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Fashion Forward (exist) - 0

Anh-Minh Le | March 1, 2018 | Story News and Features National

It was only a handful of years ago that Tim Brown remembers being at dinner parties and feeling some trepidation during the portion of the evening when everyone would go around the table and discuss what they were working on. “We’d get to me,” he says, “and I’d mumble something about wool shoes, and people would pat me on the head.” Lost on the other guests, perhaps, was that these weren’t just any wool shoes. The natural and renewable fiber used in their fabrication was part of a larger vision to “tread more lightly in the way that you make stuff,” says Brown. The shoes would also tap into the athleisure craze that he saw as “blurring the line between work and play.” Together with Joey Zwillinger, Brown would soon create Allbirds, a San Francisco-based footwear brand with an unconventional approach to everything from design to production to sales. The industry outsiders—neither had any previous footwear experience—launched their company two years ago with a single style (a lace-up sneaker), available exclusively on their own website, with no wholesale distribution (it remains an entirely direct-to-consumer operation).

Today, the reaction to Brown’s entrepreneurial idea—in social settings and beyond—is no doubt much more enthusiastic, as his business is already profitable, and the shoes, which often sell out, have been declared a staple of Silicon Valley wardrobes. Apple CEO Tim Cook, venture capitalists Ben Horowitz and Mary Meeker, and Google’s Larry Page are among those who have been spotted in Allbirds. “To fit into Silicon Valley, wear these wool shoes,” proclaimed The New York Times last summer. CNBC dubbed them “Silicon Valley’s favorite sneaker,” while The Seattle Times referred to them as the “latest Silicon Valley breakthrough.”

Hyperbole? Maybe. But a number of factors makes it easy to believe the headlines. There’s the first impression: a pared-down aesthetic that aligns with the Valley’s well-documented fondness for unfussy design. Allbirds’ uppers—the part of the shoes that cover your feet—are constructed of one piece of material, which means there are minimal seams, and the logo discreetly blends into the back of the sole. Comfort is the most prominent feature, though, with plenty of reviews supporting the brand’s assertion that it is producing “the world’s most comfortable shoes.” In the pages of Oprah magazine, Gayle King quipped, “I’ve never walked on a bed of marshmallows, but slipping on a pair of Allbirds sneakers must be the next best thing.” Then there’s Allbirds’ sustainability, manifested in its materials: The uppers are composed of merino wool; the shoe laces, of recycled plastic bottles; and the insoles, of castor bean oil. All of this yields a shoe that is lightweight, breathable and can be tossed in the washing machine. The wool used is ZQ-certified, a criterion that takes into account animal welfare; sourced from Brown’s native New Zealand; and milled in Italy. “We’re taking material that’s typically used in $5,000 suits, and we’ve put it in a $95 shoe,” Zwillinger says.

And, by the way, those $5,000 suits pair quite nicely with the $95 shoes. Just ask Dan Levitan, co-founder and general partner of VC firm Maveron, which led Allbirds’ Series A funding, and who was the startup’s first board member. “I wear a Brunello Cucinelli suit and black Allbirds with black soles,” he says. “I think that’s the world we’re living in today; it’s a high/low world. And when you’re lucky enough to discover something that has a luxury quality, but a more moderate price point, you feel smart.” During our conversation, Levitan talks about “the ride from obscurity to ubiquity”—the ability of a product to become ingrained in our lives. “I’d rather invest in any clothing company that the consumer wears once a week, rather than once a quarter,” says Levitan, who has Allbirds on his feet practically every day. (Maveron also backed fellow San Francisco apparel disrupter Everlane.)

Allbirds’ mantra is: “Better shoes in a better way.” According to its founders and investors, that means they are constantly improving their product. “I think many consumer companies in the last 30 years have gotten complacent,” says Levitan. “You create a product; it works; and many, many, many traditional consumer-focused companies never change the product.” Not so with Allbirds. Since the wool runner came out, it has undergone at least 27 design tweaks, including some that address concerns about the shoes’ durability (for example, honing the reinforcements). And there’s something completely new on the horizon: This month, Allbirds will roll out a shoe comprised of a plant-based material that the execs claim is even more sustainable than its merino wool. “The new materials and the new processes are going to be game-changers for the industry,” says Allbirds Head of Design Jamie McLellan. Zwillinger expands on this: “We think of ourselves a lot more broadly than a wool company or a shoe company,” he says. “We think of ourselves as innovators around material. And then we turn those materials into products that feel better and feel different.”

Nothing in Brown’s
or Zwillinger’s early careers hinted at future triumph as cobblers. Brown grew up in Wellington, New Zealand, where he excelled at soccer. He earned a scholarship and a spot on the University of Cincinnati soccer team, and went on to captain the New Zealand national team that competed in the 2010 World Cup in Johannesburg. While still playing professionally for his hometown team, Wellington Phoenix, he began exploring another trajectory: shoes. “I was sponsored by Nike and got tons of free gear,” he says. “Everything had logos. And the initial insight was that it was very hard to find footwear that was unadorned, that was simple, that was classic.” He visited a shoe factory in Indonesia in the offseason and had shoes made, which he sold to his teammates. Their feedback: The shoes were “rubbish.” As he continued to tinker with his concept for a better shoe—“as a side project, a curiosity project”—Brown was struck by how antiquated the shoe-manufacturing process was. “Everything was made out of synthetics and leather. Why are sustainable materials not being used here?” With New Zealand’s sheep population at roughly 27 million, wool seemed like an alternative worth investigating.

Around 2009, Brown “fell down the rabbit hole of this product,” he recalls. “I assumed I would go to the corner store and buy a woolen material that could be used for footwear, and, of course, it didn’t exist.” He applied for a grant through an agricultural research group and, much to his surprise, was awarded the grant, which he used to develop a textile. “I showed up to business school with this material,” says Brown, who, following his retirement from soccer in 2012, enrolled at the London School of Economics. There, one of his professors encouraged him to pursue the wool shoe idea (that professor is now an Allbirds investor).

Zwillinger, by contrast, was raised in Tiburon. He jokes that prior to Allbirds, he was “an algae oil salesman.” After collecting an engineering degree from UC Berkeley, and then an MBA from University of Pennsylvania’s The Wharton School, Zwillinger spent six years at biotech company Solazyme, where he examined ways to “take materials that everyone has pretty much ignored,” as he puts it, and use them to make products that perform better and are more sustainable. For example, algae oil can be turned into a polyurethane, a material that has traditionally been made with petroleum; through similar technology, castor bean oil can also transform into a polyurethane. With Allbirds, Zwillinger saw “a really interesting opportunity to take a leadership role and hopefully change the way the industry was thinking about manufacturing,” he says, “and even much broader than just the footwear industry, into lots of other industries, and how you make consumer products, and how you think about the product development cycle and what renewable sourcing means.”

Seven years ago, Brown and Zwillinger were introduced by their wives, who are best friends and were roommates at Dartmouth (Brown’s wife works at Google, while Zwillinger’s is an attorney). The two men’s friendship didn’t morph into a business partnership until several years later. In March 2014, Brown initiated a Kickstarter campaign for his wool sneakers. Zwillinger was among those who contributed to the $120,000 raised in just four days. But Brown, unsure if he could meet the demand given how much of the wool material he had on hand, shut down the campaign and took a step back to reevaluate. “What should have been a celebration was a moment of great worry,” he acknowledges. “It kicked off the worst year of this story really—trying to make this work.”

Toward the end of 2014, Brown received an offer from an investor. His gut told him it was a bad deal, but his wife suggested that he get a second opinion. Zwillinger confirmed Brown’s suspicions, and he subsequently passed on the offer. Soon after, Zwillinger invited Brown, who was living in London at the time, to come out to Marin County for a few days. They walked around the hills of Mill Valley. They talked shop—“why it was or was not a good idea to actually sink a large chunk of our careers and our energy into this,” says Zwillinger. Owing in part to an endorsement by Dave Gilboa, co-founder of eyeglass brand Warby Parker and Zwillinger’s Wharton classmate, Allbirds raised $2.7 million in a seed round led by Lerer Hippeau Ventures. Managing partner Ben Lerer, admits that it’s “very rare” for the outfit to invest so early, pre-brand and pre-launch. “You can just feel when someone has a real purpose in a brand that they want to build,” he says. “It’s easy to be cliche—lots of founders can talk about building brands that matter, building brands with stories. But we’ve seen enough of these deals that … we have a good track record of being able to sniff out when it’s really real. And these guys— from minute one—were really real.”

Allbirds officially launched March 1, 2016, with the wool runner in four colors. Brown and Zwillinger, who jointly hold the title of CEO, had four to five months’ worth of inventory—or so they thought. They sold out in less than a month. In spring 2017, they added a slip-on wool lounger to their offerings and opened their first store in San Francisco’s Jackson Square neighborhood, in the same building as their headquarters. In fall 2017, they established a retail presence in New York’s Soho district; debuted a children’s line called Smallbirds (“The name was too good,” says Brown about the expansion into toddler sizes); and announced another $17.5 million in funding, bringing their total to $27.5 million. “It’s been incredible,” says Brown. “No business plan could have imagined how it’s resonated with people.”

Although Allbirds has
been widely heralded as the shoe of Silicon Valley, its appeal is far-flung. According to Zwillinger, this past holiday season, the company sold to every ZIP code in the U.S. except two. (The biggest concentration of buyers? Not Palo Alto, but Brooklyn.) Its profile has no doubt been helped by the bevy of celebrities who are fans, including Emma Watson, Ryan Gosling, Julia Louis-Dreyfus and Rob Lowe. The latter recently shared with me that he gifted his father with a pair. “I said, ‘Dad, you’re not supposed to wear socks with them; they’re way more comfy without,’” recounts Lowe, whose father resisted the sartorial tip at first. “Then he did it and was like, ‘These are the greatest shoes that anybody’s ever given me!’” (As we spoke on the phone, Lowe noted that he was even wearing a pair of Allbirds sneakers at that moment.) The fashion industry has also taken notice of the shoes. Eva Chen, Instagram’s head of fashion partnerships, has sported the wool runner in natural white in her famous pose: selfies shot in the back of a cab that show off her shoes, handbag and fruit of the day. (For her, the sneakers mate well with Gucci and Chanel purses, as well as apples.)

During my visit to the Allbirds office, I mention to the founders that I’m allergic to wool. Still, Zwillinger encourages me to give their shoes a try. It’s not the scratchy kind of wool, he says, as he explains that the fiber the company employs is 17.5 microns in diameter. “The cheap stuff that you associate with hot, itchy sweaters is usually 23 to 28 microns. And those are really itchy because they have scales that are big, whereas our superfine merino feels like silk, but it keeps all the miraculous benefits of wool.” He even goes so far as to tell me: “I’ll put money down that you’re gonna feel great in [Allbirds] for a long period of time.” Challenge accepted. Worst case, I think to myself, I’ll have to make a trip to the store later for some Benadryl. But Zwillinger was right: My allergies were fine.

Not surprisingly, Allbirds’ popularity has led to copycats. In December, the company filed a trade dress infringement lawsuit against Steve Madden, claiming that its Traveler sneakers knocked off Allbirds’ design—right down to the embroidered eyelets. Consumers have picked up on the visual similarities too. On Amazon, one reviewer remarked that the Steve Madden shoes “are a rip off of Allbirds, but not as comfortable,” adding that the quality of the former is inferior, yet the price tag is relatively the same (the Traveler retails for $89). “They knocked off the look of the shoe; they didn’t knock off the environmental sensibility,” says Zwillinger of another significant differentiator. “The whole purpose of our business, if we do our job, is that other people will copy our techniques, [and] look at sourcing great materials. But they can’t just rip off our IP.”

Any money from a judgment in Allbirds’ favor will be donated to the National Audubon Society, a gesture in keeping with Brown and Zwillinger’s ethos (they also work with the charity Sole4Soles). It was important for the founders to charter their venture as a benefit corporation, or B Corp, which adheres to rigorous social and environmental standards—including for compensation, benefits and wages. Allbirds is now approaching 100 employees. With about 65 staffers in their 6,500-square-foot San Francisco office, they have outgrown the space and recently signed a lease in a nearby building that will offer 14,000 additional square feet and allow them to bump up the size of their retail store on Hotaling Place. More brick-and-mortars are slated to open this year, in places that Zwillinger describes as “obvious centers,” but declines to confirm exact locales.

As Allbirds marks its second anniversary, Levitan points out that it’s still “super early. They’re just beginning their journey.” As an investor, he says, he values founders who understand that “building a great, enduring brand is a process. … The real question is not how well does the runner do, but what other products can they find that resonate with the customer base and have the same … cauldron of passion.” Brown and Zwillinger are keenly aware of the opportunity in front of them. “This was something we were excited to tell our grandkids about,” says Brown of their mindset in starting Allbirds. “It’s that kind of challenge.”

Originally published in the March/April issue of Silicon Valley

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