Adidas, Allbirds sustainable sneaker is a ‘controversial way to join forces,’ Allbirds CEO says

Joey Zwillinger, Co-CEO of Allbirds, speaks with Yahoo Finance Live about collaborating with Adidas, reducing the carbon footprint for sneakers, developing plant-based leather alternative products, and how new products are expected to be released in 2022.

Video Transcript

BRIAN SOZZI: It's not often you see two sneaker companies join forces to collaborate on a product, but Allbirds and Adidas are trying to change that in the pursuit of making sustainable sneakers. After 12 months of teamwork and hard work, the pair is dropping the FutureCraft Footprint sneaker. It's being billed as a performance sneaker with as low a carbon footprint as possible.

Joining us now for more on this is Allbirds co-founder and co-CEO Joey Zwillinger. Joey, good to see you again. Thanks for taking some time this morning. Look, it's not often you see these-- a company like yours team up with, I would say, a rival to come out with a product like this. But is this sending a message to other companies in apparel that in order to drive the change in how products are made, you're going to have to join forces together and do things in unison?

JOEY ZWILLINGER: You know, Brian, that's exactly right. I think you put it really well there. It's about still fiercely competing for market share and stealing the attention of consumers, but collaborating when it comes to sustainability. I think it's acknowledging that the problem we're facing is just that it's vastly bigger than any single company can combat. And so coming together is a great opportunity to do this. We found it to be a controversial way to join forces with a competitor. And so far, so good. The first work product that you're going to see drop tomorrow is pretty incredible.

BRIAN SOZZI: Now what did Allbirds bring to the table here? I'm-- from an outsider perspective looking into what you do, I imagine Adidas tapped Allbirds really on its-- what you're doing in making sustainable footwear and apparel.

JOEY ZWILLINGER: Yeah, you know, look, there's a lot from both brands in the shoe and in the future products that we're going to come out with next year, too, with the broader commercial launch. But what you see there on the side of the shoe, 2.94, that's the kilograms of carbon dioxide emissions that is created in the production of that product, production and sale of that product. That's about half of the emissions of a Big Mac. The industry average is around 13 kilograms in emissions.

So this is an incredible breakthrough. And that's a lot of the innovation that Allbirds brings to the table. So we have built the company on a foundation of research and development around incredible materials that allow you to be comfortable, perform if you're running in this case, and do that all on the backs of nature so that we're taking the evolutions of naturally derived materials to create this amazing performance. And so we're able to bring that together. And we blend and fuse the design language from both companies. And we're really happy with the product.

JULIE HYMAN: Hi, Joey, it's Julie here. I was wondering about that 2.94. I'm glad you told us what was up there. So now do you apply that to all of your other new shoes? Are you going to be able to also get that number down for everything?

JOEY ZWILLINGER: Yeah, you know, we've actually been doing this since we started the company. So back in 2015, we started innovating around merino wool. We added something called sweet foam on the bottom of the shoe, which is the foam which actually is used in this product as well with Adidas and the collaboration, where we take the waste stream of sugarcane and we transform that using biotechnology in a number of green chemical steps. And we put it into a foam that's incredibly comfortable underfoot.

And so every time you step into a pair of Allbirds, the reason why they're so comfortable and they work so well is because of that R&D. So we've been doing that time and time again. This is a really nice evolution that we've taken as a step forward. And we're going to continue to use some of the learnings that we gained jointly with Adidas on this, but also a lot of the work that we're doing independently.

And so much exciting things coming out of our company in the coming 12 months. We've gotten performance side and our lifestyle side, and that's true now for footwear in particular, but also with apparel. As we go up the body, we're bringing some of these natural material innovations to bear on incredible second skin comfort. So this is the most exciting kind of 12, 24 months of product pipeline that we've put out. And it's all for that reason, Julie, for that material innovation.

JULIE HYMAN: Gotcha. Yeah, no, I'm definitely familiar with your guys'-- you know, sort of the way you operate and what you've done other shoes. I just wasn't sure numbers wise if it was quite as low as it is for this shoe. I'm also curious, you know, obviously, the shoes got to get to people, right? And frequently, you have some carbon output by shipping them around the globe. How do you guys think about that challenge, which is, it's obviously not a challenge-- just a challenge for you. It's a challenge for anyone making and shipping goods.

JOEY ZWILLINGER: Yeah, it is, and the effect of globalization has been that there's a lot of shipping across ocean. And when we do that, we focus on doing ocean transportation. It's still by far the lowest carbon intensity method of moving products around the world. And it's not just the finished goods going from our factory to the warehouses. What we're trying to be mindful of is the entire global supply chain.

So when you think about what we do, it starts at the farm level. We work with sheep in the case of Merino wool. We have eucalyptus fibers that we take. And we have to move each of these components and assemble them in a thoughtful supply chain, being mindful that the overall carbon footprint is what we're optimizing and trying to get to zero.

Now, of course, this starts with the consumer. We start with a problem that we're solving in terms of great comfort rate, style, and great performance. And then we utilize nature to drive that down to zero. So that's the purpose. And it's not just in the production. I'll just remind you it's about getting it to the stores, getting it to the homes of consumer in the case of our digital sales, and it's even the end of life of that product.

So everything is contemplated and put into that one number. We liken it to calories on the back of a food label, where you're thinking about I don't exactly know what a calorie is, but I know that if I want to burn it off, the higher the number, the more workouts I'm going to need to do. And same thing with carbon footprint. That's the way that we can be mindful of our impact on the planet while we're also consuming the product that we love.

BRIAN SOZZI: Well, I do know, Joey, I will not-- I am not one to be eating Big Macs, like you mentioned ago-- a lot of calories in those things. You know, I was spending a few hours trolling your latest investor deck. And a couple of things stood out to me. One, you're working on a plant-based leather alternative to hit the market next year. What is that going to look like?

JOEY ZWILLINGER: Well, I don't want to reveal anything too crazy here. But we are working really hard. We invested in a company called Natural Fiber Welding. It's out of Peoria, Illinois, actually. And they're using natural oils, things like plant oils and the like, to create an alternative to bovine or cow-based leather. We've always wanted to have sneakers with leather, but we never wanted to utilize that component from live animals.

And so what we've done is we've invested in this company and helped to co-commercialize and co-develop an alternative to bovine leather that performs exactly the same, is incredibly scalable, and will give us just such a compelling weapon in our arsenal to make products that are great. You can think of, if you look at this sneaker market, there's a ton of leather that goes around probably next to the foam material on the bottom of sneakers, the most ubiquitous component in the entire industry.

And so we've done it in a way where it's not only competing on a performance, but it's a 98% reduction in carbon. And this is where the win-win of our company kind of is such a great-- typifies what we've tried to do, which is, drive the carbon down, and at the same time, create this wonderful customer experience as a result of that. So you should expect to see something really exciting in the coming months from that.

BRIAN SOZZI: All right, sign me up for a pair of those plant-based shoes. And then secondarily, another thing I noticed, you want to broaden your footwear assortment. Now you know you recently introduced trail shoes, but when you say broaden the assortment, what does that mean? Does that mean Allbirds is going to get into boots, let's say?

JOEY ZWILLINGER: I think where we thrive and where we win is in the area kind of in that crossover phase of athletic performance and in a functional lifestyle gear. So you might not see us going down to the catwalk and probably not into the rodeo for cowboy boots. But we are really focused on this, that crossover and that intersection.

And so I think when you mentioned the trail shoe, it's a really great example. We opened it up and launched our first ever performance product that's called the Dasher, kind of a basic running shoe, do your 5, 10 Ks with, light workouts, Orangetheory, whatever you like to do. And then what we did was last year, or just recently, we introduced the trail shoe. That's a very specific use occasion when you're either hiking or running in the woods or whatnot. Amazing traction. We utilized brand new technology in that product. And it celebrates a whole bunch of different materials that we've done research on over the years.

And we see next year, the opportunity to really bring something compelling in the long distance street running. So this has to be lighter weight, utilize new technology to get incredible rebound. And this is what runners want. So it's just a slow, methodical march in the performance category of building credibility, using different use occasions and applying different materials to make those to be the best experience we possibly can be for runners. So this is just a methodical march down that line, and same mentality in the lifestyle space. So that's the kind of roadmap in how we developed this for the consumer.

JULIE HYMAN: Joey, finally, I want to ask you about your stock. You guys are trading below your debut price at this point. And, you know, you're saying all the right things, right? You're talking about growth. You're talking about your ESG sort of themes, which definitely hits the zeitgeist right now. And I don't know if it's because of more broadly what we're seeing in the market and sort of a more risk-off tone right now. But how much does that concern you? I mean, that's your capital right there, right, that is now in your currency, effectively, that is now going down. So what do you-- what message would you have to investors about that?

JOEY ZWILLINGER: Well, I think the investors that we joined up with at the IPO and prior to the IPO, we had a number of really wonderful institutions that were kind of crossover public and private when we were a private company. And our message has always been consistent. This isn't a quarter to quarter game. We're creating a global brand that we expect to be resonant with, hopefully, many, many millions of people around the world. And as we do that and as we methodically grow that, this is a long journey.

Fortunately, we're very well capitalized. We're not an acquisitive company, so we don't really think about our stock as currency in that respect. And for us, it's about hitting the numbers, building a phenomenal business financially, being true to our consumer and creating wonderful consumer experiences. And we think the quarters will follow.

And I would say, I really strongly believe that the stock market is a wonderful weighing function for the health of a company in the long run. But today, if it goes up 10%, I don't feel 10% smarter, and our company is not 10% better. And if it goes down, same thing. So I really have, fortunately, been surprised at how successfully I've done not looking at our stock price because really, it is the long-term. And check back with me in a year or two years, and I think we'll all be really happy with the results.

BRIAN SOZZI: Point well taken. We'll leave it there. Allbirds co-founder and co-CEO Joey Zwillinger, good to see you again. Good luck the rest of this holiday season.