Allbirds, the shoe company, has sold its shoe business to American Exchange Group and wants to pivot to supplying high-performance computing to firms that are not comfortable or able to work with hyperscale suppliers.
We might wish the firm luck with its pivot. On the other hand, it might be the clearest sign of excess in the artificial intelligence market. That isn’t to say there is froth everywhere. But there might be some similarities to Pets.com, perhaps a poster child for investor exuberance during the dot.com bubble.
Both companies built their identities around a specific consumer promise, but were unable to reach profitability.
Pets.com sold dog food below cost and lost money on nearly every order once shipping was factored in.
Allbirds similarly struggled with margins.
Pets.com simply ran out of cash. Allbirds was able to sell its core business.
The pivot is the issue.
Pets.com had no logistical or supply chain advantage over existing pet retailers. As did many other firms, it simply appended the “.com” suffix to its name. Allbirds seems to be doing the same using “AI.”
Allbirds has no obvious AI infrastructure expertise, proprietary technology, or data moat. The pivot is a financial and PR maneuver, not a strategy grounded in capabilities.
Can a footwear company successfully manage the technical and cooling requirements of a tier-four data center? One might argue they can buy graphics processing units and hire personnel who do such things now.
Pets.com proved that brand awareness doesn't solve logistics. NewBird AI now has to prove that it can surmount the "compute" expertise gap in a market segment with lots of other competitors, such as bitcoin miners similarly pivoting to high-performance computing “as a service.”
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