The latest startup to "catch Silicon Valley's eye" is a company called Juicero that's selling, essentially, a $900 Nespresso for organic cold-pressed juice. Even though it offers the kind of overpriced, niche gizmo you'd find in a Hammacher Schlemmer catalogue, the company is flush with $US120 million in investment capital. Silicon Valley giants are betting on its success.
Juicero raised investment capital from Google Ventures, Kleiner Perkins Caufield & Byers, and Campbell's Soup, among others. These companies are making a foolish bet, and the story of Juicero's rise is the story of what's wrong with startup culture.
I spoke with Juicero's founder, Dave Evans, and I can almost understand how investors felt when they opened their pocketbooks. He's dialed in to that Gwyneth-adjacent health-elixer LA scene. Evans recognises that he is making a product most people can't afford, but he sees it as the first step in a larger movement. "I think without being egotistical, I can give you the analogy of Tesla with the Roadster. This is our first entry into the market, this is a small-scale unit. We did a small batch, and we need to get it out into the world."
The company intends to make a more affordable model in the future, but for now, Evans believes commercial sales will give the hoi-polloi a taste of juice. "Fortunately, the machine is actually built and can be made accessible in a place like Le Pan Quotidian, so someone could have it then," he said. (Le Pan Quotidian has already agreed to purchase Juicero devices.)
Juicero is marketing its luxe device and subscription service as an efficient way to jumpstart a healthy habit, and Evans argues that it's financially smart for some people to use Juicero. "If you look at a two year ROI at $US700, it's less than a dollar a day. So if you look at someone who makes juice, it's a bargain, because their time is so valuable," he told me.
Of course, Evans' estimate does not include the cost of the packets, an additional $US100-$US200 a week. The Washington Post did a price comparison with bottled juices that deflates the "it's cheaper in the long run" argument, since Juicero's packets alone are pricier than simply buying an overpriced juice at the store:
— Christopher Ingraham (@_cingraham) April 1, 2016
Silicon Valley's enthusiasm for Juicero is not an isolated quirk. This kind of money dump is just the most recent twist on the trend of pouring money into frivolity. Look at the millions given to subscription services like doggie treat purveyor BarkBox ($US21 million from investors), or on-demand home massage startups like Soothe ($US47.3 million from investors).
Apparently the promise of "Uber for helicopters" is so great that companies like Blade ($US6 million) have ample funding for their dreams of making extravagant travel more accessible to the people who need transit options the least.
Investors don't care that most people cannot afford these products. They don't care that they do not solve problems, that they exist to temporarily excite the affluent into spending money. Juicero might be the most innovative juicer of all time. It still doesn't need or deserve $US120 million to disrupt juice.
The Juicero is a premium kitchen appliance. It miniaturizes an industrial juice press to countertop-size. It's not necessarily a bad product, and Evans is not a bad entrepreneur. Owning a $US700 juicer is insane to me, but so are most luxury purchases. The disturbing part of Juicero's rise isn't the device, or the price.
It's the startup's absurd overvaluation, and the way that overvaluation exemplifies Silicon Valley's skewed priorities. Juicero is the kind of thing that should only exist in small batches. I'm not saying that companies that sell niche, expensive products should be bereft of funding. But the piles of money they receive now is grossly disproportionate to the value they bring to the world.
Illustration by Sam Woolley