Paul Buchheit argues that too much early funding lets founders avoid customers and live in delusion. Juicero raised $120 million for a $700 juice squeezer without validating demand, a cautionary tale about funding before product-market fit.
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This is one of the key startup things where they're like, you know, if you, if you're not embarrassed of your product, you waited too long to launch. Like, these things are at the root, there's a lot of, like, frugality there, right? Because you're, you don't want to spend too much time or too much money. Like, you want to get it out there as quickly as possible and at as little cost.
Also, you don't want to spend too much time, money on the wrong thing and you just don't know enough. Right. You could have built too much email and you wouldn't have learned what to actually build.
Right. It's easy to go completely off the rails. And it's one of the most surprising things, like I've learned just working with so many startups is how often the cause of death is too much money. Like, I think there are companies that, if they had not been so well funded, could have been successful. And the company I like to make fun of, not because they may have been successful, but just because it's funny to laugh at, is juicero. Like the $700 juice bag squeezing machine. And the thing that made that, I think, such a, like, tremendous train wreck is that they gave them $120 million for that thing before they ever, like, talked to any customer. Like, if, if Juicero had gone through YC and we gave them $120,000, they would have had to go talk to a customer and be like, hey, like, we want to sell you this $700 juice bag squeezer. Right? They would have had to talk to customers like, like, and that's the thing, like, we push so hard on of startups is like, you have to go talk. I think I just lost the mic. You have to go talk to your customers. It's so easy to become detached and off in this, like, bubble of delusion. And the problem with having lots of funding before you're really ready for it is that's exactly what happens. So you can sell yourself on this idea. Oh, yeah. Once we build the perfect juice bag squeezer, like, we're going to take over the world. Everyone's going to want to spend $700. I mean, plus, like, you, you get this giant box in the mail that has tiny bags of juice in it. It's awesome. Everyone's going to want this. They were able to live in that delusion for years because they never had to go out and talk to customers.
If I recall, you could actually just recreate everything it did by just going like, that.
Right. The reason for it. So I cut open one of the bags. The reason is, I think, to actually get it to work, they had to really heavily macerate the fruit. So that's why I call it a juice bag squeezer, is because it was actually already juiced. So it was really just separating the pulp from. From the juice. Which is why also, it's no better than just, like, going to the store and buying juice. Like, the whole thing was, like, built on a number of flawed premises, but in particular, you weren't really even juicing it. It had already been juiced. You were just straining the juice.
But there's a deep lesson there, which is, no matter what you raise, if you raise $50,000 or 5 million.
You.
Should think of the amplification you need. If you raise $5 million, that doesn't mean you can create $150,000 worth of value and be happy. You have to create $50 million worth of value.
Yeah. But you can't. Like, it's easy, again, I think, to come up with stories in your mind about how you're doing it. Because, like, once we release this juice squeezer. And that's why I think, like, you just have to stay close to the customers. You have to be out there selling because you can just become delusional otherwise. And so that's why, you know, with startups, like, I. I've just seen it again and again. Like, if they get a huge round of funding before they have product market fit, it kills the company. Like, it. Because. Because it's just too hard for the founders to resist that. Because actually going out and dealing with the fact that you don't have product market fit is really painful. It's easier to tell yourself stories about how, oh, yeah, we're killing it. I'm hiring. I just hired a whole new team. We've got this cool office. Like, there's all these, like, working on cool technology. Yeah. We're doing all this amazing stuff. Like, I'm in the press all the time. I go conferences, I'm up on stage like Theranos. It's easy to just kind of be completely detached from reality because you're not out there selling a thing and you're creating a thing that people actually want to use.
