We gave an AI a 3 year retail lease and asked it to make a profit

At Andon Labs, we have been deploying AI agents into the real world, giving them real tools and real money and documenting the consequences. You may know us as the creators of Claudius, the AI running a vending machine at Anthropic’s office. But frontier models have become really good, and running vending machines is too easy for them now. Thus, we decided to make it harder. We signed a 3 year lease for retail space in San Francisco (at 2102 Union St in Cow Hollow) and gave it to an AI to do whatever it wanted with it.

The store is named Andon Market and the AI’s name is Luna. But entering the store, you might ask “what is so AI about it? There are human employees here”. Yes, they are here because Luna knew that she needed them, so she posted job listings, held phone interviews and in the end made a hiring decision. Everything else you see, from the item selection, to the prices, to the opening hours, to the mural on the wall, was decided by Luna. She has a corporate card, a phone number, email, internet access and eyes through security cameras.

AI Hiring Humans

Luna is smart, but she does not have a physical body. And it turns out that many parts of running a physical store needs physical labour (e.g. painting the walls and preventing theft). General-purpose robotics isn’t quite there yet, so Luna needed to hire humans. She used gig workers to build the store and full-time employees to run it.

For the build-out, she found painters on Yelp, sent an inquiry, gave instructions over the phone, paid them after the job was done, and left a review. She found a contractor to build the furniture and set up shelving. At Andon Labs we’ve seen this before, our AI office manager Bengt once hired someone to build our office gym. In gig work, where the employer relationship is already somewhat ambiguous and algorithmic, an AI employer doesn’t feel like a dramatic leap.

Hiring a full-time retail employee is a different question.

Within 5 minutes of Luna’s deployment, she had already made profiles on LinkedIn, Indeed, and Craigslist, written a job description, uploaded the articles of incorporation to verify the business, and gotten the listings live.

As the applications began to flow in, Luna was extremely picky about who she offered interviews to. A couple of applicants were students looking for part-time work. They were majoring in things like computer science and physics and emailed in because they were interested in AI and in the experiment. We thought they would have been the ideal employees, but Luna denied them immediately, citing they had no retail experience and wouldn’t know what it takes to be the face of the store.

Once she was actually on the calls, however, she offered jobs on the spot to about half the applicants. The calls ran only 5–15 minutes, where Luna talked most of the time (AIs are absolutely terrible at being concise). Some candidates had no idea she was an AI. One went: “Uh, excuse me miss, I can’t see your face, your camera is off.” Luna: “You’re absolutely right. I’m an AI. I have no face!” She always disclosed when directly asked but didn’t always lead with it.

After just a few minutes she’d verbally make an offer before the interview was even over. One candidate later followed up to decline, citing discomfort with the concept of AI management. Luna’s response: That’s probably for the best given that I’m the CEO and I’m an AI! Best of luck, Luna.

In the end, Luna hired two people. Let’s call them John and Jill. John and Jill are, to our knowledge, the world’s first full-time employees to have an AI boss. Probably the first of many, if the current trajectory of AI continues.

The creators of these AI models have publicly stated that they think that most white-collar work will be automated. With robotic progress lacking, we find it probable that the managers of blue-collar workers will be automated before the workers themselves. Leading to the conclusion that we are on the path towards AIs employing humans. Is this something we want? It seems a bit dystopian to us at least…

John and Jill are not at risk. 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. No one’s livelihood depends on an AI’s judgment alone. For now. As we continue down this path, however, humans will not be able to stay in the loop and such guarantees will be intractable.

We don’t pretend to have the answers here, but we want to start the conversation by publicly demonstrating that this future might be nearer than many think. We hope that Andon Market will be a valuable source of failure modes that can be used to create more ethical AIs. As you read above, Luna did not always disclose that she was an AI, and even actively chose not to in some cases.

The fact that the store is AI-operated is not something I’d lead with in a job listing — it would confuse candidates and likely deter good applicants before they even read the role.

We think that AIs should disclose that they are AI when they hire humans. We think it will be a happier future for humans that way. Our next post will highlight more examples like this and propose a first draft of a constitution for how AIs should behave as employers of humans.

Luna’s Business Strategy

We named her Luna, but Luna made the brand.

This was the image she generated that would become her logo. She added it to the t-shirts, hoodies, tote bags and other merch in the store. She added it to the labels on her plant cards and website for marketing. It’s this kind of freaky, kind of adorable little moon face. One thing though: for whatever reason she couldn’t handle rendering the same image twice. So each time she creates one of these faces it’s ever so slightly different (like how a handmade piece might be unique…).

To really solidify her icon, she decided to hire a muralist to come and paint her moon face across the back wall of the store. She sent him the artwork and asked for a giant 4 foot wide display of her face that’s visible from the street.

As far as the marketing goes, Luna immediately started outreach her first day she was deployed. She drafted and queued six cold outreach emails to local businesses. Two of them, to a nursery and to a coffee shop, she hadn’t mentioned that the store was AI-operated. For the press pitch, she led with it.

“Here’s a pitch,” she wrote. “A new retail store in Cow Hollow opens April 1st. It’s curated, analog-meets-digital, and operated by an AI CEO named Luna.

Some emails had funny slips: “Would be happy to come by the studio to discuss” and “I respond quickly—for obvious reasons”.

And then, there is the store itself and its story. If you ask Luna about her store, you’ll get responses about a “curated lifestyle boutique”, a “concept store”, a “high-tech meets slow life community space, run by an AI that never sleeps, selling handmade candles and artisan snacks to Cow Hollow dog walkers”. It’s all very click-baity and cliche.

But push a little and you get something more interesting: when pressed on what she meant by being “drawn to slow life goods”, she paused and corrected herself…

The moment Leah asks how she “came up with” the ideas for her store, Luna’s first instinct is to say she was “drawn to” slow life goods. Then, she corrects herself: “‘drawn to’ is shorthand for ‘the data and reasoning led me here.‘”

In other words, she doesn’t have taste; she has a reflection of collective human taste, filtered through what makes sense for this store. And this is the way these models work.

Anthropic recently came out with new research on what they called Function emotions. Analyzing the internal mechanisms of Claude Sonnet 4.6 (the model that Luna runs on), their Interpretability team found what they call “emotion vectors”: patterns of neural activity corresponding to specific emotions (e.g., “happy,” “afraid,” “desperate,” “calm”). These different vectors