value and opportunity

For the older investors among my readers, the name Zapata maybe rings a bell.

In 1998, US fish oil producer Zapata announced that they had enough of fish oil and planned to go big time into the “Internet business”. The history of Zapata itself reads like a novel, among other it was owned in its various incarnations (Real oil company, fish oil nutrition etc.) by George Bush Sen., The Glazer family, Wilbur Ross and Phil Falcone.

As one could imagine, the Dot.com Pivot was not very successful. The final “pivot” then was to transform into the company that is now called Spectrum Brands, a medium successful collection of consumer products. The long term Chart of Spectrum from Google also shows the short & crazy spike from the Dot.com Pivot.

This sounds very similar to Allbird’s recent move to transform from a failing Sneaker company into a super sexy Ai GPUaaS company.

History doesn’t repeat itself but as the saying goes, it rhymes.

If I want to draw some learnings from the Zapata episode, I would point out two things:

1. The Allbirds Pivot will most likely not lead to long term shareholder value creation
2. In Zapata’s case, the peak of the bubble was still ~2 years away (April 2018 vs. March 2020). I would not take this as a benchmark but the experience shows that bubbles like Dot.com and potentially also the AI bubble part can run much longer as anyone imagines. Trying to time a bubble based on episodes like this is very difficult.

In any case, the Zapata example shows that rarely anything is new in investing and a pivot of a non-sccessful company into the “hot thing of the moment” company is an old strategy. I guess we will see a lot more of this in the coming weeks / months as the Allbird example has made the backers of this pivot some serieous money.