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Because that tiny company somehow roped in $120mm in funding. And after Bloomberg did a story on it, people realized how absurd it was.

by cosmie 10y ago

api 10y ago
Keurig is huge. It's a money machine. Why not spin that into another market? Maybe you'll land an easy flip: build it, prove it, and get acquired by the company behind Keurig or some other food product/service mega-corp. Cha-ching. This is reasoning by analogy rather than from first principles. Most people reason mostly by analogy and so therefore most investors reason mostly by analogy. Reasoning by analogy is why these kinds of bad "X but for Y" or "like X but Y" ideas get funded. They look like other successful ideas by simple pattern recognition. Add in a team with good credentials (secondary indicators) and a founder who sends solid alpha-primate signals (matters little unless sales are in-person) and what's not to like? To see why "Keurig for Juice" is a bad idea, we have to look at it from a first principles point of view. Fruit is perishable, and the taste of juice is highly dependent upon the freshness of the source fruit. As a result a juicing machine is really only going to be competitive with pre-packaged juice if the fruit is fresh. Fresh fruit juicers already exist, but they're not super-profitable since there is no recurring revenue angle. You can buy fresh fruit at any supermarket or farmers' market, and indeed doing so is likely going to give you fresher fruit than getting it from a specialized vendor. Fruit is also heavy. It's mostly water. That means shipping it around is expensive, especially when you factor in the need to preserve it at a low temperature (dry ice? thermoses?). That means competing with supermarkets and other experts in food shipping (or local farmers, etc.) is going to be very hard and shipping costs will eat your margins. All that means a Keurig for Juice has to be expensive. That means it has to be a premium product. Premium customers for a juice machine are only going to be interested in it if the juice it produces is very good and very fresh. That in turn amplifies all the problems above in a vicious cycle. In the end you're left with the very top of the premium market, and that market is more likely to buy their premium juice from a restaurant or, at the very top, have their in-home maid/nanny/whatever make them fresh squeezed juice from locally grown fruit. Coffee is different. Coffee is somewhat perishable but nowhere near as perishable as fruit, and it's far easier to package and preserve. It preserves for a long time at room temperature. It can sit on store shelves. It's also small and light and easy to ship. Keurig works because it makes sense from first principles. It's easy to package coffee in a cartridge and it's fairly easy to build a machine to brew it. The result is something more convenient than drip coffee and customers like that, and the cost of doing this is not prohibitively high for either supplier or customer. Fruit fails for the aforementioned reasons. Keurig for fruit makes no sense. Reason from first principles, not by analogy. Reason from first principles, not by analogy. Reason from first principles, not by analogy.

Because that tiny company somehow roped in $120mm in funding. And after Bloomberg did a story on it, people realized how absurd it was.

by cosmie 10y ago

Because that tiny company somehow roped in $120mm in funding. And after Bloomberg did a story on it, people realized how absurd it was.

api 10y ago

Keurig is huge. It's a money machine. Why not spin that into another market? Maybe you'll land an easy flip: build it, prove it, and get acquired by the company behind Keurig or some other food product/service mega-corp. Cha-ching. This is reasoning by analogy rather than from first principles. Most people reason mostly by analogy and so therefore most investors reason mostly by analogy. Reasoning by analogy is why these kinds of bad "X but for Y" or "like X but Y" ideas get funded. They look like other successful ideas by simple pattern recognition. Add in a team with good credentials (secondary indicators) and a founder who sends solid alpha-primate signals (matters little unless sales are in-person) and what's not to like? To see why "Keurig for Juice" is a bad idea, we have to look at it from a first principles point of view. Fruit is perishable, and the taste of juice is highly dependent upon the freshness of the source fruit. As a result a juicing machine is really only going to be competitive with pre-packaged juice if the fruit is fresh. Fresh fruit juicers already exist, but they're not super-profitable since there is no recurring revenue angle. You can buy fresh fruit at any supermarket or farmers' market, and indeed doing so is likely going to give you fresher fruit than getting it from a specialized vendor. Fruit is also heavy. It's mostly water. That means shipping it around is expensive, especially when you factor in the need to preserve it at a low temperature (dry ice? thermoses?). That means competing with supermarkets and other experts in food shipping (or local farmers, etc.) is going to be very hard and shipping costs will eat your margins. All that means a Keurig for Juice has to be expensive. That means it has to be a premium product. Premium customers for a juice machine are only going to be interested in it if the juice it produces is very good and very fresh. That in turn amplifies all the problems above in a vicious cycle. In the end you're left with the very top of the premium market, and that market is more likely to buy their premium juice from a restaurant or, at the very top, have their in-home maid/nanny/whatever make them fresh squeezed juice from locally grown fruit. Coffee is different. Coffee is somewhat perishable but nowhere near as perishable as fruit, and it's far easier to package and preserve. It preserves for a long time at room temperature. It can sit on store shelves. It's also small and light and easy to ship. Keurig works because it makes sense from first principles. It's easy to package coffee in a cartridge and it's fairly easy to build a machine to brew it. The result is something more convenient than drip coffee and customers like that, and the cost of doing this is not prohibitively high for either supplier or customer. Fruit fails for the aforementioned reasons. Keurig for fruit makes no sense. Reason from first principles, not by analogy. Reason from first principles, not by analogy. Reason from first principles, not by analogy.