3 start-ups that failed & lessons learned
Featuring Juicero, Quibi & Jawbone
Welcome to the 114th edition of Start-up Society! Check out the previous issue, if you have not already, here!
Today’s article examines the cautionary tales of three startups that crashed and burned. Startups are notoriously risky ventures, with a majority of them failing within their first few years. Even those that achieve early success can run into unexpected challenges. Juicero, Quibi, and Jawbone are examples of startups that failed despite significant investments and early momentum. Read on to learn valuable lessons about entrepreneurship, innovation, and the importance of understanding customer needs!
Juicero
Juicero was founded in 2013 with the goal of revolutionizing the juicing industry with a high-tech machine that could produce fresh, cold-pressed juice at home. The company raised over $120 million in funding and boasted a star-studded investor list, including Google Ventures, Kleiner Perkins, and Campbell Soup Company. On paper, the company and the product seemed to be well-positioned to take advantage of a market that is always looking for healthy diet options made easy.
Juicero achieved some notable milestones, including a partnership with Whole Foods and the launch of a new, lower-priced model. However, the company faced significant criticism for the high cost of its product and the perceived wastefulness of the pre-packaged bags. In 2017, Bloomberg published an article revealing that the juice could be squeezed out of the bags by hand, leading to widespread ridicule and a sharp decline in sales.
Why it Failed
Despite the hype and investment, Juicero’s fortunes quickly soured. The company faced criticism for the high cost of its juicer (which retailed for $699) and the fact that it required pre-packaged bags of pulp that could only be purchased through Juicero at a premium price. Additionally, it was revealed that the juice could be squeezed out of the bags by hand, rendering the machine unnecessary.
Lessons Learned
- Be transparent: Transparency and honesty in marketing and product claims are essential. Juicero’s claims about the necessity of its machine were proven false when it was revealed that the juice could be squeezed out of the bags by hand. This led to a loss of consumer trust and a decline in sales.
- Don’t overprice your product: Market research and understanding consumer preferences are crucial. Disruptive technology is not enough. Juicero had a high-tech machine but failed to recognize that consumers were not willing to pay a high price for a juicing machine that required pre-packaged bags of pulp.
Go Deeper
The tech start-up that made a $700 juicing machine has shut down
Squeezed out: widely mocked startup Juicero is shutting down
Quibi
Quibi was a short-form video streaming platform founded in 2018 by Hollywood mogul Jeffrey Katzenberg and former HP CEO Meg Whitman. The app offered original content in episodes of 10 minutes or less, designed specifically for viewing on mobile devices. Quibi raised over $1.75 billion in funding, including from major media companies such as Disney and NBCUniversal.
Quibi launched in April 2020, at the beginning of the COVID-19 pandemic. In October 2020, just six months after its launch, Quibi announced that it would be shutting down. In 2021, streaming platform Roku acquired the content from Quibi for an amount less than $100 million, with the condition that the content would remain in their short-form format. The shows would be rebranded as “Roku Originals” and relaunched on the service in May 2021.
Why it Failed
Despite the significant investment and star power behind the project, Quibi failed to gain traction. The company blamed the pandemic for the slow adoption of the platform, as users were spending less time on-the-go and more time at home which led to a decrease in demand for short-form content and a rise in streaming services such as Netflix and Disney+.
However, the company also faced criticism for its lack of social sharing features and the fact that users had to pay a subscription fee despite the abundance of free short-form content available on other platforms such as TikTok, Instagram, and YouTube.
Lessons Learned
- Be agile: Blaming the pandemic for Quibi’s failure is unfair. The market is constantly changing, and businesses need to be able to adapt quickly in order to survive. Quibi failed to do this, and as a result, it was unable to compete with other streaming services that were already established.
- Test your assumptions: Quibi made a number of assumptions about what consumers wanted, but these assumptions turned out to be wrong. The company thought that people would be willing to pay for a streaming service that only offered short-form videos. However, research has shown that people are more likely to subscribe to streaming services that offer a variety of content, including long-form shows and movies.
Go Deeper
A look at why Quibi failed so soon after launching
Why did Quibi fail? A Complete Q&A
Roku will launch original programming fueled by Quibi’s content on May 20
Jawbone
Jawbone was a consumer electronics company that produced wearable fitness trackers, wireless speakers, and Bluetooth headsets. One of its flagship products was the Jawbone UP3, a fitness tracker that was launched in 2015. It was the third generation of Jawbone’s UP activity tracker series and featured advanced sensors for tracking heart rate, sleep, and physical activity. The device was designed to be worn on the wrist and synced with a mobile app to provide users with insights and analysis of their fitness and wellness data.
Led by CEO Hosain Rahman, the company raised nearly $1 billion in funding from top-tier venture capital firms Sequoia, Andreessen Horowitz, Khosla Ventures, and Kleiner Perkins Caufield & Byers, lifting its peak valuation to $3.2 billion in 2014.
Why it Failed
Over its 18-year lifespan, Jawbone faced a series of setbacks, including product recalls, supply chain issues, and legal disputes (including a patent infringement lawsuit with Fitbit and an investigation by the US International Trade Commission). The company ultimately filed for bankruptcy in 2017 and its assets were liquidated.
The company’s investment into its UP3 fitness tracker proved to be a poor bet; iterations of the product encountered various problems, and users often ran up against the limitations of the device as well as its high price.
Jawbone also faced stiff competition in the wearable technology market from companies like Fitbit and Apple. These competitors offered similar products at better prices or with better features and a more established brand.
Lessons Learned
- Stay focused: Jawbone was a successful company for many years, but it eventually failed because it tried to do too much. The company expanded into new markets, such as wearables and fitness trackers, but it didn’t have the resources to compete with established players in those markets.
- Have a strong competitive advantage: Even with innovative products, a company must differentiate itself from competitors and build a strong brand image. Develop a unique value proposition that sets your company apart and resonates with target customers.
Go Deeper
Jawbone’s demise a case of ‘death by overfunding’ in Silicon Valley
Jawbone is going out of business
The stories of Juicero, Quibi, and Jawbone remind us that even the most hyped-up and well-funded startups can face unexpected challenges and fail. However, failure is not the end — it’s an opportunity to learn and grow. It’s important to stay nimble, adapt to changing circumstances, and always put the needs of the customer first. Remember, failure is not fatal, but the refusal to learn from it is.
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Authored by Arteen Zahiri, Rumeer Keshwani, & Elham Chowdhury
