Roughly forty-five years ago I moved to New York City to start life as a grown-up. It took me a while to find the best local takeout for pizza and sandwiches, and how to negotiate Chinatown. I had to learn the parks in my neighborhood that were devoid of tourists, as well as the best places to run that lacked traffic. And of course there were the logistics of city living, from how to use the subways and buses, to where to get a good bacon, egg and cheese sandwich.
In the midst of all that my mom called to see how I was doing. A Jersey girl at heart and in practice, she always loved New York City, though her exposure to it was Radio City Music Hall, Broadway and the Macy's Thanksgiving Day Parade. To say her image of the city was a romanticized suburban one was putting it lightly. Still, she liked to read up on it and the high life she imagined it offered to her first born. In the midst of that discussion she passed on that she had just heard about the hottest clubs in town, to which I countered (with love), "Mom, no offense, but if you know about the hottest clubs in New York City, they are no longer the hottest clubs in New York City."
That recalled the famous quote attributed to Joe Kennedy, the father of JFK. The story goes that in the summer of 1929 Kennedy stopped to get his shoes shined on his way to his office. While the boy was buffing his shoes, he started giving Kennedy stock tips on which companies to buy. That led to an epiphany and his supposed utterance, "If shoeshine boys are giving stock tips, then it's time to get out of the market." Kennedy went back to his office and liquidated his portfolio, enabling him to not only survive the Great Crash, but to make a fortune by shorting the market afterward.
While research shows the story is likely more apocryphal than true, it's not wrong. Like my mom's tip, the point is that when people in the least likely position to know something authoritatively profess expertise, there's a good chance that whatever they are talking about is pretty much over and it is time look for the exits. Which brings us to current machinations of Allbirds.
Founded in San Francisco in 2015, the company started out making sustainable, natural shoes on the crowd funding platform Kickstarter. Their variants were made of wool, and the company promoted itself as an all-natural, environmentally friendly brand. It expanded rapidly in both product line and reach, becoming a fad with well-known customers from Barack Obama to Leonardo DiCaprio. All that led to going public in 2021, with a valuation of about $4 billion. Almost immediately it started to crash, as complaints about its product and balance sheet led to lawsuits and management turnover. Fast forward to January of this year, when it closed all but 4 of its stores. Finally in March it sold its name, assets and intellectual property for less than $40 million, about 1% of its peak. For most companies, that would have been it.
But wait, there's more.
Barely one month after going belly up in the shoe world, the remaining corporate entity (which no longer owns the "Allbirds" brand) announced a new line of business. Rather than make eco-friendly footwear, they would pivot to their adjacent expertise of... wait for it... artificial intelligence. Rebranding itself as "NewBird AI," it raised $50 million from an unnamed institutional investor to acquire "high-performance GPU assets" to begin transitioning into a "fully integrated GPU-as-a-Service." Translation: it's going to buy and rent out AI level computing power to tech startups, competing with companies such as Amazon Web Services, Microsoft Azure and Google Cloud. Though not an engineer, my assumption is that the amount of Merino wool in an Nvidia processor is low, but what do I know?
A shoe company plunges into the AI marketplace. If that doesn't raise a few flags as to where we are in the AI timeline I don't know what does. What's even harder to fathom is that some "unnamed institutional investor" thinks there is a chance for success. But stranger things have happened. Or as Yogi Berra commented when he found out about a Jewish man being elected mayor in Dublin, Ireland, "Only in America."
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Marc Wollin of Bedford has given up trying to judge good ideas. Or not. His column appears weekly via email and online on Substack and Blogspot as well as Facebook, LinkedIn and X.
