, you know,
COVID and various other things, the tariffs out of Vietnam
and stuff, or proof that the idea was just never
that strong to begin with.
Speaker 3 (06:48):
This failure. Look, I think the base idea is excellent.
I think positioning yourself on sustainability is really good. But
I think sustainability is always a multiply It's not your
core reason for buying a product, particularly not chols. You know,
if you lined up one hundred New Zealanders or US
customers right now and said, look to tell me, what
(07:09):
are the main reasons why you'd buy a shoe. Virtually
nobody would say sustainability. They would say comfort, performance, identity,
all these sorts of other things. And so you can
have sustainability as a multiplier, but you've got to perform
really really well on other important product attributes. And I
think that's just a really hard thing to do in
the shoewear market. So I think the base idea was excellent,
(07:32):
but I think they just failed to evolve and didn't
have deep enough pockets to write a compelling brand narrative
around the brand.
Speaker 2 (07:39):
It's an interesting and fascinating story and a sad ends
to what was a very hyped company. But really appreciate
your time this afternoon, doctor Bodo Lang, and hopefully we'll
catch up against sowon my pleasure That is marketing expert
from Massi University, doctor Bodo Lang.
Speaker 1 (07:55):
For more from news Talks that'd be listen live on
air or online and keep our shows with you wherever
you go with our podcasts on iHeartRadio
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