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Juicero: how much would you pay for your juice?

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Post analyzes Juicero, company that had great mission – to help people live healthier – and provides thoughts on why it moved from a cool tech kid to the digital revolution loser in 16 months

Once one of the most generously funded startups in Silicon Valley’s history, a company that had ambitiously planned to change the future of juicing, Juicero announced that it was closing its operations just 16 months after the launch. How did the company that had a great mission in mind – to help people live healthier – with its high-tech, slick, beautifully designed juicing machine, moved from a cool tech kid to the digital revolution’s loser so fast?

To fulfill its mission of making juicing easy, clean and fast, Juicero claimed that it created revolutionary juice machine, which, beyond Apple-like design, was Wi-Fi-enabled. The machine was designed to automatically press single-serving packets of fruits and vegetables straight into a glass, offering a cold-press juice without the need of preparing and cutting vegetables and fruits and cleaning after the juicing. Thanks to built-in Wi-Fi, machine could also detect expiry date on the juice packs and notify its owner if product was beyond its best before date.

Juicero was launched in March 2016. Despite its initial hefty price of US$700 and additional price of US$5-8 for packs of fruits and vegetables to make juice, it received positive New York Times review and whooping $120 million funding from top investors, including Google Ventures and Kleiner Perkins Caufield & Byers.

The future looked bright and promising. Up until the day when Bloomberg’s journalists were testing the machine and discovered that they could press juice with their own hands relatively easy, obtaining same amount of juice, and saving $700.

https://www.youtube.com/watch?v=5lutHF5HhVA

Why such an obvious failure was never recognized by Juicero investors in the first place? There were several main reasons that made investors blind. First was time. Not an obvious choice for the VC money at the first sight, Juicero was introduced just in time when internet-connected products and internet of things have become the new exciting thing in Silicon Valley. Startups in this area were hot, and Juicero stood out as a simple and premium direct-to-consumer device.

Second was its model, based on subscription for weekly supplies of juice packs. Subscription model had been proven at that time with success of companies like Nespresso and Dollar Shave Club, and venture capitalists were excited about the businesses with similar model. As Brian Frank, investor in food-tech industry at FTW Ventures fund, pointed out,  “Investors are very intrigued by businesses that combine the one-time sale of hardware that ends up leading to repeat purchases of consumable packages”.

What were key causes of Juicero failure? The first and the most basic one, was the way Juicero designed its machine. Instead of offering a simple solution, they tried to address consumer problem with a way too complex product. A product that was essentially useless.

Second was Juicero business model, in particular its pricing and supply chain elements. Pricing was not sustainable. Even before Bloomberg fatal news piece, $700 price tag was way too much for the value it offered – clean juicing experience. Eventually reduced to $400 it still was above willingness to pay for most of the households, limiting potential market to a tiny niche. On a supply chain side, Juicero made a decision to produce both its machine and juice packs in house in an attempt to control whole supply chain, the strategy that appeared to be too expensive for the company. Additionally, Juicero didn’t recognize the opportunity to create a new market where other manufactures could supply its machine with juice packs. This move could have driven wider adoption of their business and helped reducing shipping costs.

Juicero is a great example of how companies and investors fail when attempting to blindly ride tech wave. At first look, the company packed all right elements in its idea to set itself up for success: internet-connected product, sexy look and feel, future cash flows through subscription model. And yet, it all didn’t make sense just because it ended up offering a solution for a non-problem. Juicero is a vivid demonstration that shows that tech revolution’ losers are not only companies that fail to adapt to digital transformation, but also those that fail to apply it in a meaningful manner.

Sources:

https://www.bloomberg.com/news/features/2017-04-19/silicon-valley-s-400-juicer-may-be-feeling-the-squeeze

https://www.theguardian.com/technology/2017/sep/01/juicero-silicon-valley-shutting-down

https://www.theverge.com/2017/9/1/16243356/juicero-shut-down-lay-off-refund

https://www.forbes.com/sites/paularmstrongtech/2017/04/21/why-juicero-needs-to-be-squeezed-out-of-existence/#4144d43c23d8

http://www.businessinsider.com/juicero-fails-to-solve-for-a-very-real-problem-2016-3

10 thoughts on “Juicero: how much would you pay for your juice?

  1. Thanks for this great post, Iryna! This was really interesting and a great example of when money and blind faith can really get in the way of the actual potential that a company has and of the value creation it is producing for its customers. From your post, it is clear that the VCs who were investing in the company thought that they had a great opportunity for significant value capture, with this tech enabled product that could appeal to people who were interested in healthy lifestyles and people who wanted to show offer expensive and branded tech in their homes. Where the company seems to have failed is on the value creation for the consumer piece. $700 is a hefty price tag for a product that can be squeezed by hand and be just as valuable to a consumer.

  2. I’ll admit, I laughed a little when watching the Bloomberg video. What started out as super epic technology turned into hand-squeezed juice out of a bag. Do you think Juicero could’ve pivoted to providing just ready-made juice bags of different flavor and ingredient combinations? I imagine that the “juice” market is already quite competitive, but perhaps Juicero had access to particular recipes or ingredients that others don’t? Or perhaps Juicero could’ve pivoted on the hardware side to compete with NutriBullet?

    I’m also surprised at how such an obvious issue eluded so many sophisticated people. I wonder what their design / testing process looked like. Juicero is a great example of how being overly concerned with “can we do it” clouds the more important question of “should we do it.” A solution searching for a problem rarely leads to good product-market-fit or, even more basic, a good product.

  3. Wow, very interesting post! I view this as a classic marketing issue. When I think of Juicero’s target customers, I think of health conscious individuals whose primary value proposition is to consume a healthy and fresh juice product. The product itself (with juice ingredients served in a pre-packaged pouches primarily) may inadvertently suggest to the consumer that the items are heavily processed – the complete opposite of healthy and fresh (even if this is not the case). I wonder if Juicero could have marketed the product differently to highlight the fresh nature of the ingredients, despite being in packaged juice packs. My view is that the clear issue is that the product is not aligned with the underlying value proposition of the target customers.

  4. Great post, and I do love the Juicero story. As you point out, it’s a reminder that sometimes things don’t need to be disrupted. It certainly reinforces the theory that the more successful founders are ones who first discover a problem, and then build a solution for it, rather than the other way around.

  5. Thanks, Iryna! I followed the Juicero story/drama as well while it was in the news – the Bloomberg video cracks me up every time. I would disagree with your notion that Juicero had a good mission of helping people to live healthier lives. Assuming juicing is even good for you, Juicero targeted the very upper end of the market – these people already have much better health outcomes than lower income individuals. If they really cared about improving health outcomes, they would have priced this ridiculous product somewhere reasonable where lower income individuals could potentially afford it. Ahhh, Karma.

    I do wonder if this product would have had success if Juicero had just sold the bags or had a machine that actually added value to the juicing process. I don’t think this market opportunity is a dead end by any means, but certainly this was not the right approach.

  6. Great post! What an interesting example of technology in search of a problem instead of sitting down and thinking about whether disruption is really needed/ desired. Feels like they could have benefited from some basic design thinking approaches (e.g., early prototype testing with customers — my hypothesis would be that customers actually value the experience of dealing with real fruit and vegetables (at essentially the same per drink price and a much lower initial capex). I wonder if they could have designed the experience to more closely replicate that (perhaps with less of the mess). Also an amazing example of how the financing ecosystem can pile on without a lot of hypothesis-testing and validation.

  7. This was really interesting to read about and watch. It seems that customer testing and greater scrutiny over the job to be done could have predicted its future. This could also demonstrate the negative impact from the vast amounts of dry powder in the market and the need to deploy capital in an environment with fewer viable investments. As a startup that is able to quickly raise capital, it may be blinded into assuming that the business model has legs when it doesn’t.

  8. Thank you for your post! I found this story very interesting and hadn’t actually heard about it, unlike most of our classmates. What strikes me as the most surprising is the initial price tag of $700 and lack of product testing with consumers, which ultimately resulted in this fiasco. I would imagine that founders thought they are catering to a certain segment of society who were ok paying that much money for something that perhaps wasn’t as valuable, when they first put the price tag. Their way of capturing “value” I guess. But, did they realize that they weren’t creating that much value in the first place? I would imagine the juice from a NutriBullet to be equally nutritious as their juicer. Did they bother to do a comparison? A big takeaway from this is how every entrepreneur should clearly articulate additional (consumer) value created from his or her own product vs competitors’. A second takeaway is a reinforcement from what we learned in TEM – do consumer testing iteratively until you have found your product-market fit.

  9. Thanks for sharing! I’ve actually never heard of Juicero so this was very interesting. What strikes me as funny is that they went after the individual consumer market when perhaps they could have gone after businesses both small and large. I work on a team at the launch lab and they have a Bevi Machine that makes flavored still and sparking water and it’s been a huge hit (though not sure how the company is doing financially). For a company, $700 seems like a small price tag to pay. Additionally, since companies pay your health insurance they are always looking for ways to encourage you to be healthy so they can in turn save on your insurance. This seems like it would be a great and cheap candidate in that respect as well as a perk in the office that keeps employees happy.

  10. Great post Iryna! I wonder what other companies in silicon valley right now are full of hype but with empty promises. How do you think it took so long for people to discover the truth about Juicero? After the Bloomberg article came out, it felt so obvious that this thing was a sham

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