What the Allbirds Fiasco and AI Bubble Can Teach Small Business Leaders
The hottest fad is often exciting. But if you chase it, you will often be lead astray
Some of you may remember the Allbirds craze a decade ago. Founded in 2014 by a couple of New Zealanders via a successful Kickstarter campaign, they manufactured footwear and apparel using minimalist designs and sustainable principles. To make a long story short, their popularity exploded, with their shoes eventually being worn by such notable celebrities like Barack Obama and Leonardo DiCaprio. Over the course of a few years, they raised hundreds of millions of dollars of funding, before going public in 2021.
Shortly after their IPO, the company was valued at just over $2 billion. But the company soon began to falter, and after another few paltry years, the company eventually sold all of its remaining inventory, IP, and brand assets for just $39 million.
This story isn’t about the rise and fall of a company. That’s nothing special, honestly. Companies succeed and fail every day. The story here comes shortly afterwards.
That asset sale? That happened on March 30, 2026, a short time ago. Just two weeks after that, with their stock trading at $2.49, they made an announcement. They were accepting a $50 million investment, becoming an AI company, and changing their name to NewBird AI. In their press release, they said that they planned to “acquire high-performance, low-latency AI compute hardware,” as well as “provide access under long-term lease arrangements, meeting customer demand that spot markets and hyperscalers are unable to reliably service.”1
Despite the odd business decision and even stranger press release verbiage, the stock shot up to a high of $24.31. That’s an 876% return in a single day, for those of you keeping score. A company with no operations and a small pile of cash was suddenly worth $150 million because they said the words “AI.”
Now, to be fair, Allbirds was broken. Their core business was failing. Change wasn’t only optional, it was necessary. But there’s a difference between fixing a broken business and abandoning it entirely for something unrelated. One is adaptation, while the other is desperation dressed as a strategy.
I recently wrote about how AI is distorting everyone’s view of the economy. That’s not going to change anytime soon. Nor is the purpose of this column to try and change the world’s opinion.2 Rather, my goal is to help guide small business owners and leaders with the navigation of an increasingly-complex world. And there’s nothing more complex than a bubble mixed with irrational behavior. Public markets reward the story. But small businesses have to survive the reality.
I want to be clear: AI is not a fad. A fad is something that will eventually lose popularity and disappear. AI is here to stay. But what is becoming problematic is the premium the market now assigns to anything remotely related to the AI bubble. That becomes risky for everyone, especially those that try to chase revenue where none may exist.
As small business owners, we constantly have to evolve. We have to keep our eye on the horizon while also managing an operation of a few, or a few dozen people. It’s become increasingly difficult to do that when the world throws what feels like ten existential news stories at us each week.
And when things get difficult, it’s human nature to reach for something easy. Whether that’s AI (in this example) or some other trend, it can be an actual existential threat to your business. The reason you’re successful in the first place is because you found a market need, satisfied that need with an efficient operation, and continued to work on raising both demand and supply for your product or service. Your success is likely despite all of the craziness going on in the world, not because of it.
So when the world continues to be crazy and irrational, one of the keys is to take a step back and review your goals. Small business ownership is not about easy money, fast success, or taking gambling-like risks. It’s about playing the long game. Compounded interest plays an enormous role in small business growth. If your foundational revenue hits $5 million per year, you can safely bet that, if you do your job properly, next year you should have at least that same amount of revenue. You’re not resetting each year, you’re simply trying to build on that successful business model.
The challenge isn’t avoiding change. It’s knowing which change actually matters.
A simple test when you believe a new opportunity arises: does this new idea or opportunity strengthen your existing business, or does it require you to become a completely different business? When my family decided to purchase one of our customers back in 2013 to vertically integrate, the only question was whether it would strengthen our existing business. We weren’t looking to become something new. Instead, we wanted to ensure that this acquisition made our existing operations and financials stronger. It did, and we went forward.
Over the years, we were presented with plenty of other opportunities to purchase other businesses. And in all cases, we declined. It wasn’t because of price – some of those companies were offered to us at a steal. We passed because we couldn’t figure out how it would strengthen our core business.
If something is intriguing to you only because it’s attracting attention from everyone else, that’s not really a strategy. It’s more speculation. And if you want to speculate, go to a casino and play roulette. Same thrill, less risk to your employees.
A coda to the story: shortly after the stock exploded, Allbirds stock fell precipitously the remainder of the week, until it settled at 10.80, losing 55% of its value in just a couple days. Sure, it’s still trading at nearly five times what it was a week earlier, but we all know that it’s going to end up back where it started, perhaps even lower.
And the complete pivot to an unrelated and bubble-ish industry was not unprecedented. Back in 2017, the Long Island Iced Tea Corp. rebranded as a blockchain company, in an attempt to grab ahold of the budding crypto craze. While the stock nearly quintupled in the short term, it eventually crashed, was delisted from the stock market, and had multiple executives charged with insider trading.
A public company can afford to be that stupid – a small business owner can’t. Keep your eyes on what you know and what you do best. It’s great to take some risks and try new things. But just make sure those risks aren’t the existential kind, where you could bring your own company down. Businesses that last don’t chase what’s hot.
Got it.
I can’t even succeed at that in my own home.