Nadia Carlsten Takes Helm at Smartbird as Allbirds Transitions to AI
Allbirds has transitioned from shoe manufacturing to AI with the launch of Smartbird, led by CEO Nadia Carlsten, who aims to carve out a niche in the AI infrastructure market despite the challenges ahead.
In April, Allbirds made a significant shift in its business model by pivoting to artificial intelligence (AI), a move that some observers likened to a plot twist straight out of a Silicon Valley satire. The direct-to-consumer shoe company, known for its lightweight footwear that became synonymous with a certain Silicon Valley aesthetic, has embraced a new trend in the tech industry.
This strategic pivot appears to have paid off. Allbirds sold its shoe division for $43 million and subsequently raised an additional $100 million from the stock market, rebranding itself as Smartbird in the process.
Nadia Carlsten, a former executive at Amazon Web Services (AWS) with a PhD in engineering, has taken on the role of CEO at Smartbird. She previously led the European computing firm DCAI before assuming her new position. In an interview with TechCrunch from Amsterdam, Carlsten stated, 'We’re going to be recruiting a brand new team for the AI business, and we’re going to be getting an office.' She noted that the shoe business officially closed as of the previous day and that her immediate focus is on assembling a leadership team, particularly seeking someone to oversee infrastructure operations.
Smartbird is positioned to become an AI infrastructure provider, capitalizing on the ever-increasing demand for computational resources needed to train and operate deep learning models. Unlike other companies that aggressively trade the costs of chips against GPU usage, Carlsten intends to focus on more controlled deployments. Smartbird's ideal clients are those who require direct oversight of the servers that run their models, often due to political or business considerations, and who prioritize data sovereignty over the scalability typically offered by public cloud services.
Carlsten has not yet been able to quantify the market size for Smartbird's services, suggesting it is still in its early stages, as many companies are only beginning to test AI tools. During her tenure at DCAI, she collaborated with firms such as Novo Nordisk and other European companies that prioritize data sovereignty or operate unique models, including those in the pharmaceutical, energy, financial, and public sectors.
From Carlsten’s perspective, Smartbird does not directly compete with large cloud providers or neoclouds; rather, it competes with internal corporate projects. Nevertheless, established companies like Hewlett Packard and Equinix already offer similar AI compute services, presenting a challenge for Smartbird.
The business model for Smartbird is established, but there are uncertainties regarding whether it can achieve the same level of growth as cloud services, which typically focus on expansive growth. Carlsten anticipates that compute clusters will be deployed for several clients by the end of the year. Other startups, such as General Compute, have more ambitious goals, having recently announced a $300 billion chip order as they emerged from stealth mode.
Carlsten believes that Smartbird does not require large chip commitments to fulfill its vision, as potential customers generally need hundreds to thousands of chips. She emphasized that the focus is not on large volumes of GPUs but rather on the agility of the clusters and maintaining control over the infrastructure stack.
Smartbird is also unlikely to compete on price with other providers, as cloud services typically optimize chip usage around the clock to offer the most affordable computing options. However, Carlsten argues that companies with specialized workflows may operate more efficiently with their own servers.
The demand for AI infrastructure is a significant market force, influencing stock prices for chip manufacturers, cloud service providers, and energy companies, and even sparking investor interest in the concept of orbital data centers. Carlsten insists that Allbirds' transition to Smartbird was a well-considered decision.
'It wasn’t, ‘Let’s just do AI, because it’s AI, and it’s hot,’' Carlsten stated, who will receive an annual salary of $700,000 along with stock valued at approximately $9 million for her role. 'It was really about, do we have a chance to build a business over time that is going to find this niche in the market and be able to grow over time?'
One notable change that accompanied Allbirds' transition was the abandonment of its public benefit corporation (PBC) status, which had been established to uphold its sustainability commitments. PBC charters often serve to highlight non-financial commitments, similar to OpenAI, which focuses on AI safety. This shift suggests that PBCs may not be as unassailable as once thought.
Carlsten mentioned that Smartbird's board is committed to pursuing her AI strategy over the long term. 'There are some companies out there chasing AI,' she remarked, 'but at the end of the day, what matters is, is there actual weight behind the chasing?'
