After Layoffs, AI Startup Defends Bizarre Plan to Launch a Hundred 24/7 Cafes

When you’re building out an experimental AI-powered insurance company, it’s probably best to stick with the business fundamentals — and leave the fancy espresso to the baristas.

That’s the lesson being learned by the brain trust at Corgi Insurance, a frenetic insurance startup grabbing headlines for its excessively strict workplace culture, social media gaffes, and most recently its bizarre strategy to smother San Francisco in coffee shops operating 24/7.

Unfortunately for Corgi, those latter dreams have lost their buzz. As the San Francisco Chronicle reports, the insurtech venture has recently laid off employees tasked with establishing Corgi-branded cafes across the city. The layoffs come just a week after one of Corgi’s two cafe locations was ordered to shut down after city officials caught it operating without a legal permit (though sources familiar with the matter told the Chronicle most of those impacted by the company’s layoffs weren’t involved in that debacle.)

The original headline to this piece had opined that Corgi’s cafe plans were showing signs of disintegration. But in an email with the subject “Demand for Correction,” the company’s head of legal insisted that the cafe blitz is still underway, calling on us to “correct the headline and article to make clear that Corgi continues to plan additional cafe openings and has not abandoned its cafe expansion strategy.” The attorney also took exception to our use of the term “about-face” to characterize the situation in the prior paragraph. (Fearing the wrath of Corgi, we updated the headline and replaced the word “about-face” with “layoffs.”)

Corgi had initially set a goal of launching 100 new coffee shops in just six months, for a frantic rate of at least 17 a month. After failing to even make a dent in that goal, the plans have been significantly altered, and at least two insiders have been sent packing as Corgi embarks on an “internal shakeup.”

Real estate agents familiar with the Corgi’s dealings told the Chronicle that the company was taking a scattershot approach toward expansion, chasing multiple new storefront leases simultaneously, even as internal strategies vacillated wildly.

“They were pretty much talking to everybody in the market at the same time,” one source told the paper.

The whole thing underscores the reckless abandon with which investors have rewarded startups for even mentioning “AI.” Valued at an eye-watering $4 billion just two years into its lifespan, Corgi was recently accused of repackaging open source software and passing it off as something new. (We had originally characterized this project as a “foundation” of the company’s business, but Corgi’s lawyer insisted that “it is a peripheral Corgi product generating less than 0.1 percent of company revenue,” so we took that wording out.)

Corgi’s founders deny that — of course — but the drama underscores the degree to which American venture capital has rewarded some of the most hare-brained startups with mountains of cash.

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