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Startup Selling $400 Juicers Plans to Lower Prices and Cut 25% of Staff

July 14, 2017, 4:00 PM UTC

Startup Juicero is looking to squeeze its customers a little bit less.

The San Francisco-based maker of countertop at-home and office cold-press juicers is undergoing a “strategic shift” to lower the cost of its $399 machines and juice packs filled with raw fruits and vegetables on an accelerated timeline.

The new plan was laid out in a letter to employees from Juicero CEO Jeff Dunn, which was obtained by Fortune. Juicero declined to comment.

Dunn wrote in the letter that “the current prices of $399 for the Press and $5 – $7 for produce Packs are not a realistic way for us to fulfill our mission at the scale to which we aspire.”

The company will focus on the second generation of the machine—what internally it calls v2—to reduce the price. The letter did not detail how much the v2 will cost, but in January, Dunn told Fortune the company was targeting less than $300. A source close to the company said the plan is now in the $200 range. Juicero started out pricing its machines at $699 before saying in January that it would drop the cost.

Dunn’s letter said the company will lay off about 25% of its staff as part of the shift, particularly in sales and marketing, as it focuses on product development and manufacturing.

The decision follows a Bloomberg article from April that detailed how users could squeeze the juice packs with their bare hands without the use of the machine made by Juicero—what it called “one of the most lavishly funded gadget startups in Silicon Valley.” The report found that hand-squeezing the packs produced nearly the same amount of juice as the machines did and just as quickly.

Dunn addressed the Bloomberg story in a Medium post at the time and again in the letter to employees, writing that “it was frustrating to read that something we always knew about, and that our customers simply aren’t interested in doing, was somehow new and relevant.” The letter said that when it offered an extended return period to customers a few months ago—after the release of the Bloomberg article—less than 5% of its customers took advantage of it.

Dunn, who became CEO in October, has worked at Coca-Cola (KO), Bolthouse Farms, and Campbell Soup’s fresh division (CPB). Campbell Soup-backed venture fund Acre Ventures is an investor in Juicero as is Kleiner Perkins. Randy Komisar of Kleiner Perkins, who’s a board member of Juicero, said in a statement to Fortune, “This first year on the market has proven the strong consumer interest in Juicero and now the focus turns to expanding access. The Board is very supportive of Juicero’s strategic shift to focus resources on lowering prices via product, manufacturing, and distribution innovation.”

The hand-squeezing debacle further fed some of the flak Juicero has received since launching its juicer in the spring of 2016. As Fortune wrote in January, “Some held up the countertop appliance as a symbol of all that was wrong with Silicon Valley: a $699 connected device that solved a problem most people didn’t even have the luxury of affording—how to get fresh juice on demand at home.”

The company was founded by Doug Evans, who has said his plan was to do for juicing what Steve Jobs did for computers. Dunn’s letter noted that Evans was stepping back from daily operations but would remain a board member.