So as you might have heard… Allbirds, the D2C shoe company that lost 99% of its market value since its 2021 IPO and recently sold its brand and footwear assets to American Exchange Group for $39M, announced that it is changing its name to “NewBird AI” and pivoting its business to AI compute infrastructure, with a long-term vision to become a fully integrated GPU-as-a-Service and AI-native cloud solutions provider.
The company has obtained $50M in financing to fund the new venture, news of which sent the stock soaring over 500% into “meme stock” territory. It has since settled to around $11.40 per share, or about 350% higher than where it started.
There's been a lot of chatter surrounding this news during the past week, and a lot of it has been hilarious. After all, it is a fairly unexpected pivot that's easy to poke fun at. My buddy Jarek messaged me on LinkedIn after the news broke, “Can’t wait to read your write up on allbirds 😆 wtf” — which I'm happy to share below.
To summarize my thoughts on the pivot: “Sure, why not?”
I'm a huge fan of pivoting as a business, and have made some successful pivots myself over the years (albeit not as drastic as switching industries altogether). Some of the biggest household names in history have had major pivots themselves:
- Nokia started as a paper mill and rubber boots company, and Samsung began as a noodle and grocery trading company, before both became phone and technology giants.
- YouTube originally launched as a video dating site.
- Instagram started as a check-in app called Burbn before pivoting to photo sharing.
- Twitter began as a podcast directory called Odeo before pivoting to microblogging and later evolving into a CSAM marketplace.
- Wrigley started selling soap and baking powder, gave away gum as a bonus, then pivoted to gum.
- 3M started as a mining company before pivoting to sandpaper and eventually Post-it Notes.
- OpenAI started as a non-profit AI research lab before eventually pivoting into an Anthropic clone. LOL, burn!
The list of companies that have successfully pivoted their businesses into completely different products, oftentimes serving completely different industries, is extensive. Then again, so is the list of companies that have failed…
I strongly believe that having an audience is the most valuable currency a business can have in today's world, and Allbirds has built one that it can leverage into eyes on its next business venture.
All that said, can Allbirds pull it off? Nah, probably not. They couldn't even make it in e-commerce. They're going to get eaten alive in AI infrastructure, especially trying to go at it with just $50M in the bank. Sam Altman eats $50M for breakfast.