Last week, news broke that ChefSteps had laid off a significant percentage of its staff. At the time, it was unclear what the future held for the company other than an assurance from company CEO Chris Young that the Seattle startup and its flagship hardware product, the Joule sous vide appliance, would live on.
Now, thanks to a Facebook post from Young, we have a clearer picture of what a downsized ChefSteps will look like. Young’s note, which he wrote to the Cooking With Joule Facebook group, reiterated that ChefSteps and the Joule would live to see another day.
However, as I speculated last week, it looks like the company is getting out of the sauce business.
From the post:
I appreciate your understanding that in the coming days our focus will be on supporting our affected friends and that we may be a bit slower to respond than usual.
This also means that we will be discontinuing certain lines of business, including Joule Ready and any additional content being added to ChefSteps Premium.
I liked the Joule Ready sauce concept, even if the pricing for sauces ($4-$7 depending on the sauce) was a little high. Still, the idea of creating an easy sous vide meal without having to worry about getting the necessary ingredients to make a sauce like Thai curry or or tikka masala made life a little easier, even if it meant supplying your own protein.
From the looks of it, not enough people agreed with me. I have a feeling if the company was turning a profit or saw strong growth ahead for Joule Ready, they wouldn’t have killed the business after only half a year.
The company is also axing its paid content business. ChefSteps Premium, which offered video-centric cooking classes, in-depth how-to’s and exclusive recipes, cost subscribers a one-time fee of $39. While it’s not clear how successful Premium was, the business clearly either didn’t have enough subscribers to justify the investment of putting new content behind the paywall or the company simply couldn’t afford to keep the team on. I do think the company made a strategic error early on by choosing to not ask its ChefSteps Premium customers to renew access annually (it was a pay-once, permanent subscription product), which negated any revenue growth opportunities as the company grew its subscriber base.
Finally, while Young didn’t go into too many details about how they ran into a cash crunch, he did drop one interesting clue:
As you’ve heard, there have been some changes at ChefSteps in the past week. Our funding situation unexpectedly changed (emphasis mine) and we’ve had to make the incredibly difficult decision to let a significant fraction of our amazing team go. This truly sucks.
While it was always assumed ChefSteps was in a good financial place because of the backing of billionaire Gabe Newell, it’s apparent now that wasn’t necessarily the case. Most interestingly, it looks like the sudden change in the health of the company’s balance sheet was not anticipated, making me wonder if either Newell called in the loan or had changed his position somehow and didn’t want to extend more credit to the company. There’s also the possibility ChefSteps had been seeking other financing and had something fall through at the last minute.
Either way, it looks like the company’s runway was suddenly shortened, which meant the startup no longer had the luxury of experimenting in new lines of business such as food delivery and premium content.
I also wonder if this means ChefSteps will permanently shelve its ongoing development of other hardware products. While the company never disclosed publicly what their next product would be, they’d been signaling for some time that new products were on the horizon.
With last week’s news, chances are any new products (one of which was speculated to be a steam oven) likely won’t see the light of day anytime soon.
what’s happened since? the youtube channel seems to have stopped uploading a few months ago.