The primary driver behind my decision to walk away from a lucrative Wall Street career was my coming to terms with the fact that our financial system is largely a rent-seeking scheme designed to enrich parasitical, unethical behavior at the expense of the nation as a whole. As soon as I recognized this, I could no longer feel proud of my work and certainly couldn’t justify my large paycheck for being a compliant, highly productive cog in this machine.
In the nearly decade since, I’ve come to understand that the financial system, while absolutely core to the propagation of the declining U.S. empire, is just the tip of the iceberg when it comes to our problems. Not only is the financial system broken; the American political system is broken, healthcare is broken, policing is broken, intelligence agencies are broken, rules for engagement in warfare are broken. Pretty much everything is captured and broken, systematically designed to benefit the few at the expense of the many.
In contrast, one of the few things that seemed to be working, at least relatively well, was the technology sector. Silicon Valley is the poster child for this industry, and while the “innovative” nature of products coming out that celebrated tech hub have been declining for years, it still seemed vibrant and dynamic compared to the rest of the U.S. economy. I’m increasingly starting to wonder whether much of that was just an elaborate illusion.
Most of you probably haven’t heard of the company Juicero, but you should be paying attention to it.
What follows are choice excerpts from a recent Bloomberg article, Silicon Valley’s $400 Juicer May Be Feeling the Squeeze:
One of the most lavishly funded gadget startups in Silicon Valley last year was Juicero Inc. It makes a juice machine. The product was an unlikely pick for top technology investors, but they were drawn to the idea of an internet-connected device that transforms single-serving packets of chopped fruits and vegetables into a refreshing and healthy beverage.
Doug Evans, the company’s founder, would compare himself with Steve Jobs in his pursuit of juicing perfection. He declared that his juice press wields four tons of force—“enough to lift two Teslas,” he said. Google’s venture capital arm and other backers poured about $120 million into the startup. Juicero sells the machine for $400, plus the cost of individual juice packs delivered weekly. Tech blogs have dubbed it a “Keurig for juice.”
But after the product hit the market, some investors were surprised to discover a much cheaper alternative: You can squeeze the Juicero bags with your bare hands. Two backers said the final device was bulkier than what was originally pitched and that they were puzzled to find that customers could achieve similar results without it. Bloomberg performed its own press test, pitting a Juicero machine against a reporter’s grip. The experiment found that squeezing the bag yields nearly the same amount of juice just as quickly—and in some cases, faster—than using the device.
Juicero declined to comment. A person close to the company said Juicero is aware the packs can be squeezed by hand but that most people would prefer to use the machine because the process is more consistent and less messy. The device also reads a QR code printed on the back of each produce pack and checks the source against an online database to ensure the contents haven’t expired or been recalled, the person said. The expiration date is also printed on the pack.
Evans, 50, follows a diet of mostly raw, vegan foods. Technology was a new thing for him, but he picked it up quickly. He said he spent about three years building a dozen prototypes before devising Juicero’s patent-pending press. In an interview with technology website Recode, he likened his work to the invention of a mainstream personal computer by Apple’s Jobs. “There are 400 custom parts in here,” Evans told Recode. “There’s a scanner; there’s a microprocessor; there’s a wireless chip, wireless antenna.”
Kleiner Perkins Caufield & Byers joined Alphabet Inc. and others in funding Juicero. Evans’s subscription model had hit on a sweet spot for venture capitalists, said Brian Frank, who invests in food-tech companies through his FTW Ventures fund. The successes of Nespresso and Dollar Shave Club have made VCs eager to chase such deals, he said. “Investors are very intrigued by businesses that combine the one-time sale of hardware that ends up leading to repeat purchases of consumable packages,” said Frank, who doesn’t own Juicero shares.
But after the product’s introduction last year, at least two Juicero investors were taken aback after finding the packs could be squeezed by hand. They also said the machine was much bigger than what Evans had proposed. One of the investors said they were frustrated with how the company didn’t deliver on the original pitch and that their venture firm wouldn’t have met with Evans if he were hawking bags of juice that didn’t require high-priced hardware. Juicero didn’t broadly disclose to investors or employees that packs can be hand squeezed, said four people with knowledge of the matter.
Built on the promise of technology, Juicero was among the top-funded U.S. hardware startups in 2016. But in October, Evans was replaced as chief executive officer by Jeff Dunn, a former president at Coca-Cola Co. A few months later, Juicero dropped the price of the machine to $400 from $700. “It’s very difficult to differentiate yourself in the food and beverage sector,” said Kurt Jetta, who runs retail and consumer data firm Tabs Analytics. “Entrepreneurs may be tempted to have a technology angle when it’s not really there.”
Evans is now chairman of the startup’s board. The company sells produce packs for $5 to $8 but limits sales to owners of Juicero hardware. The products were only available in three states until Tuesday, when the company expanded to 17. Packs can’t be shipped long distances because the contents are perishable.
In Bloomberg’s squeeze tests, hands did the job quicker, but the device was slightly more thorough. Reporters were able to wring 7.5 ounces of juice in a minute and a half. The machine yielded 8 ounces in about two minutes.
Now watch the video...
There’s so much wrong here, it’s gonna take a little time to unravel it all. Let’s start with the company’s founder, Doug Evans, who apparently liked to compare himself to Steve Jobs. Here’s a free tip for everybody. Whenever a company’s founder compares him or herself to Steve Jobs, run the other way. There’s a high probability the product is an overhyped fraud. I recall another disgraced, overhyped CEO who was frequently compared to Steve Jobs; Elizabeth Holmes, the founder of blood testing company Theranos. In a 2014 Fortune profile on her, Jobs was mentioned on several occasions.
During my four days at Theranos, Holmes dressed identically every day: black jacket; black mock turtleneck; black slacks with a wide, pale pinstripe; and black low-heel shoes. Steve Jobs, because of his vision and perfectionism about “great products”–words Holmes punches out with precisely Jobs’ brio–is obviously a hero to her. As an apparent memento mori, she hangs in her office a framed screenshot of his Apple Internet bio, printed out on Aug. 24, 2011, the day he stepped down as CEO because of pancreatic cancer.
That clinched it for him. “When I finally connected with what Elizabeth fundamentally is,” he says, “I realized that I could have just as well been looking into the eyes of a Steve Jobs or a Bill Gates.”
Although I believe Balwani when he says that Holmes’s “overall goal and direction” for the company “has been linear,” I don’t believe that Walgreens wellness centers represent the ultimate target of that vector. There are pieces of the puzzle we haven’t seen yet. In some cases she may be waiting for regulatory approval, while in others she may just be waiting, like Steve Jobs, to finish perfecting her next “great product” before unveiling it with a flourish.
We all know how that turned out. But I digress, let’s get back to Juicero. According to Bloomberg, the company’s founder went around claiming that the “juice press wields four tons of force—“enough to lift two Teslas,” but then a few paragraphs later we learn that “a person close to the company said Juicero is aware the packs can be squeezed by hand but that most people would prefer to use the machine because the process is more consistent and less messy.”
You’ve got to be kidding me. So the company knew the machine squeezes juice from its packets as effectively as two human hands, but in order to sell this monstrosity for $400 a pop (originally $700), they had to market it as some technological breakthrough. Is that what’s happening here?
Finally, and perhaps most concerning, look at a couple of the entities that helped fund Juciero to the tune of $120 million: Kleiner Perkins Caufield & Byers and Alphabet Inc. (the parent company of Google). These are large, sophisticated players and they bought into this thing. From what I can tell, they were mesmerized by the fact the machine looked like and iPhone, connects to the internet, and was headquartered in San Francisco. Either that, or they knew the whole thing was a marketing scheme designed to trick morons into spending an enormous sum of money for the right to buy expensive juice packets that could probably be emptied just fine using a $20 machine.
Neither of the above conclusions is comforting. Either high-profile VCs were tricked by this ridiculous product, or they willingly went along with a what appears to be a sleazy scheme. Unfortunately, the bottom-line here seems to be that Silicon Valley is rapidly running out of ideas. That, or perhaps something far more perverse and systemic might be going on.
Tomorrow’s post will attempt to address the above question, but for now it’s safe to say that this Juicero episode bodes very poorly for the one area of the U.S. that had heretofore been one of the last remaining hubs of innovation.
If this is the state of Silicon Valley, the American economy is in even worse shape than I thought.