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Walk into any Silicon Valley office in the late 2010s, and you’d probably see at least one pair of Allbirds. Woolen and environmental players, sneakers once showed a kind of corporate culture (even Barack Obama was a fan), and the company behind them was worth about 4 billion dollars at its peak, in 2021. But for several years, sales have been reported. Attempts to replicate the success of his signature product—see: woolen leggings and cotton underwear—did little to sustain the business. Earlier this year, Allbirds sold most of its stock for pennies and closed its remaining retail stores. Now it has a final idea: a hard pivot to AI.
The plan, announced yesterday, is to change its name to NewBird AI and use 50 million dollars from an unnamed investor to buy specialized chips called GPUs, and then rent them to other companies. The move is a high-risk bid to save the company’s stock, and it has already worked: Allbirds’ value soared by more than 600 percent yesterday. While businesses reorient themselves around AI all the time, Allbirds is experimenting with a more extreme version of the strategy. At first glance, it may seem like a cynical (and quite possible) grab for money. But for a sneaker company, AI branding could also be an escape route.
Last month, Allbirds sold for less than 1 percent of its value in 2021. Because almost nothing was saved in the fire sale, it is now essentially a shell company. BloombergMatt Levine he argued yesterday that the company may be banking on tech execs’ “interest in their brand” to make this pivot work. But Allbirds CEO Joe Vernachio is an outdoor apparel industry veteran with no visible AI experience; the company did not respond to questions about the future of its executive team or the future of other people who work there.
There’s an obvious reason for companies to jump on the AI train—the technology is creating enormous wealth. The S&P 500 hit a record high yesterday, thanks in part to the strength of the US technology sector. And that doesn’t take into account the two major AI companies, both of which are private. OpenAI and Anthropic are worth about $1.2 trillion combined—more than the GDP of Poland. When these companies go public, as is expected in the not-too-distant future, they will generate incredible wealth for their executives and investors.
The idea that a shoe company could use a new brand of AI to quickly generate its stock price will strengthen the suspicions of fraudsters. we are in a bubble. It features a cautionary tale of crypto craze: In 2017, shares of Long Island Iced Tea Corp. they flew like that 500 percent after the company announced the pivot of blockchain technology. The highs were short lived. A year later, Long Blockchain Corp. (got a new name too) was delisted from the NASDAQ. When struggling video game retailer GameStop tried a same crypto pivot in 2022, its shares rose 30 percent in a day. But that did not stop the gradual decline of the company from the high stock price that it had seen in 2021. The trick did not work for a long time because it destroyed the idea of what GameStop was: Why a brick and mortar store where I shopped before. Assassin’s Creed III suddenly sell NFTs?
But in this unprecedented market, where private lenders many and VCs are doubling down on AI, flexibility can be a good thing. Many companies have incorporated AI into their existing products over the past few years, with varying degrees of success. Mattel’s toys will soon have AI components, PepsiCo wants to rely on AI agents to transform its sales and operations, and Bath & Body Works has used AI to develop a “scent finder” called the Gingham Genius. Few businesses are immune to the allure of this technology, and the investment potential that tends to come with it.
NewBird AI’s lack of experience in the industry will make it difficult to turn short-term stock prices into long-term gains. Questions remain about who is investing in the business, and how its leaders can continue to raise money in the future. The $50 million Allbirds has raised, with just $5 million up front, is less than big AI companies often bring in. OpenAI announced $122. billion in new funding at the end of last month. And it is unclear whether the Allbirds will command the type of access personal lines of credit which other public companies have relied on for their AI aspirations. Despite the financial promise of its new business model, Allbirds is actually a small, inexperienced player in an already crowded market. Perhaps accounting for the expectations of traders, the stock has fallen sharply 25 percent today.
Allbirds is now abandoning what made it different during its formative years and adapting to a business environment where raw computing power is king. Despite the founder’s commitment to making sustainable shoes, the company is turning to notoriety a lot of energy corner of the technology industry and the possibility of slashing language about the preservation of the environment from its constitution. Whether this new brand succeeds or not, it has already underscored the absurd appeal of AI—and how much of our economy is being pulled into its orbit.
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Here are three new stories from Atlantic:
Today’s news
- President Trump said that the United States can to hold talks with Iran this weekend and that the two countries are “very close” to an agreementeven as the US military expands its blockade of vessels linked to Iran. He also announced a 10-day ceasefire between Israel and Lebanon starting today and invited the leaders of both countries to Washington, DC, for peace talks.
- A federal judge ordered Trump to do so stop the construction of the upper ground of the planned hall of the Palace despite the administration’s claims that it is needed for national security, deciding that the project cannot proceed without congressional approval.
- Trump nominee Erica Schwartza vaccine assistant who served as deputy surgeon general during his first term, leading the CDC. If confirmed, he would be the organization’s fourth leader in about a year.
Evening Read
The Path to Stability Autocracy Begins to Collapse
Written by Gal Beckerman
A few days after Donald Trump won his second term, I called a few Hungarian political analysts to ask what the future of America might look like. My inspiration was not natural; analysts had made many such calls. Hungary was seen as a bellwether for the bad direction which Trump said he was going to lead the United States. During a decade and a half of his administration, the Prime Minister Viktor Orbán had been robbed electoral systems and laws for the benefit of his party, come control (directly or indirectly) 80 percent of the media in the country, and created many independent institutions. But when I asked the Hungarians to give it to me directly, they started telling me another story, about what was happening on the “islands.”
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Rafaela Jinich contributed to this journal.
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