Juicero — Judgment

Juicero, Big Red Car?

Big Red Car here in the lovely, sunny, cool ATX enjoying a fresh squeezed carrot juice with some ginger and some sugar beets. Do not tell the guys at Jiffy Lube about this. All they serve is that senior citizen synthetic crap.

So, have you heard about the failure of Juicero? No? Allow the Big Red Car to explain it to you. Comes now, Juicero! Juicero! Juicero!

Juicero, Big Red Car?

Juicero was a gizmo built from more than 400 moving parts which brought cold press juicing — in all its nutritious, vegan glory — to the masses. The masses would have to, initially, fork over $700 for that much glory and $5-8 per baggie filled with diced fruits and veggies to make the juice. That $5-8 is for one serving of the juice. So, maybe the masses were not so massive?

[Fairness — as the Juicero empire began to encounter a bit of friction, they lowered the price to $400. Still, a $400 gizmo to get a glass of juice? Did I tell you the gizmo created 8,000 lbs of pressure to press those juice molecules out of their proprietary sacklets? Four freakin’ tons, on your countertop, pressing the crap out of the plastic bags which you could only buy from them. Wow! Hello, America! Is this a great country or what?]

The gizmo was tech rich and savvy. It was a custom piece of tech engineering marvelousness. The device was extraordinarily well engineered. It might have been made by Bosch or BMW — that good. NASA wanted one for the space station.

It was WiFi savvy and could read the bag of veggies and ensure you were drinking “safe” juice. No shelf life or sell by date problems. Just wholesome, fresh, cold pressed juice.

[If you violated the sell by date, the Juicero refused to perform its sacred duties. No 8,000 lbs of pressure if you were a day overdue. The Juice Police and the Juice Force combined to set you straight, transgressor.]

An insanely expensive, extraordinarily well-engineered piece of stuff squeezing — 8,000 lbs of pressure, four tons — the snot out of a proprietary plastic bag of chopped up goodness — what could possibly go wrong?

The investment thesis was to create a bit of juice wizardry which could tap into that Keurig vibe — bit of hardware and a constant flow of consumable coffee — ooops, sorry, juice — content. It was a sales and subscription revenue model.

How much, Big Red Car?

Some of the brightest and biggest VC firms invested more than $118,000,000 to bring fresh squeezed juice to your honed Cararra marble countertops in that newly renovated kitchen with the triple ovens and the steam, convection microwave. It was to sit right next to your … wait for it … Keurig machine.

Seed round – $4,000,000 (Oct 2013)

Series A – $16,500,000 (Apr 2014)

Series B – $70,000,000 (Mar 2016)

Series D (the Titanic is sinking round) – $28,000,000 (April 2016)

Monkey see, monkey do — monkey want some fresh apple-ginger-mango juice?

Test question — how much per month do you have to burn to blow through $118MM in less than four years?

Who, Big Red Car?

Amongst those investment lumaries were: Abstract Ventures, Acre Venture Partners, AGO Partners, Bryant Stibel Investments, Campbell Soup Company, Campfire Capital, First Beverage Group, GV (Google Ventures gone underground and anonymous), Haas Portman, Interplay Ventuires, Kevin W. Tung, Kleiner Perkins Caufield & Partners, Melo7 Tech Partners LLC, Thrive Capital, Two Sigma Partners, and Vast Ventures.

The leader of the pack was Artis Ventures.

We did not list some of the individuals involved while they are in mourning, but some of these guys are the biggest, the brightest, the boldest, the bravest — just ask them.

OK, so Big Red Car, WTF?

What happened, dear readers, is that the 8,000 lbs of pressure (4 tons) provided by the machine turned out to be overkill, superfluous, unnecessary. Right in the middle of things, it was discovered that a simple human (know any of these homo sapiens?) could hand muscle the proprietary bags of fruits/veggies and squeeze out the juice just like the machine.

OMG, Big Red Car, you mean a human can exert FOUR TONS of pressure?

No, dear readers, it didn’t require 8,000 lbs of pressure after all (four tonnes for you English folk and Canadians).

It just required MaryAnne the receptionist to squeeze it with the same hands with which she operates the laminator or the paper cutter.

MaryAnne — lovely strawberry blonde with the boyfriend with all the tattoos and piercings — was as effective as the $700 (reduced to $400) machine and she was already on the payroll.

MaryAnne, the receptionist, squeezing the goodness out of a proprietary Juicero fun pack. Hey, she has big, powerful hands. Still MA on her best day can’t squeeze four tons worth, can she?

Not only that, MaryAnne liked doing it and didn’t take up any counter space.

[OK, you perverts out there. Do not say it. I know what you’re thinking — MaryAnne gave the Juicero bag a hand job. I told you not to say that, didn’t I? God, you’re so immature.]

So, what happened, Big Red Car?

Dear reader, you have to get out more. They closed the company.

They closed the company?

Yes, they closed the company. No more $400, four ton, 8,000 lbs juicers. [MaryAnne did that.]. No more proprietary fruit/veggie sacks for $5-8/each.

No more Juicero.

What do we learn from this, Big Red Car?

We learn many things, dear readers.

 1. These Silicon Valley VC wizards are not nearly as smart as they want to believe. Sure, they encounter a few failures to find their winners, but they were backing a guy who’d already struggled in the juice business. This guy.

Hello, my name is Evans. Doug Evans. I want to bring $700 (to be discounted to $400) NASA engineered juicers running WiFi and proprietary fruit,veggie sacks at $5-8/each to the masses. Trust me. This is going to be huge. Now, can I pencil you in for a few of these babies? Tell me what it’s going to take to get one of these babies in your appliance garage?

 2. These smart guys, the VCs, were selling juice. At the end of the day, the consumable was a cup of juice. The same cup of juice you can buy at Whole Foods or a juice bar.

 3. Due diligence is, apparently, just a theory. Something you talk about at cocktail parties because of the alliteration.

Nobody ever thought to squeeze the freakin’ fun bags? Nobody tried to see why it “required” 8,000 lbs of pressure (that’s four tons, y’all) to free the juice?

Who was in charge of this? Why did it take $118,500,000 before anybody decided to run the MaryAnne test?

 4. Ask the next VC who turns down your pitch whether he invested in the Juicero deal. Have some fun.

OK, that’s enough. You get the message. Work your deal. Work it hard. Don’t be discouraged when you’re out looking for money. You are dealing with guys who funded a four ton (8,000 lbs) juice press which used proprietary plastic IV bags and which was shown to be a fuck-all by MaryAnne, who is smarter than all of them collectively.

Have some fun with this. Is this a great country or what?

But, hey, what the Hell do I really know anyway? I’m just a Big Red Car. Be good to yourself and, hey, go get a good cup of juice at Whole Foods.

#freethejuice 

 

 

 

 

  • I’ve seen this before, but never ever on such a completely massive scale. To quote Ricky Ricardo: Loooocy!! Wha’ happen’??!!

  • sigmaalgebra

    That’s a total riot! A good comedy screen writer could make a movie about that where people would laugh and thigh slap so hard the audience would be awash in broken femurs!

    The writers should be able to do the same for that big taxi cab company apparently some big VCs believe will be another Google, you know the one, the one, and there can be at most one, that lost nearly $1 billion last year alone and is still in business, Uber.

    Uh, guys, GUYS, Uber VC guys, over here, guys! Shut up, sit down, and listen up — it’s for your own good!

    First, lots of people have cell phones, and more have ordinary phones. I know; I know; there aren’t many pay phones left, but, did I mention, there are a lot of cell phones? Right, need phones to call cabs. Right, we got that.

    Second, the taxi cab business is 99 44/100% local. It’s a local business, like Vito’s Pizza carry-out or Chung’s Chinese carry-out, and, in both cases, along with the taxi business, super tough to make global. The global overhead will sink all the little boats.

    Uh, the reason for such local businesses, why they can survive longer than a lot of VC funded businesses, is that they have a solid market (people like pizza and Moo Shu Pork) and a huge barrier to entry, the geographic barrier; that is, no one drives 50+ miles for a pizza or quart of Moo Shu Pork so that such a carry-out is not in competition with anyone or thing more than 100 miles away. So, do well in a radius of 100 miles, usually 25 miles will do, and can do well, well enough to buy a house and support a family, especially if have children running 2-3 more such.

    Some US bio-medical VCs may know what they are doing: E.g., there are a lot of bio-medical Ph.D. and MD degrees at such firms.

    But the US information technology (IT) VCs are a really goofy bunch: Bluntly for technology, they want to ignore it down to hate it.

    They have a really simple approach: An entrepreneur contacts them for funding. Test 1: Did they send a URL or app name of their product? Test 2: Does the product have a user interface (UI) and user experience (UX) that indicates that 1 billion people will “love” (Paul Graham) it right a way, even find it “addictive” (movie, The Social Network about the start of Facebook)? Test 3: From Comscore, etc., does the site have “traction”? Test 4: Does the site have revenue, earnings? Test 5: Are there several founders, each naive about venture funding and desperate for a check under almost any conditions (e.g., all the credit cards are maxed out, and each has a pregnant wife about due). Test 6: Can the VC see a fast exit opportunity, e.g., as an acqui-hire, as an M&A by a big company that would like the startup to disappear, by an old company that wants to start to move into the 21st century? Being “another Google” is considered too rare, really unpredictable, due essentially only to rare luck, and ignored, even if explained in detail by the entrepreneur!

    So, the startup has to do relatively well on these tests, or the VC will return to his golf game or yoga exercises.

    Nowhere in these tests is any attention to the technology. Is it new, correct, powerful, valuable, proprietary, secret sauce with a big business advantage, with a significant barrier to entry?
    The US has (1) the US DoD and (2) the world’s best collection of research universities. For the DoD, back to at least 1942, it is the unique, unchallenged, world-class exploiter of STEM field research from the research universities and getting those results protecting US national security. So, this pair, (1) and (2), are the grand example of how to do research and get it doing powerful things in the real world. And some of those things, e.g., GPS, are, or would be if the USAF charged fees, very valuable. Alas, the IT VC totally ignore (1) and (2).

    Congress doesn’t ignore (1), (2) and, instead is overwhelmingly the source of money for both of them and for just the one reason, US national security.

    Well, mostly the VCs are investing OPM (other people’s money), typically pension funds, university endowments, funds of wealthy families, investment groups of wealthy countries, etc., called limited partners (LPs). So, really the people to be pleased are the LPs. If the VCs are making money, even if they are just backing push carts in Manhattan selling hot pretzels, the LPs will be happy. But, also, if only to avoid embarrassment, the LPs don’t want to miss out on the next Google.

    Well, the IT VCs are being slow to deliver more Googles, and on average the IT VC’s return on investment (ROI) has not been very good. But, what is an analyst, MBA, at a big LP to do? Something new and different, out there all alone, being scowled at by all of his management chain? Nope! Better stay with the herd! So, net, all the IT VCs and all the LPs closely agree, low ROI or not, too few new Googles or not, for better or worse, on the tests above. For anyone with a background in IT in high end US research universities and/or the US DoD, the IT VCs look brain dead — they refuse even to read about the crucial, core technology.

    Well, that has been the situation. But, wait, there’s more! It used to be expensive to do an IT startup! Need, e.g., all those shrink wrapped boxes! And/or needed a Web site, and that took an expensive server from Sun Micro Systems with some of the few people who knew how to bring up a good Web site on Sun servers.

    But all that has changed! Now for $1500 or so, can buy parts for one heck of a powerful first Web server. For how to bring up a Web site, the Internet and the book stores are awash in tutorials. The infrastructure software is enormous, powerful, and usually available for free. E.g., there is the Microsoft BizSpark program where can get a lot of high end Microsoft server side infrastructure software for free for three years and on good terms later. With a common $100 DVD copy of Windows
    7/10 Professional, can install and run that infrastructure software. For software development, there is Microsoft’s .NET Framework with beautifully designed and implemented programming languages and object libraries. So, an entrepreneur just needs to wade through all those goodies and then concentrate on his startup. Yup, can have a one person, sole, solo founder startup. And, why not? In any small business, the CEO very much needs to know just everything about his business.

    Then by the time that solo founder is doing well on the tests, especially the part about earnings, he may quit contacting IT VCs!

    So, close to true, by the time the IT VCs are ready to write a check, a good solo founder will no longer want it!

    So, IT VCs have gotten frustrated with anything technical and have been moving out to low or no tech: Uber, SnapChat, grocery deliveries to homes, …, and that juice machine!

    Uh, maybe that juice machine did well on those VC tests! Or, none of those tests had enough in due diligence to find that there was no barrier to entry, that is, that MaryAnn could do as well and so could Whole Foods, etc.

    Or, maybe some of the VCs thought: “Sure it’s silly. And I drink juice daily without that contraption. But we can run this up the flag pole of the big publicity machine and have a lot of people buy and let us get a good exit before people catch on! Uh, people with a lot of disposable income like to have shiny things to spend the money on, and we are giving them a chance!”.

    Considering all the funding rounds and the number of investors, apparently the CEO was really busy promoting! So,maybe the VCs thought: “For someone with that much hustle, there’s no way they will fail!”.

    But it wasn’t just a little bit silly; it was really silly!

    Uh, for that big squeeze issue, even if MaryAnn couldn’t do it, still have the shop table top vise Dad had when I was a child. Currently the thing is in my basement workship clamped to a 4 x 8′ sheet of plywood on two sawhorses. That vise can do some big squeezing! For more, I can get a long pipe, get some more leverage, and get much more squeezing. For more, could buy a bigger vise that could do much more! And there could be other cheap DIY opportunities to make a squeezing machine! For the fresh vegies, lots of grocery stores have those all nice and fresh, nicely cut up, in jars, cold, ready to eat!

    Net, bottom line, the IT VCs are lacking good means of decision making, in particular project evaluation, and would do about as well smoking funny stuff. But, such failures won’t last because, as elsewhere, Darwin is on the case!

  • SFG

    Fascinating. All that the machine did was compress the juice pack. lol It’s just funny that they were IV bags too!
    Seems impossible that 118 million dollars fell for it.

  • JLM

    .
    Turns out MaryAnne the receptionist is smarter than a legendary list of venture capitalists when it comes to getting the juice flowing.

    http://themusingsofthebigredcar.com/juicero-judgment/

    Juicero, the story of how $188.5MM of VC money went up in juice.

    BRC
    http://www.themusingsofthebigredcar.com

    #juicero #maryanne