What began as an epic quest to find a solution to running a whole country without oil, by developing an ambitious electric car battery swapping scheme, ended up becoming a cautionary tale of spectacular failure which was fueled by creative math and the willful ignorance of its CEO.
Shai Agassi's Better Place was at one time considered to be a promising electric car company, because instead of building a better electric vehicle, it focused on delivering a cheaper EV, with little to no profits on the car itself but an income model that depended on recurring revenue from charging stations and battery swapping infrastructure.
So why aren't more of us driving affordable electric cars and enjoying the benefits of swappable batteries, and why did this innovative company end up firing Agassi as the CEO and filing for bankruptcy? What were the factors that led this startup to its epic failure?We've covered Better Place a number of times, sometimes accompanied by a lot of well-founded skepticism, and other times with admiration for the technology and infrastructure being developed by the company, but now it's time to bite the bullet and take a good hard look at the lessons that can be learned from a failed green venture.
The reasons that Better Place never got the traction it needed to make a difference in clean transportation, even with almost $1 billion in funding, are set forth by Max Chafkin in an exposé in Fast Company. The backstory is fascinating to read, and makes Better Place stand out as a classic case of overly-optimistic projections and overreaching ambitions.
"Agassi got virtually every meeting he ever asked for--with world leaders, celebrities, and CEOs of some of the world's largest companies. The press anointed him the creator of a Next Big Thing. (Fast Company included Agassi on its 2009 Most Creative People in Business list.) Money from investors came fast and in big waves, roughly $900 million, and it seemed like it would never stop flowing. Until, suddenly, it did.
How did a company with so much going for it stumble so badly? Agassi's grand vision gave Better Place life, but according to former employees, investors, and board members, that same grand vision also ultimately destroyed it. Entrepreneurs are frequently told not to drink their own Kool-Aid--which is to say, to remember that the stories they tell about how their products will save humanity are just that." - Fast Company
If you're interested in what can happen to even the most promising ventures, especially those with a bigger mission in mind (such as changing the world for the better), set aside some time and read A Broken Place: The Spectacular Failure Of The Startup That Was Going To Change The World. Aside from the interesting story of this startup, one big takeaway from the piece is that if your big world-changing idea resembles Agassi's in any way, beware of believing your own hype and getting too creative with your financial and sales projections.