The fall of former direct-to-consumer darling Allbirds has taken a very weird turn. Allbirds, the sustainable shoemaker that caught fire with the Silicon Valley set about a decade ago, will start selling silicon itself.
The company said in a press release that it will transform itself into a business focused on leasing GPUs – the powerful graphics chips underpinning the AI boom that are in short supply and high demand, much to the chagrin of gamers and tech CEOs. The husk of the shoe company that once was will “pivot its business to AI compute infrastructure, with a long-term vision to become a fully integrated GPU-as-a-Service (GPUaaS) and AI-native cloud solutions provider.”
The announcement does little to address the unprecedented weirdness of going from selling minimalist wool boots to hawking AI hardware-as-a-service. Allbirds says it will soon rebrand itself as “NewBird AI,” a venture being funded by $50 million in convertible debt from an undisclosed investor.
Allbirds plans to use the funds to buy a bunch of high-end hardware which it will then loan out to customers hurting for computing power in long-term leases. All of this is part of a grand vision for a “neocloud platform” which will somehow rise out of the ashes of a once-great retailer of, it must be emphasized, cute little shoes.
Allbirds loses its wings
During its heyday, Allbirds was synonymous with a Bay Area aesthetic that emphasized simplicity and eco-awareness over conspicuous consumption. With shoes made from natural fibers and more sustainable materials, a pair of Wool Runners bundled environmental virtue signaling with comfortable, everyday designs much simpler than what an athlete-focused sneaker giant like Nike would dream up.
As Allbirds gained traction, the company went public and plunged into the brick-and-mortar world with a rapidly-expanding footprint of physical locations. Two years ago, Allbirds began scaling back its retail presence “opportunistically” before eventually announcing that nearly all locations would shutter their doors earlier this year to lower costs and set up the business for long term stability. “This is an important step for Allbirds, as we drive toward profitable growth under our turnaround strategy,” Allbirds CEO Joe Vernachio said in late January.
In February, Allbirds pointed to a more palatable pivot to high fashion, but that turnaround plan was short-lived and by the following month the company announced that it would sell its assets for a mere $39 million, a fraction of the $4 billion it was once worth. American Exchange Group (AXNY), which owns brands like Aerosoles and Ed Hardy, would pick up the pieces. “This next chapter with AXNY builds on the foundational work already completed and sets up the brand to thrive in the years ahead,” Vernachio said – a normal statement for a company in peril and one without even a hint of the deeply strange plot twist ahead.
Recalling a more bizarre pivot requires some work. Once upon a time, RadioShack pivoted to cryptocurrency, offering up its own altcoin ($RADIO) and issuing a blitz of edgy tweets for attention. The inherent insanity of Allbirds’ shoes-to-GPUs pivot easily bests the spectacle of RadioShack’s sad devolution, but is it the weirdest pivot of all time? That honor might still belong to the Long Island Iced Tea Corp, which in 2017 changed its name to Long Blockchain, sending its price sky-high – an event that eventually resulted in the SEC charging three people with insider trading.
