[HN Gopher] Allbirds S-1 IPO
___________________________________________________________________
Allbirds S-1 IPO
Author : marc__1
Score : 93 points
Date : 2021-08-31 14:21 UTC (8 hours ago)
(HTM) web link (www.sec.gov)
(TXT) w3m dump (www.sec.gov)
| alangibson wrote:
| I don't see how Allbirds can have any sort of moat keeping out
| competitors even in the medium term. Shoes are notoriously easy
| to duplicate. See for instance the many, many near-perfect Croc
| copies.
| owenwil wrote:
| Wow, glad to see this. Allbirds is a great business, makes good
| products, and cares about having an impact on the world/reducing
| climate impacts - not sure if I've ever seen any other S1 filing
| that mentions climate impacts/goals as extensively.
|
| If the amount of shoes/repurchases I and many others I know have
| made over the years from them is any indication, they're going to
| keep growing fast - they seem to have a knack for bringing
| customers back; the filing says more than 43% of customers return
| to purchase something else, which is impressive.
| tyre wrote:
| > Allbirds is a great business
|
| They haven't proven that. Yes, they've sold a lot of shoes, but
| they've never made a profit and don't project doing so.
|
| Every money-losing company that raises money has a story of how
| it will become profitable. It is possible that they do, but
| they haven't yet.
| mywittyname wrote:
| The company could be profitable tomorrow if they wanted to.
|
| It's not like this is some grand, new, unproven business
| concept, or one that is only competitive due to VC capital.
| They sell shoes, and they sell them at a decent profit. There
| are lots of large apparel companies out there making stacks
| of money, many of whom started off selling shoes.
|
| This is not Uber/AirBnb, it's Adidas/Puma/Nike.
| alberth wrote:
| Whenever I hear about Allbirds, I can't but laugh and think about
| this site: https://vcstarterkit.com
| maxehmookau wrote:
| Seems reasonable. Nice product, well priced, strong
| sustainablilty credentials.
|
| Good for them.
| [deleted]
| pvm3 wrote:
| Great job by founders and team but I worry that most of these new
| CPG companies are not sustainable. Buffett invested billions into
| Heinz and Kraft, which struggled as a result of the
| commoditization of brands. I know fashion is different but most
| of these companies (e.g. AllBirds, Away) are not luxury brands.
| Are these valuations truly sustainable?
| [deleted]
| rcar wrote:
| Their balance sheet looks very healthy for a growing company
| with a strong gross margin and very sustainable net losses
| relative to the capital they've been able to raise. As long as
| they can maintain their brand position in the space, the
| multiple they last raised at doesn't seem absurd to me at
| least.
| agloeregrets wrote:
| Oh I agree, but I would put large bets against any company
| with a fresh take on a popular product that suddenly has an
| IPO. The growth curve to satisfy shareholders will destroy
| the brand's name and quality as what they do...doesn't really
| scale well. Eventually you are outsourcing shoe production to
| new sources, getting lower quality wool for cheaper, reducing
| costs in customer service. For a year or so things look great
| on paper, then slowly sales start to slip, the company cuts
| costs further, slowing the slip and then the cycle repeats
| until the brand is known for their Shoe Department collection
| for 29.99.
| Raed667 wrote:
| A great (2019) video about the sustainability claim of Allbirds
|
| https://www.youtube.com/watch?v=et33AaoZZCQ
| ordinaryradical wrote:
| I'm honestly more compelled to invest because of this vision
| than the financials. We need products like this to succeed in
| the world.
| nkotov wrote:
| Super excited to see this. I'm on my fifth pair of Allbirds - by
| far the most comfortable shoes I've had in a while and I like the
| way they look. My only gripe with them is how easy they get dirty
| if you get the lighter-colored ones.
|
| I think long-term, stores might be their best bet. There is still
| a good amount of people who are skeptical on purchasing shoes
| online even with easy return options. Good job to these founders!
| lupire wrote:
| Fifth pair in how many years?
| vavooom wrote:
| Hiked for 6 weeks straight across Europe mostly in a pair of tree
| runner Allbirds. Incredible shoe and company.
| bitsoda wrote:
| I hope they stay in business for a long time. Not to sound like a
| shill or anything, but their shoes are some of the most comfy
| I've tried. I pretty much wear them to the office every day. Are
| there more comfortable shoes out there? I don't know, probably,
| but I'm a happy Allbirds customer all the same.
| sheepybloke wrote:
| I've had a couple of Vivobarefoots that I've been super happy
| with. They're fantastic quality and incredibly comfy. They do
| take a bit for your feet to get used to since they have a very
| thin sole, but they are great.
| bpicolo wrote:
| I like them for the most part, but their soles early on were
| dangerously slippery on any marginally wet surfaces, big turn
| off. I've heard this is better but not great now?
| jmsuth wrote:
| This was my experience too. It was like ice skating.
| jareklupinski wrote:
| after wearing a few different pairs of allbirds for years
| without issue, i just sprained my foot a week ago after
| slipping on a slick sidewalk after a drizzle in a reasonably
| new pair
|
| non-skid soles on a fashionable lightweight sneaker are
| impossible to find :(
| bpicolo wrote:
| Have you tried ECCO? Bit pricier but I've found their stuff
| to be great.
| acrooks wrote:
| I find Allbird comfortable and stylish but I find that they
| wear out incredibly fast. I've owned four pairs of Allbirds and
| they've all had a fairly short shelf life compared to my other
| shoes.
|
| My everyday shoe now is from Casca [1]. They're a Vancouver-
| based company with a specific focus on quality: I've worn them
| almost every day since fall 2018 (when they launched) and the
| shoes still look as good as new. And they're machine washable.
|
| They're also incredibly comfortable. When you buy a pair of
| shoes, you have the option to take a few pictures of your feet
| and the shoes will be delivered with custom 3D-printed insoles.
| It's amazing the difference in comfort when a shoe is moulded
| to your feet.
|
| [1] https://casca.com/
| dzhiurgis wrote:
| Same here. Only use them to get to the store, out for food.
|
| They great for when it's too cold for jandals but you are too
| lazy to put socks on.
| mbesto wrote:
| I haven't worn them, but my friends tell me one of the other
| defining features is the ability to wash them very easily.
| Anyone else can confirm?
| ubermonkey wrote:
| Both my wool ones and my eucalyptus ones wash quite well
| (cold water, take out insoles, don't dry), so yes, can
| confirm.
| gjs278 wrote:
| atoms are better
| finnh wrote:
| Johnston & Murphy makes a comfortable shoe, probably the only
| ones in my closet that rival my Allbirds.
|
| In particular the McGuffey Plain Toe:
| https://www.johnstonmurphy.com/mcguffey-plain-toe/8318.html
|
| YMMV, of course!
| Server6 wrote:
| I like their shoes because they're not crazy styled. Normal
| standard shoes - no bullshit. They're comfortable and if a pair
| wears out I can buy the exact same shoe. Have you ever tried to
| replace a pair Nikes with the the same shoe? Its impossible.
| lotsofpulp wrote:
| That's why I like ASICS. I can just keep buying the same
| model shoe.
| wallacoloo wrote:
| > Are there more comfortable shoes out there?
|
| I went from Allbirds to Baabuk. Similar comfort (I can wear
| them sockless without chafing) but they seem to last twice as
| many miles before wearing out & they look a lot better IMO.
| tomduncalf wrote:
| Seconded. I was ranting to a friend about how I was fed up of
| finding shoes I liked only for them to be discontinued next
| time I need them and he showed me his Allbirds (which
| conveniently looked very similar to the Nikes I was trying to
| replace) and I was instantly sold - very pleased with the
| comfort and they feel like they should be very durable. Seems
| like a nice company in terms of thinking about environmental
| impact etc too.
|
| I've now become the person who tells other people about my
| shoes lol - they had better not change the design!
| floatingatoll wrote:
| I hope someday they make women's shoes in sizes greater than
| 41, so that I can recommend them to my trans friends that have
| 42+ feet. It's not really very profitable to market size 42 to
| women, and shoe retailers just don't bother to make them at
| all, rather than charging more! so I always have a superbly
| difficult time finding _good_ fashion recommendations in the
| shoe space. Disappointed to see them IPOing without considering
| a wider size range, but maybe the IPO will make them more
| inclusive. (In the meantime, Rothy's is a classy alternative
| available up to 44, iirc.)
|
| ps. Yes, I know this is HN, but it's such an absurdly difficult
| space that if I can help a _single_ trans woman reading this
| comment, then it was worth the risk of being attacked for
| caring. Fashion is often high tech these days too. With custom-
| to-order clothing and fast fashion normality, there's no
| excuses for retailers who don't extend their size range
| anymore. It's just that lots of techy hackers aren't aware of
| the market bias. I've been studying fashion for a couple
| decades and there are insanely great innovations that I don't
| post to HN because we're not mature enough yet. Hooray for
| Allbirds' offering an opportunity to talk about one of my tech
| interests safely :)
| [deleted]
| babelfish wrote:
| How does the Allbirds Men's line differ from the Allbirds
| Women's line? All of their shoes look pretty much the same to
| me, could your trans friends just order a 42+ shoe from the
| Men's line?
| floatingatoll wrote:
| I have no idea. I didn't think to check their Men's line.
| The typical variation is that "typically women's" colorways
| are simply not offered in men's, so if you want a shoe that
| has any sort of red hues (such as pink, purple, lavender,
| lilac, wine, maroon, etc) then you're out of luck, because
| most retailers only offer "typically men's" colorways in
| their men's sizes. You'll also see stylistic variations,
| heel size variations, and "these shoes are intended for use
| with or without socks" variations.
|
| Still. I'll go check now, though, and I feel kind of dumb
| for not thinking to look sooner. Thank you for the pointer.
| ubermonkey wrote:
| I have worn my tree runners nearly every day all summer.
|
| I wear my wool runners most days in the winter.
|
| I worry, though, than an IPO signals a growth curve that will
| impose quality problems.
| judge2020 wrote:
| Better URL directly to the S-1, like other S-1 posts:
| https://www.sec.gov/Archives/edgar/data/1653909/000162828021...
| 42droids wrote:
| Does anyone know when these shares will be available for us mere
| mortals? Thanks
| [deleted]
| diebeforei485 wrote:
| I have a pair of their shoes and like them. I had no idea they
| made clothes[1] however. Good luck to the team.
|
| [1] https://www.allbirds.com/products/womens-wool-jumper-orchid
| avelis wrote:
| I have bought their shoes for awhile now. I like their shoes and
| the expansion into other shoe types.
| kerbs wrote:
| The wool line made them popular, but the tree runner in my
| opinion is my absolute favorite shoe.
|
| My white pair has survived about 10 runs through the wash, and
| damn if there isn't a better looking shoe to wear sockless.
| mtalantikite wrote:
| Never heard of them until just now. Looking at the men's
| "Everyday" collection they sort of remind me of the original
| Yeezys if you were to take the edge off of them and make them
| blend into an office park. Not really my thing, but I'm here for
| companies not using slave labor and trying to use materials that
| aren't so destructive to the planet.
| all_usernames wrote:
| They are, or were, extremely trendy among the tech workers of
| the Silicon Valley / San Francisco.
|
| They're premium priced and definitely casual in style and
| function, with a sustainability-focused marketing sheen.
|
| I've had a few pairs and the quality is above-average but
| definitely not a "buy it for life."
| jonpurdy wrote:
| I ordered a couple of styles a few years ago. They seemed
| incredibly comfortable but both didn't fit properly due to the
| lack of half sizes so they were returned.
|
| I guess it hasn't affected their valuation much though.
| mc32 wrote:
| Their footwear is comfortable and affordable. Their core
| attribute is being "greener" using biological material (not so
| different in this respect from Rayon) in some of their
| manufacturing input...
|
| But... their footwear wears out quite quick (the soles esp.),
| so overall, I do not know that if you were to study its carbon
| footprint over two years, if they would actually come ahead
| compared to conventional footwear.
| duffyjp wrote:
| Affordable is relative. These are at least twice what I've
| ever paid for casual-looking shoes.
| mc32 wrote:
| Most sports shoes kids wear in highschool will run about
| the same, unless they are on sale. Nike, Adidas, etc. They
| will run the same or more, sometimes less. That's my
| reference.
| ubermonkey wrote:
| Are you serious? $100 for a pair of shoes is, at least for
| me, under the midpoint for shoe cost in my adult life.
|
| A few cheaper options exist in my closet, but mostly
| they're more expensive.
| Izikiel43 wrote:
| You can get cheap pair of shoes at outlets, I haven't
| paid more than 50$ in the last 5 years for a pair of
| shoes.
| mc32 wrote:
| I've bought at outlets. Half of the time it's because
| they had a quality defect that appears a few month into
| wearing them. (Stitching or glue, etc).
| ubermonkey wrote:
| I'm stunned by this. Do you just never, ever dress up for
| anything?
| DavidPeiffer wrote:
| I guess that goes to show there's a wide range of needs
| and desires in the market.
|
| I've been wearing the same line of tennis shoes for a
| handful of years. Outside of work boots for projects, I
| wear the tennis shoes for almost every other event and
| task, breaking out dressy black shoes a handful of times
| per year.
|
| They run around $65 unless I find a deal. That shoe is
| adequate for my needs and budget, fits well, and the
| variations from year to year are minimal. I'm hesitant to
| deviate away from something I know works well.
|
| I've never found a pair of Nike tennis shoes that are
| comfortable. Nike shoes would probably be more expensive
| than my go-to pair, but I'm sure for some people my
| tennis shoes would be really uncomfortable.
|
| All that said, I am considering trying a pair of
| Allbirds. I'm 4 hours from their nearest store, and have
| never bought a pair of shoes online, so I may swing by
| next time I'm in Minneapolis.
| ubermonkey wrote:
| Allbirds has a pretty great return/exchange policy, so I
| wouldn't sweat the online order if you're interested.
|
| They come in whole sizes only; the rest of my shoes are
| 9.5 to 10.5 depending on application. My Allbirds fit
| perfectly; both pairs are 10s.
| chansiky wrote:
| Most footwear is fast fashion. People throw out shoes well
| ahead of them being worn out. I appreciate all the natural
| materials for this purpose, because at least they biodegrade
| better, which may have something to do with being worn out
| faster.
| mtalantikite wrote:
| That's disappointing to hear. I personally try to buy things
| that will last for years. I'd rather spend a lot of money on,
| say, a pair of Red Wings and wear them for a decade, maybe
| with an occasional resoling, than a pair of boots that will
| be a mess in a year or two. Also, NYC (where I am) will
| really tear a pair of shoes up from all the city walking, so
| that's a bit of an extra incentive to go for quality.
|
| It's good that their inputs aren't horrible for the planet,
| but if they break down in a couple years it might not make
| that much of a difference.
| mc32 wrote:
| I (obviously?) didn't do a long term study. They have some
| details about their claims here:
| https://www.allbirds.com/pages/sustainable-practices [you
| can download their report]
|
| Most sportswear shoes, "sneakers" in vernacular, don't
| accommodate resoling. But evenso, the plastic mesh or wool
| upper (depends on model) tends to wear out in obvious spots
| (same as where socks might wear out, like toes).
| mtalantikite wrote:
| Yeah absolutely -- the sneakers I buy (Vans) definitely
| can't be resoled, but they last a long time.
| creaghpatr wrote:
| Wouldn't call them the best value, but I love my pair they are
| extremely comfortable and versatile for matching with stuff.
| Fashion-wise, they are pretty bland.
| the_arun wrote:
| Unfortunately Amazon doesn't have these shoes. I need to
| create yet another user account.
| atestu wrote:
| You don't need to create an account to buy their shoes. You
| can check out as a guest, they use Shopify.
| acdha wrote:
| They're very comfortable & breathable - I used to refer to them
| as my office slippers back when offices were a place where we
| spent time. Nice enough looking for meetings, but you didn't
| mind wearing them all day even in the summer.
| warent wrote:
| I had a pair for like 3 years. They're extremely durable and
| light, easy to clean (toss in the wash, air dry), it's almost
| like wearing super tough socks.
|
| The best part about them was the convenience and comfort, but
| as far as style they're maybe one rung up the ladder from
| Crocs, so you're not really winning points there. They go well
| with shorts and look particularly awkward in jeans.
| maininformer wrote:
| I second this, they are extremely durable I had mine for over
| 4 years.
| wallacoloo wrote:
| The heel of mine separated from the sole within 6 months.
| Beginning to wonder if I have some quirk with my stride
| that tears shoes apart early, or if their quality is just
| inconsistent.
| cube2222 wrote:
| After realizing most shoes are animal-based or synthetic, even if
| they're not leather, I've set out to find a pair which is non-
| synthetic non-animal-based and I've found these (and giesswein's
| which I didn't like).
|
| Bought them, really comfortable, great refund policy (could test
| out 2-3 pairs to find my right size), would definitely recommend.
| [deleted]
| stronglikedan wrote:
| Shame they don't seem to make wide sizes.
| fkfowl3 wrote:
| Apart from all the numbers. The other thing that actually matters
| is the quality itself. I'm definitely not locked in on the brand
| as the products are not great after you them for a while. i.e
| they don't age graciously and i see it as a major problem in the
| long run (no repeat customers).
| neom wrote:
| "*Grew net revenue from $126.0 million in 2018 to $219.3 million
| in 2020, representing a compound annual growth rate, or CAGR, of
| 31.9%;
|
| *Grew our digital revenue from $113.2 million in 2018 to $194.6
| million in 2020, representing a CAGR of 31.1%;
|
| *Grew our store footprint from three in 2018 to 22 in 2020;
|
| *Grew our U.S. and international revenue by $52.5 million and
| $40.7 million, respectively, from 2018 to 2020, representing a
| CAGR of 20.8% and 112.4%, respectively;
|
| *Increased gross margin by 454 basis points from 46.9% in 2018 to
| 51.4% in 2020;
|
| *Generated net losses of $14.5 million and $25.9 million in 2019
| and 2020, respectively; and
|
| *Generated adjusted EBITDA of $(1.3) million and $(15.4) million
| in 2019 and 2020, respectively."
| nappy-doo wrote:
| EBITDA in a non-comparison context is meaningless. EBITDA is
| only useful when you're comparing ownership of two like
| businesses.
|
| What is interest, if not an expense? What is tax, if not an
| expense? What is depreciation if not an expense? Alright,
| amortization, yeah, that one could get added back in - I buy
| that.
|
| Whenever someone starts talking about EBITDA, check your
| wallet.
| addicted wrote:
| EBITDA is a good measure of the upper bound of the earning
| potential of the current business.
|
| And you're also right in that it's useful for comparing with
| similar companies. It's greatest value is in the variety of
| ratios that it slots into.
|
| If 2 similar companies have very different EBITDA/Revenue
| ratios, e.g., that would indicate that the company with the
| lower EBITDA/rev ratio is probably less efficiently run.
| JCM9 wrote:
| The point of these things is that there are strict rules on
| what counts and what doesn't do it's a measurement that has
| some common degree of understanding. It's far from perfect,
| but absent these things companies have a habit of making up
| BS metrics to make the company look healthy (remember
| "Community Adjusted EBITDA") when the standard metrics would
| call the company's financial health into question.
|
| These metrics companies like to put out there, not
| surprisingly, tend to be something along the lines of "look
| at all the profit we're making if you for a moment ignore all
| the reasons why our business model is not profitable."
| cliftonk wrote:
| EBITDA is a useful measure for understanding how much cash a
| business generates if you were to strip it down. E.g.
| EV/ebitda is the most widely multiple for buyouts and most
| accurately takes into account operating leverage. It's less
| useful for a business like this, but saying "ebitda is a
| scam" is illiterate.
| swamp40 wrote:
| Why can't the comparison context be from one year to the next
| year?
| ericmay wrote:
| Because your choice isn't "invest or not" but invest
| relative to other potential investments in the marketplace.
| mbesto wrote:
| The parent comment is right. EBITDA is used for both
| industry comparison _as well as_ YoY trends. For YoY it
| 's used to try to eliminate "noise".
| ericmay wrote:
| YoY trends don't matter in isolation as you're trying to
| decide to make an investment.
| mbesto wrote:
| > YoY trends don't matter in isolation as you're trying
| to decide to make an investment.
|
| What.
|
| You 100% can make investing decisions in isolation. I
| don't think this is what you meant you say, because this
| makes absolutely no sense at all. If someone comes to me
| and says "if you give me a dollar today, I'll give you
| $10 tomorrow" I really don't need to consider anything
| else. Sure, someone else might say "I'll give you $11
| instead", but if the deal is there and I can analyze that
| the risk of default is minimal, then I can absolutely
| make that decision in isolation.
| ericmay wrote:
| We must be talking past each other. I have no idea what
| you're talking about. What do you mean by you can make a
| decision in isolation? How would you know that giving
| someone a dollar for 10 dollars tomorrow is a good
| investment unless you have other investments or
| investment opportunities to compare it to?
|
| And even so, how would you construct a life such that you
| were naive to all investment opportunities until this
| single one arises? It doesn't make sense.
| mbesto wrote:
| > I have no idea what you're talking about.
|
| Clearly.
|
| I said: - EBITDA is used for both comparison and YoY
| trends
|
| You replied: - YoY trends don't matter in isolation
|
| All of my clients (PEGs) used EBITDA both as a tool to
| normalize YoY trends _and_ to do like for like
| comparisons of comparable assets. Ultimately this is to
| evaluate whether they want to make an investment or not.
|
| Since you cared to provide some contradictory
| clarification to my comment, I can only assume you were
| disagreeing that EBITDA can only be used for comparative
| measures, which is 100% not true as per practice. Hence
| my example was that in theory you could make an
| investment decision in isolation (as naive as that might
| be).
| ericmay wrote:
| I think the person in the OP edited their post. They no
| longer mention YoY changes which is what the comment I
| replied to was asking about and I responded to.
|
| All I was saying is that you have to have context and
| something to compare the YoY to and you can't simply look
| at a YoY growth rate. It's _literally meaningless_ to do
| so without comparables. It 's like saying the velocity of
| something is 50, ok who cares unless you can tell me how
| it relates to some other thing. If a company grows 100%
| YoY I don't care without information relating it to
| _other investment options_. 100% could very well be
| really bad unless I know what is normal, below average,
| above average, etc.
|
| So idk what's really going on here anymore. I think
| something has become confused that's causing this
| conversation to go in useless circles.
| lumost wrote:
| Isn't EBITDA the number of greater interest to institutional
| investors such as Private Equity funds?
|
| Interest could be irrationally expensive for a business,
| taxes could be higher than they should be if the entity is
| not setup correctly, Amortization represents assets which
| could be sold off.
|
| These are all things that PE firms can fix/work on to one
| extent or another with financial engineering. They can't
| really grow cash flow.
| mywittyname wrote:
| PE usually look to load up the company they acquire with
| debt to cover their purchase price. EBITDA gives them a
| good idea of how much debt the company can service via
| cashflow.
| mbesto wrote:
| 1) It's adjusted EBITDA which makes it even more meaningless.
|
| > What is interest, if not an expense? What is tax, if not an
| expense? What is depreciation if not an expense? Alright,
| amortization, yeah, that one could get added back in - I buy
| that.
|
| 2) There is a specific reason these get taken out, because
| they generally represent values that the company either has
| little control over (taxes) or represent episodic
| expenditures (capital purchases, or debt raises) that have
| meaningful life greater than 1 year. D/A are essentially
| synonymous. So, no, D/A are not expenses, because they are
| simply representations of capital expenditures shown _as_
| expenses (the distinction is important) throughout the useful
| life the asset (intangible or tangible).
|
| Easy way to illustrate this is an airline who buys an
| airplane in year 1 and then uses that plane for 30 years. If
| EBITDA wasn't useful, then calculating their earnings over a
| period time won't tell you anything about trends of the
| business health.
|
| The devil is in the details. EBITDA is not all that bad, it's
| just not a "one figure to rule them all", especially since
| most firms create an "Adjusted" version of it to fit some
| narrative (and they always do).
|
| To your point. The cashflow statement is much more important
| IMHO.
| RC_ITR wrote:
| The reason EBITDA became popular is because private equity
| firms had low cost of borrowing (e.g., they would
| manipulate I expense) and were good at financial
| engineering such that tax rates could easily become 0 in
| the short term. D and A are excluded because they're not
| cash.
|
| Then, people just sort of adopted EBITDA as shorthand for
| "FCF from operations" and then companies like Allbirds took
| advantage of that to do whatever they want with it.
| mbesto wrote:
| > Then, people just sort of adopted EBITDA as shorthand
| for "FCF from operations"
|
| Very true.
|
| > then companies like Allbirds took advantage of that to
| do whatever they want with it.
|
| Here's an insider secret - everyone manipulates Adj.
| EBITDA (not just "Allbirds like companies"). It's part of
| the game of business sellers, which is why buy-side
| auditing is so important to get right. This is more or
| less why public security analysts exist - to keep
| pressure on proper reporting from the company. If WeWork
| actually went public every analyst worth a salt would
| basically throw out their "Community Adjusted EBITDA" and
| the term would be rendered meaningless.
| lupire wrote:
| What is digital revenue? Online sales of physical products, or
| something else?
| black6 wrote:
| How, as a consumer goods manufacturer, do you continue to lose
| money? My background is in a different manufacturing sector,
| beer, but even as a journeyman brewer I was doing COGS analyses
| and knew exactly how much each bottle/keg cost us for each brew
| so that we could be profitable.
| blueblisters wrote:
| For eCommerce ad-driven sales, I would think that ad expenses
| should be a part of COGS. It's easy to attribute sales to
| each ad dollar spent, and the impact of reduced ad spending
| will likely impact revenue, not just growth.
| rcar wrote:
| From their S-1, 2020 revenue was $219m. From that, $106m was
| cost of revenue, $87m went out to SG&A, and $55m for
| marketing. Presumably if they wanted to hit pure
| profitability, they could take their foot off the gas on the
| admin expenses and marketing, but since they're still seeing
| good growth and seem to be having an easy enough time getting
| capital, they may as well keep spending on additional growth.
| panda88888 wrote:
| I haven't looked at the filing in detail yet, but I would
| guess expanding their physical store footprint is burning
| money and the source of loss. They are in the
| expansion/growth phase so I would not expect profitability
| until either runway runs out or growth slows.
| perpetualpatzer wrote:
| Out of fairness, their gross margin is 51%, so they're
| covering their COGS comfortably.
|
| They're spending a lot on operating stores and advertising,
| where the input-output math is less clear/predictable. You
| could also believe that those stores stores will scale up in
| efficiency as people know that they're there and leave their
| house post-COVID.
| KoftaBob wrote:
| Losing money isn't always due to a company charging less for
| a product than the direct cost to make it.
|
| In the case of startups like this, the loss is often due to
| the large costs of things like expanding number of stores,
| expanding manufacturing capacity (it's not always as simple
| as sending orders to China to make), expanding their
| logistics system to handle shipping more and more shoes, etc.
| [deleted]
| BoorishBears wrote:
| Because it's not their money.
|
| It's a VC money, and the VCs will let this go on as long as
| an exit is in sight because they can then extract their money
| + a hefty premium.
|
| Then at that point the money faucet is re-plumbed to the
| public's money via institutional investors and from there
| they're free to do the slow decline to penny stock at their
| own pace
| vlad11 wrote:
| VC backed company try to grow revenue at all cost, they don't
| care about profit.
| neom wrote:
| Building a business to such scale that it can be a public
| company is an extremely expensive endeavour, continuing that
| growth till a time such that the business can sustain "market
| weather" while in the public is even more so. As crazy as it
| may seem, the bar for a public market business to be
| considered a "stable" or "safe" investment is very very very
| high and takes years in the public to build the platform that
| holds your market share. In near all instances, you have to
| continue to spend _a lot_ into that sustainability.
| beambot wrote:
| Haven't read the S-1, but their gross margins appear pretty
| solid, so they're probably spending aggressively in SG&A and
| capex-heavy depreciated assets that will hit COGS over time.
|
| Eg growing from 3 stores to 22 in two years probably requires
| a lot of big upfront expenditures.
|
| It's important to look at cashflow statements, P&L, and
| balance sheet in concert rather than isolation -- especially
| for larger fast-growing companies.
| robbiemitchell wrote:
| Why are the top line numbers shown from 2018 to 2020? If I had
| to guess, it would be because 2018-2019 showed the most growth
| while 2019-2020 showed less, and they want to show good %
| changes.
| farmerstan wrote:
| No. All S1s do it this way for some reason.
|
| My wife just worked on an S1 and had a similar comment but
| she investigated other S1s and saw that was just how it was
| done.
| ABeeSea wrote:
| You would be correct. On page 18, 2019 revenue was 193M and
| 2020 was 219M, growth of only 13%.
| RC_ITR wrote:
| Not mentioned: $140mn in Sales and Marketing to generate $110mn
| in Gross Profit.
| hammock wrote:
| Is that unusual?
| RC_ITR wrote:
| When you're growing that gross profit by 10% and you're not
| locking customers into long term revenue agreements?
|
| No comment on usual or not. Definitely not "good".
| ac29 wrote:
| Maybe not unusual for a young, growing company, but its
| obviously not sustainable for each dollar in profit to cost
| more than a dollar in sales/marketing effort. Thats a
| negative ROI.
| [deleted]
| wonnage wrote:
| You're confusing profit and revenue
| RC_ITR wrote:
| Many investors think in gross profit terms rather than
| revenue terms, because gross profit is the actual "cash
| in" from a given sale.
|
| That had become less common because software has famously
| high gross margins that aren't necessarily linearly tied
| to revenue, but allbirds are shoes.
| gamblor956 wrote:
| Gross profit = the profit from a specific business
| activity, in this case, sales, when looking solely at
| sales revenue less the specific costs of generating that
| revenue (aka COGS).
|
| Net profit = the profit from the overall business, taking
| into account all sources of income and all expenses.
|
| Sales and marketing are usually not treated as part of
| COGS, because they are not a necessary expense (in this
| context, COGS would include things like materials and
| production costs).
| jgalt212 wrote:
| Are they paying people $14 to then in turn purchase an $11
| shoe? Why can't I just keep the $14?
| joshuamorton wrote:
| They're paying 14 to get people to purchase a 25 dollar
| shoe. Profit is after Cost of revenue.
| RC_ITR wrote:
| More accurately, they're paying people $14 to buy a $20
| shoe that cost $9 to make. And they're not just "keeping
| the money" because they're hoping to be valued on a revenue
| multiple.
| ddek wrote:
| So, we're doing fashion startups now?
|
| Seriously though, I have no idea how valid Allbirds
| sustainability credentials are. They are, however, like slippers
| I can wear outside. Mine are two years old and have almost no
| signs of age. Price point is about normal for my shoes. I'm a
| fan.
| deberon wrote:
| Software is ubiquitous, us technologists work in way more
| industries than "tech".
| drjasonharrison wrote:
| And the assumption that "tech" ends at the browser, cloud, or
| digital device is rooted in ignorance about how consumer
| goods are created from the "raw inputs"
| md_ wrote:
| OK, so serious question: what's the cool tech in Allbirds?
| I'm willing to buy that the wool sneakers are
| technologically innovative, but my gut instinct is that the
| S-1 is on HN because, somehow, we've all become convinced
| that direct-to-consumer businesses are "tech adjacent."
|
| Like, what about that DTC toothbrush company? Or those guys
| who sell disposable razors? Or the online viagra salesmen
| whose ads are all over the MTA? Somehow, investors have
| become convinced these are tech companies ("democratizing
| access to consumer goods?") that should be valued at whacky
| p/e ratios, instead of yet another online commodity
| retailer.
| marc__1 wrote:
| from the filing:
|
| *New materials. Our successful track record of
| commercializing and bringing to market new innovations
| has made us a desirable partner for many outside R&D
| companies and vendors, allowing us to be first to market
| with novel materials while accelerating development
| timelines and reducing costs. A recent example is our
| collaboration with Natural Fiber Welding, Inc. to
| commercialize a 100% natural, plant-based leather-
| alternative. As we continue to build our library of
| materials, we plan to create new, differentiated
| products, as well as leverage new materials across our
| existing product platforms by refreshing our classic
| silhouettes.
|
| We estimate that a standard pair of sneakers results in a
| carbon footprint of 14.1 kg of CO2e. Today, through our
| use of renewable, natural materials and responsible
| manufacturing, the average pair of Allbirds shoes has a
| carbon footprint that is 30% less than our estimated
| carbon footprint for a standard pair of sneakers, and we
| offset the entirety of the rest to provide our customers
| with carbon-neutral products. Furthermore, we believe in
| the power of selective industry collaboration to
| accelerate progress, as evident by our partnership with
| adidas to unveil the world's lowest carbon footprint
| running shoe at 2.94kg of CO2e in May 2021. This
| partnership, as well as our decision to open up the
| carbon-negative, green EVA used to make SweetFoam, and
| our carbon footprint methodology demonstrates our ability
| to scale our impact to the broader industry and beyond,
| while extending our brand's leadership as a
| sustainability innovator.
|
| For example, in 2018, with the help of our partner,
| Braskem S.A., the petrochemical company and a leading
| biopolymers producer, we pioneered a carbon-negative
| green EVA made with Brazilian sugarcane, as an
| alternative to traditional EVA made from petroleum. We
| used this new carbon-negative green EVA to create
| SweetFoam, which is now in all of our shoe soles.
| [deleted]
| ericd wrote:
| Well, "tech" is short for "high technology", which
| typically means the bleeding edge. I'm certain that parts
| of modern shoe manufacturing are very novel, especially
| around materials science, but is its bleeding-edge-ness its
| defining characteristic, like it has been for eg computing?
|
| Because from where I'm sitting, it looks like they're
| making sneakers only very slightly differently than Nike
| has been for many decades, using a different foam resin
| supplier that claims to make it out of sugarcane feedstock
| rather than petroleum, and some nice claims of using
| recycled bottles for laces to make it so that their
| customers can feel a little better about buying fairly
| disposable shoes made from polymer foam.
| lotsofpulp wrote:
| The big difference is whether or not the product has near
| zero marginal costs, network effects, and/or large moats
| due to copyrights and patents. From a valuation perspective
| these factors greatly affect how much money can be made.
| rad_gruchalski wrote:
| Or how Germans pronounce it: "Albert's". Congrats on the ipo.
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