Allbirds’ AI Reboot: Bold Leap or Giant Misstep

Welcome to We Fixed It. You're welcome. The show where we take over companies, you come along for the ride, and we try to put them back better than we found them. Until recently, Allbirds was the unofficial uniform of the tech industry. If you were a founder, a VC, or just wanted to look like one, you wore those everywhere. The company was built on clean design, sustainable materials, and a strong understanding of their target. The product worked because it gave off the allure of success while still coming across as grounded and approachable. Then the numbers started going sideways. Revenue fell by half. Losses piled up and the company's stock tumbled down to a market cap of about 21 million, which sounds okay, but that's roughly 1% of its $4 billion valuation when it went public in 2021. That's a steep decline in a relatively short time. So when your company loses almost all its value, what do you do? Well, in Allbirds' case, they announced their big comeback as an AI company. Wait, what? Well, guess what? The market loved it. Their stock surged by more than 400% in a single day. Which brings us to the question we're here to fix. Are we living in a moment where you can just take a struggling company and say, we do AI now? And AI or not, is it really that easy to rise from the ashes as a whole new company that does a completely different thing? Is Allbirds onto something or are they just capitalizing on a moment before they close up shop forever? Well, we're going to get to all that and we're going to pretend it's our company and tell Allbirds or Newbird AI, their new name, what we would do if we were in their shoes. And those are big shoes to fill. So joining us today is Todd M. Schoenberger, CEO of Crosscheck Media and Chief Investment Officer at Crosscheck Management. He's a veteran financial commentator who's appeared on CNBC, Fox News and CNN, which means that a shoe company going all in on AI is probably not the craziest thing he's ever heard. Welcome, Todd. Tell us a little bit more about you. Well, thank you for having me. I do appreciate it. And like you said, thank you for the kind words of the introduction. I do work for a single family office out of Washington, D.C. I'm the CIO, and we do focus on a few critical areas such as real estate, AI, oil, some of the more headline names that we're hearing about these days. And I'm also the CEO of Crosscheck Media, which is a spinoff of our media division of Crosscheck. And I'm here today to talk all about the shoe company. Yeah, thanks, Todd. It's not just a shoe company, is it? No, it's not. Oh, this is going to be great. Let's talk Allbirds. So what's so confusing, at least to me, is that what Allbirds is attempting is not a traditional pivot. It's switching categories entirely. They're going from footwear to AI infrastructure. They're entering into a space that requires deep pockets, technical operations expertise, strong negotiating power, and enterprise sales experience in a very competitive space. If they don't know what they're doing, their new $50 million raise could come and go like that. Now, Allbirds is not the first company to attempt a dramatic reinvention. reinvention. It could even work. Nintendo started as a playing card company before it became a gaming giant. Netflix mailed DVDs before it became the backbone of streaming. Amazon went from books to everything. But none of these were overnight identity swaps. In each of those cases, the companies identified a market need, built capacity, invested heavily, and expanded over time. And those are some of the success stories. Turning one company into a drastically different company can backfire horribly too. Let's talk it out. But what I think gives Allbirds a fighting chance is how beloved a brand it was. This wasn't an anonymous shell company. It was a $4 billion breakout that was incredibly popular. But why AI? Why now? Hot take, Chino. What do you make of the switch from shoes to AI? Are you buying this? Yes and no. I've been conflicted with it. In the beginning, I thought, what do you mean AI? And I actually want to break it down a little bit more because we've all heard of CPUs, central processing units, which is the brain of a computer. And what Allbirds is looking to do is sell, again, what we love on the podcast, software as a service, graphic processing units, GPUs. That is the brain of AI. So they're doing GPUs as a service, which I think is brilliant. Essentially what it allows companies to do, because when you're investing in AI and the tech, there's a lot of capital that you need from that. And you're moving that more into an operating expense, which I know I'm sure you'll jump into. So brilliant for people who, and companies starting out that don't have the capital that all birds once had are the name, brand, and identities. I think good in theory, where their challenge is going to be is, you know, the brand attachment theory, we still call it Allbirds. I don't even remember what the new name is, but it's always going to be Allbirds. And I think, again, moving from shoes to AI, when you look at the workforce and the culture, it takes a different level of skill there. And so I'm wondering what the kind of social identity, those that are working there, of, okay, well, what does this mean for me? And I want to touch into that, but I got to talk about the operating side, Melissa, and hand it over to you of just what does this mean to just switch? You can't just do that, it seems. You actually have made me, given me pause to think about it because I have my beloved Allbirds here. I have, this is my third pair. The pivot really only works if Allbirds can explain why it belongs in this space at all. And so you kind of explain that a little bit because going from sneakers to AI is such a wide leap that that's going to be the obvious question. Is this, you know, and Todd and Aaron, we can talk about this from a brand perspective, but is this just a gimmick to buy them some time? and whether it's a real strategy, because definitely from an operating perspective, you're going into some unchartered space compared to where you were in the sneaker space. And so for me, that's something I'm really a little concerned with, because it doesn't feel like they thought realistically about what that's going to take. You know, standing up an AI infrastructure business from scratch requires heavy capital in of itself and they're a struggling business. It requires what you just mentioned, you know, specialized talent and a very clear use case and a wedge of what are they, what makes them so different than every other company that's slapping AI into their name or into their brand. So it will really need an operating system that's much different than that retail side that they are looking at. It's a tech side. You've got product, they've got compliance, they've got security issues like data governance, all of those types of things that they didn't necessarily have to deal with before. And those all come with a price because we all know that the tech talent in this world right now, if you have AI certification, if you have any of that, you can ask for a higher salary. So it's an interesting concept. And I'd love to hear, you know, because it really feels to me that it's really driven by using their brand to get by time. And so that's what I would be interested in hearing, like, from you, Todd, or you, Aaron, about like, whether you think they're going to get enough out of this to even actually build a business. Yeah, go for it, Todd. Well, I was just going to say, I mean, first of all, it's irresponsible of the company. The people that lead Allbirds are not stupid people. These people have graduate degrees from some of the best business schools in the country. There are speakers at Stanford. I mean, they're very smart people. But they went from a $4 billion valuation down to, like you said, Aaron, $21 million. They almost didn't have a choice. They had to do something. And God bless them, because guess what? They just brought in a $39 million. They sold the company for $39 million, and they raised another $50 million. Granted, the company was $77 million in debt, but now they think, okay, we could just say that we're a new AI company. What they did, they didn't pivot to AI. They pivoted to a headline, and that helped the underlying stock pop in one day. But with that, it made a lot of people rich in that one day. But afterwards, now you have to question, what is the strategy here? What's their business model look like? They don't really have a business model. They can't compete at just $50 million. I mean, you need billions of dollars and they're not even close to that. So this is a company that I would imagine we're going to hear about in a Harvard case study someday. And with that, it probably will be deteriorating and dissolve and evaporate from there on. Well, Todd, what I find so fascinating is that you call it a rebrand, but it's kind of an unbrand. So they took a brand that has cultural cachet and consumer awareness. It's beloved. And they're saying they're going into operations and infrastructure, you know, back of the house. And who cares how AI runs and who cares how the internet runs? Why would they take something with so much public goodwill, even as their stock slid and they lost their valuation? Maybe people lost money in the problem. But people still love this company. Why would they go and say, we're doing something that's so far apart from the public eye? They had no choice. The company was quickly, they were going to be gone. I mean, in 12 months from now, you never would have heard of them again. And you are right. You're absolutely right. They had that in their charter about being environmentally friendly. And now they're doing the complete 180 and going into what is really a utility draining type of operation that they actually had to ask their board to remove from their charter that they're no longer going to be environmentally friendly. I mean, the whole spirit and the heritage of all birds is no longer going forward. So any goodwill that they had, forget about it. They're looking at a completely different customer base right now, looking to change that model. They made a ton of business mistakes down the line. We already know that. They opened up 60 retail stores. What they should have been focused on is developing their shoes and continuing to evolve those shoes and do more of an online type of business. But they didn't do that. They felt that everybody wanted to go into their stores and buy their shoes. It just didn't happen. Now they've got a ton of inventory. These shoes, who knows who's, I mean, I know the new company bought them, who also helped Ed Hardy, et cetera. They might be able to help them down the line. But realistically, right now, for them to go into AI, forget about it. I don't see it working out for them. Yeah, because if they wanted to make a headline, they could go into ice cream. We all like ice cream. You know why? And that'll get them a stock bump or something. Just do something that has visibility behind it. But to say, or even AI software that does something that's public-facing or consumer-facing. But to say, yeah. Yeah, and you'd be in a California. This would be like In-N-Out Burger going to compete against Intel. It doesn't work that way. Yeah. Right. I think, Todd, you brought up a really good point. And I wanted to talk about that as well as around their mission. Right. So this is really a destruction of what all birds really stood for. You know, their original mission was essentially to make better things in a better way, meaning comfortable, good looking footwear built with more sustainable materials and a lighter environmental footprint. So you felt good about it. It was kind of the Patagonia of shoes, so to speak. And they really emphasize that. And really, I think that's why it ended up being something like a beloved brand. Like people felt like, oh, this is good for the environment. I'm wearing these recycled shoes, whatever. But they could have actually leaned into their mission a little bit in this pivot. And I think that's a mistake they've made because better things could have meant something like, I'm making this up, better infrastructure, right? So, you know, a new company in AI, we have, we're going to have a better infrastructure than a lot of these popping up companies that are around AI. A better way means more operational discipline. You know, they wanted to operate a certain way with rigor and reliability and security and support and cost discipline. They could try to, you know, focus their new AI company in that direction. And then sustainability is a big thing about Allbirds, the original sneakers brand. And they could have translated that into efficiency. They could have rebranded that Aaron, like you said, into AI that talks about sustainability and how to make companies more sustainable. Really focused that their purpose could still stay, but their category is changing. And to your point, Todd, they just kind of threw it all out. And they were just like, okay, we're going to keep bird, you know, like, you know, and like, I loved your, your in and out example because that is actually hilarious. Yeah. You know, you, you know, you go to it out and then get an Intel chip, you know, like that doesn't even make any sense. So I do think that that is an example of, you know, it really is living in to Chino, what you mentioned, the gimmick of it all. It's not living into anything that feels authentic besides them just trying to a money grab. And then, like you said, they're going to be in a Harvard business review fairly soon. Yeah, I want to jump on that, too, because you're talking about identity continuity, right? Like continuity. You just you know why you just throw this old mission away. And I think if they were able to have, you know, said we're going to be the better. I don't know what that means. It's always not great anyway. It's destructive from the universe. We get it. But if they had come with that in mind, it would have brought a little bit more trust within their consumers and their investors, right? Like the, I just, the psychological safety of it all is really interesting because we just, I just love how you're empathetically sharing. It's like, we just don't trust it. We don't trust it. It a gimmick And I think if they want to try to turn this around I don know how they can because already the train has left the station They pulled back so many things to flip it back the other way The PR needed and involved would be helpful. But if they were to be listening, all birds, listen, you need to build back that trust. You need to try to use the brand that you're known for. You are the tech bros shoe. But I think, again, you can use it as like, you know, we were in the vicinity of these people. And this is, you know, why we thought, listen, it's a Hail Mary moment. We needed it. Because the reality, too, is the numbers. How do you go from 4 billion to 21 million? Like, that is a huge loss. And for us, what's happening is, you know, we're confirming that they kind of, you know, they weren't doing great already. And just this weird gimmick is just showing us as like, you're not probably going to do really great here too. Why would we trust you? If you couldn't handle a shoe, how are you going to handle AI? And I think they need to kind of manage that narrative a lot more. and leaning away from the only good thing about them is not the move. From a brand perspective, psychological safety for the people involved, like all the people that are currently there, as well as just proving that this isn't just a gimmick. Todd, we're not here to give investment advice, but we're not allowed to either. But if you're an investor, are you going to give Allbirds any money at the stage of the game and what they just announced? So it's very funny. So when the news broke that they were changing the AI and the stock popped, it was up some 600% in the one day. And the next day was when I looked into it. And I did have that fear of missing out, the FOMO trait. Should I get into this? And I was almost on the ledge. I was right there. I was thinking, I got to do this. I got to get into it and invest in this. and thank goodness I didn't because it would have ended in tears because the stock has been dropping. It was down 30% the very next day after that pop. So to answer your question, Aaron, absolutely not. I would absolutely stay away from this. This is kryptonite. Unless you like to lose money, you probably shouldn't be in it. If you look at the chart of this stock, it actually has done nothing but gone down. Over the past month, the rolling 30-day period, The stock's up 170% because of that one-day pop. But just over the last week, it's down 30%. So no, you do not want to buy a loser like that. Sure. We did an episode about meme stocks. You know, is this one where the people that are paying attention are doing it for the dips in the day trading? Or are there serious investors looking at this and saying, okay, maybe there is something to it? No, they're definitely not looking at it like a fundamental standpoint. They're just looking at it for the quick buck. they might as well just bet on next week's Kentucky Derby. And you get the results a lot faster then. In this case, you are not going to be thinking long-term with this stock. What happened on the day that it popped 600% is that 21% of all the shares that were outstanding on Allbirds were actually short-selling. They were short-sellers, meaning that they expected the stock to continue to go down, and therefore they would make money. But once the stock started going up, they had to cover their shorts and buy their stock back, which then caused this ripple effect of having to bring in even more buyers. So that point on meme stocks, then you have these people that are thinking, oh, I want to jump on my Robinhood account because all of a sudden Allbirds is up 50%, 75%, 100% for the day. They start buying in. They push the stock higher and higher and higher. It went all the way up to $24 a share. It trades right now at $2.50. So you take a stock like that, or actually I'd take it, it's probably a little over $3 now. But with that, there are people that are just gambling with this. They're not thinking this company is going to do anything. Best to stay away from it. Yeah. Okay. Well, yeah, they're the Robinhood people that'll throw 50 bucks at it and the social phenomenon and that one day peak. But then there's also, there's investors that are handing over $50 million. Yeah. So why would they do that? Well, that's a good question. So on the $50 million investment, which has yet to close, mind you. Sure. So they haven't actually received those funds yet. As of this taping, yeah. Exactly, as of this taping. But with that, the real reason for that is because there is such an appetite on Wall Street from private equity firms and family offices and institutional investors who want to get inside somehow these AI companies and invest in them. And if you just put AI out there, if you take your show and add AI to it, you could probably raise some money. I mean, that's how much of an appetite there is right now. Yeah, there you go. For AI investments, because people are willing to write a check and they're just willing to do it. And the problem is, is those are the types of investors that get burned later on. So best to be prudent once you start going down this path and you want to invest in AI. And AI is the future, but you also have to understand the risks that are involved with it. Melissa, operationally, they own customer data. They have a really good market segmentation understanding. They own whatever. Maybe they own some supply chain or logistic software or something they've developed that helps their processes that maybe could be a segue to AI. Why are they doing hardware? Yeah, to me, again, this doesn't make sense because they're not really taking anything. they're not taking any signal from their old company to their new. So to me, that is an issue with what a big watch out for besides everything else that we've talked about for Allbirds is that they really need to carry forward something believable from their old business. And they do have that because that translates to trust that translates to operational rigor that translates to values driven brand. And this new venture is something that's really unknown. And so that pivot feels very much like a gimmick and not intentional and not. And for them to not feel less random, they really do need to think about where would we go and transfer that. And so to me, I think, you know, again, I mentioned brand building around their mission. So really reframing that strategy that, you know, what doesn't transfer cleanly is really the product. and the infrastructure layer in itself. So that would require a lot of investment and deep technical capability. But what does transfer is managing your fiscal responsibilities, managing margin, your inventory, your vendor coordination. So customer experience, turnaround and execution, all of those things, depending upon what your services or product is, is transferable in that, in that space. But it's, again, the fact that they've done this so quickly and without any, it doesn't feel like any actual business strategy planning. So if they had said, you know, you know, and even if they had said, we're going to, you know, we're looking for funding, you know, because we're having some struggles here. We're going to close some of our shops. But what we're going to go do is we're going to try to invest in AI that will help retailers. We'll help these athletic brands, right? Athletic leisure brands are hot right now, right? Like Lululemon, all of those, you know, they're all super, super hot, right? So what if they said, we're going to go to some of these places and we're going to say, you know how we were able to have ours, our sneakers individually made, you know, the colors, the options so that people really felt like they were great. What if we were able to replicate that process and that operations and share that playbook, you know, with you and sell it or, you know, or now we're going to have AI help us do that so that you can, you know, promote, you know, to your customer, your loyal customers. Hey, we know that it's been, you know, eight months since you bought a pair of running shoes. We think it's time. And here's some ideas of some of the new ones based on your foot arch, you know, how many miles you run every day, all of those kinds of things. I think that that would have been a better place to go into. And then they could have actually utilize some of that knowledge, some of that technology they already currently have, and the relationships they've built with their vendors and the supply chain. I like what you're saying, Melissa, that if you're down to, what is it, 39 million with maybe 50 million pending, but that's only because of the, hey, look over here, we're AI. So down to $39 million, can you really reinvent as a company that does all that? Or Chino, what happens to all your people? Do you just hang on to your C-suite and hire some sales reps and that's your company now? So that's what I was going to get to. It's like they need to invest in the legitimacy of the AI side, right? Again, you're a shoe company. Sure, you know a lot of people in tech, they wore your shoes. Does that mean there's someone... I know that they've done some hiring as well, but they need to have a retraining strategy. They need to be transparent about what does this mean for them as a brand, for the people that are working there, as I mentioned before. And I think at the end of the day, if they are not able to articulate why, and again, leveraging the brand as Melissa has shared too, You do have brand knowledge from people who've used and have been your customers who want to see you succeed. There's not everyone wants to see you fail, but take that brand recognition and invest in legitimacy right now. Hire a PR person, right? Do I think and do I agree with Todd that I don't really think this is going to go anything that is just a gimmick? Sure. But if we're going to live in a hypothetical land where what should another company do who wants to tack AI onto their name to, you know, rebuild some type of a brand or movement and, you know, kind of change the narrative of their dying business. I think the playbook is leaning into your mission, looking at that old brand as an asset. But again, investing in the right people, the right talent, communicating that to your talent. I don't think it needs to be, you know, there's always going to be haters. So you need to have an opportunity and a communication around what the critics are going to say, get ahead of it. I think if they came with a better campaign, Aaron, that's kind of more your domain. Like how, you know, the story is not leaning in anything that's genuine. We think this is a gimmick. So how could they have gotten ahead of that is super important. I think, yes, again, invest, invest, invest that $50 million into something that's going to make you more credible. I love everything you're saying. And $50 million is not even the entry point for the hardware, let alone the company infrastructure. To Todd's point, you know, you can't start up a company for that little, honestly, you really can't in AI and tech. You really need to understand what space you're getting into and cloud and computing costs rise faster than revenue. And then you're really in a messed up place. And that's where people who really know what they're doing and have a wedge in the sense of they have an answer to a serious question that needs to be, you know, addressed in the in the ecosystem of AI that they have, you know, they have actual customers. You know, Allbirds doesn't. And the second is like the operational complexity that we just talked about, Aaron. And it's not just about that. You have all of this baggage. You have all these old sneakers. You have all these people, like Chino said, you have this culture of, you know, retail, and now you're trying to move into this tech culture, which is very different. And the way you scale it is different. And so deployment from day one needs to be crisp. The product needs to be ready. You have to be able to understand what it takes to grow revenue. And I don't think this team, and I would say that C-suite, even though they, to Todd's point, they might be some of the smartest people. I think what they're doing is trying to buy some time for them to get the walkout paper, you know, walk out and get the few bucks that they can out of it. And actually, I don't think, I think that would have been a better strategy, honestly, instead of doing this gimmicky thing with AI. I think if they would have just owned it and been more authentic and said, look, we're struggling, you know, asking their loyal customers, like, hey, what should we do? Where should we go? How should we build out? Right. You know, like, is there something and, you know, and maybe they would have become a meme stock because maybe all of the tech bros, you know, in Silicon Valley would have invested a little bit in them to say, hey, we want to keep you afloat. And we want you to now brand your all birds with, you know, meta on the side so we can give them to all of our employees as a uniform type of thing. Right. You know, I mean, I just think that they, you know, I, it, it, it seems like way too little of an investment. I mean, I, okay, this is rich people problems when I'm saying $50 million seems like I would take, you know, $50, but I do believe that it's, it's not going to, we're not going to be able to pull them out of the ashes, you know, especially with the strategy that they have. And I think Chino and Aaron and Todd, you've hit all the things, but unit economics one-on-one, like this is not, there's no way. No because if you going to enter into an already competitive market you either have to own something proprietary which it sounds like they don or you have to undercut everyone else who already playing which it sounds like they can afford to do Or you have to have handshake deals with the tech bros that they live and breathe with and have these pending agreements saying, okay, we'll buy you at a premium way above and beyond market price, which probably isn't going to happen either because companies don't, there's some loyalists out there, but people don't want to overpay for something. that's untested. So Todd, what does $50 million get them? How long can they sustain on that? And what's the true point of entry to be a viable competitor in this market? Usually about a billion dollars if you really want to be a player. And the reason why is because you use NVIDIA chips, NVIDIA GPUs that can range, they price between, obviously with the speed of what you're looking for, but they range from as low as $20,000 up to $70,000. So on $50 million, think about this. You have to build the infrastructure. You have to buy these units. You also have to find the utility, the electricity that's actually going to be powering these units. There's a lot at stake here. Plus, you've got to work with the local government. You also have to work with the local community because a lot of people don't want these places around because it just drains on utility costs and then raises their electric bills. And you hear that a lot now where you have utility costs so high for American households, and especially the ones that are located within the vicinity of any type of data center, any type of AI organization. So there is that that you have to deal with. There's a lot of moving pieces that I question that the person that was selling a pair of Adidas one day is going to truly understand what is actually at stake here. And it's a reason why the big companies like the Oracles and Microsofts, the Intels that are in there that actually are spending billions of dollars and they're actually involved with this. The other part of this is that, and a lot of people never talk about this, but is the depreciation. These units don't last forever. So they have to be substituted. You have to pull them out and put in new ones, which then are also costing more. And usually that happens within a year. So places like an Oracle, they're building this gigantic data center in West Texas right now. In order to keep their costs low, they actually have put up a windmill farm. Therefore, they're off the grid. They're not working with the state of Texas with their electricity. They're creating their own energy to keep this thing going. However, they do know that in one year from now, everything they're installing now is going to have to be replaced with something that's newer, something that's faster and therefore you have to wonder if an all birds company is going to truly understand that i think a lot of people think they could just buy the equipment and they're good it doesn't work that way you have to continue to keep up and i'm not exactly sure they have the the wherewithal when it comes to that you gave me an idea todd i think they should do all birds windmills that's closer that's closer to birds right like that's closer to birds it's sustainability it's climate like what about doing something like that i mean i my goodness how great would that be right and work with an ai data center something like that there would there will be a lot more that you can do and it will probably be profitable for them down the line so yeah i'm surprised they're not going in that direction and i think you know just adding to what todd said at the end of the day if it's constant renewal you need to continue to replace which i think everyone's forgetting this piece. I love that nugget of information, Todd, but it kind of confirms what we know. They were failing to begin with, right? They kind of foiled their arms, foiled their wings, I should say, to grasp at, you know, some, and now it's kind of confirming that you're not going to do well long-term. So this is one of those cases that all birds, if you can hear us, fly home and just wrap it up, wrap it up, or lean back into your shoes, because this is not going to work. I love that. I love that because I do think they do have a great brand. And what they should do is as they're going into bankruptcy or wherever they're going, which is pretty clear, they should lean into that, lean into their loyal customer suite. And like I said, you know, it's true they could still try to partner and restructure and get something out of it and you know partner with one of these athleisure brands partner with you know even like you know they were very sustainable very good you know like you know there's the tom shoes and bombas where they're giving away you know all these things what about if they you know because these are reasonably priced tennis sneakers why don't they do something with that and where they could partner with schools they could partner you know they could do something totally different and I think that you might see as Todd said there's people out there wanting to invest in something right and invest in something good and not just AI but I think invest in their community and give back and in this time. Like, I feel like Allbirds is taking a risk when they should trust their own community just as much as anything and the trust that they built and the reputation they built to try to help pull them through a really tough time. It may not pull them through to keep them a standalone company, but they could get absorbed by somebody else and it could still be a, you know, beloved brand. Yeah. But after, Melissa, I agree with everything you're saying, but after burning through all that capital and all that valuation and taking your company down to the studs, is there anything they could have announced that beyond having a moment in the sun that investors and the public would say, okay, we like what you're saying. We're behind you. Or are they poisonous? Do they have the credibility beyond whoever they have on the hook right now that may or may not shake out. Do we trust them, Todd? Yeah, well, that's a good question because they were once a category killer in that space, in the shoe apparel space, and they could have continued to evolve in that space to remain in their lane and really had taken that $4 billion valuation that they had after they went public in 2021, and they could have done more. But instead, they followed it to almost like a slow death over the past few years, five years. And then the company, they decide, OK, we're just going to sell it off pennies on the dollar and we're going to regroup and just go in an entirely different direction. There were so many things they could have done that they didn't do. And as a result, those failures, they start piling up. And it's really a shame because it's actually a sad business story at the end because they were such a good company with such a great loyal following. And now they completely reverted to a whole different sector. And I don't even know how they're going to be able to compete at this point. We just don't trust them. That's, I think, the net net of everything, right? Like you just I can't trust you to, you know, manage a shoe company. And now I'm definitely not going to manage or expect that you're going to manage an AI company where you need a lot more capital than what you have to do that successfully. And again, you're just kind of confirming what we already knew, but you just had your moment in the sun. So it's a sad story. It's a sad one. You know, it's a cautionary tale. And in the world of startups, and I've worked in a few of those, you know, mergers and acquisitions are a big deal. right you know it happens a lot of times there's a lot of hubris you know you you as a founder you want to go public you want it to be all you about your your product or whatever your service might be but a lot of times it doesn't happen and to Todd's point you know they've now pretty much bullet hold their entire reputation they've been entire you know product you know you could almost you know say that going from four billion down to where they are today um was based on you know oh things changed and they didn't keep up with it they didn't keep up with the joneses they didn't keep up with you know all the changes that were happening and you know and they and they could have done that but it's still with their brand i think that somebody would have acquired them for $50 million and then kind of like slow rolled, rebuilt it and used it for something else, you know, use it to launch. Like I said, for like Lululemon, like launch a footwear brand, right. You know, like launch into that. And it would have been, it would have been, you know, something that would have worked, but I think that based on their pivot, I mean, basically they're saying we don't care. We're just, we just are going to try to do the last cash grab. I feel like they're in that one of those money machine things where the dollars are flying around and they're trying to come in their pants and stuff, you know, and then they're going to walk out. Right. And they're going to have like thirteen dollars and that's it. And it's it's pretty sad because, like I said, I feel like there were some possibilities and I wish we would have been able to talk to them a lot earlier on, you know, and said, hey, before you make this huge pivot, like I think that there's some really good things that, you know, and I would, I would say that, you know, we talk about this all the time, the culture they've built, the employees they have, the people that have worked there, you know, you want to work for a mission driven company. A lot of people find great purpose in that. And so it must be very frustrating for that team that is still there trying to keep the lights on to see such a big pivot and see that they're not going to get anything out of that. Right. Like, well, maybe they'll get a pair of sneakers. That's it. Well, and I reached out to the founders to get their side, and I'm still open to hearing what they have to say. But you do wonder also, we didn't mention this, but was it responsible to give them a $4 billion valuation in 2021? Did they have an unlimited market? And was it really representative of the growth trajectory that that company had in front of them and the possibility? Was $4 billion realistic? Maybe it was. Yeah, okay. Well, at that time it was. Yeah, then, but now no way. And Wall Street doesn't care about anything except forward earnings, forward guidance. How was the company going to do for expansion? And it just wasn't there. So you saw the valuation drop to a fraction of what it once was. I also going to throw something out there. Me and my partner were talking about this, right? Allbirds, the shoe, you know, sustainable, plain looking, right? They're nothing gimmicky. It's not a Nike. There's no swoosh. It's a standard shoe for everybody. They have great, you know, water resistance. This came up at around the time of COVID. Everyone was at home. No one was wearing flashy things anymore. And I also think just the time and place of when it came to light, does play a factor here. And obviously, as people continue to shop and athleisure, although big, and you have brands like Aloe and Lulu, who've also taken a hit too in recent times, because people are going to start wearing jeans now that they're going into the office more and things like that. But the valuation of $4 billion in 2026 looks a lot different. They get dropped down to $21 million. And again, of course, the decisions they made from an operational standpoint is one, but I think from a cultural zeitgeist standpoint too, people are dressing up more and they're not dressy shoes, frankly. So that's another piece to the puzzle. Do I think if they leaned in on being a sustainable shoe, do I think they could have had a rebrand? Yes. Do I think that they can if they have the right PR to say, hey, we made a mistake. Oh my goodness. We're going back to our basics. and like, sorry that, you know, we kind of freaked out there. Potentially, for the people who love the meme and the lulls and the trolls and the loyalists, I think you can lean into that. I think that's the only way, a real Hail Mary moment for them if they can go back to shoes. But if they're going to pivot into AI, we're all going to jump off the bird. And that's a great point, Chino, about that 20, I was going to say 2021 was an anomaly of a year and based on unsustainable and unpredictable consumer trends. So yes, okay, they achieved that valuation at the time. Try that now. If they launch today, would they launch it at $4 billion in this market? Probably, you know, brand new company, second chance on fresh identity and all that. Probably not going to hit that mark, that threshold. I mentioned this before. I actually gifted my entire leadership team, about 90 people, Allbirds for a holiday gift or end of year gift, not holiday gift, end of year gift. And I loved it because they could all pick the color they wanted, their size. You know, we had, you know, like two choices of the type of shoe, whatever sneaker that they were going to get. they thought that was fantastic because it was not branded actually with like the company's stuff on there but I'm thinking you could brand it because it doesn't have anything on there um and just a little something on the back maybe um but they all loved it was practical it was easy but to your point you know it's not a status thing like it's not like you're wearing your dunks or, you know, all the other kinds of shoes that now sneaker culture is such a huge culture. So you're right that there was not enough foresight and forethought thinking strategically about like where sneakers were going and maybe doing some, and I don't know if Allbirds ever did this, but like a lot of those sneakers companies do collaborations with musicians and entertainers and athletes and other things that kind of bring a whole new culture, pop culture to that Um you know and I just feel like they missed the boat there that they could like again we were talking about how do you partnership differently Like maybe they become the corporate thing because again like there so many corporate chotskis out there like who wants chapstick who wants you know another battery charger I don't need that with your logo on it. But like sneakers, that's pretty cool. Right. You know, and I think that that's something that would be a very interesting, like, you know, gift at conventions and things like that. And so I just think that there's they had that opportunity. They just kind of kept it very narrow and just thought that they could just survive, Aaron, on that like valuation and that people would just keep coming. And as we all know, in every business, we've talked from everything from coffee to sandwiches to cars, luxury cars, you know. It doesn't matter. People's tastes constantly are developing and changing. You've got to keep up with it. You've got to look forward and you've got to pay attention to what you are doing and what like real problem you're fixing or what, you know, what are, what, what are you answering? What call are you answering that people and customers really want? Thanks, Melissa. Before we tell them what to do, so athleisure and sneaker market and all those, like they're not going away. There's winners and losers. But is there, Todd, is there a world where they could have taken the $39 million or 39 plus $50 million or whatever they could scrounge up and say, you know what, we're going to figure out our shoe market. We're not abandoning this. There's still money to be made here. Is there a world where they could have turned this around and stayed the course as the kind of company that they were? Yeah, absolutely. I mean, their shoes themselves were unique shoes. They were different. They offered a different story, a different narrative. They probably could have done a considerable amount of things because, like you said, Bess, everybody still needs shoes. I mean, it's just like oil. You still need it. And so you need these items. You have to go out and get them. You don't necessarily need a fur coat, but you do need a pair of shoes to walk around. And as a result, they could have done so many other things. I think when they opened up their 60 retail stores, that was probably the kiss of death for them because those lease agreements were long-term leases. They were paying rent on these stores that they were just simply putting paper up in the windows because the stores were going out of business. So they could have been much more of a direct-to-consumer, online type of shopping experience. And therefore, they could have done a lot more to help penetrate that industry and also take market share. And you see companies like a Nike, Nike's struggling right now, and they are not, their sales are down, nobody's buying their shoes. But remember, Nike is one category, tennis shoes. You know, Melissa said it best, she could create these shoes, they were customized shoes, different colors, different logos, everything you wanted with them. And that's something that's unique that you can't get elsewhere. So there's a lot of things they could have done, they still can do it actually, if they truly want to try. But I don't know. It sounds like the train has already left the station. Yeah, you do wonder about some of these retail stores. I was at a center the other day and there was not Stanley, but Yeti. They had the Yeti coolers and it's this beautiful retail space. And maybe their sales are incredible, but you have to wonder if those types of things are built to last. I'll share this story with you in the retail space. So there's a company called Vineyard Vines. You may have heard of them. They're similar to like Johnny O brand out in California. So Vineyard Vines had a great strategy going on. They were direct-to-consumer. They had a few stores. They worked on a collaboration with Nordstrom. They're selling their product. Everything is great. And they're catering to that group that's going to the beach or selling the idea that you're sitting on the beach and you have an extra large shirt on. and you're in martin's vineyard yeah right so what vineyard vines did though which hurt them they went out and they went and hired a bunch of executives that were deep into the retail space they were used to selling a certain way to a different clientele then all of a sudden their catalogs came out and the first few pages of vineyard vines which used to consist of t-shirts that were selling for 25 dollars with that vintage whale they were selling 150 dresses I was ridiculous. And then all of a sudden they tried to be more on the high end and that hurt Vineyard Vines. They still exist, but that really hurt them. And it helped Johnny O in California actually expand their operation and take market share away from Vineyard Vines. So you have to be aware of your staffing, of who you have, the executives that are making decisions. A big box retailer like Target is exactly, they went through the same process. They brought in a lot of outsiders rather than actually promoting internally. And these outsiders were changing the game. They were doing all kinds of things. Target has yet to truly recover from the problems that they had over the last couple of years because of what they were marketing about. So as a result, you have to be aware. You have to be concerned with that. Allbirds wasn't that big, so they probably didn't have these problems. But as a retailer, there are things. And that goes with any business. You have to worry about your company culture. And don't worry about changing culture. Worry about expansion and taking market share. and increasing revenues. Those are the most important things. Okay. Well, with that, let's fix it. That's what we do here. So we said, okay, there is a world you could stay as a shoe company. It's going to take some bridge loans or some heavy financing, and you got to figure out what went wrong, why you were built on a 2021 bubble that isn't realistic for today's market environment. But how do you keep up with trending consumer tastes? How do you do those cross-brand tie-ins, the celebrity endorsements. Keep your product the way it is. People like the product. There's no issue there necessarily. They like the customization, but really do some deep soul searching and get some financial backing to buy yourself time and come out of this stronger as a shoe company. That's one path for them. If you're going to go way on a detour, even in AI, maybe use AI or technology to do something that was inherent to your company. So if you believe in sustainability and the clean side of things, then go into clean tech, go into windmills, make them look like birds. If you want to keep the bird in there somewhere, go into the responsible part of AI where we all know throughputs and all these things are energy draining, but maybe you're using that to look across your loyalist base. You've got some of the best minds in the country. Maybe pull them together like a think tank or a council and say, what do we do about this? Guide us here because we don't, let's admit, we don't know what we're doing quite yet, but we want to. And we want to emerge from this as an AI forward company and really understand what's the entry point to stay viably financial and responsible to our investors. What's the underserved market need here? And what can we uniquely contribute as a company that no one else is doing? There's a lane there too, but pick one. Obviously, if you're over it and you're no more shoes anymore, then don't pretend to be a shoe company and increasingly make the customer service experience worse and start to cut your product lines because people won't buy that. They won't like anything about you anymore. And if you're going all in on AI or clean tech or something, really, you know, make, think about why you're there. Why, why make that very clear. If it's anything beyond a cash grab or just a way to stall for time or anything, be, you know, be real with everybody and explain how it connects to your company values. How are you going to see those through? Don't ask the board to secretly erase some things that, that, you know, we're tied to everything that you stood for. It's just, there's just not going to happen, but there is a responsible way to swap what you're doing and say, we're closing this store. And guess what? We're opening another store or another line of business here. And this is the way we're doing it. And here's why, and here's the evolution, you know, for marketing, it's a story. Here's our evolution and our story. And here's why we're going to do the way we're going to do this, the way we're going to do it and why the market just needs us to do this right now. And it's got to be Allbirds. Pick a lane, shoes or AI or tech. But Melissa, if we handed all that advice over to them, do we fix the situation? I don't think it's going to get fixed. I'm just going to say that I think Allbirds has already shot themselves in their sneakers in their foot. So I feel like they're going, they'll be done very shortly. but I think there are glimmers of opportunities for people that are interested in the Allbirds fire sale so what I mean by that is you know they're going to go down but somebody could come in and take what has already been built that brand the name you know buy that at a very discounted price and take it and do some of the things that we've talked about where we've said look, let's lean into our overall sneaker mission and our loyal customers, and we can look at how do we grow from being just the affordable sneaker to something else? What if we're the online choice? What if we're a corporate logo choice? Whatever it might be. So I think there are opportunities for all birds to kind of rise like a phoenix. I do think if they stay in this crazy pivot lane that they said, I don't think they're going to be able to build operational credibility fast enough. I think, Todd, you've talked about the unit economics. It doesn't make any, like anybody who's taken econ 101 knows that this is not the path you go on. And I think, Erin, you brought up a really good point of, you know, and you brought this up very early on in the conversation, but narrow their focus to stay on one clear AI wedge, whatever that might be, if that's what they want to do. But again, I don't think that they made the right choices by not carrying forward something believable from their old brand to the new. And I do think, though, those are some of the things that could rise from the ashes in the future for somebody who is looking to make, you know, something great out of, you know, a disastrous situation here. So. Okay. Well, Melissa, you put another option on the table so they can, if they want to cash out, sell your brand, sell your logo, sell your, your supply chain contacts while it's still worth something and someone will scoop it up and write you a check. All right. So that's a third option. Chino, we gave them three pathways that are different from what they're doing, if they take anything that we, they're going to do what they're going to do. If they take anything that we've asked them to do, do we fix it? No, not currently. We didn't fix this one. They need money. Even with the AI path, you need to raise a billion dollars is what Todd shared. It's just like the market entry point. You're $70 million in debt in lieu of this $50 million that may or may not come. I do think identity continuity is kind of the theme of this. If they can take that identity and bring it forward somehow, whether that's through a fire sale, whether that's remembering that they are shoes and if you can lean into that at a time where people are open, yes. Other than that, this AI play is not going to work. You just don't have the money. When you do, maybe we'll do another episode on this. But right now, it's not the way to go. Okay. We got a rare no from Chino. I'll take the hit. Todd, do you think out of what they were proposing that Allbirds do next, do we give them a second path? And do we extend their life trajectory compared to what they're setting out to do? only if they revert back and they embrace AI, but they use it to their business advantage of selling these shoes. If they go down that path, then they will survive. They will do well. They actually will expand. But to reverse course and try your hand in something that is completely foreign to you, no, not going to work. It never works. And that goes with anything. It can be professional or personal. I'm all for expansion and trying to try new things. However, you have to be practical. And in this case, not a good idea for them. So I think they need to push. They have to pull this thing back, utilize AI, help themselves expand further, increase their market share, and they'll be fine. But like I said before, that train has left the station. I don't see them coming back anytime soon. Probably not. But if Todd, if we follow what you're saying and Melissa and she know, there's still money to be made in those shoes. Don't ditch them yet. Well, that's going to wrap up our Allbirds episode. Well done, everyone. Before we go, I'd like to give a big thanks to Todd Schoenberger. Thank you for being our guest today. Todd, let us know. How can we all keep up with what you're doing? Actually, the best thing you could do is go to YouTube, go to the Crosscheck Media channel, and click subscribe. We always have shows and videos up there that are educational, especially in the world of finance and Wall Street. And we'll talk about subjects like all birds, of course. So definitely welcome everyone to go there and you can follow us. Fantastic. Thank you, Todd. Thanks, Chino. Thanks, Melissa. To our listeners, I hope you enjoyed this episode. If there's another company out there that you think is long overdue for reinvention, hit us up. Let us know at wefixeditpod.com. We love hearing from you. If we learned anything today, it's that AI is still in the Wild West phase where anything can happen and everyone wants a piece of it, including all birds. So next time you go in for a checkup, your dentist might try to sell you some AI on the side. Be prepared for it and we will see you next time. We hope you enjoyed this episode of We Fixed It. You're welcome. We go into every episode somewhat cold, and nothing we say should be construed as legal advice, financial advice, or anything that would get us in trouble. All trademarks, IP, and brand elements remain property of their respective owners.