March 30, 2022 • 40 mins
Allbirds was founded on the purpose of “Better things made in a better way.” After 8 years of business, they’ve invented numerous ways to walk that talk.
In 2014, Allbirds co-founders Tim Brown and Joey Zwillinger created a way to make sneakers out of wool instead of oil. Only 8 years later, Allbirds is now a publicly-traded company working to put their entire industry on a more sustainable path. How did they get here, and what did it take to take it all on?
Today’s episode is a 1-on-1 with Allbirds co-CEO, Joey Zwillinger. Joey shares with us how Allbirds’ purpose has driven product innovation, and how the company keeps its thinking fresh and its products recyclable.
Guests:
Joey Zwillinger - Co-Founder and CO-CEO, Allbirds
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Show Notes:
- Allbirds is adding another element of sustainability to their business model with ReRun: a marketplace for upcycled products.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Welcome to Calling Bullshit, the podcast about purpose washing, the
gap between what companies say they stand for and what
they actually do, and what they would need to change
to practice what they preach. I'm your host, time Ontogue,
and I've spent over a decade helping companies define what
they stand for, their purpose and then help them to
(00:27):
use that purpose to drive transformation throughout their business. Unfortunately,
at a lot of organizations today, they're still a pretty
wide gap between word. Indeed, that gap has a name.
We call it bullshit. But, and this is important, we
believe that bullshit is a treatable disease. So when the
(00:47):
BS detector lights up, we're going to explore things that
a company should do to fix it. This episode is
our second positive case study, when we do a deep
dive on a purpose led company that we think is
getting it right. Today, All Birds. We're going to talk
(01:13):
to All Birds co founder and co c e O
Joey's Willinger about what it's like to run a purpose
led business and ask him what works, what doesn't, and
how he thinks about the future. Before we get to Joey,
let's catch up on the All Birds story. Sneakers have
(01:34):
come a long way. Since their invention in the eighteen
hundreds and since the fifties, sneaker companies have touted a
variety of technological innovations. Here fiers with a magic wedge
that helps you run your fastest and jump your highest
look the ground rip and tread on red ball jets
gets you off like a rocket stops you on a dime.
(01:55):
The exclusive arch guard supports your foot, puts comfort in
spring in every the rebop pump when I pop up
my size thirteens get support, protection and a custom fit.
So Michael, my man, if you want to fly first class,
pomp up an air out today. There are a multibillion
dollar industry start to jump over the one d billion
(02:18):
dollar mark in a few years. But one place innovation
has been sorely lacking is in materials. Most sneakers are
full of petroleum based foam and plastics, non biodegradable, with
a high carbon footprint, so they're pretty hard on the
planet environmentally. The fashion industry enter Tim Brown, native New
(02:42):
Zealander and former professional soccer player, who had worn more
than a few sneakers in his lifetime, Tim new sustainability
was an important issue for the future and for customers,
and he found a way to move sneaker materials away
from oil. His first innovation, wool. Tim got a grant
(03:04):
from the New Zealand Wool Trust for his concept and
developed it further during an entrepreneurship course, but the professor
pulled him aside and told him his sustainable sneaker was
a terrible idea and suggested he just put it on Kickstarter,
where he assumed it would tank quickly. Here's Tim in
that original Kickstarter pitch video. You can't grow up a
(03:27):
kiwi and I understand how good wool is. It's tough,
regulates temperature, reduced the smell, wicks away moisture, and importantly,
as a sustainable and bidegredible resource. We need you will
help to shake out the shoe industry and take New
Zealand wool and we'll run us to the world. He
began the campaign hoping to raise thirty dollars, but within
(03:51):
just five days he'd raised over a hundred and twenty
thousand dollars. But there was a good reason that making
wolves aakers had never been done before. It was really hard.
Enter Joey's Willinger, a materials engineer and one of Tim's
early Kickstarter customers. Joey had focused his whole career on
(04:14):
making environmentally friendly materials, but kept running into people who
just didn't get it. I had this just recurring nightmare
of a meeting. Every time I'd get advanced discussions in
business development with with customers and potential customers, it would
devolve into this sourcing conversation of can you just do
what we do now and just do it cheaper? Every
single time, I was like, you guys are missing the
(04:35):
big picture here, like the consumers do want this. Tim
and Joey met through their wives who were roommates in college,
and they hadn't even considered a potential partnership until Joey
invited Tim to visit him in California to talk about
the idea that would soon become All Birds. We spent
(04:55):
like three days really walking around the hills just north
of San Francisco talk king about why the world needed
an issue company. I'd come out of this career in
sport that you know, I'd unlocked this incredible amount of
meeting and playing for my country, and I found myself
in my first real job post business school making shoes,
(05:16):
and I didn't really know why. And I think the
best thing about that meeting was it unlocked out why.
It wasn't just about disrupting the shoe industry or creating
a comfortable sneaker. It was about creating a direct consumer
brand and business that made sustainability a non negotiable. So
(05:37):
they got to work engineering a sneaker made of wool
and fundraising. In sixteen, they raised seven point to five
million dollars from investors like Leonardo DiCaprio and Mavron, and
they used that money to launch their website selling the
Wool Runner, a sneaker that was soon recognized as the
(06:01):
world's most comfortable shoe by Time magazine. By the next year,
the company had fifty employees in their San Francisco headquarters,
forty in its Nashville warehouse, and three fifty contractors in
a factory in South Korea. And as they grew, they
didn't stop innovating. In March, All Birds launched a sneaker
(06:23):
made from South African eucalyptus fibers, called the Tree Runner,
the first shoe to receive certification from the Forestry Stewardship Council.
Then All Birds invented a foam derived from sustainably sourced
sugarcane rather than petroleum based plastic, that they called Sweet
Phone and now sweet Foam is used in all of
(06:44):
their shoes and I absolutely love this. They open sourced
the recipe for sweet Foam to encourage other footwear companies
to use it too, and instead of being upset when
All Birds copycats showed up on Amazon, Joey's Willinger wrote
an open letter to Jeff Bezos challenging him to copy
their materials and their environmental commitment to funny Amazon never responded.
(07:12):
In August of All Birds moved into apparel, starting with
socks made from yet another material innovation, Trino, a mixture
of marino wool and eucalyptus tree materials used in their footwear,
and they've recently launched a new material made of crab
shells called XO like Exo skeleton. In November, All Birds
(07:37):
went public under the symbol b I r D. The
stock initially surged, valuing the company at four billion dollars.
So how do we make more stories like this one happen?
I asked All Birds co founder and co CEO Joey's
(07:59):
Willinger to tell us what he's learned about being a
leader in environmental manufacturing and running a purpose native company.
That conversation after the break, I am very excited to
(08:20):
introduce the co founder and co CEO of All Birds,
Joey's Willinger. Joey, welcome to calling Bullshit. Thank you so
much for having me. I'm glad i'm here. I'm glad
to be talking to you. I would love it if
we could just start out and learn a little bit
more about your background. Sure, winding all the way back
(08:41):
to upbringing, I had two very socially conscious parents and
not particularly environmentalists, but pushed me in a direction of
making sure they didn't care what I did. They just
wanted to instill in me that I had to do
something that contributed a little bit broader than my family
or myself for certainly for just money or something like that.
But they did help push in a good direction with
a high level of curiosity. And I was an engineer,
(09:04):
and that got me really interested in exploring innovation and
a whole bunch of different opportunities, which not knowing business,
I was like, okay, let's go get a basic education
out there and did consulting and then I did a
little investing in early stage companies through a venture capital firm,
and that that really was the first time I got
introduced to entrepreneurship in its true form, and I I
(09:24):
was thrilled with it, and I started to fall in
love with the idea that you could do so much.
I had so much dynamism in entrepreneurship, that you could
create the rules yourself and create this little organism of
a culture and make an impact on the planet that
was so significant with a little bit of creativity, uh
and a great team. Around that same time, I also
(09:46):
realized that the biggest crisis that was facing our species
of truly existential crisis. That was a very big moment
for me where I realized I wanted to dedicate my
professional life to doing as much as I could for
the environment. That sent me down a path, and I
think entrepreneurship was so interesting that I started hunting down
(10:06):
the path. I joined a company called Solos I'm as
a result of that, which was a biotechnology company where
we engineered micrology to replace petroleum, so basically a carbon
neutral version of any kind of petroleum derivative, whether it
was fuel or chemicals or even cosmetics. Ingredients. I ran
that the chemicals group, so I was replacing petro chemicals,
and I was I was out there doing tons of
(10:27):
business development, trying to design molecules that could outcompete petro
chemical and do it on a zero carbon emission basis,
and everyone was so excited about it. And then they
just passed me to the sourcing guy at their company,
and that person just asked me to do whatever they
did then cheaper, and that was very frustrating. That was
where I realized that politicians were lagging and consumers were
(10:48):
going to lead the way. I was convinced of it
that consumers wanted a no compromise offering for whatever the
product they were buying and consuming, they wanted it to
be amazing. And if it was shoes, could you imagine,
You're just there's twenty billion pairs of shoes every year
bought and sold, and they are made with plastic. Almost
every person you look around the street is wearing a
(11:08):
pile of plastic. That's all they are. And it's just
mind blowing to me, the dissonance between what I knew
the consumers wanted and what the brands were making. So
I thought there was just an opportunity. I didn't know
it was going to be sneakers. Unfortunately, my my night
and shining armor was Tim Brown, my co founder, who
swung in with an idea with the wool shoe, and
we really connected on the idea that this could be
a really big platform and a really big opportunity as
(11:30):
a business opportunity, but also to lead on environmentalism in
this space. Yeah, that, let's pivot to all birds. How
do you guys articulate all birds? Purpose? We say, make
better things in a better way, and I'll unpack it
a little bit. Making better things we say that first,
and that means that whatever you're using it for. In
our case, if it's shoes, it needs to be more comfortable,
(11:53):
look better, help you perform better. If you're using them
for athletics, they're just better and done in a better way.
For us, is about helping to reverse climate change. If
the planet has a heart, it's it's Climate change is
the issue that that is most analogous to helping you
as a human stay alive. It's it's the heart needs
(12:13):
to beat, and if our climate goes away, that is
existential problem. So for us, it's all about helping to
reverse climate change, and so we measure everything deeply against
that purpose. Yeah, it is the issue of our time.
How do you guys think about the let's call it
the dominant system that all birds is trying to improve upon.
Oh man, it's like a drug. We're competing with the
(12:35):
system of this drug of fast and sheep synthetics. And
for a hundred years since Rockefeller did a great job
and found kerosene to light lamps and then turn it
into fuel for Ford's to you know, model ts. Since
that time, chemical engineers, very smart people have been working
(12:56):
with all of their energy to squeeze out another dollar
from the barrel oil. And there's a lot of heat
and pressure and chemical engineering expertise that goes into squeezing
that last value from the barrel of oil to make
chemicals and cheap synthetics. And what that has resulted in
is an industry that relies exclusively on polyesters, nylons, synthetic
(13:17):
foams from petroleum, and then cow leather as well, which
are all horrific for the environment. It's a terrible direction
in terms of its contribution to global warming and and
twenty billion pairs each year. There's a lot of feet
out there. That's how much are consumed every single year.
So this is this is the system that we are
disrupting against. We are creating a system. We call it
(13:38):
vertical retailing, but everything is sold directly to the consumer.
We connect that to our innovation model where we unlock
this amazing customer experience so better products. And we do
that on the backs of highly evolved and naturally derived
innovations things from fibers, from nature, green chemistry, you know,
a whole bunch of different processes that unlock amazing value
(13:59):
for consumer us without denting the earth. Yeah, it's incredibly
impressive what you've done with materials, and I do want
to get deeper into that too. But just to kind
of level set, what is the carbon footprint of the
average sneaker, the plastic ones that you guys are trying
to replace. Yeah, so the average sneaker, best we can estimate,
(14:20):
and most most of the legacy companies in our in
our category don't disclose this information, so best that we
can calculate this, and we've run our own models on
what we estimate too as well as seeing the disclosures.
Is about fourteen kilograms of carbon dioxide equivalent emissions, and
I say that kind of jargon ee sounding word. But
C O two E, which i'll refer to for the
(14:41):
rest of this is is just carbon or carbon dioxide.
It's not just carbon dioxide. It's also methane or other
greenhouse warming gases, and they're multiplied to kind of show
the greenhouse warming potential of that emission. And we package
that all into a single metric So it's about fourteen.
And just to give you what that means and context,
hamburgers about six kilogram of tomatoes about two point two
(15:05):
pounds of tomatoes in the grocery store. That's about nine emissions.
So a sneaker is fourteen on average, and the ones
that we make are typically under ten. Right, I noticed that.
Hang on, sorry, I just wanted to show you. I
just got my first pair nice and I did see
you know your purpose on your box, which was cool.
You also labeled the carbon footprint right on the shoe,
(15:28):
which I thought was interesting. We wanted to understand our impact,
so we had to develop our own tools so that
we could measure down to the gram of carbon dioxide
emissions what we were doing across the whole life cycle.
That means from like the farm to the consumer and
even through their use phase and end of life of
that product. So we had to develop a pretty sophisticated model.
(15:50):
Once we understood the impact, we decided we would be
carbon neutral. So we went through and created the strategy
to try to get down to zero carbon emissions ourselves.
But along the way we had to know what it was. First,
we had to start to reduce it from all our
internal activities, and then we also had to offset it
along the way, so we made it carbon neutral. We
then released the tool publicly and we also started labeling
(16:11):
our products around the same time, and we decided that
singular metric is best analogized by calories on the back
of a food label. It's a way to contextual, as
in a simple single metric, your impact on whether you're
contributing and exacerbating the problem on climate change or you're
helping combat it. So we wanted that accountability on the company,
and we wanted it put it on right on the
product so that everyone could start to evaluate quality of
(16:34):
product and price of product and also the environmental and
climate change impacts. And now now there's a way for
people to do that. We hope a lot of people
copy us, which is why we we kind of open
source and release this tool to the industry. That's awesome.
I love that. And in a way, you know, when
as I was reading about you and watching some videos,
it really does seem like you're a materials innovation company
(16:58):
as much as you are a shoe and apparel company.
Like you've developed brand new materials like tree and sweet foam,
great names, by the way, can you talk a little
bit about those those innovations. That is how we think
about ourselves actually, Like the reason for being for us
is innovation on naturally derived materials. We think about ourselves
as a purpose native company, meaning we established this company
(17:21):
with the idea that we would use it so that
every shoe we sold and every dollar we made in
revenue was going to increase our environmental impact in a
positive way. So that alignment between mission and financial outcome
was essential for us. And so the only way we
could get at that is to focus and constrain our
research and development process to naturally derive low carbon intensity materials.
(17:46):
And so every new innovation that we go and look at,
it's got to do four things. It's got to be
amazing for the consumer, it's gonna just feel better. That's
the first and foremost the most important thing. The second
is that it's got to be a reasonable cost, because
you know, we have to deliver this at an approachable
value for customers. We have to have enough of it
in abundance so that it's durable, sustainable, and we can
(18:09):
make a lot of shoes out of it. And lastly,
it's got to be very low carbon intensity, and and
the best way to do that is to take the
best of nature and in a highly renewable fashion and
package it into a shoe that that does all those
great things that we try to do. So Tree was
a wonderful example where we use Forest Stewardship Council certified
(18:32):
eucalyptus fibers to make the uppers of our shoes. Sweet
foam is such a special one. We we knew when
we started the company. We really we wanted to be
very good and a big hole with the bottom of
the shoe, the soul and in the entire foot where
and all of it is made from petroleum. And we
knew from my background, we knew we had an opportunity,
particularly if we convinced this one company down in Brazil
(18:55):
to take the waste stream of sugar cane processing and
convert that through a number of biotechnology and the chemical
steps that we could actually replace the most ubiquitous foam
and all of the footwear industry. It's a it's a
chemical called e V A and and you can take
that and you can make it from the waste stream
of sugarcane processing, which actually makes it, in carbon accounting,
(19:17):
a carbon negative material that actually absorbs more carbon out
of the atmosphere than it takes to create it, So
you're a net positive every time you use this component.
And so we we use that, and we then we
converted into a foam which we call sweet Phone, and
we open sourced that based material to the whole industry
because it's so ubiquitous and using such high volumes in
(19:38):
the sneaker industry that if everybody used it, the planet
would be wildly better off, and it would also drive
the cost of that material down, so it would be
a win win for everybody. And so that kind of
collaborative approach to sustainability is often better than the traditional
super competitive method of innovation I P. Protecting. So you
(20:00):
and source these materials, so these materials are available. Yeah,
with our partner brass Can, we we co developed this
thing and then we we open source to everybody. And
some big brands are using and a lot of small
brands are using, and there's a lot of brands that
have yet to use it, and shame on them. You
should use it. Yeah, completely agree. That's that's super cool
and and obviously wool is also a huge part of
(20:22):
your proposition. So why wool, Well, you know, Tim is
from New Zealand and there is a lot of sheep
in New Zealand, a lot of sheep. There's like thirty
million sheep and a whole bunch of those of marino sheep,
and so Tim had a indoctrination from that bringing in
in the value of wool, and marino wool in particular.
It's a miracle fiber. It absorbs moisture and you don't
(20:45):
feel damp when you're wearing. It regulates your temperature, it
feels incredibly soft and touch and it's got some like
great strength characteristics. And it's not only is it wonderful
for all of those attributes making it an incredibly comfortable product,
but it's also from nature and particularly when you utilize
regenerative farming practices, which is one of our biggest initiatives
(21:06):
to push all the farmers we work with in New
Zealand and beyond to use regenerative farming practices. This too,
can be a carbon negative material, and so that the
power of harvesting wool in a regenerative manner and packaging
it into a product that feels better, performs better is
that magic sweet spot of where all birds exist and thrives.
(21:29):
Do you think leading a purpose led business is harder?
I asked that, because, for instance, you have a lot
more stakeholders to think about than the CEO of, for instance,
a traditional company who normally just thinks about shareholders. It's
an interesting question. I've never really thought about that, but
I kind of think it's easier. As long as you
(21:51):
intelligently designed the business system so that you're truly purpose native,
where which I define as as the financial and impact
incentives are exactly aligned, then I find it easier because
it's a tool that I use so much to make
sure that the purpose is resonating with our consumers so
(22:11):
they gravitate to our products more. The purpose resonates with
our employee base, so we get amazing talent. You know,
the purpose frankly resonates with our investors, like the the
idea that you can allocate your capital as a capital
allocator against opportunities that both make money and make great
impact on the world. These are all super aligned. So
(22:32):
I I find that the paradigm that is often assumed,
which is that these stakeholders are inherently intention is a
legacy of how business has skewed too far in one
direction around profit only and forgot that we all live
in a system. And so I find it quite a
lot easier. It's the tool I leverage the most great answer.
(22:53):
So at some level, proclaiming that All Birds is a
purpose led business makes the company target. Even if by
comparison you're a beacon of hope in your industry, do
you ever feel that pressure? Sure, And look, we try
to be very careful to say, uh, and we're pretty
(23:13):
clear about this that we are not perfect, like, but
there's lots of holes in what we're doing. You know,
the fact that we are above zero carbon emissions for
the products that we make means that we're not doing
a great job against our mission. Yet, like we need
to keep running super hard and working every day, which
is what we do to make amazing products that people
love and want to spend their money on and that
(23:33):
make a lower impact. Yet at the same time, there's
a lot of different perspectives on what ideal looks like
from an environmental perspective and what you should be fighting
for recyclability, circularity to others, it's climate change that lots
of people have a definition of of what this is.
So you're always exposed and when you put your neck
(23:54):
out and try to take a leadership role in anything
in life, people want to shoot you down when you
get up to a certain level. That's part of the job,
and I'm completely comfortable with that and also comfortable knowing
we may make some mistakes and all we can do
is transparently describe what we're doing and why we're doing
it and what our views are. And then you know,
(24:14):
it's up to consumers or other people to to make
a judgment on whether they believe in what we're doing
or not. I will humbly submit that I think we've
done a very good job of creating a system that
is logical and ladders up to making a very positive
impact on the most important problem our species faces, and
we do a lot of disclosure, you know, just as
(24:34):
an example, we're a public company. We do earnings calls
where we talked to investors every quarter and in the
beginning of the year. Typically a company, a public company
will give guidance for the next year on what you're
gonna do for your financial targets, what's revenue gonna look like,
what's profit going to look like. We also gave a
carbon reduction target in our earnings called guidance, and as
(24:57):
far as we know, we're the first company to ever
give a carbon reduction goal for what we're gonna do
in our R and D process to drive down carbon
emissions of our products throughout the next year. And that's
all aligned and budgeted against our goal to be a
zero emission company without the use of any offsets. That
gives you a sense of how we put ourselves out there,
(25:20):
how we try to drive accountability, how we try to
be authentic leaders and admit that we're not going to
be perfect all the way, but show people why we're
doing it and how we're doing it. It's interesting. I
want to dig into that for just a second because
it feels like in let's call it old school business,
transparency was something to be afraid of, Like you were
supposed to hide your flaws. You had to present this
(25:43):
kind of facade to the world that everything is perfect.
You're just making me think like being transparent in a way,
it's the best defense, right if you call yourself out
on things before anybody else does, you're sort of pre
disastered in a way to deal a line from the world.
According to Garb, like the worst has already happened in
(26:04):
a way, great great booked. Yeah, well, you know, I
I think there's another factor that contributes to that trend
that you're identifying is that information spreads more quickly than
it ever has. So if you're out there and you're
saying something to a consumer that becomes untrue your the
ability for your reputation to be snapped immediately is so
high and will happen so fast that you'd be a
(26:26):
fool not to be authentic and transparent in this environment,
because at some point that you know, the music stops
and and and that's when the dancing stops. All Birds
began as a purpose led business, but there are a
lot of companies that didn't begin that way that are
now trying to figure out how to make the transitions.
(26:46):
So what advice would you have for the c e
O s who are just beginning their purpose led journey. Yeah,
it's a great question because I do empathize with that situation.
You know, there's a lot of businesses that have been
around long before it was practical to be an environmentalist
in business, and long before even environmentalists got their hands
(27:07):
around what the problem looks like and how severe this is.
But that doesn't give an excuse for not acting with
extreme urgency right now. And I guess the thing I
would point to the most is that alignment of financial
outcomes with impact outcomes. And you know, corporate social responsibility
CSR is an acronym that's thrown around a lot that
(27:28):
to me often trivializes what businesses need to do in
terms of creating a truly purpose led enterprise. The reason
I'll say that is because CSR is often an appendage
that's off to the side of the business, and it's
it's saying, Okay, now we've made our profit, like, let's
do some philanthropic giving to this group that we think
(27:50):
is going to make a splash for consumers or make
our employees feel proud to work here. Whereas typically companies
who make products, sixty plus percent of the impact that
they make on the environment is born out of those
products and the materials they source to manufacture that products,
and the transportation and all that stuff. Focus on fixing
that for anyone that makes stuff, fix that and make
(28:13):
sure that it ladders up to the metrics that mean
the most. And so I would say, act with urgency,
act with purpose, create a system of incentives, even incentivize
the people who lead the business like these systems need
to be laddered up. So I told you that carbon
emission reduction goal that we stated alongside our financial guidance.
I'm paid on that. If we don't hit those reduction
(28:34):
targets for carbon emission, I don't make as much money.
And same for all of the executives and and and
leadership team at all birds. We've done it all the
way down to that human level, and it all matters.
You've got to have this system with a singular or
simple set of metrics that you can manage a company
to just like your financials, measure your impact on that
and drive results. Yeah, No, I agreed, effort follows money,
(28:56):
just following the thread of money for a second, there's
people who ding purpose led companies because some folks claim
that you have to make a choice between purpose and profit.
In your mind, does being purpose led mean being somehow
less competitive or somehow having more modest financial goals? No,
(29:20):
let me let me reframe that for you. If you're
making a product, Let's say you're making a T shirt
and you have the opportunity to use super high end
fabric that feels incredibly comfortable, drapes perfectly, gives everyone the
perfect fit, but it costs a ton of money. Do
you use it or not? Some materials cost more, some
materials cost less, and you still got to make a profit.
(29:43):
So you have to make these judgments on the quality
of a product. We make the same kind of decisions
on sustainability, and you try to objectively make these into
a framework how much money can I spend? How much
money will my customer be willing to afford? In the
same way, we try to objectively arbitrate these decisions when
it comes to whether this is going to make a
(30:04):
strong enough environmental impact for us to absorb the additional
cost on two and and the way we objectively view
that is through what we believe is the best estimate
of the social cost of carbon and carbon emissions. All
of that has been estimated. Most people believe it to
around fifty bucks. We try to target about a hundred
bucks per metric ton of carbon diox that equivalent emissions
(30:25):
into the atmosphere. If it's above or below, that line
helps us make that trade off, and we've inextricably linked
our value to customers, so it's not just a cost conversation.
But we know that if we launched a product and
it doesn't have a hero material that's derived from nature
and it makes them perform better or feel more comfortable,
we are not delivering on the promise. So this is
it's a non negotiable for us, and we try to
(30:47):
objectively arbitrate this just like you would quality and cost conversations.
Does being publicly traded ever create pressure to compromise on
any of those values, you know, going back to that
alignment of financial outcomes and an environmental impact, It really
doesn't get in the way for us. If tomorrow we
(31:08):
came out with a fully plastic shoe that was made
from all synthetics, like sure, maybe some people would buy
it for a while, but like the house of cards
would come down quickly in that case, so just feel wrong.
Kill it would feel wrong of course, So it doesn't
get in the way, um in that sense. And we've
always had the view that every time we've ever taken
(31:29):
money from anybody, friends and family, venture capital people, or
public investors, we have been very, very transparent and clear
about how we're established as a company. You know, we're
we're incorporated as a public benefit corporation with our public
benefit being environmental conservation equal in our responsibility to our
fiduciary responsibility. So you know, it's it's all out there,
(31:52):
like it's all legal. Everything we do comes from our
orientation around meeting this like critical and important consumer or
trend of associating what you consume with your values around
the environment. Yeah, that's incredibly inspiring. Use the phrase public
benefit corporation, and sometimes it's it's a little confusing because
(32:13):
public benefit corporation that designation gets wrapped up or confused
with being a B corp. And you are both, as
I understand it, that's right. Could you just help us
understand the difference between those two things. So a PBC
a public benefit corporation, is a legal framework and it
allows us as management team of the company not only
(32:36):
to do things on behalf of the stated public benefit
in our case environmental conservation, it actually implores you to
and and you actually haven't have an obligation to support
environmental conservation because that's our public benefit in the same
way that you have an obligation to protect the interests
of your shareholders. That would be called a fidy share responsibility.
(32:56):
And so because those two things are legally entwined, the
reason we did that if Tim and I are no
longer with this business, the next management team would also
have to have that obligation because it's truly inside of
the legal charter of the company, and you'd have to
have two thirds of your shareholders approve any kind of
change to that. And if we're no longer here, it
(33:16):
lives on. The B corp on the other hand, is
largely an assessment tool. It's a one size fits all
test that compares how All Birds does versus how the
local grocery store does, the local bedego whatever. Everyone can
be a B corp and so it asked you questions
about everything under the sun around wages and social impact
(33:37):
of your supply chain and environmental issues and a whole
bunch of different things. And it says, are you a
balanced stakeholder led company where you are attenuating various issues
for all stakeholders, not just whatever your public benefit is
on your PBC and corporation documents. It's quite a bit
of work. Yeah, it's very becoming a corp. It's like
(33:59):
very very very very extensive. And I'm proud to say
that every time we take the assessment, our scores get
better and it helps hold us accountable to being good
to all stakeholders, employees, supply chain partners, customers, the environment,
all the above. That's great. I have one or two
final questions to ask you. First of all, on calling BS,
(34:22):
we define BS as the gap between word indeed, and
we have a tool that we use called the BS
scale where we rate organizations on that gap, zero being
the best zero gap between word indeed and a hundred
being the worst basically total BS. So, taking into consideration
that you're on a journey, nobody's perfect, where would you
(34:45):
rate all birds on that scale today? UM, I'm gonna
I'll answer the question, but let me qualify my answer.
I would I would put our industry that we operate in. First,
I'll say, to give a contextual is this, I would
put it at like a like a eighty. There's worse
(35:05):
industries out there. There's like, you know, single use plastic
baggy companies that say they're sustainable. So so Sho's shoe
industry is not the worst in the world. At your
BS gap meter, I give our industry and a D
and I would put us probably at a twenty. But
I think we should actually talk about what we do,
maybe even more than we talk about it, because I
(35:25):
think that people inside our organization have a lot to
be proud of because of how rigorous and intellectually honest
we approached the idea of making sure that our our
impact is positive and that every time we sell a
shoe and you choose to buy All Birds instead of
some other brand out there making shoes, you're doing something,
even if it's a small thing, you're doing something very
(35:45):
positive for the environment, and hopefully you'll love the product too. Joey,
this has been a great conversation. I really appreciate you're
spending the time with us today. So um, thank you
for being here. Yeah, thank you so much for them.
It's a topic you're talking about time. I appreciate you
do in your work. Oh, I appreciate that. Thanks. I'd
(36:08):
like to end the show today by giving All Birds
an official BS score. The scale goes from zero to
a hundred. Zero means zero gap between word indeed, and
a hundred means the gap is huge total BS. So
you've heard Joey give himself a twenty. That's a low score,
and based on what I've heard today, I'm going to
(36:31):
agree with them because though the reality is no company
is perfect, All Birds has done so much to bake
their purpose right into their business. To weigh in with
your thoughts, visit our website Calling Bullshit podcast dot com.
You'll be able to see where All Birds ranks on
(36:51):
BS compared to the other companies and organizations we've featured
on the show. And if you're starting a purpose led
business or your think king of beginning the journey of
transformation to become one, here are three things that Joey
said that you should take away from this episode. One,
(37:12):
like Simon Sinex says, find your why. Your why is
the animating purpose that will inspire you, your employees, and
your customers. And your why is the real description of
the business that you're in. When Tim and Joey walked
the hills of northern California, they realized it wasn't the
(37:32):
shoes they were passionate about. It was making better things
in a better way. All Birds is a sustainable materials
innovation company that happens to make shoes. Your why will
be different, of course, but make sure it describes the
reason your company actually exists. Often, like All Birds, a
(37:53):
good why doesn't even mention the product you make. Two,
your business model really matters. In a truly purpose led company,
your business model and your purpose are aligned, meaning the
more of your products that you sell, the better off
society in the world will be. As Joey said, when
(38:14):
purpose and business model align, your business actually resonates more
powerfully with customers, employees, and suppliers, and it makes your
job as a leader much easier. Three. Define the metrics
that matter. Purpose led businesses strive to make a positive
social or environmental contribution to the world. Measuring that impact
(38:38):
and tying it to remuneration at every level of the
company is key. As Joey said, if All Birds doesn't
hit their carbon reduction goals, then he and tim don't
get paid. Your impact goals may be different, but defining
them clearly and tying them to financial reward will get
everyone in your company aligned and inspired. Thanks for joining
(39:03):
us today, Joey, and thanks to the whole All Birds
team for helping make this episode happen. You can find
Joey's social media handles in the show notes, and if
you have ideas that we should consider for future episodes,
you can submit them on the website too. And if
you thought this episode was all right, rate and review
(39:26):
us on Apple Podcasts and subscribe on the I Heart
Radio app, Apple Podcasts or wherever you get your podcasts.
And thanks to our production team Hannah Beale, Amanda Ginsberg,
Andy Kim d s Moss, Hailey, Pascalites, Parker Silzer, Basil Soaper,
(39:46):
and me Jehan Zulu. Calling Bullshit was created by co
Collective and is hosted by me Time montegu Thanks for listening.
Welcome to Calling Bullshit, the podcast about purpose washing, the
gap between what companies say they stand for and what
they actually do, and what they would need to change
to practice what they preach. I'm your host, time Ontogue,
and I've spent over a decade helping companies define what
they stand for, their purpose and then help them to
(00:27):
use that purpose to drive transformation throughout their business. Unfortunately,
at a lot of organizations today, they're still a pretty
wide gap between word. Indeed, that gap has a name.
We call it bullshit. But, and this is important, we
believe that bullshit is a treatable disease. So when the
(00:47):
BS detector lights up, we're going to explore things that
a company should do to fix it. This episode is
our second positive case study, when we do a deep
dive on a purpose led company that we think is
getting it right. Today, All Birds. We're going to talk
(01:13):
to All Birds co founder and co c e O
Joey's Willinger about what it's like to run a purpose
led business and ask him what works, what doesn't, and
how he thinks about the future. Before we get to Joey,
let's catch up on the All Birds story. Sneakers have
(01:34):
come a long way. Since their invention in the eighteen
hundreds and since the fifties, sneaker companies have touted a
variety of technological innovations. Here fiers with a magic wedge
that helps you run your fastest and jump your highest
look the ground rip and tread on red ball jets
gets you off like a rocket stops you on a dime.
(01:55):
The exclusive arch guard supports your foot, puts comfort in
spring in every the rebop pump when I pop up
my size thirteens get support, protection and a custom fit.
So Michael, my man, if you want to fly first class,
pomp up an air out today. There are a multibillion
dollar industry start to jump over the one d billion
(02:18):
dollar mark in a few years. But one place innovation
has been sorely lacking is in materials. Most sneakers are
full of petroleum based foam and plastics, non biodegradable, with
a high carbon footprint, so they're pretty hard on the
planet environmentally. The fashion industry enter Tim Brown, native New
(02:42):
Zealander and former professional soccer player, who had worn more
than a few sneakers in his lifetime, Tim new sustainability
was an important issue for the future and for customers,
and he found a way to move sneaker materials away
from oil. His first innovation, wool. Tim got a grant
(03:04):
from the New Zealand Wool Trust for his concept and
developed it further during an entrepreneurship course, but the professor
pulled him aside and told him his sustainable sneaker was
a terrible idea and suggested he just put it on Kickstarter,
where he assumed it would tank quickly. Here's Tim in
that original Kickstarter pitch video. You can't grow up a
(03:27):
kiwi and I understand how good wool is. It's tough,
regulates temperature, reduced the smell, wicks away moisture, and importantly,
as a sustainable and bidegredible resource. We need you will
help to shake out the shoe industry and take New
Zealand wool and we'll run us to the world. He
began the campaign hoping to raise thirty dollars, but within
(03:51):
just five days he'd raised over a hundred and twenty
thousand dollars. But there was a good reason that making
wolves aakers had never been done before. It was really hard.
Enter Joey's Willinger, a materials engineer and one of Tim's
early Kickstarter customers. Joey had focused his whole career on
(04:14):
making environmentally friendly materials, but kept running into people who
just didn't get it. I had this just recurring nightmare
of a meeting. Every time I'd get advanced discussions in
business development with with customers and potential customers, it would
devolve into this sourcing conversation of can you just do
what we do now and just do it cheaper? Every
single time, I was like, you guys are missing the
(04:35):
big picture here, like the consumers do want this. Tim
and Joey met through their wives who were roommates in college,
and they hadn't even considered a potential partnership until Joey
invited Tim to visit him in California to talk about
the idea that would soon become All Birds. We spent
(04:55):
like three days really walking around the hills just north
of San Francisco talk king about why the world needed
an issue company. I'd come out of this career in
sport that you know, I'd unlocked this incredible amount of
meeting and playing for my country, and I found myself
in my first real job post business school making shoes,
(05:16):
and I didn't really know why. And I think the
best thing about that meeting was it unlocked out why.
It wasn't just about disrupting the shoe industry or creating
a comfortable sneaker. It was about creating a direct consumer
brand and business that made sustainability a non negotiable. So
(05:37):
they got to work engineering a sneaker made of wool
and fundraising. In sixteen, they raised seven point to five
million dollars from investors like Leonardo DiCaprio and Mavron, and
they used that money to launch their website selling the
Wool Runner, a sneaker that was soon recognized as the
(06:01):
world's most comfortable shoe by Time magazine. By the next year,
the company had fifty employees in their San Francisco headquarters,
forty in its Nashville warehouse, and three fifty contractors in
a factory in South Korea. And as they grew, they
didn't stop innovating. In March, All Birds launched a sneaker
(06:23):
made from South African eucalyptus fibers, called the Tree Runner,
the first shoe to receive certification from the Forestry Stewardship Council.
Then All Birds invented a foam derived from sustainably sourced
sugarcane rather than petroleum based plastic, that they called Sweet
Phone and now sweet Foam is used in all of
(06:44):
their shoes and I absolutely love this. They open sourced
the recipe for sweet Foam to encourage other footwear companies
to use it too, and instead of being upset when
All Birds copycats showed up on Amazon, Joey's Willinger wrote
an open letter to Jeff Bezos challenging him to copy
their materials and their environmental commitment to funny Amazon never responded.
(07:12):
In August of All Birds moved into apparel, starting with
socks made from yet another material innovation, Trino, a mixture
of marino wool and eucalyptus tree materials used in their footwear,
and they've recently launched a new material made of crab
shells called XO like Exo skeleton. In November, All Birds
(07:37):
went public under the symbol b I r D. The
stock initially surged, valuing the company at four billion dollars.
So how do we make more stories like this one happen?
I asked All Birds co founder and co CEO Joey's
(07:59):
Willinger to tell us what he's learned about being a
leader in environmental manufacturing and running a purpose native company.
That conversation after the break, I am very excited to
(08:20):
introduce the co founder and co CEO of All Birds,
Joey's Willinger. Joey, welcome to calling Bullshit. Thank you so
much for having me. I'm glad i'm here. I'm glad
to be talking to you. I would love it if
we could just start out and learn a little bit
more about your background. Sure, winding all the way back
(08:41):
to upbringing, I had two very socially conscious parents and
not particularly environmentalists, but pushed me in a direction of
making sure they didn't care what I did. They just
wanted to instill in me that I had to do
something that contributed a little bit broader than my family
or myself for certainly for just money or something like that.
But they did help push in a good direction with
a high level of curiosity. And I was an engineer,
(09:04):
and that got me really interested in exploring innovation and
a whole bunch of different opportunities, which not knowing business,
I was like, okay, let's go get a basic education
out there and did consulting and then I did a
little investing in early stage companies through a venture capital firm,
and that that really was the first time I got
introduced to entrepreneurship in its true form, and I I
(09:24):
was thrilled with it, and I started to fall in
love with the idea that you could do so much.
I had so much dynamism in entrepreneurship, that you could
create the rules yourself and create this little organism of
a culture and make an impact on the planet that
was so significant with a little bit of creativity, uh
and a great team. Around that same time, I also
(09:46):
realized that the biggest crisis that was facing our species
of truly existential crisis. That was a very big moment
for me where I realized I wanted to dedicate my
professional life to doing as much as I could for
the environment. That sent me down a path, and I
think entrepreneurship was so interesting that I started hunting down
(10:06):
the path. I joined a company called Solos I'm as
a result of that, which was a biotechnology company where
we engineered micrology to replace petroleum, so basically a carbon
neutral version of any kind of petroleum derivative, whether it
was fuel or chemicals or even cosmetics. Ingredients. I ran
that the chemicals group, so I was replacing petro chemicals,
and I was I was out there doing tons of
(10:27):
business development, trying to design molecules that could outcompete petro
chemical and do it on a zero carbon emission basis,
and everyone was so excited about it. And then they
just passed me to the sourcing guy at their company,
and that person just asked me to do whatever they
did then cheaper, and that was very frustrating. That was
where I realized that politicians were lagging and consumers were
(10:48):
going to lead the way. I was convinced of it
that consumers wanted a no compromise offering for whatever the
product they were buying and consuming, they wanted it to
be amazing. And if it was shoes, could you imagine,
You're just there's twenty billion pairs of shoes every year
bought and sold, and they are made with plastic. Almost
every person you look around the street is wearing a
(11:08):
pile of plastic. That's all they are. And it's just
mind blowing to me, the dissonance between what I knew
the consumers wanted and what the brands were making. So
I thought there was just an opportunity. I didn't know
it was going to be sneakers. Unfortunately, my my night
and shining armor was Tim Brown, my co founder, who
swung in with an idea with the wool shoe, and
we really connected on the idea that this could be
a really big platform and a really big opportunity as
(11:30):
a business opportunity, but also to lead on environmentalism in
this space. Yeah, that, let's pivot to all birds. How
do you guys articulate all birds? Purpose? We say, make
better things in a better way, and I'll unpack it
a little bit. Making better things we say that first,
and that means that whatever you're using it for. In
our case, if it's shoes, it needs to be more comfortable,
(11:53):
look better, help you perform better. If you're using them
for athletics, they're just better and done in a better way.
For us, is about helping to reverse climate change. If
the planet has a heart, it's it's Climate change is
the issue that that is most analogous to helping you
as a human stay alive. It's it's the heart needs
(12:13):
to beat, and if our climate goes away, that is
existential problem. So for us, it's all about helping to
reverse climate change, and so we measure everything deeply against
that purpose. Yeah, it is the issue of our time.
How do you guys think about the let's call it
the dominant system that all birds is trying to improve upon.
Oh man, it's like a drug. We're competing with the
(12:35):
system of this drug of fast and sheep synthetics. And
for a hundred years since Rockefeller did a great job
and found kerosene to light lamps and then turn it
into fuel for Ford's to you know, model ts. Since
that time, chemical engineers, very smart people have been working
(12:56):
with all of their energy to squeeze out another dollar
from the barrel oil. And there's a lot of heat
and pressure and chemical engineering expertise that goes into squeezing
that last value from the barrel of oil to make
chemicals and cheap synthetics. And what that has resulted in
is an industry that relies exclusively on polyesters, nylons, synthetic
(13:17):
foams from petroleum, and then cow leather as well, which
are all horrific for the environment. It's a terrible direction
in terms of its contribution to global warming and and
twenty billion pairs each year. There's a lot of feet
out there. That's how much are consumed every single year.
So this is this is the system that we are
disrupting against. We are creating a system. We call it
(13:38):
vertical retailing, but everything is sold directly to the consumer.
We connect that to our innovation model where we unlock
this amazing customer experience so better products. And we do
that on the backs of highly evolved and naturally derived
innovations things from fibers, from nature, green chemistry, you know,
a whole bunch of different processes that unlock amazing value
(13:59):
for consumer us without denting the earth. Yeah, it's incredibly
impressive what you've done with materials, and I do want
to get deeper into that too. But just to kind
of level set, what is the carbon footprint of the
average sneaker, the plastic ones that you guys are trying
to replace. Yeah, so the average sneaker, best we can estimate,
(14:20):
and most most of the legacy companies in our in
our category don't disclose this information, so best that we
can calculate this, and we've run our own models on
what we estimate too as well as seeing the disclosures.
Is about fourteen kilograms of carbon dioxide equivalent emissions, and
I say that kind of jargon ee sounding word. But
C O two E, which i'll refer to for the
(14:41):
rest of this is is just carbon or carbon dioxide.
It's not just carbon dioxide. It's also methane or other
greenhouse warming gases, and they're multiplied to kind of show
the greenhouse warming potential of that emission. And we package
that all into a single metric So it's about fourteen.
And just to give you what that means and context,
hamburgers about six kilogram of tomatoes about two point two
(15:05):
pounds of tomatoes in the grocery store. That's about nine emissions.
So a sneaker is fourteen on average, and the ones
that we make are typically under ten. Right, I noticed that.
Hang on, sorry, I just wanted to show you. I
just got my first pair nice and I did see
you know your purpose on your box, which was cool.
You also labeled the carbon footprint right on the shoe,
(15:28):
which I thought was interesting. We wanted to understand our impact,
so we had to develop our own tools so that
we could measure down to the gram of carbon dioxide
emissions what we were doing across the whole life cycle.
That means from like the farm to the consumer and
even through their use phase and end of life of
that product. So we had to develop a pretty sophisticated model.
(15:50):
Once we understood the impact, we decided we would be
carbon neutral. So we went through and created the strategy
to try to get down to zero carbon emissions ourselves.
But along the way we had to know what it was. First,
we had to start to reduce it from all our
internal activities, and then we also had to offset it
along the way, so we made it carbon neutral. We
then released the tool publicly and we also started labeling
(16:11):
our products around the same time, and we decided that
singular metric is best analogized by calories on the back
of a food label. It's a way to contextual, as
in a simple single metric, your impact on whether you're
contributing and exacerbating the problem on climate change or you're
helping combat it. So we wanted that accountability on the company,
and we wanted it put it on right on the
product so that everyone could start to evaluate quality of
(16:34):
product and price of product and also the environmental and
climate change impacts. And now now there's a way for
people to do that. We hope a lot of people
copy us, which is why we we kind of open
source and release this tool to the industry. That's awesome.
I love that. And in a way, you know, when
as I was reading about you and watching some videos,
it really does seem like you're a materials innovation company
(16:58):
as much as you are a shoe and apparel company.
Like you've developed brand new materials like tree and sweet foam,
great names, by the way, can you talk a little
bit about those those innovations. That is how we think
about ourselves actually, Like the reason for being for us
is innovation on naturally derived materials. We think about ourselves
as a purpose native company, meaning we established this company
(17:21):
with the idea that we would use it so that
every shoe we sold and every dollar we made in
revenue was going to increase our environmental impact in a
positive way. So that alignment between mission and financial outcome
was essential for us. And so the only way we
could get at that is to focus and constrain our
research and development process to naturally derive low carbon intensity materials.
(17:46):
And so every new innovation that we go and look at,
it's got to do four things. It's got to be
amazing for the consumer, it's gonna just feel better. That's
the first and foremost the most important thing. The second
is that it's got to be a reasonable cost, because
you know, we have to deliver this at an approachable
value for customers. We have to have enough of it
in abundance so that it's durable, sustainable, and we can
(18:09):
make a lot of shoes out of it. And lastly,
it's got to be very low carbon intensity, and and
the best way to do that is to take the
best of nature and in a highly renewable fashion and
package it into a shoe that that does all those
great things that we try to do. So Tree was
a wonderful example where we use Forest Stewardship Council certified
(18:32):
eucalyptus fibers to make the uppers of our shoes. Sweet
foam is such a special one. We we knew when
we started the company. We really we wanted to be
very good and a big hole with the bottom of
the shoe, the soul and in the entire foot where
and all of it is made from petroleum. And we
knew from my background, we knew we had an opportunity,
particularly if we convinced this one company down in Brazil
(18:55):
to take the waste stream of sugar cane processing and
convert that through a number of biotechnology and the chemical
steps that we could actually replace the most ubiquitous foam
and all of the footwear industry. It's a it's a
chemical called e V A and and you can take
that and you can make it from the waste stream
of sugarcane processing, which actually makes it, in carbon accounting,
(19:17):
a carbon negative material that actually absorbs more carbon out
of the atmosphere than it takes to create it, So
you're a net positive every time you use this component.
And so we we use that, and we then we
converted into a foam which we call sweet Phone, and
we open sourced that based material to the whole industry
because it's so ubiquitous and using such high volumes in
(19:38):
the sneaker industry that if everybody used it, the planet
would be wildly better off, and it would also drive
the cost of that material down, so it would be
a win win for everybody. And so that kind of
collaborative approach to sustainability is often better than the traditional
super competitive method of innovation I P. Protecting. So you
(20:00):
and source these materials, so these materials are available. Yeah,
with our partner brass Can, we we co developed this
thing and then we we open source to everybody. And
some big brands are using and a lot of small
brands are using, and there's a lot of brands that
have yet to use it, and shame on them. You
should use it. Yeah, completely agree. That's that's super cool
and and obviously wool is also a huge part of
(20:22):
your proposition. So why wool, Well, you know, Tim is
from New Zealand and there is a lot of sheep
in New Zealand, a lot of sheep. There's like thirty
million sheep and a whole bunch of those of marino sheep,
and so Tim had a indoctrination from that bringing in
in the value of wool, and marino wool in particular.
It's a miracle fiber. It absorbs moisture and you don't
(20:45):
feel damp when you're wearing. It regulates your temperature, it
feels incredibly soft and touch and it's got some like
great strength characteristics. And it's not only is it wonderful
for all of those attributes making it an incredibly comfortable product,
but it's also from nature and particularly when you utilize
regenerative farming practices, which is one of our biggest initiatives
(21:06):
to push all the farmers we work with in New
Zealand and beyond to use regenerative farming practices. This too,
can be a carbon negative material, and so that the
power of harvesting wool in a regenerative manner and packaging
it into a product that feels better, performs better is
that magic sweet spot of where all birds exist and thrives.
(21:29):
Do you think leading a purpose led business is harder?
I asked that, because, for instance, you have a lot
more stakeholders to think about than the CEO of, for instance,
a traditional company who normally just thinks about shareholders. It's
an interesting question. I've never really thought about that, but
I kind of think it's easier. As long as you
(21:51):
intelligently designed the business system so that you're truly purpose native,
where which I define as as the financial and impact
incentives are exactly aligned, then I find it easier because
it's a tool that I use so much to make
sure that the purpose is resonating with our consumers so
(22:11):
they gravitate to our products more. The purpose resonates with
our employee base, so we get amazing talent. You know,
the purpose frankly resonates with our investors, like the the
idea that you can allocate your capital as a capital
allocator against opportunities that both make money and make great
impact on the world. These are all super aligned. So
(22:32):
I I find that the paradigm that is often assumed,
which is that these stakeholders are inherently intention is a
legacy of how business has skewed too far in one
direction around profit only and forgot that we all live
in a system. And so I find it quite a
lot easier. It's the tool I leverage the most great answer.
(22:53):
So at some level, proclaiming that All Birds is a
purpose led business makes the company target. Even if by
comparison you're a beacon of hope in your industry, do
you ever feel that pressure? Sure, And look, we try
to be very careful to say, uh, and we're pretty
(23:13):
clear about this that we are not perfect, like, but
there's lots of holes in what we're doing. You know,
the fact that we are above zero carbon emissions for
the products that we make means that we're not doing
a great job against our mission. Yet, like we need
to keep running super hard and working every day, which
is what we do to make amazing products that people
love and want to spend their money on and that
(23:33):
make a lower impact. Yet at the same time, there's
a lot of different perspectives on what ideal looks like
from an environmental perspective and what you should be fighting
for recyclability, circularity to others, it's climate change that lots
of people have a definition of of what this is.
So you're always exposed and when you put your neck
(23:54):
out and try to take a leadership role in anything
in life, people want to shoot you down when you
get up to a certain level. That's part of the job,
and I'm completely comfortable with that and also comfortable knowing
we may make some mistakes and all we can do
is transparently describe what we're doing and why we're doing
it and what our views are. And then you know,
(24:14):
it's up to consumers or other people to to make
a judgment on whether they believe in what we're doing
or not. I will humbly submit that I think we've
done a very good job of creating a system that
is logical and ladders up to making a very positive
impact on the most important problem our species faces, and
we do a lot of disclosure, you know, just as
(24:34):
an example, we're a public company. We do earnings calls
where we talked to investors every quarter and in the
beginning of the year. Typically a company, a public company
will give guidance for the next year on what you're
gonna do for your financial targets, what's revenue gonna look like,
what's profit going to look like. We also gave a
carbon reduction target in our earnings called guidance, and as
(24:57):
far as we know, we're the first company to ever
give a carbon reduction goal for what we're gonna do
in our R and D process to drive down carbon
emissions of our products throughout the next year. And that's
all aligned and budgeted against our goal to be a
zero emission company without the use of any offsets. That
gives you a sense of how we put ourselves out there,
(25:20):
how we try to drive accountability, how we try to
be authentic leaders and admit that we're not going to
be perfect all the way, but show people why we're
doing it and how we're doing it. It's interesting. I
want to dig into that for just a second because
it feels like in let's call it old school business,
transparency was something to be afraid of, Like you were
supposed to hide your flaws. You had to present this
(25:43):
kind of facade to the world that everything is perfect.
You're just making me think like being transparent in a way,
it's the best defense, right if you call yourself out
on things before anybody else does, you're sort of pre
disastered in a way to deal a line from the world.
According to Garb, like the worst has already happened in
(26:04):
a way, great great booked. Yeah, well, you know, I
I think there's another factor that contributes to that trend
that you're identifying is that information spreads more quickly than
it ever has. So if you're out there and you're
saying something to a consumer that becomes untrue your the
ability for your reputation to be snapped immediately is so
high and will happen so fast that you'd be a
(26:26):
fool not to be authentic and transparent in this environment,
because at some point that you know, the music stops
and and and that's when the dancing stops. All Birds
began as a purpose led business, but there are a
lot of companies that didn't begin that way that are
now trying to figure out how to make the transitions.
(26:46):
So what advice would you have for the c e
O s who are just beginning their purpose led journey. Yeah,
it's a great question because I do empathize with that situation.
You know, there's a lot of businesses that have been
around long before it was practical to be an environmentalist
in business, and long before even environmentalists got their hands
(27:07):
around what the problem looks like and how severe this is.
But that doesn't give an excuse for not acting with
extreme urgency right now. And I guess the thing I
would point to the most is that alignment of financial
outcomes with impact outcomes. And you know, corporate social responsibility
CSR is an acronym that's thrown around a lot that
(27:28):
to me often trivializes what businesses need to do in
terms of creating a truly purpose led enterprise. The reason
I'll say that is because CSR is often an appendage
that's off to the side of the business, and it's
it's saying, Okay, now we've made our profit, like, let's
do some philanthropic giving to this group that we think
(27:50):
is going to make a splash for consumers or make
our employees feel proud to work here. Whereas typically companies
who make products, sixty plus percent of the impact that
they make on the environment is born out of those
products and the materials they source to manufacture that products,
and the transportation and all that stuff. Focus on fixing
that for anyone that makes stuff, fix that and make
(28:13):
sure that it ladders up to the metrics that mean
the most. And so I would say, act with urgency,
act with purpose, create a system of incentives, even incentivize
the people who lead the business like these systems need
to be laddered up. So I told you that carbon
emission reduction goal that we stated alongside our financial guidance.
I'm paid on that. If we don't hit those reduction
(28:34):
targets for carbon emission, I don't make as much money.
And same for all of the executives and and and
leadership team at all birds. We've done it all the
way down to that human level, and it all matters.
You've got to have this system with a singular or
simple set of metrics that you can manage a company
to just like your financials, measure your impact on that
and drive results. Yeah, No, I agreed, effort follows money,
(28:56):
just following the thread of money for a second, there's
people who ding purpose led companies because some folks claim
that you have to make a choice between purpose and profit.
In your mind, does being purpose led mean being somehow
less competitive or somehow having more modest financial goals? No,
(29:20):
let me let me reframe that for you. If you're
making a product, Let's say you're making a T shirt
and you have the opportunity to use super high end
fabric that feels incredibly comfortable, drapes perfectly, gives everyone the
perfect fit, but it costs a ton of money. Do
you use it or not? Some materials cost more, some
materials cost less, and you still got to make a profit.
(29:43):
So you have to make these judgments on the quality
of a product. We make the same kind of decisions
on sustainability, and you try to objectively make these into
a framework how much money can I spend? How much
money will my customer be willing to afford? In the
same way, we try to objectively arbitrate these decisions when
it comes to whether this is going to make a
(30:04):
strong enough environmental impact for us to absorb the additional
cost on two and and the way we objectively view
that is through what we believe is the best estimate
of the social cost of carbon and carbon emissions. All
of that has been estimated. Most people believe it to
around fifty bucks. We try to target about a hundred
bucks per metric ton of carbon diox that equivalent emissions
(30:25):
into the atmosphere. If it's above or below, that line
helps us make that trade off, and we've inextricably linked
our value to customers, so it's not just a cost conversation.
But we know that if we launched a product and
it doesn't have a hero material that's derived from nature
and it makes them perform better or feel more comfortable,
we are not delivering on the promise. So this is
it's a non negotiable for us, and we try to
(30:47):
objectively arbitrate this just like you would quality and cost conversations.
Does being publicly traded ever create pressure to compromise on
any of those values, you know, going back to that
alignment of financial outcomes and an environmental impact, It really
doesn't get in the way for us. If tomorrow we
(31:08):
came out with a fully plastic shoe that was made
from all synthetics, like sure, maybe some people would buy
it for a while, but like the house of cards
would come down quickly in that case, so just feel wrong.
Kill it would feel wrong of course, So it doesn't
get in the way, um in that sense. And we've
always had the view that every time we've ever taken
(31:29):
money from anybody, friends and family, venture capital people, or
public investors, we have been very, very transparent and clear
about how we're established as a company. You know, we're
we're incorporated as a public benefit corporation with our public
benefit being environmental conservation equal in our responsibility to our
fiduciary responsibility. So you know, it's it's all out there,
(31:52):
like it's all legal. Everything we do comes from our
orientation around meeting this like critical and important consumer or
trend of associating what you consume with your values around
the environment. Yeah, that's incredibly inspiring. Use the phrase public
benefit corporation, and sometimes it's it's a little confusing because
(32:13):
public benefit corporation that designation gets wrapped up or confused
with being a B corp. And you are both, as
I understand it, that's right. Could you just help us
understand the difference between those two things. So a PBC
a public benefit corporation, is a legal framework and it
allows us as management team of the company not only
(32:36):
to do things on behalf of the stated public benefit
in our case environmental conservation, it actually implores you to
and and you actually haven't have an obligation to support
environmental conservation because that's our public benefit in the same
way that you have an obligation to protect the interests
of your shareholders. That would be called a fidy share responsibility.
(32:56):
And so because those two things are legally entwined, the
reason we did that if Tim and I are no
longer with this business, the next management team would also
have to have that obligation because it's truly inside of
the legal charter of the company, and you'd have to
have two thirds of your shareholders approve any kind of
change to that. And if we're no longer here, it
(33:16):
lives on. The B corp on the other hand, is
largely an assessment tool. It's a one size fits all
test that compares how All Birds does versus how the
local grocery store does, the local bedego whatever. Everyone can
be a B corp and so it asked you questions
about everything under the sun around wages and social impact
(33:37):
of your supply chain and environmental issues and a whole
bunch of different things. And it says, are you a
balanced stakeholder led company where you are attenuating various issues
for all stakeholders, not just whatever your public benefit is
on your PBC and corporation documents. It's quite a bit
of work. Yeah, it's very becoming a corp. It's like
(33:59):
very very very very extensive. And I'm proud to say
that every time we take the assessment, our scores get
better and it helps hold us accountable to being good
to all stakeholders, employees, supply chain partners, customers, the environment,
all the above. That's great. I have one or two
final questions to ask you. First of all, on calling BS,
(34:22):
we define BS as the gap between word indeed, and
we have a tool that we use called the BS
scale where we rate organizations on that gap, zero being
the best zero gap between word indeed and a hundred
being the worst basically total BS. So, taking into consideration
that you're on a journey, nobody's perfect, where would you
(34:45):
rate all birds on that scale today? UM, I'm gonna
I'll answer the question, but let me qualify my answer.
I would I would put our industry that we operate in. First,
I'll say, to give a contextual is this, I would
put it at like a like a eighty. There's worse
(35:05):
industries out there. There's like, you know, single use plastic
baggy companies that say they're sustainable. So so Sho's shoe
industry is not the worst in the world. At your
BS gap meter, I give our industry and a D
and I would put us probably at a twenty. But
I think we should actually talk about what we do,
maybe even more than we talk about it, because I
(35:25):
think that people inside our organization have a lot to
be proud of because of how rigorous and intellectually honest
we approached the idea of making sure that our our
impact is positive and that every time we sell a
shoe and you choose to buy All Birds instead of
some other brand out there making shoes, you're doing something,
even if it's a small thing, you're doing something very
(35:45):
positive for the environment, and hopefully you'll love the product too. Joey,
this has been a great conversation. I really appreciate you're
spending the time with us today. So um, thank you
for being here. Yeah, thank you so much for them.
It's a topic you're talking about time. I appreciate you
do in your work. Oh, I appreciate that. Thanks. I'd
(36:08):
like to end the show today by giving All Birds
an official BS score. The scale goes from zero to
a hundred. Zero means zero gap between word indeed, and
a hundred means the gap is huge total BS. So
you've heard Joey give himself a twenty. That's a low score,
and based on what I've heard today, I'm going to
(36:31):
agree with them because though the reality is no company
is perfect, All Birds has done so much to bake
their purpose right into their business. To weigh in with
your thoughts, visit our website Calling Bullshit podcast dot com.
You'll be able to see where All Birds ranks on
(36:51):
BS compared to the other companies and organizations we've featured
on the show. And if you're starting a purpose led
business or your think king of beginning the journey of
transformation to become one, here are three things that Joey
said that you should take away from this episode. One,
(37:12):
like Simon Sinex says, find your why. Your why is
the animating purpose that will inspire you, your employees, and
your customers. And your why is the real description of
the business that you're in. When Tim and Joey walked
the hills of northern California, they realized it wasn't the
(37:32):
shoes they were passionate about. It was making better things
in a better way. All Birds is a sustainable materials
innovation company that happens to make shoes. Your why will
be different, of course, but make sure it describes the
reason your company actually exists. Often, like All Birds, a
(37:53):
good why doesn't even mention the product you make. Two,
your business model really matters. In a truly purpose led company,
your business model and your purpose are aligned, meaning the
more of your products that you sell, the better off
society in the world will be. As Joey said, when
(38:14):
purpose and business model align, your business actually resonates more
powerfully with customers, employees, and suppliers, and it makes your
job as a leader much easier. Three. Define the metrics
that matter. Purpose led businesses strive to make a positive
social or environmental contribution to the world. Measuring that impact
(38:38):
and tying it to remuneration at every level of the
company is key. As Joey said, if All Birds doesn't
hit their carbon reduction goals, then he and tim don't
get paid. Your impact goals may be different, but defining
them clearly and tying them to financial reward will get
everyone in your company aligned and inspired. Thanks for joining
(39:03):
us today, Joey, and thanks to the whole All Birds
team for helping make this episode happen. You can find
Joey's social media handles in the show notes, and if
you have ideas that we should consider for future episodes,
you can submit them on the website too. And if
you thought this episode was all right, rate and review
(39:26):
us on Apple Podcasts and subscribe on the I Heart
Radio app, Apple Podcasts or wherever you get your podcasts.
And thanks to our production team Hannah Beale, Amanda Ginsberg,
Andy Kim d s Moss, Hailey, Pascalites, Parker Silzer, Basil Soaper,
(39:46):
and me Jehan Zulu. Calling Bullshit was created by co
Collective and is hosted by me Time montegu Thanks for listening.
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