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Calling Bullshit

Allbirds: Making a Material Difference

Calling Bullsh!t March 30, 2022 413 1


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Our guest

1525473070151 (1)
Joey Zwillinger

@allbirds

Co-Founder & Co-CEO of Allbirds

The sneaker company with a comfortable lead in sustainability.

Stated purpose: Make better things in a better way.

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.

If we don’t hit our reduction targets for carbon emissions, I don’t make as much money. And same for all of the executives at Allbirds. You’ve got to have this system with a simple set of metrics that you can manage a company to, just like your financials.

– Joey Zwillinger

Allbirds’s BS score is

Show notes

Episode Transcript

THEME MUSIC: “In Passage” by Migration

TY MONTAGUE (VO)   

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, Ty Montague. I’ve spent over a decade helping organizations define what they stand for — their purpose — and helped them to use that purpose to drive transformation throughout their business.

Unfortunately, at a lot of companies and organizations today, there’s still a pretty wide delta between word and deed. 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 BS detector lights up, we’re going to explore things that a company could do to fix it. 

TY MONTAGUE (VO)   

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 Allbirds. 

MUSIC: “Coulis Coulis” by Confectionery

TY MONTAGUE (VO)   

We’re going to talk to Allbirds Co-Founder and Co-CEO Joey Zwillinger 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 Allbirds story.

TY MONTAGUE (VO)  

Sneakers have come a long way since their invention in the 1800’s. 

And since the fifties, sneaker companies have touted a variety of technological innovations… 

[SOT Keds Commercial] “Say, why do you kids wear keds?” “So I can run faster and jump farther, so I can win more often.” “Right!”  Keds kid’s Keds! Product of United States Rubber.

[SOT PF Flyers Commercial] PF flyers with a magic wedge that helps you run your fastest and jump your highest! 

[SOT Reebok Commercial]: The Reebok Pump! When I pump up my size thirteens get support protection and a custom fit. So Michael, my man, if you want to fly first class. Pump up and air out. 

TY MONTAGUE (VO)  

Today, they are a multi-billion dollar industry.

[SOT]: …industry set to jump over the $100 billion mark in a few years. 

TY MONTAGUE (VO)  

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. 

[SOT]:Environmentally, the fashion Industry is f—ed..   

TY MONTAGUE (VO)  

Enter Tim Brown – native New Zealander and former professional soccer player who’d worn more than a few sneakers in his lifetime. Tim knew 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.

SFX: Sheep Baaah 

TY MONTAGUE (VO)  

Tim got a grant from the New Zealand Wool Trust for his concept and developed it further during a entrepreneurship course in 2014. But the professor pulled him aside and told him his sustainable sneaker was a terrible idea and suggested he put it on Kickstarter where it would tank quickly. Here’s Tim in that original Kickstarter pitch video.

[SOT Allbirds Kickstarter video] You can’t grow up a Kiwi and not understand how good wool is. It’s tough. Regulates temperature, reduces smell, wicks away moisture, and importantly is a sustainable and biodegradable resource. We need your help to shake up the shoe industry and take the New Zealand wool and the wool runners to the world.

TY MONTAGUE (VO)  

He began the campaign hoping to raise $30,000. But within just five days, he had raised over $120,000. But there was a reason making wool sneakers had never been done before – it was really hard! 

Enter Joey Zwillinger, a materials engineer and one of Tim’s early kickstarter customers. Joey had focused his career on making environmentally friendly materials, but kept running into people who just didn’t get it. 

[SOT Joey GS conference] In a time when oil prices are low, substitute products are, are cheap, fast, and easy, brands kind of get soft and lazy. Every single time it was like, you guys are missing the big picture

TY MONTAGUE (VO) 

Tim and Joey met through their wives who were roommates in college. But they hadn’t considered a potential partnership until Joey invited Tim to visit him in California to talk about what would soon become Allbirds.  

[SOT Joey GS conference] We spent like three days really walking around the Hills, just north of San Francisco, talking about why the world needed a new shoe company.

[SOT Tim GS conference] I’d come out of this career in sport. That, you know, I I’d unlocked this incredible amount of meaning in playing for my country. And then I’d found myself in my first real job, you know, post business school, making shoes. And I didn’t really know why. 

And I think the best thing about that meeting was it unlocked our why. 

TY MONTAGUE (VO) 

It wasn’t just about disrupting the shoe industry, or creating a comfortable sneaker –  it was about creating a direct to consumer brand and business that made sustainability a non-negotiable. 

TY MONTAGUE (VO) 

So they got to work, engineering a sneaker made of wool and fundraising. In 2016 they raised $7.25 million dollars from investors like Leonardo DiCaprio, and Maveron. And they used that money to launch their website, selling the Wool Runner. A sneaker that was soon recognized as the world’s most comfortable shoe by Time Magazine. 

By the next year, the company had 50 employees in their San Francisco headquarters, 40 in its Nashville warehouse, and 350 contractors in a factory in South Korea. 

And as they grew they didn’t stop innovating. In March 2018, Allbirds launched a sneaker made from South African eucalyptus fibers called the “tree runner”, the first shoes to receive certification from the Forestry Stewardship Council. 

Then, Allbirds invented a foam derived from sustainably sourced sugar cane, rather than petroleum-based plastic that called SweetFoam and now Sweetfoam is used in all of their shoes. And I absolutely love this, they open-sourced the recipe for SweetFoam to encourage other footwear companies to use it too.  And instead of being upset when Allbirds copycats showed up on Amazon, Joey Zwillinger wrote an open letter to Jeff Bazos challenging him to copy their materials and environmental commitment too. 

Funny, Amazon never responded.

In August 2019, Allbirds moved into apparel starting with socks made from yet another material innovation, Trino – a mixture of the Merino wool and eucalyptus tree materials used in their footwear. And they’ve recently launched a new crab shell-based material called EXO, like exoskeleton.  

In November 2021, Allbirds went public under the symbol BIRD. The stock initially surged 90 percent valuing the company at 4 billion dollars. 

INTERSTITIAL MUSIC

TY MONTAGUE (VO) 

So, how do we make more stories like this one happen? 

I asked Allbirds Co-Founder and Co-CEO Joey Zwillinger 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.

INTERSTITIAL MUSIC

TY MONTAGUE 

I am very excited to introduce the co-founder and co-CEO of Allbirds – Joey Zwillinger. Joey, welcome to calling bullshit.

JOEY ZWILLINGER

Thank you so much for having me, Ty. Glad I’m here. 

TY MONTAGUE 

I’m glad to be talking to you. I would love it if we could just start out and learn a little bit about your background?

JOEY ZWILLINGER

Sure! Winding all the way back to uh upbringing, I had two very socially conscious parents not particularly environmentalist, 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, or certainly for just money or something like that.

But they did help push me in a good direction with a high level of curiosity. And I was an engineer 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. I 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 was thrilled with it and I started to fall in love with the idea that you could do so much – it 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 and a great team. Around that same time, I also realized the biggest crisis that was facing our species, truly existential crisis. That was a very big moment for me where I realized I wanted to dedicate my professional life, at least to doing as much as I could for the environment.

That sent me down a path and I think entrepreneurship is so interesting that I started hunting down the path. I joined a company called Solazyme as a result of that.

Which was a biotechnology company where we engineered micro-algae 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 petrochemicals and I was out there doing tons of business development, try to design molecules that can out-compete petrochemical 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 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 20 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 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 Knight in 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 a business opportunity, but also to lead on environmentalism in this space.

TY MONTAGUE 

Yeah, I love that. Let’s pivot to Allbirds. How do you guys articulate Allbirds’ purpose? 

JOEY ZWILLINGER

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, 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 climate changes is the issue that, that is most analogous to helping you as a human stay alive. It’s the heart that needs to beat. And if our climate goes away, that is an existential problem. So for us, it’s all about helping to reverse climate change. And so we measure everything deeply against that purpose. 

TY MONTAGUE 

Yeah, it is the issue of our time. How do you guys think about the let’s call it the dominant system that Allbirds is trying to improve upon?

JOEY ZWILLINGER

Oh man. It’s like a drug we’re competing with the system of this drug of fast and cheap 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 Fords to, you know, model T’s. Since that time,  chemical engineers, very smart people, have been working with all of their energy to squeeze out another dollar from the barrel of 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 chemical and cheap synthetics. And what that has resulted in is an industry that relies exclusively on polyesters, nylons, synthetic 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 20 billion pairs each year. There’s a lot of feet out there. That’s how much are consumed every single year. So this is the system that we are disrupting against. We are creating a system we call it vertical retailing, but everything is sold directly to the consumer.

JOEY ZWILLINGER 

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 for consumers without denting the Earth.

TY MONTAGUE 

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?

JOEY ZWILLINGER

Yeah. So, the average sneaker – best we can estimate – and most of the legacy companies 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 to as well seeing the disclosures it’s about 14 kilograms of carbon dioxide equivalent emissions.

And I say that. Jargony sounding word, but CO2 E which I’ll refer to for the rest of this is just carbon, or carbon dioxide. It’s not just carbon dioxide, it’s also methane or other greenhouse warming gasses. 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 14. Just to give you that, what that means in context a hamburger is about six kilograms of tomatoes, 2.2 pounds of tomatoes from the grocery store. That’s about nine emissions. So a sneaker is 14 on average. And the ones that we make are typically under ten.

TY MONTAGUE  

Right. I noticed that you, you, actually, hang on, sorry. I just wanted to show you I just got my first pair. And I did see, you know, your purpose on your box, which was cool. You also label the carbon footprint right on the shoe, which I thought was interesting.

JOEY ZWILLINGER

We wanted to understand our impact. So we had to develop our own tools so that we could measure it down to the gram of carbon dioxide emissions, what we’re 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. 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 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 contextualize in a simple, single metric, your impact, and 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 right on the product so that everyone can start to evaluate quality of product and price of product, and also the environmental and climate change impacts.

So now, there’s a way for people to do that. We hope a lot of people copy us, which is why we open sourced that and released this tool to the industry..

TY MONTAGUE 

That’s awesome. I love that and in a way, you know what, as I was reading about you and watching some videos, it really does seem like you’re a materials innovation company, as much as you are a shoe and apparel company, like you’ve developed brand new material. Tree and sweet foam. Great names by the way. Can you talk a little bit about those, those innovations? 

JOEY ZWILLINGER

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 establish this company 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. 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 gotta like, just feel better. That’s the first and foremost, the most important thing. The second is that it’s gotta 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 make a lot of shoes out of it. And lastly, it’s got to be very low carbon intensity. 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 does all those great things that we try to do.

So tree was a wonderful example where we use forest stewardship, council certified eucalyptus fibers to make the uppers of our shoes. Sweet foam is such a special one. We knew when we started the company. We really wanted to be very good and a big hole with the bottom of the shoe, the sole, in the entire footwear industry. 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 to take the waste stream of sugarcane processing and convert that through a number of biotechnology and then chemical steps that we could actually replace the most ubiquitous foam and all of the footwear industry. It’s a, it’s a, a chemical called EVA. And, and you can take that and you can make it from the waste stream of sugar cane processing, which actually makes it in carbon accounting, 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 use that and then we convert it into a foam, which we call sweet foam. And we opened sourced that base material to the whole industry, because it’s so ubiquitous and used in such high volumes in 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.

Ty: IP protecting, right? So you open source, these materials are available?

JOEY ZWILLINGER

Yeah. with our partner brass cam, we co-developed this thing. And then we, we open sourced it to everybody and some big brands are using it and a lot of small brands are using it. And there’s a lot of brands that have yet to use it and shame on them. You should use it.

TY MONTAGUE 

Yeah, completely agree. That’s super cool. And, obviously wool is also a huge part of your proposition. So, why wool?

JOEY ZWILLINGER

Well, you know, Tim is from New Zealand. And there is a lot of sheep in New Zealand.

TY MONTAGUE 

A lot of sheep..

JOEY ZWILLINGER

There’s like 30 million sheep and a whole bunch of those are Merino sheep. And so Tim had an indoctrination from his upbringing in, in the value of wool and Merino wool in particular. It’s a miracle fiber. It absorbs moisture and you don’t feel damp when you’re wearing it. It regulates your temperature. It feels incredibly soft to the touch and it’s got some great strength, characteristics. And not only is it wonderful for all of those attributes, it’s 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 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.

TY MONTAGUE 

Right.

JOEY ZWILLINGER

So that, 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 Allbirds exists and thrives.

TY MONTAGUE 

Yeah, I love it. 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.

JOEY ZWILLINGER

That’s an interesting question. I’ve never really thought about that. But I kind of think it’s easier as long as you intelligently design the business system so that you’re truly purpose native, where, which I define 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 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 idea that you can allocate your capital as a capital allocator against opportunities that both make money and make a great impact on the world. These are all super aligned.

So I find that the paradigm that is often assumed, which is that the stakeholders are inherently intentioned, 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.

TY MONTAGUE 

Great answer. So at some level proclaiming that Allbirds is a purpose led business makes the company a target, even if by comparison, you’re a beacon of hope in your industry. Do you ever feel that pressure?

JOEY ZWILLINGER

Sure. And look, we try to be very careful. And we’re, we’re pretty clear about this, that we are not perfect. Like 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 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, lots of people have a definition of, of what this is. So you’re always exposed. And when you put your neck 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. AndI’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, it’s up to consumers or other people 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 an example, we’re a public company. We do earnings calls where we talk 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 going to do for your financial targets. What’s revenue going to look like what’s profit, going to look like we also gave a carbon reduction target in our earnings call guidance. And as far as we know, we’re the first company to ever give a carbon reduction goal for what we were going to 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, of You know how we put ourselves out there, how we try to drive accountability, how we try to be authentic leaders admit that we’re not going to be perfect a lot of the way, but show people why we’re doing it and how we’re doing it.

TY MONTAGUE  

It’s interesting. I want to dig into that for just a second, because it feels like, you know, 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 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, right. You’re sort of pre disastered in a way to steal a line from The World According To Garp, like, the worst has already happened in a way.

JOEY ZWILLINGER

Great. Great book. Yeah. Well, you know, 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, the ability for your reputation to be snapped immediately is so high and will happen so fast. That you’d be a fool, not to be authentic and transparent in this environment, because at some point that, you know, the music stops and that’s when the dancing stops.

TY MONTAGUE 

Yeah, hundred percent. Allbirds 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 transition. So what advice would you have for the CEOs who are just beginning their purpose led journey?

JOEY ZWILLINGER

Yeah, it’s a great question. Cause 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 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. 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 saying, okay, now we’ve made our profit, like let’s do some philanthropic giving to this group that we think is going to make a splash for consumers or make our employees feel proud to work here. Whereas typically companies who make products. 60 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 product and the transportation and all that stuff. Focus on fixing that. For anyone that makes stuff, fix that and make 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, 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 targets for carbon emission I don’t make as much money and same for all of the executives and leadership team at Allbirds. We’ve done it all the way down to that human level and it all matters. You 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.

TY MONTAGUE 

Yeah, no, I agreed. F effort follows money. Just following the thread of money for a second, , so 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?

JOEY ZWILLINGER

No, 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 costs less and you still got to make a profit. 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 would 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 strong enough environmental impact for us to absorb the additional cost onto, 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 be around 50 bucks, we try to target about a hundred bucks per metric ton of carbon dioxide equivalent emissions into the atmosphere if it’s above or below that line and helps us make that tradeoff. 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 a non-negotiable for us. And we try to objectionably arbitrate this just like you would quality and cost conversations.

TY MONTAGUE 

Right. Does being publicly traded ever create pressure to compromise on any of those values?

JOEY ZWILLINGER

You know, going back to that alignment of financial outcomes and environmental impact, it really doesn’t get in the way for us. If tomorrow we came out with a fully plastic shoe that was made from, you know, 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.

TY MONTAGUE 

It would just feel wrong, Joey! It would feel wrong.

JOEY ZWILLINGER

Of course. It doesn’t, it doesn’t get in the way, in that sense. And we’ve always had the view that every time we’ve ever taken 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 and our responsibility to our fiduciary responsibility. So, you know, it’s, it’s all out there. Like it’s all legal. Everything we do comes from our orientation around meeting this like critical and important consumer trend of associating what you consume with your values around the environment. 

TY MONTAGUE 

Yeah, that’s incredibly inspiring. You use the phrase public benefit corporation, and sometimes it’s a little confusing because public benefit corporation that designation gets wrapped up or confused with being a B Corp. And you are both, as I understand it. Could you

JOEY ZWILLINGER

That’s right.

TY MONTAGUE 

Could you help us understand the difference between those two things? 

JOEY ZWILLINGER

So a PBC, a public benefit corporation is a legal framework. And it allows us as a management team of the company not only to do things on behalf of the stated public benefit in our case, environmental conservation, it actually implores you to. And you actually 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 interest of your shareholders, that would be called their fiduciary responsibility. 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 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 Allbirds does versus how the local grocery store does. The local bodega, whatever. Everyone can be a B Corp. and so it asks you questions about everything under the sun, around wages and social impact of your supply chain. 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 PVC incorporation documents. 

TY MONTAGUE 

It’s quite a bit of work, isn’t it?

JOEY ZWILLINGER

It’s very… 

TY MONTAGUE 

You know becoming a B Corp. It’s like very, very

JOEY ZWILLINGER

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.

BS RATING THEME MUSIC

TY MONTAGUE 

That’s great. I have one or two final questions to ask you. First of all, on, on calling BS. We define BS as the gap between word and deed. 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 rate Allbirds on that scale today?

JOEY ZWILLINGER

So I, 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 I’ll say to, to contextualize this, I would put it at like a, at like a 80 there’s worse industries out there. There’s like, you know, single use plastic baggy companies that say they’re sustainable. So shoes, shoe industry is not the worst in the world at your BS gap meter. So I’d give our industry an 80 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 think the 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 impact is positive and that every time we sell a shoe and you choose to buy Allbirds, 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 positive for the environment. And hopefully you’ll love the product too.

TY MONTAGUE 

Joey, this has been a great conversation. I really appreciate your spending time with us today. So thank you for being here. 

JOEY ZWILLINGER

Yeah. Thank  you so much for having me. It’s a great, great topic. You’re you’re you’re talking about Ty and I appreciate you doing your work. 

TY MONTAGUE 

Oh I appreciate that. Thanks. 

THEME MUSIC: “Passage” by Migration

TY MONTAGUE (VO) 

I’d like to end the show by giving Allbirds an official BS score.  The scale goes from zero to one hundred.  A zero means there is zero gap between word and deed, and 100 means the gap is huge — complete BS.  

You’ve heard Joey give himself a twenty. Based on what I have heard today, I’m going to agree with him because though the reality is, no company is perfect.  Allbirds’ has done so much to bake their purpose right into their business. 

To weigh in with your thoughts visit our website, callingbullshitpodcast.com. You’ll be able to see where Allbirds ranks on BS compared to the other companies and organizations we feature on this show.

And If you’re starting a purpose-led business, or you are thinking of beginning the journey of transformation to become one, here are three things Joey said that you can take away from this episode:  

1) Like Simon Sinek 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 you’re in. When Tim and Joey walked the hills of Northern California they realized that it wasn’t shoes that they were passionate about, it was “making better things in a better way”. Allbirds 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 Allbirds, a good “why” doesn’t even mention the product you make.

2) 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 and the world are. As Joey said, when purpose and business model align, your business actually resonates powerfully with customers, employees and suppliers and makes your job as a leader much easier.  

3) Define the metrics that matter. Purpose-led businesses strive to make a positive social or environmental contribution to the world. Measuring that impact, and tying it to remuneration at every level of the company is key. As Joey said, if Allbirds doesn’t hit their carbon reduction goals, 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 inspired. 

Thank you for joining us today, Joey Zwillinger. And thanks to the whole Allbirds team for helping to make this episode happen. You can find Joey’s social media handles in the show notes. If you have ideas for companies or organizations who are getting it right that we should consider for future episodes, you can submit them on the site too. 

And if you thought this episode was All-right, subscribe to the Calling Bullshit podcast on the IHeartradio app, Apple Podcasts, or wherever you get your podcasts.  

Thanks to our production team: Hannah Beal, Amanda Ginzburg, Andy Kim, Haley Paskalides, Parker Silzer, Basil Soper and Mijon Zulu. 

Calling Bullshit was created by co:collective and is hosted by me, Ty Montague. Thanks for listening.

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