If we've learned anything about the tech landscape in 2016 it's that private equity money is drying up and Silicon Valley entrepreneurs better start scaling back on their dreams of huge funding rounds for their game-changing dreams.
In an environment where Unicorns are dying from a magical plague and the tech IPO scene looks like a deserted western town inhabited solely by tumbling tumbleweeds, no one is going to take a flyer on some crazy dude with a weird overpriced idea...
And then there is Doug Evans’s brainchild. With no experience running tech companies and a bungled juice-bar chain under his belt, he has extracted a remarkable $120 million in investments from Silicon Valley titans, including Google Ventures and Kleiner Perkins Caufield & Byers, and big companies like Campbell Soup.
His pitch: a $700 machine that makes an 8-ounce glass of juice.
Oh...Well these big VCs must be totally clear about what they're getting into. After all, Fidelity just marked down a bunch of tech startups so caution is the watchword of the day.
Is it a juice-ordering app? Is it just another kitchen-counter contraption? Or is it a 111,000-square-foot food processing factory, staffed by dozens of hourly workers, washing and slicing up fruits and vegetables in Los Angeles?
It is all of these things. “It’s the most complicated business that I’ve ever funded,” said David Krane, a partner at GV, formerly Google Ventures. “It’s software. It’s consumer electronics. It’s produce and packaging.”
What the f@ck?
The machine itself is a white plastic slab roughly the size of a food processor. To get some juice, you insert a pouch that resembles an IV bag and press a button. A couple of minutes later, a thin stream of vividly colored liquid squirts into a glass.
This Evans dude must have bowled those geniuses at Google Ventures over with his MBA plain talk and clarity of vision...
But getting from farm to glass involves a daunting mix of hardware, code and food processing. The arrangement relies on a smartphone app, always-on Wi-Fi, QR codes, high-tech packaging and an army of workers slicing fruits and vegetables in very particular ways.
Ultimately, however, what makes Juicero so special is not quantifiable by conventional science, said Mr. Evans, the founder and chief executive.
“Not all juice is equal,” he said. “How do you measure life force? How do you measure chi?”
Are we really being asked to believe that Google Ventures and Kleiner Perkins sank significant amounts of their investors money into a startup run by a total weirdo? These are major venture capitalists, they must see something we don't...
Mr. Evans trained as an Army paratrooper before joining a graphic design firm. His love affair with juice began in 1999, when he met Denise Mari, a vegan, at a nightclub. Soon he was dating Ms. Mari and converted to veganism, too.
Hoping to create an eatery compatible with their strict dietary regimen, Mr. Evans and Ms. Mari bought some industrial-strength juicers and developed Organic Avenue, which sold $10 bottles of cold-pressed, unpasteurized juice and other vegan snacks.
“It was a vision of a restaurant someone could go to where no animals were harmed, and no humans were harmed,” he said. “It was so magical to be able to have that. I was drinking several glasses of juice a day as my primary form of hydration.”
He had a business before this...It must have thrived!
After the first store opened in 2006, the business grew quickly. But margins were persistently thin. New York real estate is expensive, and inventory was perishable.
“We were on the brink of insolvency,” Mr. Evans said.
In 2012, Mr. Evans and Ms. Mari, who are separated but remain friends, sold a majority interest in Organic Avenue to a private equity firm. Shortly after that, both were ousted. (The company was eventually sold to another private equity firm, which shuttered all the stores.)
Oy vey. Well, did his failure unleash a killer business instinct, à la Steve Jobs and NeXT? Evans must have learned about thin margins when ideating his $700 juice machine.
Upon being fired, Mr. Evans said, he had a problem. “For me, I was just wondering: How am I going to get my juice?” he said.
$120 million?!?! Really, Silicon Valley?
How bizarre is this story? Well, Alyson Shontell over at Business Insider wrote a rather flattering take on Juicero's launch this morning. Due to "feedback" she had changed her headline to this by midday:
Well, that kind of remains to be seen, doesn't it?