The Launch Path — A Case study
Juicero: A story of startup failure.
A $700 WiFi-connected juice machine for your home. What could go wrong?
One of Silicon Valley’s most infamous recent failures is Juicero. The startup received $120 million in venture capital from leading investors including Kleiner Perkins and Google Ventures and then proceeded to go bankrupt within three years.
The Juicero press as a wifi-connected device that sat on your kitchen counter and made delicious fruit and vegetable juice on-demand. It used proprietary single-serving packets of pre-juiced fruits and vegetables sold exclusively by the company by subscription.
The founder compared himself to Steve Jobs, and hired very expensive industrial designers to create a beautiful machine.
The machine sold for $699 (later lowered to $499), and the juice packets sold for around $5 apiece. Each packet had a QR code on it and the machine wouldn’t work unless it could scan the QR code and connect to the internet to validate the packet code.
People love fresh fruit and vegetable smoothies, and they were sure to love the convenience of a machine like this in their own home. Plus, this was certain to be a highly-profitable business model, since the high-margin packets were required in order to use the machine, and could only be bought from the company.
But, as you’ve probably already guessed, it failed miserably. The machine was too expensive, too unreliable, and couldn’t be used for anything else (there was no way to press your own fruits and vegetables, for example).
The death knell came when Bloomberg ran an article pointing out that the machine itself was completely unnecessary — you could just buy the juice packets and squeeze them by hand, yielding exactly the same result. The company shut down in 2017, just 17 months after launching (and after $120 million in investor capital had been flushed down the toilet).
In retrospect, the business model was fatally flawed from the beginning. They had an expensive solution to a problem no one really had, and the profit margin was based on the consumer “lock in” of a proprietary machine and consumables that could only be bought from the company.
What consumers really want (and continue to buy today) is juicers that you can toss your own fruits and vegetables into — no internet connection required.
To me, the Juicero story is one of a company that raised too much money too soon, encouraging them to build and launch product offering without doing proper market validation first.
This article was merged into my new book, The Launch Path, now available on Amazon.
