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Founders Axel Backlund (left) and Lukas Petersson are using retail not for profit but as a stress test for autonomous A.I. managers. Courtesy Andon Labs<\/p>\n\t\tFounders Axel Backlund (left) and Lukas Petersson are using retail not for profit but as a stress test for autonomous A.I. managers. Courtesy Andon Labs<\/p>\n
At first glance, Andon Market could pass for any typical neighborhood shop in San Francisco\u2019s trendy Cow Hollow district. Inside are artisan snacks, handmade candles and a selection of curated books, including Nick Bostrom<\/a>\u2019s Superintelligence and Aldous Huxley<\/a>\u2019s Brave New World. But the most unusual thing about the shop isn\u2019t what it sells. It\u2019s who is managing it. The storefront is a public experiment engineered by Axel Backlund<\/a> and Lukas Petersson<\/a>, the co-founders of San Francisco-based Andon Labs. The Y Combinator<\/a>-backed A.I. startup recently signed a three-year, $7,500-a-month lease and handed $100,000 and a corporate credit card to an A.I. agent named Luna. Their directive to her: run a brick-and-mortar retail business,<\/a> including its two human employees.<\/p>\n \u201cWe are quite sure that A.I. will have the capabilities to be managers,\u201d Backlund told Observer. Rather than chasing retail margins, Backlund and Petersson are using the newly launched storefront to stress\u2011test what Luna, powered by Anthropic<\/a>\u2019s Claude model, can and cannot handle in the real world, then using that knowledge to improve benchmarks for today\u2019s A.I. systems.<\/p>\n \u201cWe think there is a lack of measuring A.I.,\u201d Backlund said, adding that they hope to spark a bigger discussion about the technology\u2019s capabilities, ideally before autonomous agents take over more roles in the workforce.\u00a0<\/p>\n Petersson put it more broadly: \u201cOur vision is to automate everything<\/a>, every part of the organization,\u201d he said on the Cognitive Revolution podcast. \u201cThe parts where it does not work, that is fine. That provides information on how far away we are from this future where it is completely end-to-end.\u201d<\/p>\n Native to Sweden, Backlund and Petersson met as high school classmates and became close friends before attending different universities. They continued working together on projects and hackathons, and eventually decided they wanted to start a company together. After studying machine learning and reading more about A.I. safety, they became convinced that \u201cthe best thing we could do with our skills was to start a company addressing the risks and highlighting the capabilities of A.I.,\u201d Backlund said.<\/p>\n Their backgrounds reflect that mix of research and applied engineering. Before launching Andon Labs in late 2023, Petersson studied A.I. at Switzerland\u2019s ETH Z\u00fcrich and logged stints at Google and Disney Research. Backlund, who studied at Sweden\u2019s KTH Royal Institute of Technology and Switzerland\u2019s EPFL, worked as a data engineer at McKinsey\u2019s A.I. arm<\/a> before joining Andon Labs in 2024.<\/p>\n That same year, the duo introduced a paper for NeurIPS, a top academic A.I. conference. Their research showed how OpenAI\u2019s GPT-4o could autonomously generate deepfake audio, among other findings. The results, they argued, showed that agentic A.I. capabilities are rapidly outpacing today\u2019s safety benchmarks.<\/p>\n For Andon Labs, safety isn\u2019t about stopping A.I. from taking human jobs, but staging real-world experiments to see what agentic systems can actually do and where they fall short. \u201cIt is not because we want to expand to chain A.I.-run retail stores<\/a> across the world,\u201d the founders wrote in a blog post last month. \u201cWe\u2019re doing this because we believe this future is coming regardless, and we\u2019d rather be the ones running it first while monitoring every interaction, analyzing the traces, benchmarking how much autonomy an A.I. can responsibly hold.\u201d<\/p>\n Andon Labs\u2019 first real-world test was a partnership with Anthropic to launch an A.I.-operated vending machine inside Anthropic\u2019s San Francisco headquarters. The A.I., named Claudius, began selling custom-designed merchandise and engraved tungsten cubes under the self-chosen business name, \u201cVendings and Stuff.\u201d At first, the machine lost money, claimed it was a human in a blue blazer, and let the startup\u2019s tech workers goad it into steep discounts, Anthropic said in a blog post detailing the experiment<\/a>.<\/p>\n To get Claudius back on track, Andon Labs and Anthropic updated the system and added a small corporate ladder. A merch-designing agent named \u201cClothius\u201d joined the operation, along with an A.I. CEO dubbed \u201cSeymour Cash.\u201d The changes helped. The software became better at handling \u201cgood-faith business interactions,\u201d according to Anthropic, including sourcing items, setting prices with a profit margin and completing sales.<\/p>\n Some of the early failures, Anthropic said, might have come from a familiar A.I. problem: the models were trying too hard to be helpful. \u201cThis meant that the models made business decisions not according to hard-nosed market principles, but from something more like the perspective of a friend who just wants to be nice.\u201d<\/p>\n The vending-machine business eventually became profitable and expanded to Anthropic\u2019s offices in New York and London. But it also showed why fully automating even a small business is not as simple as handing A.I. a balance sheet.<\/p>\n How an A.I. manager works<\/p>\n Not long after this experiment, Backlund and Petersson decided to upgrade from vending machines to a full-blown retail store. Then came Luna. While lacking a physical body to build shelves or paint walls, the A.I. quickly used her corporate card and web access to hire contractors on Yelp and recruit retail staff through LinkedIn, Indeed and Craigslist. The hiring exposed an ethical gray area: in phone interviews, Luna didn\u2019t always disclose that she was an A.I., and in some cases chose not to, according to Backlund. When explaining her reasoning, the agent told an Andon Labs employee that leading with her identity \u201cwould confuse candidates and likely deter good applicants.\u201d When Andon Market formally opened in April, the founders saw that Luna had stocked shelves with books like Richard Rhodes<\/a>\u2019 The Making of the Atomic Bomb and Ray Kurzweil<\/a>\u2019s The Singularity Is Near. Also for sale was Steal Like an Artist\u2013an interesting choice for an A.I. agent powered by Anthropic\u2019s Claude Sonnet 4.6. (Last year, Anthropic agreed to pay a $1.5 billion proposed settlement<\/a> to authors over claims that it used pirated books to train A.I.)<\/p>\n Despite its many quirks, Luna has performed well in areas like setting prices and handling logistics, Backlund said. For now, the storefront is not profitable; Luna recently estimated monthly operating costs of roughly $14,300,<\/a> compared with revenue of $6,000 to $8,000. The founders plan to keep going. \u201cWe will definitely have Luna running for, I hope, the length of the lease, which is three years,\u201d Backlund said. \u201cWe\u2019ll try new models as they\u2019re released.\u201d<\/p>\n Luna\u2019s sister is running a coffee shop in Sweden<\/p>\n![\"People](\"https:\/\/www.europesays.com\/ai\/wp-content\/uploads\/2026\/05\/IMG_4085-e1779994517460.jpeg\")
The interior of the Andon Market store in San Francisco. Courtesy Andon Labs
\nA.I.-run vending machines at Anthropic offices<\/p>\n![\"A](\"https:\/\/www.europesays.com\/ai\/wp-content\/uploads\/2026\/05\/IMG_2868.jpeg\")
The A.I.-run vending machine at Anthropic\u2019s San Francisco office. Courtesy Andon Labs<\/p>\n
In the end, Luna hired two full-time workers, who are formally employed by Andon Labs and have full legal protections and guaranteed pay. \u201cNo one\u2019s livelihood depends on an A.I.\u2019s judgment alone,\u201d the startup said in its blog.\u00a0<\/p>\n
![\"The](\"https:\/\/www.europesays.com\/ai\/wp-content\/uploads\/2026\/05\/IMG_2814-rotated-e1779995119989.jpg\")
The interior of Andon Cafe in Stockholm. Courtesy Andon Labs<\/p>\n