Latest / Minds, Bodies, and Terawatts / SoftBank Wants to Buy America's Biggest Security-Guard Company for $30 Billion, and the Stated Plan Is to Replace Some of the Guards With Robots

Transcript

SoftBank Wants to Buy America's Biggest Security-Guard Company for $30 Billion, and the Stated Plan Is to Replace Some of the Guards With Robots · Minds, Bodies, and Terawatts

• 0:00
  [Host] This is Minds, Bodies, and Terawatts, the show where the robot salesman skipped the pitch and bought the customer. Bloomberg reported on October 16 that SoftBank is weighing a takeover of Allied Universal, the biggest security guard company in America. Sam, SoftBank is the firm that pours money into AI, so why would it want a company full of people in uniforms?
• 0:21
  [Guest] Because of the uniforms. Bloomberg's sources say founder Masayoshi Son is looking for places to put AI-powered robots to work, and the plan with Allied is to eventually swap some of the guards for machines on certain tasks. With Allied's debt included, the whole deal lands near thirty billion dollars.
• 0:37
  [Host] Hold on, I've seen the security robots at the mall, the ones that look like a rolling trash can and get stuck on curbs. Nobody is trusting that thing with a building at three in the morning.
• 0:50
  [Guest] And Bloomberg's own reporting agrees with you, because humanoid guards are the part it says will take longest. The talks are early and SoftBank declined to comment. But look at what Son is not doing, which is selling robots to the security industry.
• 1:05
  [Host] He's buying the industry instead.
• 1:06
  [Guest] The biggest piece of it. Allied's own numbers say it has about eight hundred thousand workers worldwide, and more than four hundred of the Fortune 500 as clients.
• 1:16
  [Host] So what does owning the guards get him that selling robots to the guards' bosses wouldn't?
• 1:21
  [Guest] The contracts. Every one of those clients already pays Allied a monthly bill for a body at the door. If you own that bill, you decide, post by post, when the body becomes a machine, and the client never has to sign off on a robot. From then on the only line that matters is what the guard costs per hour.
• 1:42
  [Host] Okay, so what does the guard cost?
• 1:44
  [Guest] The Labor Department counts about one point three million security guards in the United States, and the median one earns eighteen dollars and twenty-eight cents an hour, before benefits and overtime.
• 1:55
  [Host] Eighteen bucks an hour. That is not a job a robot has to be brilliant to beat.
• 2:01
  [Guest] It doesn't have to be brilliant at all. It has to be cheaper, and dependable enough that a manager stops keeping a human around as insurance. That bar gets cleared one post at a time, starting with the posts that need the least judgment, like the overnight lobby or the perimeter loop at a warehouse.
• 2:19
  [Host] But the guard business is famous for not being able to keep guards. If the overnight lobby is empty anyway, who loses a job?
• 2:27
  [Guest] Nobody gets fired, which is exactly why nobody fights it. The Labor Department's own outlook says most guard openings come from replacing people who leave, so the machine takes the post nobody stayed in, and the raise that would have filled it never gets paid.
• 2:43
  [Host] So what is left for the guard who stays?
• 2:46
  [Guest] The part a machine can't do, like talking down a drunk guy at the door, with fewer of those shifts to go around. Not all at once, but one lobby at a time, until the overnight shift at a hundred buildings is one person watching a hundred screens while machines do the walking.
• 3:04
  [Host] Where do the robots even come from? SoftBank doesn't build them.
• 3:07
  [Guest] It has been buying the people who do. Bloomberg notes last year's five-point-four-billion-dollar deal for the robotics division of ABB, the Swiss industrial giant, and Son said on the investment giant Blackstone's own podcast, three days before this story broke, that SoftBank has more than thirty robotics companies in its portfolio, quietly getting ready.
• 3:26
  [Host] Did he say what they are getting ready for?
• 3:29
  [Guest] He said humans still do a lot of tiring jobs, and asked who enjoys that. Which is a fair question, as long as you also ask what the person at the door for eighteen dollars an hour does on a Tuesday when the door no longer needs them.
• 3:45
  [Host] Let me ask the selfish question. If the robot costs less than the guard, does my building's security bill go down?
• 3:52
  [Guest] Not by much, if history holds. Robots get priced against the wage they replace, not against what they cost to build. The vendor charges the client a little less than the guard cost, and keeps the rest.
• 4:05
  [Host] But now the vendor is also the security company. Who is on the other side of that negotiation?
• 4:11
  [Guest] Nobody, and that is what makes this different from selling robots. When the robot maker and the employer are the same company, the client sees a small discount and the guard sees a shorter schedule. The gap between eighteen dollars an hour and whatever the machine really costs stays inside SoftBank.
• 4:28
  [Host] And which buildings would these robots guard first?
• 4:31
  [Guest] The reporting also notes Allied has a growing business guarding data centers. So the first machines may well be posted at the door of the buildings that run the AI that runs the machines.
• 4:42
  [Host] So he is not betting that robots can guard a building. He is betting that whoever owns the guard contract decides when they do, and keeps the difference, with nobody in the room bargaining for the guard's share.
• 4:55
  [Guest] For more on who keeps the savings when a machine takes a post, head to unscarcity dot ai. The book is on Amazon, the audiobook is on Spotify. This has been Minds, Bodies, and Terawatts.