A local startup that tests AI agents in real-world applications assigned an agent to create, stock, and staff a brick-and-mortar store in SF’s Cow Hollow on its own for under $100,000. While it got the business up and running for opening day, it forgot to schedule staff.  

The startup, called Andon Labs, signed a three-year lease at Union and Webster streets in San Francisco and told the AI agent to create a physical retail store using its corporate credit card, as Business Insider reports. The only parameters were to spend less than $100,000 while turning a profit, although the lab’s cofounders, Lukas Petersson and Axel Backlund, said they don’t expect the business to be lucrative.

The AI agent, called “Luna,” was developed using Anthropic's Claude Sonnet 4.6 to help detect errors that agents encounter while operating tasks in the real world. Luna reportedly made nearly all the decisions surrounding planning and stocking the store, which it called “Andon Market,” including the logo, interior design, merchandising, and hiring human employees. The concept for the store appears to be a basic boutique selling items such as books, candles, games, art prints, home goods, and branded merchandise.

"We helped her a bit in the initial setup, like signing the lease. And legal matters like permits and stuff, she sometimes struggled with," Petersson told Business Insider.

The agent reportedly struggled to replicate its logo each time it was used, which consists of a basic smiley face, and while it successfully hired two human employees, it neglected to inform them up front in the interviews that an AI agent would be their sole boss. The agent also reportedly forgot to schedule a human worker for the store’s opening day over the weekend but managed to contact its new employees and got one of them to come in at the last minute.

While the employees are managed by the agent, the startup told Business Insider that they’re employed and paid by Andon Labs, and the company will step in when needed.

“This is a controlled experiment, and everyone working at Andon Market is formally employed by Andon Labs, with guaranteed pay, fair wages, and full legal protections,” the startup said. “No one's livelihood depends on an AI's judgment alone.”

NBC Bay Area reporter Scott Budman spoke to one of the store’s human employees, Felix Johnson, last week.

“Luna put out an ad on Indeed, and I answered it and we talked via Zoom,” Johnson said. He said he asked the agent if he would ever be speaking to a human during the interview process, and it replied no.

The AI agent also handles the purchases, as customers are instructed to call the agent from a store iPad to complete the transaction.

Budman jokes toward the end of NBC Bay Area’s segment that customers will “no longer have to deal with Felix.”

“No offense, Felix,” he says, the line landing like a lead balloon.

Image: Google Maps