Why is better place failing

When Better Place was founded, its strategy called for initial rollouts in Israel and Denmark. These were inspired choices to prove the viability of its strategy: They are small countries where gasoline is exceptionally expensive and purchase taxes on gasoline-powered cars are very high.

Despite their relatively small populations, the economics in Israel and Denmark were such that even modest market success in just these two markets would have yielded the attractive financial returns critical for investors. Just as importantly, they would have yielded the meaningful sales volumes critical for retaining and attracting partners, most importantly automakers. As Better Place pursued new geographies it used up its limited resources: money, management attention, and, most precious of all, the patience of its partners, especially Renault.

In early May, Renault announced that it was scaling back its commitment to switchable battery cars and that the long-awaited second model, the Zoe compact that Better Place had counted on to complement the mid-sized Fluence, would not be coming after all. This vote of no confidence would make it infinitely harder for Better Place to line up new car manufacturers, without which it was dead in the water.

In February , after a series of mismanaged leadership transitions including the firing of founder and CEO Shai Agassi, Better Place finally reversed course.

It announced its exit from all non-core markets to focus exclusively on Israel and Denmark. It declared bankruptcy on May The tragedy is Better Place delivered on the most novel aspects of its business model, succeeding in both technology development and aligning the interests of the critical actors in the electric-car ecosystem. In mid, GM filed for bankruptcy, selling itself to the U. Rather, Better Place had yet to partner with a carmaker whose vehicles were available in the United States, hurting its candidacy.

Discussions would resume with the resurrected GM, but they never led to a firm deal. The perceived snub from the U. Agassi went on vacation to Israel in the summer of , disappearing from the Palo Alto office for much of the rest of the year.

He also began telling people that he had separated from his wife and now had a girlfriend, Tami Chotoveli, the owner of a luxury watch company who had apparently been moonlighting as his personal coach. Several former employees say that Agassi brought Chotoveli to meetings and hired some of her friends to top positions. Efforts to diagnose him were something of a secret parlor game among certain disgruntled workers. He decided that his absentee boss suffered from a narcissistic personality disorder.

Neither man would be immediately replaced. Stonehill and Kennedy did not return requests for comment. It would take Better Place, a company with hundreds of millions of dollars in capital and plans to file for an IPO, nearly two years to appoint a new CFO. Peleg was never replaced. Meanwhile, Agassi brought his own brand of divisiveness to the Tel Aviv offices.

At the global headquarters, which was on a different floor than the Israeli headquarters, he built himself a glass cube of an office. To the outside world, Better Place still preened in The company opened a visitor center in a Tel Aviv industrial park that February. The attraction, which was being dismantled when I visited earlier this year, featured a mile-long track where customers could test-drive a prototype car and a theater with 30 vintage car seats, a giant wall-size screen, and a hologram machine that projected a life-size Shai Agassi.

One last, slightly mystifying feature: a futuristic rotunda, not unlike the war room in Dr. More than , people went on tours—grade-school classes, tourists, and dozens of U. Some 30, sat down with a Better Place salesperson to pick a color and fill out a form stating their intent to purchase a car whose price had not yet been announced.

Employees told me that Agassi made similar boasts on internal conference calls. Agassi had assumed that the car would cost roughly half the price of a typical gasoline car and would have a range of at least miles. But the time frames he talked about for selling cars were crackers. That would be very charitable indeed. Better Place could have also drastically cut costs and conserved cash.

Sales and support could have been outsourced—or, given that there was no product, simply shut down. It could have bought off-the-shelf charging stations from GE instead of designing proprietary ones.

The program to develop the Oscar navigational system could have been scaled down. We thought we could do everything better. The November press release cited GE and UBS as investors, but people involved with the round say their contributions were minimal.

Almost all of the money came from existing shareholders. Better Place sold just cars in its first two months, mostly to employees. But the reality was a PR disaster. In June, with sales still slow and cash running out, the board of directors convened for its regular meeting.

They were taking the company away from him. Agassi had finally overplayed his hand. Agassi said no; Ofer would have to fire him outright. So Ofer did. As the new CEO, Thornley saw the full effect of that lack of accountability.

These runaway expenses meant that Better Place would have to quickly sell as many as 30, cars in Israel just to break even. But by November , the company had sold just cars there. The board fired Thornley in January He shut down operations in Australia and announced that the company would only focus on Israel and Denmark. Though Agassi has not yet commented publicly, some insider post-mortems have echoed what we already know: former CEO Evan Thornley, who followed Agassi but then stepped down four months later, said the company had sound technology and strategy, but executed poorly.

Yet what stands out is not the flaws of a single company—no business can claim perfect execution—but that the electric-car industry is still in the pre-shakeout stage. This is the period in the new-technology business cycle in which competing players refuse to accept that dozens of different sizes, shapes and chemical compositions of batteries cannot survive.

The rules state that products tend toward standardization. No current battery chemistry is good enough to fully relieve range anxiety, and none seems likely to break through any time soon. Until a meaningful battery breakthrough is made, swapping remains a valid idea. By providing your email, you agree to the Quartz Privacy Policy. Skip to navigation Skip to content.

Discover Membership. Editions Quartz. More from Quartz About Quartz. Follow Quartz. These are some of our most ambitious editorial projects. From our Obsession. By Steve LeVine. In the four years since Better Place went bust, the desire to play the blame game is understandable. The price of the car was too high. The industry was consolidating around fast charge, not battery switch. I prefer to see the glass as half full. Rather than point fingers at what went wrong, the sorry saga of Better Place reminds us of something critical about entrepreneurship in general and Israeli entrepreneurs in particular: that failure is far from the end of the journey.

Start-up Nation chronicled the story of Better Place in its very first chapter. And Singer bought a car from Better Place as soon as one was available. We get up, brush ourselves off and do the next thing. Better Place seemed like such an enormous failure in large part because it raised so much money and expectations were so high. But it was still a startup. Another important lesson that the Better Place story emphasizes: The first company to develop a new product is often not the one that reaps the biggest rewards.

Think Betamax vs. VHS or the original Macintosh operating system vs. Microsoft Windows. The first iPhone prompted Google to build its competing Android operating system, which pushed Apple to the next generation iPhone and so on. They want batteries that have a range equal to conventional cars and that can be recharged as quickly as filling a tank with gasoline.

Trade-offs are fine with easily upgradable software. With expensive hardware like a car — not so much. In the early s, Israel began developing the Lavi, a fighter jet meant to compete with the powerful American-built F We love to tackle big problems, particularly if they seem impossible to solve. I would hope that we get even better at thinking big, and that our failures will not rein in the audacity of our best entrepreneurs.