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Allbirds rose to prominence selling sustainable Merino wool sneakers that became the signature uniform of the Silicon Valley tech crowd in the late 2010s before rapidly losing popularity on the heels of its 2021 IPO. Faced with possible extinction, the company is now jumping on the AI hype train.
Sales have been declining for a couple of years now, and Allbirds announced earlier this year that it would close all of its brick-and-mortar stores. Then, last month, it announced a $39 million sale of the company to American Exchange Group, which operates brands like Ed Hardy.
Most thought that would be the end of it. But they were wrong.
On Wednesday, Allbirds announced that it was reinventing the company as an AI infrastructure company.
American Exchange Group will keep Allbirds, the shoe brand, going. But Allbirds, the company, will now go by Newbird AI, that is, if it secures stockholder approval at an upcoming meeting in mid-May.
To do so, the company agreed with an institutional investor on a $50 million convertible financing facility, i.e., debt that the investor can convert into equity later.
With that money, “Newbird” aims to buy GPUs. The long-term plan is to “become a fully integrated GPU-as-a-Service (GPUaaS) and AI-native cloud solutions provider,” according to the press release. GPUaaS is a burgeoning type of AI enterprise that aims to address the demand driven by a global GPU crunch by giving AI startups the chance to outsource the processing power behind their models.
“The Company will initially seek to acquire high-performance, low-latency AI compute hardware and provide access under long-term lease arrangements, meeting customer demand that spot markets and hyperscalers are unable to reliably service,” the press release said.
New technology is exciting, and the corporate world has shown time and again that there is nothing businessmen love more than a hype train. In the late 1990s, the hype train was the internet, with every company vying to add a “.com” to the end of their name, creating a bubble that some experts believe is dwarfed by today’s rumored AI bubble.
In the 2010s, it was the rush to get on the blockchain, a craze perfectly exemplified by Long Island Iced Tea’s rebranding as Long Blockchain. That company was delisted by the SEC in 2021.
In the mid-2020s, the buzziest word you can put in a company name to get investors rushing to buy your stock is AI. To say that Allbirds’ stock price soared with the news would be an understatement. As of 11 AM, the stock was up more than 420%. Elon Musk is weeping in appreciation right now.
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Source: Gizmodo