Allbirds’ AI Pivot, Snap Cuts 16% of Workforce, Amazon’s GlobalStar Deal | Diet TBPN

0:01John Coogan:Tax day. I hope you paid your taxes. We have a great show for you today, folks. Bunch of crazy stories going on. Allbirds is now an AI company. Snap is restructuring the entire company. Amazon's buying Global Star. There's new info on Apple's new AI glasses. We're going to take you through it all. So why am I not wearing a white suit? It's because although the market is at all time highs, I don't understand why. It feels like there's never been more chaos in the markets. And I'm seeing a lot of companies that are under pressure, a lot of software companies that are under pressure, a lot of companies I know and love under pressure.

0:40John Coogan:But it does feel like the Mag 7 is doing well and some of the bigger companies are doing well. AI is still a mega cycle and there are exciting pockets of opportunity in the market. But we will be digging into it. And certainly Allbirds is doing quite well. Yes. How much is it up today? 714%. So we talked about this maybe last week. That's an insane gain for a single day, but they're completely changing the business model. The Financial Times has a hilarious article in Alphaville. Alphaville has great headlines. Allbirds is turning into an AI compute provider because of course it is. And it goes through what's happened over the last few years, few months.

1:23John Coogan:There's been a lot of twists and turns with this story, but we'll take you through it. So they start by saying, ah, zeitgeist. Allbirds is a San Francisco maker of wool trainers that was once valued at more than$4 billion. That's pretty big for a direct-to-consumer shoe company. At the same time. DDC Darling. When it was growing and selling a lot of shoes, you know, Nike is a big company. It makes sense that if you could get a piece of that, maybe you could be a multi-billion dollar company. Yeah, and they were selling a lot of shoes. They were very on trend. Yeah, I think that they got the revenues into the hundreds of millions of dollars.

1:56John Coogan:and you would see them everywhere. Bunch of owned retail. Yeah, yeah. They definitely had some owned retail stores and were pursuing the hybrid online offline sales model. It was working. It was never just like some completely hypothetical vaporware company. Like they were real shoes. You could buy them and wear them. It was fine. But it was sold last month for$39 million to American Exchange Group, the stock having slumped more than 99 % since its flotation on the NASDAQ in 2021. And so look at this chart, Jordy. Very, very rough for all birds. Is that good? That is not good. Okay. But maybe the next plan is better.

2:36John Coogan:We'll figure it out. So the plan for the shell listing is, quote, to pivot its business to AI compute infrastructure with a long-term vision to become a fully integrated GPU as a service, an AI cloud solutions provider in connection with this pivot. The company anticipates changing its name to New Bird AI. And so this was very unexpected. We can talk about where we are. With shareholder approval, all birds will raise 50 million via convertible notes from an institutional investor it does not identify. So they're going to be able to get at least a few GPUs for that. Maybe they'll be able to plug them in.

3:16Maybe a whole rack. They can plug in a rack. But, yeah, big questions around where are they going to get the compute? Where are they going to get the energy? Will anyone rely on them? Will be willing to rely on them? Tons and tons of questions.

3:30John Coogan:This feels like an institutional investor who says, I want to participate in this idea that even older GPUs are trading above par. And so GPUs are sort of gaining value. And they want in on that in some meaningful way. but they also want to wrap it in a public company that can sort of become a meme stock, essentially. And then basically everything else about the business will be different because the entire shoe business will be sold off. And this is basically just a use of the ticker and the listing and the shell, and then probably an entirely different team, entirely different strategy, entirely different everything, basically.

4:10John Coogan:New name. So here's the Schedule 14A that explains the pivot ahead of a shareholder vote on May 18th. It adds, with respect to the renamed corporate entity, we are investigating potential opportunities in the computing infrastructure market, including the acquisition and monetization of graphics processing units, related high-performance computing infrastructure capable to support high workloads, whether from artificial intelligence and machine learning, or other needs of potential future customers and other related assets. Also, because the anticipated electronics infrastructure business would be less focused on the public benefit of environmental conservation, which is stated in the company's Certificate of Incorporation.

4:49John Coogan:I guess Allbirds was a public benefit corporation because the wool was supposed to be more environmentally friendly. It was almost like an REI type brand. They are doing away with that. And so the stockholders are being asked to approve the charter amendment proposal to remove references to the company being operated for the environmental conservation public benefit. That is not going to be popular with the Allbirds fans. Oh, boy. The announcement was enough to establish Allbirds as a meme stock at pixel time when this went to print. The shares are up 774 % at 2176 a share to give the soon-to-be shell a market cap of slightly more than$184.5 million.

5:32John Coogan:And so I guess the question you have to ask is if this 50 million comes in, they're able to buy GPUs, rack them, get some value out of it. Is that worth anywhere near$184 million? It's a tough sell, but the market will figure it out over the next few days, I'm sure. We think the value is tight. Dave Portnoy. Hold on, let's hear from you. It's interesting, I mean,$50 million is not enough to lease to a Neolab, right? Because you just can't buy enough capacity. Yeah. So it is interesting. I don't know who the actual consumer of these GPUs will be. Yeah. Maybe you could just resell them on OpenRouter or something.

6:09John Coogan:Yeah, you could resell on OpenRouter. Like you're running. I mean, George Hots was talking about that. Yeah, the Geo Hots method. He was talking about like he found a building that had cheap power and he was going to just buy a bunch of GPUs. And I think he was raising like 10 million or 20 million to do that. And he was going to sell the tokens on open router profitably. And so there's a potential business model there. Also, yes, you probably couldn't sell to a NeoLab that's doing some huge foundation model training run. but there might be some company that's doing fine-tuning on some small model or doing some niche model.

6:41John Coogan:I mean, again, to go back to George Hotz, he had a couple racks of GPUs that he was training self-driving cars on, and you have to imagine that there's lots of long-tail applications for custom models that need to be trained that aren't as big, maybe. I don't know. I mean, so this is essentially just a SPAC because everything is different. Yes, it's sort of. No, it was already a public company, and they're just a dap. They're doing like a massive pivot. I don't think they will make any progress at all. No. I think that it is entirely a meme. I woke up this morning. I was like, that is really funny.

7:18You know, taking the, taking, Allbirds became a meme, right? The company was basically dying, but the meme remained strong.

7:25John Coogan:Yeah. And it's kind of making Allbirds in some way just became such a part of the uniform of Silicon Valley. It was something that Silicon Valley was mocked for. And to take that corporate shell and make a mockery of our industry, again, feels quite fitting. And so anyways, I'm incredibly... Is this bullish for the shoes? Even Dave Portnoy said, I don't get it. And he loves a meme stock. And he loves a meme stock. Can we play this video? I have no idea how the actual stock will perform. My understanding is they sold off all of the Allbirds assets. Yeah. Right? Yeah. So for$39 million, they sold it to American Exchange Group.

8:10Yeah. They got the domain. And so they're just kind of using the listing as a quicker way to get to public markets. But the ticker remained public, and it was just sitting there. And I think a lot of people are sitting there talking to their friends, being like, why did I not think to turn all birds into a neoclap?

8:28John Coogan:Yeah. Why am I? We had a buddy who's a very, very smart investor who you could just tell wanted to slam his head into the table because he's spending all this time trying to pick real winners, invest in fantastic, durable businesses, and all right in front of him was what in hindsight is like a very, very obvious play. looking back at like the history of the last time this happened was Long Island Ice Tea. Oh yeah, that's right. In 2017, December 21st, 2017, the company announced that it was changing its name from Long Island Ice Tea to the Long Blockchain Corp. And said it would shift its strategy toward exploration of an investment in opportunities that leverage the benefits of blockchain technology while keeping its beverage subsidiary.

9:21The stock surged immediately after the announcement amid crypto mania. Again, this was the 2017 cycle. Coverage reported jumps of roughly 200 percent. And some reports said it rose as much as 380 percent midday. And it basically then just started to like chop, chop for a few weeks and ultimately faced various, had a little run in with the SEC. and they brought insider trading charges ahead, you know, because of activity that happened ahead of the pivot announcement. So I wouldn't be surprised to see something similar here.

10:03John Coogan:The Long Island Ice Tea Company was doing 4 million in sales in 2017, something like that. 25 employees, like pretty small company back then, and then just sort of wound down. People are not very optimistic that this would work. Ben says, hopefully everyone understands whatever the Allbirds pivot is, they won't likely secure any power, any GPUs at reasonable scale, and need a lot more money than this to even have a prayer. And you certainly see that with all the other NeoClouds that show up on ClusterMax. Every NeoCloud that we talk to on the show is raising hundreds of millions of dollars, and then debt on top of it and is usually has a lineage that traces back years, if not a decade, and has a whole bunch of interesting, you know, unique value props to actually, whether it's on the software side, on the deployment side, on the infrastructure side, on the energy side, actually going and finding power is very, very difficult and continues to be.

11:06John Coogan:But yes, a lot of people are saying this is dot com vibes. It is crazy. Satrini says, can we please wait until we are at least 5 % above previous all-time highs to start doing this? And it does seem like this. If you sell shoes, pivot to a GPU cloud, I guess. And Negligible Capital has the meme from Wolf of Wall Street. The name of the company? New Bird AI. It's a cutting-edge AI native at cloud infrastructure firm out of, well, they used to be out of San Francisco making sneakers. But forget that, John. They are now awaiting imminent deployment of next-generation GPU compute clusters that have both massive enterprise and consumer applications.

11:41John Coogan:Now, right now, John, the stock trades on the NASDAQ at about the price of a cup of coffee. And by the way, John, our analysts indicate it could go a heck of a lot higher than that. And, John, one more thing. They're up just 160 % today. What a wild time. Mike Isaac says, this is just going to be the default for any failing entity that owns a significant amount of real estate able to be converted into data centers. I'm waiting for the Arby's server farms. I don't know if that's what's happening here with real estate. I think it's more about the shell entity. The brand. No, not even the brand. I mean, the brand.

12:11No, the brand, like there has to be a goofiness to it. Yes. To become a meme. To have the meme potential.

12:16John Coogan:Yeah, to become a meme. Because I don't think anybody who's investing in this company actually thinks they will build a great Neoclub. Yeah, it is just a... We just have, you know, talked to so many of these companies, and there are a number of established players. In fact, they're already, you know, everyone expects the market for inference to be one of the biggest markets of all time. Yeah. But that doesn't mean that anyone that attempts to build a business here will be successful. Yeah. Well, let's move over to Snap. Evan Spiegel, former guest of the show, two-time in-person guest. They're saying he went to Coachella and came back and was like— And he decided to right-size the company.

12:56John Coogan:So he's laying off 1 ,000 full-time employees, which is roughly 16 % of the global workforce, as part of an effort to reduce costs and achieve profitability. In a memo to employees Wednesday, Spiegel said the cuts are necessary for Snap to boost efficiency as it pursues profitable growth. He cited improvements in artificial intelligence technology that let Snap employees move more quickly. The company is also closing more than 300 open roles. Spiegel told staffers, many of whom were told to work from home on Wednesday, that the job cuts and pullback on hiring will reduce SNAP's annualized cost base by more than$500 million by the second half of this year.

13:29John Coogan:SNAP estimated that total revenue rose 12 % to$1.53 billion in the first quarter, so$6 billion in total revenue run rate. adjusted earnings before interest, basically EBITDA, is$233 million during the period. Snap shares jumped as much as 9 % after markets opened in New York. Spiegel wrote a memo. He said, Last fall, I described Snap as facing a crucible moment requiring a new way of working that is faster and more efficient while pivoting towards profitable growth. Over the past several months, we have carefully reviewed the work required to best serve our community and partners and made tough choices to prioritize the investments we believe are most likely to create long-term value.

14:13John Coogan:The stock is down 31 % so far this year. And what's interesting is that it is not really this SaaSpocalypse narrative, because even if you vibe code a Snapchat clone, you won't have the actual usage data, the network effect that exists. But the market has definitely turned on stock-based comp and just is in the hunt for profitability broadly. Which, of course, Snap has never generated a single dollar of net income. When you include stock-based comp, right? Correct. I think that always includes stock-based comp. And so EBITDA is positive, but they issue a lot of stock to comp the employees, and that has weighed down on the share price because there's a lot of dilution.

15:00John Coogan:And while Spiegel is also working to sell a vision for augmented reality glasses, which the company plans to debut later this year. It has leaned heavily on outside firms to power its AI offerings. Larger rivals are spending aggressively to build and develop their own state-of-the-art AI products and infrastructure. The job cuts arrived just weeks after activist investor Irenic Capital Management took a stake in the company and called for swift changes in that memo that we reviewed on the show a couple weeks ago, including a recommendation that Snap cut its workforce in hopes of boosting the stock price.

15:29John Coogan:Like many of your peers, you overhired the investor, wrote in a letter to Spiegel last month. Unlike your peers, you haven't course corrected. Spiegel's note to employees didn't mention whether the job cuts were related to Irenic's recent demands. Other major tech companies have slashed their workforces, including SnapRival meta-platforms. Meta eliminated hundreds of jobs globally in March and shed roughly 1 ,000 workers from its Reality Labs group back in January, all while ramping up investments in AI. Spiegel suggested AI was one part of his decision for the cuts. While these changes are necessary to realize Snap's long-term potential, Spiegel said of the cuts, We believe that rapid advancements in AI enable our teams to reduce repetitive work, increase velocity, and better support our community partners and advertisers.

16:11John Coogan:And so the big question that I have generally is, like, what is the actual replacement rate? Like, how much are they spending on AI? We saw that report from Uber that they blew through a year of budget on AI tools in just a couple months. And a lot of people were sort of reacting to that, saying, like, well, I've used the Uber app for years. It doesn't feel like it's changing dramatically. Of course, there's manual workflows that internally might need to be done, and AI might speed that up. But in terms of getting net new applications, net new apps that people actually use and enjoy, that seems to be the next opportunity for real growth as opposed to just cost optimization.

16:53John Coogan:$400 million deal with perplexity is no longer happening. I guess that's been pulled back on. I really wonder why the perplexity has seen seemingly some very real growth on their new product. Computer. They've been sharing some of the increased revenue that they're seeing from that. But, yeah, that was, I think, one of the things that, yeah, in the Save Snap Now campaign, that was one of the suggestions. Was to pull out of that? Is to concentrate AI partnerships on clear winners like Gemini, OpenAI, and Anthropic. Oh, interesting. So they were not in favor. And again, it seemed like perplexity would be in a position where they would pay the most, actually, for that distribution.

17:37And we'll see if they actually backfill that slot or just focus on their own tooling.

17:43John Coogan:So the full presentation is up now, which you can read through. After nine years of being a public company, 15 years since being founded, Evan Spiegel finally decided to put a business plan together for how to reach profitability. And so you can go click through all of that. What else is going on? Oh, you wanted to talk about Anthony Pompliano's new agentic podcast on Wall Street. The show is called Best Stocks, and it's 100 % AI generated. Each episode is based off the agentic research articles. Synthetic AI content will be more popular than human-created content, he says. And he had it covered in Axios.

18:18John Coogan:I could see a daily. Yeah, so a lot of people are, Best Stocks is kind of a funny name because it's like the most generic possible name for a finance podcast. What's your finance podcast called? It's called Best Stocks. But I think that historically one of the main downsides of the podcast was that they always had this lag, right? They were recorded, edited, and then eventually published. but people and so like in some ways tv remained competitive as a place where if you wanted to understand what was happening in the markets you do it on cnbc right it's always on you can always kind of get an update there and so i think that like real-time podcasts that was part of um part of what i think uh helped us uh uh get some traction early with the show was that we were publishing every single day so it was like kind of a real-time look into the markets i think that this show, I haven't listened to an episode yet.

19:12I'll try it on the way home. Given the popularity of, I think, this, there's a real-time politics one that has done very well on Apple Podcasts, I think that this show could find an audience, right? It's basically Notebook LM, but a little bit more curated, probably a little bit more opinionated. You don't have to be prompting yourself. I would expect this to get some level of traction of people just wanting to turn something on, understand in real time what's happening. And it uses, obviously, the existing distribution. So we'll see. But not as bearish as some of the other people.

19:50John Coogan:Well, let's switch over to Amazon. Why is Amazon buying Starlink rival Global Star in an$11 billion deal? The race is heating up between Amazon and SpaceX. So Amazon's buying satellite operator GlobalStar in a deal that the company's estimated at about$10.8 billion, seeking to build a business connecting consumer smartphones with satellite internet connections. The deal would give Amazon's LEO satellite ventures a boost as it vives with SpaceX's dominant Starlink network. The Elon Musk-controlled satellite business has been launching satellites designed to connect to consumer devices and signing agreements with mobile carriers.

20:27John Coogan:Here's what's at stake. Amazon plans to launch new satellite-to-cell phone service in 2028. That It feels far away, but I guess it's only two years away. A big factor in the deal is GlobalStar's control over spectrum resources, which we've seen trade hands a few times now, which Amazon could use to provide satellite links to smartphones. Those wireless assets would enable a plan for Amazon to deploy its own... God, brace yourself. Tell me. AST Space Mobile is down 10.5 % in the last five days. Selling off. Selling off on this news. Yeah. Yeah. I mean, maybe people are worried about like a duopoly here.

21:00John Coogan:I don't know. Ben Thompson was talking about ASTS a little bit. Yeah, he said, this isn't the only example of leaning companies wanting to avoid being at the mercy of SpaceX. Verizon is at it again in terms of their own satellite service, doubling down on their investment in AST Space Mobile instead of coming to a deal with Starlink for not just better service, but service that actually exists. So AST Space Mobile is years behind. They don't have a Constellation actually up and active yet, but they have plans to. They have concepts of a plan. What other company is the clear leader in that space?

21:34John Coogan:Well, it's the one that Ben Thompson expressed hope last year would lean into a SpaceX partnership, and that was Apple. And so he says the problem, he noted, is that it was hard to see Apple and SpaceX ever resolving who would actually be in charge. Apple clearly agrees because they are not only declining to work with SpaceX. I actually think they were the driving force in this global star deal. And so the battles between all the different tech companies continue to rage. Yeah, and AST Space Mobile now has a heavily, heavily, heavily funded competitor in the same general category. Yeah. Right.

22:10John Coogan:Yeah, there was a moment where... Like Amazon's not spending$11.5 billion and then just going to be like, all right, we're going to try to run this super efficiently. They're going to invest heavily. Yep, in between Leo and Blue Origin. Or Amazon business as they get to scale. Yeah, they don't have devices and so they won't be fully vertically integrated. But what Ben Thompson's pointing out is that Apple might not want to have a single point of leverage there with SpaceX. And so they're balancing the two out. SpaceX's overall Starlink fleet numbers around 10 ,000 operational satellites. Elon had this cool chart of 10 to the 0, 10 to the 1, 10 to the 2, 10 to the 3, like the exponential every 10x number of satellites.

22:52John Coogan:and they check them off at Starlink HQ when they get to the next order of magnitude. The company plans to launch thousands more in the years ahead. Starlink has deployed more than 650 satellites dedicated to providing connections to cell phones as of the end of last year, connecting more than 12 million people, according to the company. Global Star operates a network of satellites and in recent years has provided Apple with satellite links to support features for iPhones. Apple's service allows users to send text messages, call emergency assistance, and seek roadside help in areas where cell phone service isn't available.

23:23John Coogan:And the Global Star service has always been slower than, it's high Earth orbit, so it's a lot slower than a Starlink connection, but they are already working with Amazon to figure out the next iteration of that. So Amazon said Tuesday that it agreed to a deal with Apple to power satellite services for its iPhone and Apple Watch and to work together on future satellite services using LEO's growing network. Global Star has separately been working with Canadian satellite maker MDA Space to develop new satellites that Globalstar would own with capacity dedicated to Apple. So Globalstar's global spectrum rights became more valuable as SpaceX and Apple began more aggressively using satellite links to connect phones.