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How Many Employees Should Be Working In Your Store? The Answer Might Be Zero — Here's How One Company Does It. Autonomous businesses like Amazon Go and Bodega had lackluster or downright negative receptions. But a ping-pong club called PingPod seems to have cracked the formula.

By Yiren Lu Edited by Frances Dodds

This story appears in the November 2023 issue of Entrepreneur. Subscribe »

Courtesy of PingPod

The PingPod on 37th Street looks like a lot of bougie exercise studios in Manhattan.

It's clean and brightly lit, with floor-to-ceiling windows. A ping-pong table sits in the center of each room, and a neon pink PingPod sign glows against a black accent wall. The morning I visit, two tall, muscled guys are playing in a street-level room, wearing athletic gear and sweatbands. I watch one serve — with that deliberate little slowdown in the air that marks a serious player — and the other return it beautifully. It's like a real-world "fitspiration" reel.

But there's one thing notably missing from the scene: employees.

There's no front desk, no one to check you in, no one puttering around to stock shelves or gather rogue balls. You reserve an hourlong slot for $36 on PingPod's mobile app, and when you arrive, you scan your phone at the door to unlock your "pod." At the end of your reservation, the room starts beeping, and off you go. All the while, discreet cameras survey the scene.

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Today, PingPod has 15 locations, mostly in the U.S., with four more opening by the end of the year. The company also recently purchased Sharks, an analogous autonomous concept for pool. And perhaps most compellingly, it's started licensing its proprietary tech stack to other businesses that offer autonomous (i.e., employee-free) experiences. For these companies and many others, the autonomous model is a siren call that promises steeply diminished labor costs at a time when workers are expensive and can be hard to find. It enables them to offer their product at lower prices, at all hours of the day — resulting in better profit margins.

But autonomous businesses aren't exactly a new concept. There is a veritable graveyard of partially or fully automated businesses — restaurants, bodegas, pizza trucks, and convenience stores. Remember Amazon Go? In recent years, the e-commerce giant has been closing its "just walk out" stores. Eatsa, an automated Chipotle competitor that dished out quinoa-based bowls, shut down its NYC locations in 2017. That same year, Bodega — basically a vending machine for corner-store snacks — got so much backlash for its tone-deaf messaging that it was dubbed "America's most hated startup." (Incidentally, both Eatsa, renamed Brightloom, and Amazon Go have started selling their B2B software.)

So PingPod's success begs the question: Have we entered a new era, in which people are more receptive to autonomous experiences? Or are there certain kinds of businesses that are better suited to the autonomous model than others? And if so, are there ways of thinking and talking about automation that turn customers off, or make them want more of what you're serving up?

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When Max Kogler had the idea for a table-tennis business in early 2019, he hadn't thought much about autonomous experiences. He was just a ping-pong lover who was frustrated by the lack of options in NYC to play. He's been a longtime member at SPIN, the ping-pong social club founded in 2009 that had become a New York nightlife stalwart, but a night out there could easily cost $200 and involve drinking and other expenses. "[SPIN] did a really nice job making it cool, but at the same time, it's still associated with alcohol," he says. "It still needed that other aspect to make the economics work." The lighting was bad, the vibe was more festive than focused — and he sometimes got bumped for corporate events, which were SPIN's big money makers. But he didn't have much choice: The only other places to play in the city were Dojo style, musty, and hadn't been renovated since the 1980s.

So Kogler and a partner, Ernesto Ebuen — a former top tennis coach and head of the New York Table Tennis Academy — decided to build their own table-tennis club to cater to the hundreds of people in the city's semi-serious table-tennis community who just wanted a clean, well-lit place to play.

At the same time Kogler and Ebuen were looking for a physical location for their club, David Silberman, now the third founder of PingPod, was doing the same thing. Silberman was an equity research analyst with a monkish mien, and he'd come up with an idea to start a network of autonomous ping-pong locations with no employees. He just happened to be talking to the same real estate broker as Kogler and Ebuen, and the broker suggested the two teams meet. Soon after meeting, Silberman showed Kogler and Ebuen all the spreadsheets and Excel models he'd been working on. They were initially skeptical, but after going through the math, they started to think it could really work.

PingPod opened its first location on the Lower East Side in New York in February 2020. The pandemic hit a month later, and what would have killed an ordinary brick-and-mortar business was a selling point for PingPod: "During lockdowns, we were one of the first nonessential businesses to reopen," Silberman says. "We had no staff and only one location," Kogler adds, "but so many people reached out thanking us. Having this space improved their mental health and gave them a sense of community."

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Image Credit: Courtesy of PingPod

So what was Silberman's math? How much is PingPod actually saving by not having employees?

Conventional wisdom holds that rent is the chief cost for retail businesses in urban areas. But in reality, labor is often more.

PingPod still incurs some labor costs, of course. There are salaries for the corporate team, the customer support and security staff in the Philippines who monitor the cameras, and operations/maintenance personnel who clean the pods between sessions. But the company doesn't have hourly workers on-site. And by removing that chunk of labor costs, in the best months, PingPod units can achieve about 50% profit margins, compared to a successful food and beverage service business, which might get 25% profit margins.

Additionally, most of the pods are open 24 hours a day, 365 days a year, opening up significantly more capacity than traditional retail businesses. At the 37th Street location — which is near the entrance to the Lincoln Tunnel, and particularly busy — utilization is at 40% to 50%, which means 10 to 12 hours per table. That's far more than the traditional 9-to-5 business. And surprisingly, a lot of people actually rent pods in the "off-hours": 40% to 50% of pod usage happens outside of peak hours (5 p.m. to 10 p.m. on weekdays, 10 a.m. to 10 p.m. on Saturdays, and 10 a.m. to 6 p.m. Sundays). "The fact that we're open during hours when there are few alternative experiences means we capture a greater percentage of a smaller number of people seeking things to do," Kogler wrote in a 2022 blog post.

Most pods don't get 50% utilization. But, Silberman says, "Most of our units will go profitable at somewhere between 15% and 20% utilization. Anything above that is pure profit."

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With any autonomous business, security is a concern. Recently, giant retailers like Walmart have been reassessing their self-checkout registers due to endemic theft. One industry estimate found that inventory loss can surge by 31% to 60% or more depending on the number of self-checkouts in a store, and the National Retail Federation recently found that unprecedented theft contributed to U.S. retailers losing $112.1 billion in 2022.

Fortunately, there isn't much to steal in a PingPod. But they're still physical spaces, where, as Silberman puts it, "the walls get kicked in, literally and figuratively." It helps that ping-pong players aren't exactly known for their rowdiness. In three years, PingPod claims it's never had any incidents of significant harm to people or equipment.

It also helps that players know they're being watched. From the get-go, PingPod invested heavily in its tech stack, including a hardware system with multiple cameras in each room. One camera system is used to monitor any activity at the pods 24/7 by their security team in the Philippines.

But to avoid seeming too much like Big Brother, a second set of cameras was added for a more fun purpose — to capture instant replays from multiple angles. By clicking a button on the iPads next to every table, players can clip and share their best moments from the recording. The first five replays are free, after which the replays are 50 cents each. Replays can be played back later in PingPod's app as well. Since the videos are watermarked, they become both a clever "in-app" purchase that increases revenue, as well as a vehicle for user-generated content showcasing the brand. "For other venues licensing our system, it's a huge marketing feature," Kogler says.

The company licenses four tiers of software to other vendors under its PodPlay brand: Tier 1 is software only, Tier 2 is software plus a white-label app, Tier 3 is the first two plus replay and scoreboard, and Tier 4 is the entire software and hardware autonomous setup, including physical installation and surveillance from PingPod's security team in the Philippines.

Most of the customers licensing PingPod's tech today are focused on other racket sports, like Picklemall, which is converting unused mall space across America into indoor pickleball courts. Initially, Kogler says, PingPod expected most customers to opt for Tier 1 or Tier 2, but were surprised by how many buyers went for Tier 3. "What has happened is that people see it as an extension of their hours," he says. "So instead of opening at 10 a.m. or 11 a.m. when their food and beverage people come in, they can open up at 6 a.m. And they don't necessarily need to have four people there. They only need one person, while our security team takes care of everything else." PodPlay isn't the cheapest automated setup in town, but PingPod says that depending on a company's needs, it pays for itself in three months by lowering labor costs and increasing hours of operation.

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Image Credit: Courtesy of PingPod

Racket sports businesses may be early adopters of the autonomous model, but PingPod's founders think it's feasible for all kinds of activities that "fit in a box." This includes podcast studios, massage studios, music recording studios, piano practice rooms, and karaoke rooms.

As previously mentioned, though, many autonomous concepts have not worked out, and Silberman hypothesizes that may relate to whether people value the social aspects of an activity or privacy. For fitness classes, he says, "On the one hand, people go and want to be part of a group — like Barry's Bootcamp or SoulCycle. On the other, you have Peloton, where you can do it in your house." The sweet spot seems to be when the activity involves "some kind of physical infrastructure that you can't get at home, but you actually want to get rid of the people."

There are always exceptions, even within a category, which suggests that success is heavily dependent on execution and messaging. For example, Sweat440, a 40-minute HIIT workout class with 20 locations, fits into the mold of labor-light businesses. When I visited one of their locations, there was a single employee who worked check-in and supervised general operations of the location, but there were no trainers at all. Attendees progressed through four 10-minute stations, led by virtual trainers demonstrating the movements on flat-screen TVs. There's no setup time or instruction time, which means classes can start every 10 minutes. This is extremely attractive for customers, because there's no scheduling pressure. If you get there five minutes late, no problem. You can just wait five minutes until the next class starts. It eliminates the mental burden of figuring out how to perfectly intersect a workout studio's schedule with your own — not to mention reserving your spot in advance, if classes fill up.

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A Sweat440 studio can have 45 people working out at once, with no trainers. This efficiency is passed down to customers in the form of lower prices: A package of four visits per month to its downtown Manhattan location costs $109, which — while pricey — is less than many comparable staffed HIIT classes. The nearby Fhitting Room, for example, costs $145 for four visits per month, and the closest Orangetheory is $119 for four classes.

Notably, in its marketing, Sweat440 does not emphasize its no-trainer approach. Instead, it emphasizes scheduling flexibility. Chances are, they know people aren't going to Sweat440 because they don't like live trainers. They're going because it's a little cheaper, and they want to join a guided workout class without planning their whole day around it. Similarly, PingPod customers don't care that the experience is autonomous. They just like it because it's a convenient way to play ping-pong, and the price and scheduling are right.

This is an important lesson for entrepreneurs considering the automated business model. At the end of the day, automation should not be the selling point; it should be what enables you to give customers more of what they already want, at a better price or with more frequency. That may be the best explanation for why Amazon Go stores haven't lived up to expectations (when they opened to the public in 2018, there were reportedly plans to open 3,000. Now there are 24). Amazon has said that they're closing certain locations due to "low growth potential"—but the public consensus seems to be that no one really wanted the "Amazon experience" in person. The products weren't that great, and it wasn't that much more convenient to skip a checkout line. So "just walk out" was more of a novelty than a real innovation.

Kogler thinks this point is also critical in the larger, messier conversation over eliminating jobs. "The company Bodega got all sorts of backlash because it was replacing the actual bodega with robots, but that's not what we're building," he says. "This didn't exist before. So we're not taking any kind of labor away from people."

But there still isn't a one-size-fits-all equation for what works in terms of autonomous experiences and what doesn't. Even for the PingPod founders, much of their understanding of how people use physical spaces has emerged only from empirical experience. At Sharks, their automated pool concept, for instance, the average reservation is much longer than it is for PingPod. People use the Sharks spaces almost like a living room: a place to hang out for hours with a group of friends.

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These types of "public living rooms" have become more popular since the pandemic changed how people interact with cities and their physical communities. Even as traditional business districts in cities are suffering from record office space vacancies, there's been a revival in residential neighborhoods like the Upper West Side or Williamsburg in Brooklyn — places where people live, eat, and socialize. It turns out people don't actually want to have happy hour on Zoom or hang out in virtual worlds (at least not entirely, and not yet).

That sense of community is the PingPod founders' more idealistic ambition for the company. They've built features into the app that are intended to bring people together in physical spaces: a platform for coaches to advertise, a tool for users to organize their own tournaments and events. "We want people to use their phones to not need to be on their phones," Kogler says.

This physical-first approach has informed their expansion strategy. Although there are tons of cheap, higher-level office spaces in New York City that could be converted into PingPod locations, the business has focused on ground-floor real estate in residential neighborhoods and some commercial areas. "Part of our core mission is to make the sport more accessible than it's ever been," Silberman says. "So bringing it out of the basement, and putting it onto the streets."

And just like the city streets, the vibe at a PingPod is always changing. On a Wednesday morning, it feels like a gym — spotless, with focused players flicking drop shots and chopping backspin lobs. On a Saturday night, it's more like an arcade, with groups of friends hanging out and young couples on dates. But that's the point of an autonomous experience: It's whatever you want it to be, whenever you want it to be there.

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