In April, Allbirds made a significant shift towards artificial intelligence, a move that felt reminiscent of a plot twist from a tech-themed sitcom. The popular direct-to-consumer footwear brand, known for its casual style, has embarked on a new chapter in its business journey.
This strategy mirrors tactics used by meme stocks such as GameStop, where struggling public companies attach themselves to trending concepts to attract investors and boost their stock values.
The transformation proved effective. Allbirds divested its shoe line for $43 million, secured an additional $100 million from investors, and has since rebranded itself as Smartbird.
Now at the helm is Nadia Carlsten, a former executive at Amazon Web Services with a PhD in engineering. Most recently, she was the leader of DCAI in Europe, and she officially stepped into her role as CEO of Smartbird yesterday.
“We are in the process of assembling a new team for the AI segment, and we’re looking to secure office space,” Carlsten shared from Amsterdam. “The shoe business has officially concluded as of yesterday, so that’s settled. My immediate focus is on gathering our leadership team, starting with someone to oversee infrastructure operations.”
This startup is unique as it has a sole founder and significant initial funding. However, what lies ahead remains uncertain.
Smartbird intends to position itself as an AI infrastructure provider to meet the escalating need for computing power for deep learning applications. In contrast to the neoclouds that optimize chip prices against GPU usage, Carlsten’s goal is to offer more controlled deployments. Their target customers will require direct access to their server operations, often due to business requirements or regulatory concerns, prioritizing data sovereignty over the scalability offered by public cloud services.
Carlsten could not pinpoint the size of this burgeoning market, suggesting it is still in its infancy as many organizations are just beginning to explore AI technologies. During her time at DCAI, she collaborated with companies like Novo Nordisk, which are particularly focused on data sovereignty and custom models, spanning industries such as pharmaceuticals, energy, finance, and the public sector.
In her view, Smartbird’s challenge lies not in competing with major cloud providers but rather against internal corporate initiatives. Nevertheless, established players like Hewlett Packard and Equinix are also active in this domain, offering sole-tenant managed AI computing services.
While this is a viable business model, it remains to be seen if it can grow at the same pace as cloud services, which prioritize expansion. Carlsten anticipates having compute clusters for several clients operational by the end of the year. Other startups in the space, like General Compute, have higher aspirations, with plans for substantial chip orders.
Carlsten believes large chip commitments aren’t necessary for achieving Smartbird’s vision, as her potential customers typically require a few hundred to a few thousand chips. Their focus is on the agility of operations and maintaining control over the infrastructure.
Smartbird is unlikely to compete on pricing with cloud services, which optimize chip utilization around the clock to offer lower rates. However, Carlsten suggests that companies with specialized workflows may find greater efficiency with their own dedicated servers.
The demand for AI infrastructure is a powerful market driver, positively influencing stock prices for chip manufacturers, cloud services, and energy companies, even inspiring thoughts about orbital data centers. Carlsten reassures that Allbirds’ transition was a well-considered decision.
“It wasn’t a spontaneous decision to pursue AI just because it’s trending,” Carlsten, who has a $700,000 annual salary and received stock valued at approximately $9 million, stated. “We wanted to explore whether we could sustainably build a business that occupies a unique market niche.”
Transitioning from Allbirds also meant abandoning its public benefit corporation status, which had been meant to emphasize its sustainability goals. Such charters are often utilized to illustrate a company’s non-financial commitments. The switch, however, indicates that PBC designations are not always reliable.
Carlsten affirmed that Smartbird’s board is dedicated to executing her AI-focused strategy in the long run.
“Several companies are chasing AI, but what’s crucial is whether there’s substantial intent behind those pursuits,” she remarked.
