Everyone thinks they know what value is. Especially in business, they say they understand value creation, and value propositions. But many stories in the news show that even big players can get this very wrong.
118 Million Dollars & They Still Got it Wrong
In April of 2017, The Silicon Valley Business Journal asked whether Juicero had "squeezed" investors such as Kleiner Perkins, Caufield & Byers, GV and DBL Partners, Thrive Capital, Campbell Soup Company and others out of 118 million dollars.
Juicero was one of those darlings of Silicon Valley. Everyone saw a bright future for the innovative juicing company and its sleek, high-tech juicer that allowed people to enjoy fresh squeezed fruit and vegetable juice without a single trip to the farmer's market or cleaning tiny little holes in a strainer every day. You just took a sealed bag from the fridge and popped it into the beautiful machine and a hydraulic press squeezed out the all the healthy goodness into your glass - without making any mess whatsoever. The machine was $400-$1200 and each bag of fruits and or vegetables was $5-$10, but there was no shortage of buyers who seemed very happy with their purchases. Investors were in heaven.
But trouble appeared in the form of a video someone posted on Buzzfeed showing that you could squeeze the same bag with your hands and get exactly the same amount as if you had squeezed it with an expensive Juicero machine. The catch was - that Juicero didn't sell the bags alone. You had to own one of their machines to be eligible to buy the bags.
Suddenly Juicero looked like they were ripping people off by forcing them to buy an expensive machine to do what they could easily do with their own hands and the insults went viral.
If Juicero had done a proper "value evaluation" and understood what their customers truly valued (healthy goodness without the mess) they probably could have pivoted from the bad publicity by announcing that if people wanted to buy the bags alone and squeeze them with their hands, they were welcome to do so. Instead, the founder of Juicero came out with his own videos justifying the high price and necessity of the machine. He explained that it had a computer inside that could read the barcodes on the bags. If something like spinach were recalled, that information would be in the computer connected to the cloud, and the machine would not squeeze a bag that had the suspect spinach in it. Likewise, if a bag had expired, the smart machine wouldn't squeeze it.
Obviously, the founder thought he was helping the situation with those replies, but all they did was pour gasoline on the fire of insults raging on the internet. People started questioning why in the heck they would need a machine to keep them from eating spinach under a recall when they were perfectly capable of reading the news and avoiding it. They were even more upset about the expired bags. Many thought the machine had no right to stop them from drinking juice that was a day or two past "expiration". They questioned why they would want a machine bossing them around.
Other complaints came from people who didn't want "emf radiation" around their healthy juice in the first place and questioned how anyone could think it was a good idea to put an internet-connected computer into a juicer. The insults and outrage poured in faster than juice into a glass.
Instead of pivoting and continuing to provide healthy juice until the storm blew over, Juicero went out of business in just a few weeks. 118 million dollars in investment capital, gone.
The moral of the story is - make sure you really know exactly what your customers value. In Juicero's case, they were willing to pay high prices - not because the machine was smart, but because they wanted to drink healthy homemade juice but didn't want to get their hands dirty and they also loved the machine's sleek look on their countertops. Almost no one valued the fact that barcodes were being read.
In times of crisis, knowing where your true value lies is the key to survival. You might be enjoying a mess-free glass of fresh juice right now if Juicero had known theirs.