Home / Silicon Valley / Silicon Valley’s $400 juicer may be feeling the squeeze | Business

Silicon Valley’s $400 juicer may be feeling the squeeze | Business

One of the most lavishly funded gadget startups in Silicon Valley last year was Juicero Inc. It makes a juice machine.

The product was an unlikely pick for top technology investors, but they were drawn to the idea of an internet-connected device that transforms single-serving packets of chopped fruits and vegetables into a refreshing and healthy beverage.

Founder Doug Evans liked to compare himself with Steve Jobs. He declared that his juice press wields four tons of force, “enough to lift two Teslas.” Google’s venture capital arm and other backers poured about $120 million into the startup.

Juicero sells the machine for $399, plus the cost of individual juice packs delivered weekly. Tech blogs dubbed it a “Keurig for juice.”

After the product hit the market, some investors were surprised to discover a much cheaper alternative: You can squeeze the Juicero bags with your bare hands. Two backers said the final device was bulkier than what was originally pitched and that they were puzzled to find that customers could achieve similar results without it.

Bloomberg performed its own press test, pitting a Juicero machine against a reporter’s grip. The experiment found that squeezing the bag yields nearly as much juice just as quickly, and sometimes faster, than using the device.

Juicero declined to comment. A person close to the company said Juicero is aware the packs can be squeezed by hand but that most people would prefer to use the machine because the process is more consistent and less messy. The device also reads a QR code printed on the back of each produce pack and checks the source against an online database to ensure the contents haven’t expired or been recalled, the person said. The expiration date is also printed on the pack.

The creator of Juicero is something of a luminary in the world of juicing. In 2002, Evans helped start Organic Avenue, a chain of juice bars. The New York franchise drew rave reviews from the likes of Gwyneth Paltrow. After a decade, Evans sold controlling interest to an investor, who pushed him out. The company lumbered toward bankruptcy as Evans worked on his next project.

Evans, 50, follows a diet of mostly raw, vegan foods. He said he spent about three years building a dozen prototypes before devising Juicero’s patent-pending press.

In an interview with technology website Recode, he likened his work to Jobs’ invention of a mainstream personal computer. “There are 400 custom parts in here,” Evans told Recode. “There’s a scanner; there’s a microprocessor; there’s a wireless chip, wireless antenna.”

In fundraising meetings, Evans promised a revolutionary machine capable of squeezing large chunks of fruits and vegetables, said two people who invested. Evans secured funding in 2014 by showing 3D-printed renderings of the product without a working prototype, said the people, who asked not to be identified because they signed nondisclosure agreements.

Kleiner Perkins Caufield & Byers joined Alphabet Inc. and others in funding Juicero. Evans’ subscription model hit a sweet spot for venture capitalists, said Brian Frank, who invests in food-tech companies through FTW Ventures. The successes of Nespresso and Dollar Shave Club made VCs eager to chase such deals, he said.

“Investors are very intrigued by businesses that combine the one-time sale of hardware that ends up leading to repeat purchases of consumable packages,” said Frank, who doesn’t own Juicero shares.

After the product’s introduction last year, at least two Juicero investors were taken aback to find that the packs could be squeezed by hand. They also said the machine was much bigger than what Evans had proposed.

Doug Chertok, a Juicero investor, said he figured it out on his own. “There is no doubt the packs can be squeezed without the machine,” he said. “I’m still a huge fan.”

Chertok, whose Vast Ventures is also backs organic restaurant chain Sweetgreen, said Juicero is a “platform” for a new model of delivering fresh fruits and veggies. “Juicero is still figuring out its sweet spot,” he said. “I have no doubt that they’ll be very successful.”

Juicero was among the top-funded U.S. hardware startups in 2016. In October, Evans was replaced as chief executive officer by Jeff Dunn, a former president at Coca-Cola Co. A few months later, Juicero dropped the price of the machine to $400 from $700. 

Evans is now chairman. The company sells produce packs for $5 to $8 but limits sales to owners of Juicero hardware. The products were only available in three states until Tuesday, when the company expanded to 17.

Business Briefing from St. Louis Post-Dispatch

Make it your business. Get twice-daily updates on what the St. Louis business community is talking about.


Source link

About admin

Check Also

AltSchool is a new kind of school created by Silicon Valley

Melia Robinson A new kind of school crafted by the minds and wallets of Silicon …