When Allbirds turned to AI in April, it felt like a “Silicon Valley” joke straight out of TV. The direct-to-consumer shoe manufacturer whose flimsy fit helped define what we loosely call “Silicon Valley style” has discovered a new trend to chase.
The move is straight out of GameStop’s meme stock playbook, which involves taking troubled publicly traded companies and riding on the hottest trends to reap the benefits of rising stock prices as retail investors flock to them.
Well, it worked. The company sold its shoe business for $43 million, raised another $100 million from the stock market, and is now called Smartbird.
Now Nadia Carsten has to make it work. Carsten, a former AWS executive with an engineering PhD, most recently led European computing company DCAI before becoming Smartbird’s CEO yesterday.
“We are recruiting a brand new team for our AI business and will be setting up an office,” Karsten told TechCrunch from Amsterdam. “As of yesterday, the shoe business has officially shut down, so that’s all done…The first task I’m working on now is to assemble the leadership team and find someone to lead our infrastructure operations, for example.”
Call this a startup with one founder and a very large seed round. What happens next is less clear.
Smartbird aims to become an AI infrastructure provider that addresses the seemingly bottomless demand for compute to train and run deep learning models. But unlike Neocloud, which ruthlessly arbitrages the price of a chip against the cost of GPU time or inference tokens, Carsten is aiming for a more carefully controlled deployment. Smartbird’s ideal customers require direct control over the servers running their models, usually for political or business model reasons, and value data sovereignty over public cloud scalability.
Carsten argued that the size of the market cannot yet be estimated and that the market is at a fairly early stage as many companies are still just piloting AI tools. At DCAI, she worked with Novo Nordisk and other European companies with a special interest in data sovereignty or operating bespoke models. “We definitely have talent in the pharmaceutical industry, energy industry, financial industry and public sector,” she said.
In Carlsten’s view, this means Smartbird is not competing with hyperscalers or neoclouds, but with internal projects. Still, there are established companies in this space, with Hewlett-Packard offering single-tenant managed AI computing services, as well as data center giant Equinix.
This is a real business model, but it’s unclear whether it has the same growth potential as cloud services, which are all about scaling. Karsten said the company expects to deploy computing clusters for multiple customers by the end of the year. Other startups have bigger ambitions, including inference cloud company General Computing. When the company emerged from stealth last month, it announced a $300 billion chip order.
Carlsten says that realizing Smartbird’s vision doesn’t require a large chip commitment. Because potential customer needs range from hundreds to thousands of chips. “It’s not about massive scale or a huge number of GPUs, it’s about the agility of these clusters and being able to control the infrastructure stack.”
And while Smartbird is unlikely to compete with competitors on price, as cloud services go to great lengths to optimize chip usage around the clock to provide the cheapest computing, Carsten thinks companies with specialized workflows might be able to work more efficiently on their own servers.
Demand for AI infrastructure is a powerful force in the market, driving up the stock prices of chipmakers, cloud providers, and energy companies, and even convincing investors that orbital data centers are a viable idea. But Carsten insists Allbird’s move was carefully considered.
“It wasn’t like, ‘Let’s do AI because it’s AI,’ because AI is getting a lot of attention,” Carsten said. Mr. Carsten was paid an annual salary of $700,000 and received about $9 million worth of stock for taking the job, the company said. “It really was, do we have a chance to find this niche in the market and build a business that we can grow over time?”
When Allbirds pivoted, one thing that was forgotten along the way was its public benefit corporation (PBC) status, which was meant to strengthen the sustainability efforts that were part of the shoe company’s pitch. PBC charters are often used by companies to highlight non-financial commitments. For example, OpenAI is a PBC focused on AI safety. But this change in direction suggests that the PBC is not ironclad.
Carsten said SmartBird’s board has made a long-term commitment to executing the company’s AI strategy.
“There are several companies out there chasing AI,” she told TechCrunch.
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