What Caused Allbirds’ Downfall?

Allbirds, the eco-friendly wool sneaker once seen as the unofficial uniform for the Silicon Valley set, was once valued at $4 billion soon after its 2021 IPO, but last week agreed to be sold for $39 million. What happened?

On LinkedIn, Neil Saunders, managing director of GlobalData and a RetailWire BrainTrust panelist, said Allbirds’ management underestimated how much of a premium consumers are willing to pay for sustainability -- as well as demand for the brand outside of Silicon Valley.

“In many ways, it's a shame,” wrote Saunders. “If Allbirds hadn't chased growth at any cost, if it had rounded out its sustainability credentials with other attributes like style, and if it had pursued expansion via wholesale, it may have succeeded. It didn't do those things and, as a result, it never had a clear path to profit and entered a perpetual spiral of revenue decline.”

Allbirds, initially sold only online, is among many companies launched as digital-first DTC brands -- also including Casper, Rent the Runway, Stichfix, Peloton, Away, ThredUp and Blue Apron -- that have struggled to reach long-term profitability.

Allbirds pursued a hyper-growth strategy to justify its high valuation, including reaching a peak of 60 stores by the end of 2023. The brand also expanded into categories including wool leggings (that turned out to be see-through) and technical running shoes and other sneakers with edgier designs and brighter colors to reach younger consumers. The latter assortment also failed to catch on.

Allbirds Post-Mortem Turns Up Clues on Early Demise

In an interview with Fortune on the brand’s 10-year anniversary in 2025, co-founder Tim Brown explained: “The time we had to evolve and grow that story was compressed in such an intense way”, admitting that “with the rapid success that came our way, we lost some of our DNA.”

Julia Beardwood, founder of her eponymous branding agency, further said on LinkedIn that footwear is “one of the most trend-vulnerable categories in fashion” and Allbirds’ “brand recipe of comfort, sustainability and simplicity wasn't strong enough to survive in a brutally competitive environment.”

Some have also complained that Allbirds’ focus on sustainability impacted its products’ durability.

Allbirds has never turned a profit since going public. Sales reached $152.5 million in 2025, about half of its annual peak of $297.8 million in 2022. All of Allbirds’ stores in the U.S have closed, except for two outlets.

Allbirds is being sold to American Exchange Group, a brand management company that already includes Aerosoles, Isle Surf, White Mountain, and other footwear brands. Joe Vernachio, Allbirds’ CEO, said in a statement that the sale “sets up the brand to thrive in the years ahead.”