Allbirds Shifts Focus to AI Computing: Why Not?

On April 7, Allbirds issued a press release touting its new “canvas cruiser” collection alongside a collaboration with Pantone, the color experts. Just a week later, on April 15, Allbirds released another statement revealing its plans to “shift its business towards AI compute infrastructure.” AI developments are accelerating rapidly.

To be fair, April has been quite eventful for Allbirds. The company’s downfall has been a long time coming and widely reported, but here’s a brief overview. Although its comfortable yet stylish footwear drove it to a $4 billion valuation at its 2021 IPO, sales have consistently fallen short of expectations. After enduring years of financial setbacks, it ultimately sold off the remnants of its intellectual property to American Exchange Group, a “brand management” firm that owns brands like Aerosoles and Ed Hardy. The sale price? $39 million, completed on March 30.

Now, American Exchange Group is expected to focus on revitalizing the Allbirds apparel line, starting with the canvas cruisers. Meanwhile, Allbirds plans to utilize a $50 million cash influx (or “convertible financing facility”) to invest in “high-performance GPU assets,” with the aim of creating a “fully integrated GPU-as-a-Service (GPUaaS) and AI-native cloud solutions provider.” As part of this significant transformation, Allbirds will also rebrand itself as NewBird AI.

Allbirds isn’t the only company making a transition to compute. Boom Supersonic aims to create the world’s fastest passenger jet but is also willing to sell its Superpower gas turbines to AI firms needing energy for data centers. Many bitcoin mining companies have jumped on the AI bandwagon months ago. Even Nvidia’s GPUs initially found their fame in gaming PCs. However, Allbirds seems to be the first company that began with a minimalist sneaker made from responsibly sourced Merino wool.

It’s undeniable that the demand for compute—processing power for AI—is virtually endless. Someone needs to address it; why not a shoe company? “Enterprises, AI developers, and research institutions are struggling to obtain the computing resources necessary to build, train, and deploy AI at scale,” states Allbirds’ press release. “NewBird AI is being developed to help bridge that gap.”

It remains unclear what exactly NewBird AI will contribute beyond just the funds to acquire a fleet of GPUs. Perhaps that’s all that’s needed these days. This shift is subject to shareholder approval, but investors seem to welcome the move; Allbirds stock surged by 400 percent following the announcement.

Allbirds did not respond to inquiries for comment.

If nothing else, this pivot exemplifies the current frenzy surrounding AI. Startups that once focused on product development are now investing in processors. Warby Parker, take note.