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On Wednesday morning, the once-iconic and now-struggling shoe brand Allbirds announced it would completely exit the production of “sustainable” shoes and transform into an AI company. As often happens whenever a company mentions this word, artificial intelligenceFollowing the news, Allbirds’ last-tier stock rose a whopping 600 percent.
In a statement about the decision, the company said it had secured $50 million from an undisclosed investor to “transform its business” from shoe manufacturing to AI infrastructure. The cash infusion will enable the company to purchase graphics processing units to power and develop its AI models and loan them to customers. As part of the change, Allbirds “expects” to have a new name: NewBird AI.
But if you still want to relive the recent past and connect with Barack Obama and Silicon Valley’s footwear of choice, here’s what you can do: American Exchange Group plans to license the Allbirds trademark for products sold by other shoe manufacturers and retailers. But the rest of the Allbirds (sorry, “NewBird AI”) business is in a far more desperate situation. And its swinging adoption of AI, while superficially amusing, is another sign of a particularly grim trend in modern corporate America.
The initial announcement sent Allbirds’ stock price soaring from $2.50 to $17 per share, but as of Thursday, the stock had already begun to calm down, and the stock is still far from the monumental high ($650) it reached during Allbirds’ IPO in late 2021. but Any The jump is good news for the wool runner manufacturer. Just last month, the company announced to investors that it would sell all its assets for a fraction of their value at the beginning of the decade to American Exchange Group, the private holding company that is the owner and licensee of similarly bankrupt fashion brands such as Ed Hardy and Echo Unlimited.
This sad agreement was preceded by a series of bad headlines. Allbirds closed all of its full-price retail stores in the U.S. in February and has reported huge losses over the past two years due to the abundance of cheap counterfeit products on the market and a direct-to-consumer business model that limits the exposure it can get through major retail chains. (Uncertainty over President Donald Trump’s tariffs hasn’t helped, either, since most of Allbirds’ products are made in Vietnam.) So embracing a more lucrative industry (for now), while drastic, is not. too much Amazing.
As various observers have noted, this isn’t the first time a prominent brand has clung to technology buzzwords as a means of securing investment and relevance. It was just a few years ago that leading companies were turning to virtual reality as the future of business, whether it was for internal meetings or external customer experiences. But it’s been quite some time since Burberry, for example, talked about its Metaverse partnership in the early 2020s — and the luxury designer, whose stock price has plummeted, laid off 1,700 people last year following a significant revenue shortfall. Albertsons also bet on interactive virtual shopping during the era of the Facebook-to-meta vibe, but it didn’t exactly pay off.
Meanwhile, the Web3 encryption hype cycle that pushed clunky, glitchy headsets into every American boardroom also brought NFTs to the fore, but this also completely flopped. Media companies that invested in NFTs ended up not seeing any lasting profits. Pizza brands like Papa John’s and Pizza Hut that purchased NFTs for promotional purposes similarly failed to appreciate their value. Reddit also joined the movement, dismantling its NFT infrastructure at the beginning of the year.
Glossy snake oil bottles and product bubbles have been around for centuries. But what’s especially noteworthy about the sputtering technology alliances of the 2020s is how desperate they seem. Retail stores, brick-and-mortar food stores, and text-based media are sectors that haven’t thrived in a while, but are having a particularly tough time in this strange post-pandemic economy. Generous funders like Allbirds’ $50 million investor look even more appealing in that situation, especially if the trade-offs in the deal seem cool and trendy. The prospect of a bad fall afterwards may not occur to you, because at least you I tried it.
But as the decade draws closer and economic conditions become increasingly challenging, the risks of boom and bust are becoming as pressing as the dangers businesses face. There is an interesting caveat to the switch from Allbirds to NewBird AI that has not received much public attention. The company’s investors (who, it’s worth mentioning, have not yet formally approved either the American Exchange sale or the AI pivot) will be allowed to sanction the entire breakup plan after a year if they decide that high-performance processing chips don’t work as a product line for them after all. Basically, if Allbirds shareholders give the OK to all of this, it would mean a pretty bleak ending for the once-beloved shoe brand. This is the last chance, and if the NewBird AI is not successful, all but the simple Allbirds logo will disappear and remain as zombie intellectual property.
So the shoe, once ubiquitous on San Francisco’s sidewalks and celebrated for its public efforts to make a notoriously carbon-intensive industry a little greener, turned to energy-sucking, short-lived computer processors because, well, people with pockets saw an opportunity. The new cash injection, which specifically exceeds the $39 million price American Exchange paid for Allbirds, will be used to buy ultra-efficient computing hardware from chipmakers and sell it to AI enthusiasts who can’t stock up on chips or produce them themselves like big tech companies (OpenAI and Amazon) can do, according to federal filings.
Granted, this is a real business need and not a scary idea on the surface. But there are also signs that the surge in AI spending that has propped up the economy for the past few years may not be as powerful as previously thought, as major companies in the sector renege on their prior commitments and local communities successfully sabotage data centers that house the very chips provided by companies like NewBird AI. Therefore, if the bubble bursts sooner than stakeholders expected, the kill switch timeline would be one year.
This is also a sad way for Allbirds to exit. An enterprising investor pounces on a publicly traded company that has dumped nearly all of its former $4.1 billion market capitalization into something entirely different. Because those involved really have no choice. This buyer, unlike the customers who made Allbirds popular in the past, has no love for the actual shoe. And just like we’ve seen with cryptocurrencies and the Metaverse, many other failed businesses will be deprived of hasty survival funds, even if it ends in disaster. A good example was already seen in February, when in-vehicle karaoke machine specialist Algorithm Holdings decided to become an AI-assisted transportation company, sending its stock price up a whopping 262%. This didn’t last long. After two months, the algorithm resumed trading at one-third of AI’s peak. If history is any indication, Allbirds’ final stint at the helm will play out similarly. Struck out on their feet, companies are hoping the latest technology trends will cushion them before they crash. ground.
