Enjoy’s Joyless Ride to Bankruptcy Scorches Cash, SPACs and Reputations

In just 10 short months, former Apple executive and “Genius Bar” creator Ron Johnson rode his mobile store startup Enjoy Technology from the cash-drenched hills of Palo Alto to ringing the opening bell at the Nasdaq in Times Square, to the U.S. Bankruptcy Court in Delaware.

The stunning demise of Enjoy and its much-touted “Commerce at Home” platform, that sought to rapidly deliver smartphones to customers and then upsell them other goods and services at the kitchen table, marks the combination — and culmination — after at least three major pinch points, while also tarnishing reputations and scorching over $100 million per month in valuation.

While the company’s news that it had sought protection from creditors also included word of layoffs as well as a cash injection from cell phone repair firm Asurion, Enjoy’s 20-cent stock price and $500K of cash on hand portend a different long-term fate.

From Bad to Worse

In the end, Enjoy’s unraveling was hastened by a “perfect storm” of global events that, to be fair, has shriveled much larger and more established businesses — like Netflix or Etsy — over the past year.

Setting its business model aside for a moment, perhaps the single-largest determinant of Enjoy’s downtrend was the fact that it took the fast-track path to going public as a SPAC last fall, the once-trendy back-door, blank check listing strategy that has proven to be as hollow as many Wall Street skeptics had predicted.

In fact, Bloomberg reports that Enjoy is one of more than three dozen SPACs that currently have a stock price below $1.00, with another 65 in the wings that it calculates are currently undercapitalized and will need fresh funding soon.

Add in a broad-based market selloff, increasingly challenging supply chain problems and even record-high fuel prices need to gas up its fleet of 850 mobile stores, and weights around Enjoy’s ankles became too much for it to swim.

Looking Back

That said, even as recently as its fourth-quarter earnings in late March, the message from Johnson and the company had been one of optimism and untapped opportunity, a theme it had consistently touted from its pre-listing days last summer.

“Our [Q2] results demonstrate that we are building momentum as we continue to position Enjoy’s unique business model to meet strong demand for ‘Commerce at Home,’” Johnson said last August of the company’s 65% revenue growth and the company’s “momentum on the path to bear-term profitability.”

Two months later, as Johnson and his newly listed company with a $1.2 billion market value were being feted at the Nasdaq, it was more of the same, as the man credited with putting Apple stores on the map was on to the next big thing.

“We are pioneering the next disruptive channel in retail,” he said in a statement Oct. 18, which pointed to the brand’s trademarked “Smart Last Mile” solution that would provide fast, convenient and personalized experiences to its customers with the funding needed to accelerate its expansion into new markets.

A few months later, with its share price down to $3, Johnson and Enjoy delivered fourth-quarter earnings results and another batch of hopeful promises that would prove to be empty.

“We see accelerating year-over-year growth as each quarter progresses and have a clear line of sight to achieving full year revenues between $160 million and $200 million,” the Enjoy Technology founder told analysts on the company’s conference call.

“Over the last eight years, we have steadily and purposefully built out our Commerce at Home platform to create what we see as the new gold standard for customer service to help our partners win at home,” Johnson added, coincidentally marking the time that had passed since he had. been ousted after a 17-month stint as CEO of JCPenney.

To be sure, Enjoy’s bankruptcy filing and Johnson’s latest setback are not the only high-profile flameouts in recent times, as it joins the ranks of other boom-to-bust flops like Jeffrey Katzenberg’s streaming media Quibi or the unraveling of Theranos and its founder Elizabeth Holmes, and likely many others in the looming recession era ahead.

“Fewer people are going to stores and we expect this trend to continue,” Johnson rightly observed on his last conference call. “The world’s best companies have to figure out how to take the store to the customer,” he added, unwittingly highlighting a retail problem that proved to be too difficult for him to solve.