Inside Juicero’s Demise, From Prized Startup to Fire Sale
On Sept. 1, as many U.S. businesses closed early for the Labor Day holiday weekend, Juicero Inc.—a lavishly funded startup that once sold a $699 Wi-Fi-connected juice press—announced it was shutting down forever.
Juicero’s demise was not unexpected. Its collapse was the consequence of unsustainable costs, unflattering headlines and a bungled product launch. After attracting about $134 million in funding from such illustrious investors as Google Ventures and Kleiner Perkins Caufield & Byers, Juicero was losing about $4 million a month. Four years after its founding, the startup was unable to find new backers willing to fund its ambition of making fresh juice accessible to all.
It wasn’t for a lack of trying. Over the summer, the board had discussed a generous injection of capital from existing investors. But it was too late, say about a half-dozen insiders including executives, investors and former employees. Weeks later, the board determined the company’s operations, which required shipping refrigerated pouches of fresh fruits and vegetables, were too expensive for the startup. Juicero said it was seeking a buyer and would reimburse consumers for the price of the device. “As we enter this new chapter, we also want to express the deepest gratitude to our employees who have poured their hearts and souls into developing, launching and growing Juicero over the past 3 years,” the company said in a statement.
Months before the end, a few of Juicero’s investors had lost faith in the press, touted by founder Doug Evans as a powerful machine capable of squeezing bagged chunks of fruits and vegetables into fresh juice. In April, Bloomberg reported that at least two of Juicero’s backers were surprised to discover that the startup’s proprietary bags didn’t require Evans’s press but could yield almost a full glass of juice when squeezed by hand.
The news hit the company hard. A funding negotiation worth about $55 million fell apart, say the insiders, who asked not to be identified because many of them signed confidentiality agreements. And for a few days, the web lit up with scornful Juicero commentary. A chastened board offered to refund customers unhappy with the press. The company says fewer than 5 percent of owners returned their machines during a 30-day window.
The directors, including Evans, declined to comment or didn’t respond to requests.
Evans, who is now 51, got into the juice business back in 2002, when he co-founded Organic Avenue, a New York-based chain of juice bars selling cold-press concoctions in glass jars. After working on the business for a decade, he sold a controlling stake to an investor, who pushed him out. Organic Avenue would soon go under, but Evans was already at work on his next project, Juicero, which he started in 2013. He debuted the press in 2016 after spending about three years building a dozen prototypes.
Several investors praised Evans for being a brilliant entrepreneur and said he was devoted to the company’s vision to bring fresh juice to the home kitchen. But he was a scattered and frenetic CEO, one of them says. One day Evans pushed staff to focus on North American expansion; the next he’d say the only thing that mattered was getting celebrities to post about Juicero on their social media accounts.
Some employees say Evans’s passion for wellness was overwhelming. The founder mostly ate raw and vegan foods, and would sometimes scold non-vegan employees who ate yogurt or drank milk at team meetings, according to three former employees. He occasionally referred to dairy products as “cow pus,” they say. For a time, he also refused to allow employees to expense work meals at non-vegan restaurants, the ex-employees say.
In 2016, the first iteration of the Juicero was ready to go to market, and Evans embarked on a national media tour to promote his invention. While speaking to reporters, Evans heralded his juice press as an innovative triumph generating sufficient force to hoist a pair of Teslas. The media campaign, say two investors and one employee, turned Juicero into a symbol of founder braggadocio and Silicon Valley excess.
Despite the press’s lofty $699 price, Juicero was losing money, say two people familiar with the startup’s financials. Initially, before operational expenses such as rent and employee salaries, each press cost Juicero $750 to manufacture, says one of the people. After months of limited sales last year, Juicero’s board decided to drop the price to $399.
By October, the board had replaced Evans with a more polished operator, Jeff Dunn, a former Coca-Cola Co. president. The idea was that Dunn would manage daily operations, and Evans would keep his board seat and focus on fundraising and recruiting in collaboration with Dunn.
Two former employees say Dunn was capable and practical. Under Dunn, says a former executive, sales picked up and Juicero began working on a cheaper press, called V2, that the company planned to release in 2018. The company considered using a bladder rather than a more expensive gearbox to sell the new version of the machine for $199, an investor says.
As Dunn worked to cut costs, Evans focused on what he does best: selling. He persuaded Ticketmaster’s parent company, Live Nation Entertainment Inc., to put Juicero presses in its offices and Whole Foods to stock the products in 11 of its Los Angeles stores. Office managers appreciated the ease with which Juicero’s internet connection helped automatically restock produce packs. Since launch, Juicero sold more than a million packs, with the average machine owner pressing nine packs per week, two people familiar with Juicero’s business say.
Evans also set about finding new venture investors and hoped to collect about $100 million in fresh capital that would value the startup at about $550 million. By March of this year, Evans had secured about $45 million in a financing round led by Artis Ventures. Double Bottom Line and Campbell Soup Co. also invested. A group of Asian financiers—corralled in a syndicate organized by the venture arm of UBS China—was also clamoring for a piece of the remaining $55 million in stock at the valuation Juicero wanted, say three people familiar with the financing.
By early April, when UBS was four months through its due diligence process, word spread that Juicero’s pouches could be squeezed by hand. The would-be investors fled, two insiders say. UBS China told the company it wanted to “revisit” the investment in a few months and never finalized a deal, says one of the people. The negative media cycle raised questions about Evans, and several venture funds expressed concern that he had promised a smaller and more capable press than what Juicero ultimately delivered. By May, most of Juicero’s sources of capital had drifted away.
The loss of financing was a devastating blow to Evans, Dunn and Juicero’s board, which included Randy Komisar, a partner at Kleiner Perkins, and David Krane, a founding partner of Google’s venture fund, GV. In June, say two of the people, tensions boiled over at a board meeting when Dunn criticized Evans for meddling in company operations and being a disruptive influence on staff. By the end of the meeting, Evans had offered to remove himself—entirely—from the company, though he would retain his board vote.
Money kept dwindling through mid-July, and Dunn announced plans to ax 25 percent of his 232-person staff. The job cuts did little to stanch the losses, and Dunn asked the board for an emergency influx of capital to carry the company until it could sell its cheaper press, say three people familiar with the events. In August, the venture funds with directors on the board—Artis Ventures, GV and Kleiner Perkins—considered buying up to $60 million worth of Juicero shares at a 30 percent discount to the last valuation, says one of the people.
The proposal came with conditions. Juicero would need to cut its monthly losses to $1 million, three of the people say. On average, Juicero was losing about $4 million a month.
Hungry for the capital, Juicero’s executives and engineers set to work modeling different formulas to cut the company's burn rate. They concluded a $1 million cap would render the company paralyzed, say two of the people. Worse, Juicero wouldn’t be able to produce its Hail Mary product, the Juicero V2.
With few other options available, Juicero’s board convened on Aug. 23 and voted to wind down the company’s operations. On Aug. 31, at Juicero’s final board meeting, they decided to seek a buyer. The company shared the plan publicly the next day and said it would give customers their money back. The board members felt obligated to offer refunds, two of the people say; the machines became useless once the company stopped shipping its proprietary juice packs. Investors say they believe the startup’s intellectual property and logistics systems are valuable and will recoup some of their investment; one says the company has been approached multiple times since putting itself up for sale. Several investors also say they felt Juicero was a victim of an anti-elitist political and media climate.
One vote was missing from that final board meeting: Evans’s. The founder had quietly resigned from the board the week before. As Dunn prepared the statement and communicated with Juicero’s board and executives about how to break the news to staff and the public, Evans was as far away as some directors had long wanted. He was in the Nevada desert enjoying Burning Man, an art festival known for all-night parties and self-expression.
Two insiders say Evans had no idea whether the remaining board members would decide to sell the company or go bankrupt. He only learned of the outcome while in the desert, after it was finalized. A few days later, Evans posted a picture on Instagram of the wide and empty desert flats creased with bicycle tracks. The caption: “Peace at Burning Man. #vegan #raw #juice.”