There have been a ton of incredible startups in the past but there has also been quite a lot of failed startups over the years.
The particular company I’m talking about today was valued at $120 million at its peak and shut down just 17 months after releasing their product.
This failed startup was called Juicero.
Their Business Model
They released this ad on YouTube that went quite viral with 1.1 million views in 2016 explaining their product and business idea.
Juicero’s idea was selling pre-chopped fruit and vegetable packets that worked with their juicer to create cold-pressed juice. Launched in 2016, the Juicero machine cost an insane $400 (was originally $700), while the individual juice packets ranged from $4 to $10. Company founder Doug Evans called it “the first at home cold-pressed juicing system.
There were 2 massive problems with this business which led to its failure.
1- Price
The Juicero machine started at $700 and then went down to $400. While it did lower its price it was still incredibly expensive. Today you’re able to buy cold press juicers online for about $130 and those machines you can use any fruits or vegetables. The Juicero machine only worked with their packets.
Speaking of the packets they themselves cost between $4 to $10 dollars. Each packet had a QR code on it and the machine had to scan it and connect to the internet to validate the packet code otherwise the machine wouldn’t work. If you tried to use anything other than a Juicero pack or just a packet that’s QR was messed up you couldn’t use it. While the packet pricing isn’t too bad, a big reason to make juice at home is its cost efficiency. Most juices you can make at home will cost you $2 to $4. If you’re spending more on it why not just get a pre made juice and not buy a $400 machine?
2- The Machine wasn’t Needed
Bloomberg made a video in 2017 showing how useless the Juicero actually was. In the video they use the Juicero machine and compared it to somebody just squeezing the packet. The results was almost identical. The person was able to get 7.5 ounces out of it while the machine was able to get 8 ounces out of it. It showed that all the machine did was squeeze the packet to get the juice out. Meaning you were just buying a juice in a packet instead of a cup.
Obviously this is quite a problem with the business. If the product is not cheaper or more helpful than other products then what use is the product?
In conclusion Juicero was an interesting idea that was developed terribly. They tried over engineering a machine by giving it Bluetooth and WiFi without ever taking a step back and looking at how bad the idea was.
The Value Investor 