Date: April 1st, 2016 6:01 PM
A $700 Juicer for the Kitchen That Caught Silicon Valley’s Eye
In recent years, venture capitalists have funded all manner of improbable ideas. An app that lets random people call and wake you up. A bathroom scale that posts your weight on Twitter.
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 eight-ounce glass of juice.
Mr. Evans is a raw-food evangelist, although “occasionally I eat steamed vegetables, to not be dogmatic,” he said. He wears shoes made of hemp. But even as Silicon Valley retreats from its recent boom, this unlikely entrepreneur has persuaded top investors to throw their money at one of the most enigmatic start-ups in years.
His company, Juicero, opens for business this week. But what is it?
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.”
Many of the tycoons who inhabit Silicon Valley are obsessed with health and longevity while harboring the conviction that technology can improve anything, even one of nature’s most elementary foodstuffs — in this case, juice. And they believe that niche trends, if properly disrupted, can become billion-dollar markets. Juicero is the latest expression of these techno-utopian impulses.
It is also the latest example of an unproven start-up raising enormous sums of money. Born in an earlier era in the Valley, the headier times of 18 months or so ago, Mr. Evans’s idea captivated some of the industry’s most ambitious investors. In today’s more conservative financing environment, such a pitch might not get funded.
No matter. In coming days, Juicero starts taking orders.
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.
For health nuts willing to pay a premium, Juicero promises the platonic ideal of juice. Plus, the machine never needs to be cleaned.
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.
Mr. Evans created a miniaturized version of the industrial juice presses he had used at Organic Avenue, a juice chain he developed that ultimately failed. Credit Amy Lombard for The New York Times
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?”
How It All Started
Nearly as unlikely as Juicero itself is the man behind it. 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.”
After the first store opened in 2006, the business grew quickly. But margins were persistently thin. New York real estate is expensive, and the 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.)
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.
He bought every juicer he could find, but he was never satisfied. “It didn’t have the magic that I was accustomed to.”
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So he resolved to create a miniaturized version of the industrial presses he had used at Organic Avenue. Working with freelance welders and machinists, he built prototypes in his Brooklyn kitchen. By 2013, he had a working model, albeit one that occasionally blew apart, sending pieces of metal and food scraps flying across the room.
He approached Ms. Mari and some of the original backers of Organic Avenue, who invested enough money for him to keep going. “Then I got an introduction to a partner at Kleiner Perkins through a vegan fashion designer who knew someone at the Humane Society who knew them,” Mr. Evans said.
Cold-pressed juice, the variety that Mr. Evans is hoping to capitalize on, has experienced a minor renaissance in recent years. Credit Amy Lombard for The New York Times
The partner at Kleiner Perkins, Amol Deshpande, was a believer, and the firm agreed to invest an additional half-million dollars and incubate Juicero in Silicon Valley. Mr. Evans left Brooklyn, moved into temporary housing in a shopping center on Sand Hill Road and raised $16.5 million in Series A financing.
With the extra money, Mr. Evans began hiring software engineers, mechanical engineers, food scientists and app developers. It wasn’t long before Mr. Evans realized he needed still more money. The innards of the machine were complex but manageable. It was the software, the production facility, the electrical testing and a thousand other things that necessitated a bigger staff.
“I was just naïve,” Mr. Evans said. “I was like Forrest Gump. I had no idea what it took to make a piece of hardware that could ship to consumers safely.”
So in 2015, Juicero raised a $70 million Series B round. But even that was not enough. Mr. Evans is now raising more money, currently $28 million and counting.
Juice Mania Plateau
By some measures, Juicero is very much on trend. Soylent, a liquefied meal replacement, is already popular among single-minded coders too busy to eat. Chime, a device meant to brew Indian chai, will soon be on the market. A company called Tovala is raising money on Kickstarter, hoping to build a hybrid microwave and toaster, and also sell specialized meal packs.
And cold-pressed juice, the variety that Mr. Evans is hoping to capitalize on, has had a minor renaissance in recent years. Suja, a San Diego company, is selling bottles across the country, including in Costco, for as little as $3.50 each. In 2011, Starbucks acquired Evolution Fresh, and now sells cold-pressed juice in its thousands of coffee shops.
“Just five years ago, cold-pressed juice was a niche trend, popular only with health fanatics,” Andrew Alvarez, an analyst with IBISWorld, a market research firm, wrote in a recent report. Now though, it “has hit the mainstream and given rise to hundreds of new juice bars, typically selling juice at higher price points.”
Still, there are signs that juice mania may have peaked. Last year, retail juice sales in the United States declined by 2 percent from 2014, according to Euromonitor International, another market research firm. Sales of home juicers were down 6 percent in the United States last year.
There are also health concerns. One reason sales have been falling, analysts believe, is that people are increasingly worried about sugar, even the naturally occurring kinds.
Finally, there are the environmental questions about the single-serve model pioneered by coffee companies such as Keurig and Nespresso, which creates a throwaway container with each serving. Every glass of Juicero juice needs its own pack, which is shipped from Los Angeles to the customer, although Mr. Evans said he was developing a compostable pack.
Juicero workers receive truckloads of produce from nearby organic farms, triple-wash it, then chop it into specific shapes. A specialized machine then fills each pack, ready to be shipped. Credit Amy Lombard for The New York Times
To succeed, Juicero will have to buck these trends, and also clear a more pedestrian hurdle — persuading people to pay a premium for another kitchen doodad. “Seven hundred dollars for a small cooking appliance is extremely high,” said Virginia Lee, beverage analyst for Euromonitor. “There are a lot of appliances competing for counter space, never mind the wallet.”
Expensive as it is, what Mr. Evans has packed into that counter space is rather remarkable. Inside the machine is a series of gears and metal plates that exert 8,000 pounds of pressure on packs of chopped fruits and vegetables.
To make a glass of juice, you insert a pack ($4 to $10 each) into the machine, close the door and press a button. There are five flavors, including Sweet Roots (carrot, beet, orange, lemon and apple) and Spicy Greens (pineapple, romaine, celery, cucumber, spinach, parsley and jalapeño).
Each pack has a QR code on it. A camera in the machine scans the code on each pack and, using Wi-Fi, checks in with an online database. If the pack is no longer fresh, or has been deemed contaminated, the machine won’t press it. If the pack is O.K., the gears start turning and out squirts the juice.
So far, so complicated. But the real logistical feat is behind the scenes. To create those packs in the Los Angeles plant, workers receive truckloads of produce from nearby organic farms, triple-wash it, then chop it into specific shapes (carrots are finely diced, while beets are chunkier).
A specialized machine then fills each pack. The packs are then sent by FedEx to users, who order them using Juicero’s smartphone app.
Mr. Evans and his investors speak of Juicero being a “platform” for a new paradigm of food delivery. And they speak of commercial sales. Already, chain restaurants including Le Pain Quotidien have agreed to use Juicero. The hope is that bigger companies will put machines in their office kitchens, too.
At this point, however, the investors betting millions don’t have any sales data to reassure them. Instead, they have little more than Mr. Evans’s enthusiasm for juice. He drinks it for breakfast, lunch and dinner. He is so committed to a largely liquid diet that he rarely consumes water.
“Organic cold-pressed juice is rainwater filtered through the soil and the roots and the stems and the plants,” he said. “You extract the water molecules, the chlorophyll, the anthocyanin and the flavonoids and the micronutrients. You’re getting this living nutrition. It’s like drinking the nectar of the earth.”
But do other people have such refined palates when it comes to juice? Will those who don’t subsist entirely on raw produce be able to tell a difference between organic and nonorganic fruit, as Mr. Evans claims to do? Even if they can, what will they be willing to pay for the privilege of consuming it in their own kitchens? After all, this is a machine that won’t make a glass of carrot juice if your Wi-Fi is down.
Industry insiders say that if anyone can pull it off, it is Mr. Evans. “This is not some guy who looked at a Bloomberg terminal and said, ‘Juice is trending,’” said Colleen Wachob, a former Organic Avenue employee who is now chief brand officer at MindBodyGreen, a lifestyle website. “He’s been into this since before it was cool.”