Cautionary Tale: Don’t be Allbirds

High margins; high capital turnover; both? You can’t be neither.

There are 4 quadrants. Which are you?

You can be:

1. high margin & low turnover
2. low margin & high turnover
3. high margin & high turnover (= heaven)
4. low margin & low turnover (= death)

Most leaders choose to focus on margin. But what they don’t realize is that capital turnover can often be a faster fix and have a bigger impact. Higher margins, but low turnover also means higher working capital needs. If you have excellent access to capital, this is not a problem. But access to good capital is hard for most scaling brands. So improving capital turnover reduces working capital needs and thus your need for outside capital.

In this video, I pick on Allbirds as a cautionary tale and compare them to other public companies that fill each of the other 3 quandrants.

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Let me know your thoughts.