Silicon Valley’s favorite sneaker brand is charting a path that many of its tech worker fans have walked before: the road to public markets.
Allbirds, the ecologically friendly shoe brand that’s wildly popular with the tech crowd and even actor-turned-tech-bro Ashton Kutcher, filed for an initial public offering Tuesday. With the IPO, the company is hoping to overcome a classic Silicon Valley quandary: being a wildly popular brand that hasn’t turned a profit.
Racing Against the God of Speed
Allbirds’ selling point is sustainability: its no-nonsense, simple designs utilize natural (and alluring-sounding) materials like eucalyptus fiber, castor bean oil, wool, and even crab shells. That’s enough to make any owner feel good about the carbon footprint of his or her footwear.
Initially limited to leisure sneakers, Allbirds branched out last month into athletic leggings and workout clothes made from merino wool and eucalyptus yarn. Those product lines put the company in competition with massively profitable and dominant athletic-wear behemoths Nike and Lululemon. But unlike its well-established rivals, Allbirds still has some legwork to do on the profitability front:
- Allbirds lost $26 million last year, well over its $14.5 million loss in 2019. And the firm is already $21 million in the red for the first six months of this year.
- The company’s revenue rose to $219 million in 2020 from $194 million the year prior, but hefty operating costs continued to drag down profit prospects.
Allbirds operates 27 stores in tech-friendly markets like New York, Shanghai, and Berlin, but 89% of the brand’s sales are digital. The company, valued at $2 billion, said the money raised from its IPO will pay for operating expenses, capital expenditures, and potential acquisitions.
Pearly White Profit: Allbirds could look to another up-and-coming consumer platform as a North Star of guidance. Quip, a dental care startup that offers advanced tooth cleaning products for home use, announced a fundraise of $100 million on Tuesday. With 7.5 million users and a service that can directly connect to 50,000 dental professionals, Quip has been profitable since April 2020.