Tech

Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

I'm sad to say I was promised flying cars and I got ... vending machines? 

I'm referring to Silicon Valley's derision du jour, a startup called Bodega. A couple of ex-Google employees are placing 8-square-foot locked cabinets in buildings or stores that are stocked with microwave popcorn, mouthwash, LaCroix sparkling water (of course) and other nonperishable items commonly sold at convenience stores. 

The idea, as the founders told Fast Company, is to have Bodega stations dotting cities to eliminate trips to centralized shopping locations. Think of it like online shopping, but less convenient. Bodega also promises every location will be customized through artificial intelligence (of course). Bodega outposts in dorms might have electronics and personal care items, while a machine in the office could stock pens, pads of paper and snacks. 

I have a one-word rebuttal to this pitch: Nope. This startup has basically invented a vending machine. Huzzah. And worse, they have invented a culturally insensitive vending machine company that doesn't seem to have considered financial reality. 

Stores Matter
Online shopping is growing quickly but more than 90% of U.S. retail sales are in physical stores
Source: U.S. Census Bureau
Note: Figures are adjusted for seasonal variation. Data for 2Q 2017 are preliminary.

There is perennial outrage about technology companies that are solving annoyances experienced by the 1 percent. Bodega certainly fits the bill. The idea seems to borrow from the ubiquitous Google "micro kitchens" that ensure employees (and their dogs) are never far away from oases of Red Bull, cereal and other necessities of life as a Google engineer (and pet).

And it feels particularly clueless to call the company Bodega, the Spanish word that in some cities is a catchall name for local convenience stores, typically owned by immigrants. It's like a Bay Area startup intentionally chose a name to generate the most class angst, or to become a plot line in HBO's "Silicon Valley." 

After a few hours of outrage on Wednesday, Bodega issued a semi-mea culpa on Medium saying the founders don't intend to kill the local convenience store but rather bring its best qualities to people that don't have easy access to them. Rebuttal No. 2: I'm betting most Americans at least have access to a gas station convenience store. The company also said it underestimated the backlash it would face for using the name Bodega. 

But I also have a more pedestrian objection: Bodega doesn't seem to be a good business.

I have personal experience with vending machines. I have eaten a lot of potato chips and candy out of them. And the thing about vending machines is a person in a truck has to refill them regularly with potentially dozens of items. Sometimes there's a run on Cheetos, and then there are no Cheetos for a week, which is outrageous. 

Yes, Bodega may not have to pay rent for physical stores or employ store workers. But Bodega doesn't eliminate the complicated costly logistics of a convenience store or a vending machine.  

Just like a vending machine or a store chain, Bodega staff or contractors will still need to buy a bunch of products and drive to stock them in many different locations. Maybe -- maybe! -- AI software can tailor inventory to each location, but it will be many many years before robots can pick up cans, chip bags and little Advil boxes, walk them into an office or store, unlock the Bodega cabinets and place the items on shelves.

And when that day comes, there'll be humans waiting on the sidewalk to snatch a week's supply of LaCroix Curate Pomme Baya. Inevitably, the machines will break. That requires more humans to go fix them. This does not scale, as the venture capitalists say.

When people -- often unfairly, in my opinion -- criticize the tech industry for not tackling the world's toughest problems, companies like Bodega are Exhibit A. Rant over. I'm going to grab a bag of Cheetos.

A version of this column originally appeared in Bloomberg's Fully Charged technology newsletter. You can sign up here.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. The company's website is bodega.ai, as in artificial intelligence. 

To contact the author of this story:
Shira Ovide in New York at sovide@bloomberg.net

To contact the editor responsible for this story:
Daniel Niemi at dniemi1@bloomberg.net