Allbirds Is Now an AI Company. History Is Not Impressed.

The name-change trade is back, and it rarely ends well.

Early in my career, a senior partner told me something I never forgot: “Cosmo, in this business, you’ll continually see the same mistakes made by different people. Your job is to recognize them faster each time.”

I thought about him this week.

From wool runners to GPU runners

You may know Allbirds. They’re the sustainable sneaker company that became the unofficial footwear of Silicon Valley. Founded in 2015, their merino wool shoes were so popular with tech workers that wearing a pair of Allbirds to a board meeting was practically a dress code. In 2021, they went public and reached a $4.1 billion valuation.

Then the market remembered they were a shoe company.

Sales fell. Then fell some more. Between 2022 and 2025, revenues dropped nearly 50%. They closed all their U.S. stores. The stock shed approximately 99% of its value from peak to trough.

At Tuesday’s close, the entire company was worth roughly $24 million, which is less than what it cost to build many of the stores it just finished closing.

So what did Allbirds do? On Wednesday, they announced they are selling the Allbirds brand and pivoting to AI compute infrastructure. The new company will be called NewBird AI. The stock surged 641% in a single day.

I’ll give you a moment with that.

Wait. I’ve seen this movie before.

Back in December 2017, a little-known nonalcoholic beverage company in Long Island, New York, made a startling announcement. Long Island Iced Tea Company — facing potential Nasdaq delisting with annual sales of roughly $5 million — declared it was shifting its “primary corporate focus toward the exploration of and investment in opportunities that leverage the benefits of blockchain technology.” It was also changing its name to Long Blockchain Corp.

The stock jumped 432% in one day. The company had not yet invested in or partnered with any blockchain company. It was, in the truest sense, in the “preliminary stages of evaluating specific opportunities.”

Those preliminary stages never advanced. Long Blockchain was subsequently delisted from Nasdaq, subpoenaed by the SEC, and investigated by the FBI for alleged insider trading and securities fraud. Its blockchain business, as the SEC later noted with exquisite understatement, “never became operational.”

I documented this in Wealth Your Way (Chapter 11), alongside the Electronics Boom of the late 1950s when companies added “tronics” or “sonics” to their names and rode Space Race excitement to stratospheric valuations. One record player company, American Music Guild, rebranded as Space-Tone and watched its stock jump 600% within weeks.

And the dot-com era, when a Purdue University study found that 95 companies simply adding “.com” to their existing names saw their share prices rise an average of 74% in the 10 days around the announcement. Ten of those companies had core businesses with no connection to the internet.

The names change. The game does not.

Why does this keep working?

Here’s a question worth sitting with: if we’ve been through this before, multiple times, why does it keep working?

Because humans are not wired to evaluate probabilities. We are wired to evaluate stories. And “struggling shoe company becomes AI company” is a great story. It has transformation, reinvention, and the thrill of the new. The fact that shoe companies have no particular expertise in GPU procurement or data center management is, to the speculative mind in the grip of a good narrative, simply an annoying technical detail. Add FOMO (Fear of Missing Out), and you’ve got rocket fuel.

There’s also a detail in the Allbirds announcement worth more attention than it’s getting. The $50 million financing facility funding this pivot is convertible. The investor provides capital as debt and can later convert it into equity, often at a discount. As the company noted, this “can lead to significant dilution for existing shareholders.”

So let’s tally this up. You buy a struggling shoe company after it surges on a press release. And then, as the convertible facility gets drawn down, your ownership stake gets quietly diluted. The investor who provided the $50 million gets shares at a discount. You, the retail speculator who bought in on a Wednesday afternoon, do not.

As Hemingway once put it: “How do you go bankrupt? Two ways. Gradually, then suddenly.”

The same ingredients, every time

In Chapter 11 of Wealth Your Way, I identified the recurring recipe behind several boom-and-bust cycles: a compelling story around a new and exciting technology; a new generation of speculators looking for the big score and ignoring past lessons; existing companies (particularly struggling ones) scrambling to attach themselves to the hot new thing; and the stock buyers not at all concerned with the price paid.

AI is genuinely transformative. That’s not the debate. The technology is real, the economic implications are vast, and the companies at the frontier are building durable businesses. But there is an enormous distance between “AI is a real and important technology” and “a sneaker company that lost 99% of its value and closed all its stores is now well-positioned to compete in AI compute infrastructure.” That distance is approximately the length of Manhattan.

Sir John Templeton famously warned that “this time it’s different” are the four most dangerous words in investing. He also acknowledged, to his credit, that about 20% of the time, the people saying it are right. The problem isn’t the technology. It’s confusing a great story for a great investment, and thinking those differences will go on, unabated, forever.

NewBird AI has every opportunity to prove history wrong. It just has a lot of history to prove wrong.

The FI Portfolio that you’ve patiently built, through monthly contributions and discipline, probably doesn’t need NewBird AI.

Neither did it need Long Blockchain Corp.

Neither did it need Powertron Ultrasonics.

My old partner was right. The market is endlessly patient with those who learn from history, and endlessly expensive for those who don’t. The names on the doors keep changing. The lesson never does.

As always, invest often and wisely. Thank you for reading.

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