I simply do not understand the mindset of silicon valley investors. I used to think that perhaps they had some edge that helped them to get behind successful companies, but looking at this -- how much money they raised and from whom -- I think that there are just a bunch of people who have so much money that they can afford to risk throwing it away on something that will not likely succeed.
Can someone watch the video in the article and explain what sort of mindset you have to be in and think that this is a good idea? Perhaps the initial vision was different somehow and the final product does not align with what you thought you were putting your money behind? Is it possible that you see the issues, but have so little faith in consumers not to buy crap that it seems like you'll make a reasonable profit? Maybe there's something you see or know that I don't -- perhaps some sort of shake up in the fruit industry was set to make this a hit only to not meet expectations?
I am now more deeply concerned than ever about the effect that an exploding tech bubble is going to have on our economy.
The idea of getting people to subscribe to your product looks really good to your investors these days -- once you get people to start the subscription, they are likely to keep giving you money, even when they don't really want the product anymore because there is some effort in canceling it.
I am NOT saying anything bad about the DSC, I love the commercials, but you have to wonder about a company who's business model is intertwined with subscribing to a product.
Subscription model businesses are actually pretty good businesses if you can service a genuine recurring need with a genuinely good product at a reasonable price point.
I order diapers for my kid on a subscription. As a consumer it works great for me since I didn't have any upfront one time cost like $700.
The problem I see with Juicero and its investors is that the machine is not unique, it is redundant, the investors were clearly blinded by the founder's pedigree to overlook the simple clear fact that the machine was not needed and the founder was delusional to think the machine was needed.
The answer to this is fairly straightforward: VCs don't actually expect (or need) every investment to be successful, they just need it to have the potential to be huge if everything works out.
Laypeople always seem shocked when a VC-funded company implodes. We should actually be surprised if we didn't see routine flame-outs, as that would mean VCs aren't taking on appropriate quantities of risk for the asset class.
As a final aside: I've lost count of the number of times I've pulled an about-face on businesses I initially thought were stupid -- once I had a chance to talk to the founders and better understand the vision. Many of these seemingly 'dumb' ideas have surprising depth.
Some, granted, are in fact dumber than a box of rocks.
You could say that same about Soylent as it's simply a Pediasure/Ensure marketed towards hipster 20-somethings. People love drawing the conclusion that superior marketing/design equates to better products.
Often times, if you can make a consumer happy with the experience, they don't care if they're overpaying for a terrible product.
The problem with Juicero is that their user experience laid bare how futile and ridiculous their product was by having consumers manufacture the product themselves.
If the Juicero simply made those juices in a bottle (EVEN IF the nutritional value was lost during bottling) I can see them succeeding based purely on their marketing and people suspending disbelief to support their idea they were being healthy while looking cool.
>The problem with Juicero is that their user experience laid bare how futile and ridiculous their product was by having consumers manufacture the product themselves.
Blue Apron and every other meal kit delivery business sits on the other end of the same road, yet they seem to be doing okay and without the same level of ridicule.
I wonder whether Juicero could have avoided this outcome had they mailed their customers whole fruits and asked them to peel and fill their own juice bags, that way people will not be able to put two and two together to realise that it is just another beverage maker with DRM.
P.S. I remember Juicero being rather well received by the resturant industry as it is fully automated and requires minimal cleanup, so perhaps they marketed to the wrong crowd after all.
I agree Blue Apron is equally ridiculous and I totally agree that Juicero marketed to the wrong crowd.
Juicero was too visible in high-standard markets and thus became an easy target. Whereas Blue Apron flew under the critic radar (mostly in Facebook mom feeds) before gaining enough market share for consumers to shrug off ridicule
As a former blue apron customer I don't think it was ridiculous. I churned when my wife was out of the country. There are still recipes that they sent that I still cook. Now as a business I don't think they will be able to compete with a hybrid solution that amazon/Whole Foods will be able to devise. But I see Juicero as completely different.
For Odwalla/Naked juice:
Do you pay 8 dollars per bottle, need to wait for it to arrive in the mail, pay $400 for the juice press to make it, and get locked into a single product for all of your "fruit juice needs"?
You don't need to convince me that juicero was stupid and unnecessary, just saying there's an analogue to gp's example in that there are already fairly expensive ($4/bottle) juices out there showing that there's a market for juice. There are also much more ridiculously priced juices, including, yes, $8 juices. I'm not the target market for those, but they exist at cafes and some other grab and go type places and have for a bit, so there must be at least a small market for overpriced juice.
I'm not sure it's analogous though. It'd be analogous if juicero were selling just another juice bottle ready to drink but maybe mailed to you instead of sold in stores.
What juicero did was sell you an expensive machine to essentially squeeze odwalla bottles for you into a cup... something ludicrous like that.
There may be a market for juice bottles, but juicero wasn't selling juice bottles.
The problem is a lot of disruptive businesses initially looked "completely ridiculous from the start".
VCs are not idiots, they are probably much more humble than what ordinary people think they are, because any active VC--especially if they're successful--would have run into at least several cases where they passed on a company because they "looked stupid", just to find out that they went on to become wildly successful.
Once you go through this routine several times, you generally learn to appreciate and not immediately discount seemingly stupid ideas. This happens not just to VCs but overall if you live in Silicon Valley.
Since ideas alone aren't enough, the only good measure in my experience is looking at the person who's working on it. And here lies a lot of mistakes VCs make, they just look at some guy who was successful in the past and just think it's safe to bet on them.
To be clear, I also think Juicero was a stupid idea, and I think it was stupid of them to waste so much money upfront instead of starting scrappy, but my point is that there is no such thing as an "absolutely stupid idea". Ideas are contextual.
I think people are less shocked that a VC-funded company imploded and more shocked that none of the investors seemed to see the impending implosion off on the distance.
The reason people are shocked isn't that VCs are willing to take a risk on an idea that appears ridiculous at first blanche, it's that Juicero had 4 rounds of investment before they launched, which amounted to $118.5M. That includes a $70M Series B in 2016-03 which was quickly followed by a $28M Series C one month later. [1]
Few would be surprised by a few million being spent looking for a market fit on a wacky idea, it's the scale and obvious demand to get involved at such a late stage.
I think what makes it frustrating is all the times people with honest good ideas walk out of investor meetings with nothing but empty promises. There doesn't appear to be any specific meritocracy or guidelines in the venture market, not even a chance to make money!
You see a juice shop sprout at every corner of your yuppie neighborhood, and you read about the success of Keurig, who married the coffee machine with the consumer-level printer, which allows you to control which consumables go into your machine, and you think that this can somehow be translated to said fresh juice craze.
So I don't think it's completely crazy. But a back-of-the-envelope calculation should have shown that it's probably not a great idea.
It is probably because I can go to the store right now and buy pretty great Odwalla stuff that tastes good and is healthy. However, pre-brewed coffee from a bottle isn’t at the same level as fresh coffee. The point is that there are reasonable substitutes for a Juicero, but coffee at home is something people already make but most people don’t care about making their own juice — and if they were aficionados, they would have a real juicer. Juicero just didn’t make much sense. It wasn’t solving a problem most people had.
Many people make coffee each day and they might even drink juice, but most people drink juice from bottles, so Juicero was solving a problem that didn’t really need solving for the average consumer.
> It is probably because I can go to the store right now and buy pretty great Odwalla stuff that tastes good and is healthy.
Contrary to popular belief none of that stuff is healthy. It doesn't matter whether it comes from a juicero or from a bottle, it just all contains far too much sugar.
Capsule is far more expensive over the it's lifetime than something like a Gaggia Classic. Capsules aren't anywhere near the quality of coffee shops, unless you're counting Dunkin.
Nitpick on your nitpick. While the word originated in Italy as espresso and that is mostly what we use in the English-speaking world, expresso is not totally uncommon and it's not necessarily a misspelling or folk-etymological error. French and Portuguese use the expresso variation for instance, and the x spelling is considered 're-latinized'.
Depending on where you live the beverage may have entered your culture via French or Italian influences, perhaps one reason why expresso seems more common in Canada than in the US (though espresso dominates in Canada as well, no doubt helped by the ubiquity of Starbucks).
Actually, ANY coffee brewed in a proper machine is going to be better than keurig, even from a Dunkin Donuts. Coffee needs three things to be ok: recently roasted grounds in suffice quantity, hot enough water, and long enough brew time. You can skimp on one of those three and still get barely passable coffee. Fall short of two of those marks and the coffee is crap water. Keurig machines fail at all three. The only redeeming quality of Keurig is a convenient single serving format.
> Capsule is far more expensive over the it's lifetime than something like a Gaggia Classic. Capsules aren't anywhere near the quality of coffee shops, unless you're counting Dunkin.
To add on to this - many offices replace their teas with Keurig capsules as well. This leads to a tea that's much more expensive (capsules are something like 4 or 5 times the cost of a tea bag), dirtier, more complicated and more time consuming to make.
Looking at the popularity of Keurig machines, I'm not surprised people saw potential in Juicero.
Portuguese is my first language, and I never even noticed it's written differently in English. Noticed now.
As I said in my gourmet item, it is not something that correlates perfectly with quality. It may correlate better with price than quality. It's a property coffee shares with wine.
The main price gap is between a capsule machine, and an entry level automatic coffee machine (where you dont have to clean up the mess after each coffee, just empty the grinds every few days). That's the same barrier juicero was going after in my view.
If you look on gumtree (like craigslist here in Australia) by far the most common appliance item by a very large margin are basic juicers. People like the idea, but in practice they go un-used because they're a pain to clean and people can't be bothered.
Best I could tell that was the same idea Juicero was after.
Espresso is are more sensitive to the quality of the beans being used and the evenness of the grind than the machinery. Personally, I don't like most coffee shop espresso - beans are roasted so much they taste burnt and chemical, and any character from the terroir has been lost. For similar reasons, I think most capsule coffee is disgusting.
I get my beans whole, by subscription, grind them myself just before making an espresso. Another advantage of starting from the beans (apart from something that is actually pleasant to drink) is that you can select lots of other brewing methods, whether it's aeropress or moka pot, cafetiere or filter, with different grind levels as appropriate.
Also if you like milk-based coffee products (where the taste of the coffee is far more diluted, and the quality is less relevant), having a steam wand is handy and much better than any attachment I've used on any coffee machine, including Nespresso, and other much more expensive models that do bean to cup.
I know a couple of people that worked at Juicero. The news article that humiliated Juicero came just as they were about to get another round of funding. All of the investors pulled out, so they basically ran out of cash. This is completely due to the negative publicity generated by that one article that went viral. It couldn't have come at a more inopportune time for them, it's almost as if the reporters wanted to do as much damage as possible to the company.
You talk as if the negative press wasn't justified. And as if journalists were supposed to consider a company's convenience when writing about them. And as if investors were such empty vessels that they are blown hither and thither by each thing they read.
If one negative article about your product can kill your company, your problem is not a couple of journalists. It's your product.
Soylent? No normal person I have ever met in my life has ever heard of the stuff. Slim Fast — everyone has heard of that, but Soylent? That’s an ultra niche product with little mass market appeal. Is it successful? Sure, but about as successful as a company that produces kits for growing orchids. The whole concept of Soylent is essentually Ensure for Hipsters. Even the name sounds like some kind of cyberpunk cliché.
> Even the name sounds like some kind of cyberpunk cliché.
I'm pretty sure this is a deliberate reference to the specific thing. I'm not sure if I won't end up looking stupid for saying the obvious, but this: https://en.wikipedia.org/wiki/Soylent_Green
If "knowing your users" applies to startup success, it should also apply to VC startup success. I think most VCs are simply out of touch and thus don't understand what average consumers want, leading to poor investment decisions like this.
While I agree, I don't think it's the case every VC desires to appeal to the average consumer. Companies ranging from Gucci to Rolls Royce to Tesla have made a good business for themselves knowing what the above average consumers they want to cater to like. Thus VCs, like any company, should be judged as to how well they know their target audience. At their price point, Juicero clearly wasn't wanting to appeal to the average consumer. But they instead missed the mark in appealing to their target market--the wealthier than average.
Can someone watch the video in the article and explain what sort of mindset you have to be in and think that this is a good idea? Perhaps the initial vision was different somehow and the final product does not align with what you thought you were putting your money behind? Is it possible that you see the issues, but have so little faith in consumers not to buy crap that it seems like you'll make a reasonable profit? Maybe there's something you see or know that I don't -- perhaps some sort of shake up in the fruit industry was set to make this a hit only to not meet expectations?
I am now more deeply concerned than ever about the effect that an exploding tech bubble is going to have on our economy.
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