The Israeli newspaper Haaretz put it bluntly. Shai Agassi, the man who built the groundbreaking Israel-based but global electric car-charging company through the sheer force of his personality and stellar ability to sway a crowd, has been relieved of his CEO responsibilities, though he remains a director and shareholder, and “is expected to have little influence on the firm from now on.”
Ouch. Let’s put this in perspective. Better Place without Shai Agassi is like Tesla Motors without Elon Musk, or Apple without Steve Jobs. One tends to sympathize with the critics who say that the Apple maps fiasco would never have happened on Jobs’ watch, but there are drawbacks to visionary founders, too. It’s usually their way or the highway.
In five years since the company's founding, Agassi has globe-trotted and raised $800 million. But he also spent a whole lot, and Haaretz reported that the company has lost $477 million since early 2010, and $64 million just in the second quarter of 2012. That’s a pretty high burn rate.
As it happens, I went to Israel in May of this year, when Agassi was still very much in charge of the company. He was his usual expansive self, buoyant about the company’s progress and imagining an electric car timetable much faster-moving than most other observers.
In the latest count I've seen, Better Place has opened more than 20 $1 million-plus battery switch stations in Israel, and 12 in Denmark. It had contracts to build networks in the U.S. and Australia, and it was evolving a China strategy, too.
I visited one of the swap stations (right) and was impressed by the smooth automation, but it wasn’t enough to convince me that battery switching will work for regular consumers. I think it’s most effective with fleets. Why? Because fleets (taxis are a great example) want to operate around the clock, can’t afford the downtime of lengthy charging, and operate out of central facilities ideal for storing batteries.
Unfortunately, Better Place hadn’t signed up any of Israel’s major taxi fleets — they seemed reluctant to go electric — and not that many regular folks yet. At the time of my visit, Better Place had 140 Renault-built Fluence Z.E. cars on the road, half of them driven by employees. It hadn’t convinced any other automakers to build cars with switchable batteries.
Moshe Kaplinsky, a former high-ranking officer in the Israeli Defense Forces turned CEO of BP Israel, said then that the company had 1,800 cars committed for leasing and “hundreds of private customer orders.” But it was widely seen as a slow start and not enough to generate a positive cash flow.
Better Place is declining to comment on the reason for Agassi’s abrupt departure, though Israeli press reports stated clearly that the continuing losses are the main reason. Better Place was said to have $131 million left at the end of June.
The loss of Agassi isn’t the end of the world, and I hope Better Place can move forward and start generating revenue. One hurdle is that the company as conceived was very much Agassi’s personal vision. That vision included swap stations, so that became the company’s mantra. If Better Place’s new CEO — Evan Thornley, the head of the Australian division — wants to evolve a more conventional business model, and he’ll still have to deal with a massive installed investment. Agassi’s vision also included having customers buy the car and lease the battery, which is a strategy interwoven with battery switching.
On that visit I also met Idan Ofer, at least at one time Israel's richest man, Better Place’s biggest investor and chairman of its board. He was upbeat about the company and about the future of electric cars. “The world will move eventually to electric mobility,” he said.
Ofer also said he had resigned from his family’s various business interests, which included oil refineries, shipping and power generation. He had sold his Audi A6 and now drove only his electric Tesla Roadster and Fluence Z.E. “Now, my only official role is chairman of Better Place,” he said. Perhaps, on closer examination, he didn’t like the company’s progress under Agassi. But Ofer was bullish on the company in recent interviews.
There’s an interesting parallel here that some people are missing. Coda Automotive, the American car company that is converting a Chinese car to electric, was launched by a visionary CEO named Kevin Czinger. Like Agassi, he was a magnetic public speaker who could sell ice to Eskimos. He rivaled Elon Musk in creating media spectacles. Trust me about Agassi's way with a crowd, or better yet, watch this video of him in action at a recent TED talk:
The conventional wisdom is that both Czinger and Agassi fell victim to a well-known scenario — the visionary so strong at start-up isn’t as good at the nuts and bolts of actually running the company and making a profit. Idan Ofer knows if that’s Better Place’s thinking, but he’s not talking.
Better Place will carry on. One David Paul Rose posted a tribute on Agassi’s Facebook page. “[We] can and do admire Shai Agassi for what he started and appreciate the emotional (as well as financial) stock he has in Better Place,” he wrote. But, Rose added, “Better Place is not Shai, we, the investors, board members, managers, employees and customers, are Better Place and it is we who will work, each in our own way, to ensure that Better Place continues to grow, develop and succeed, because while it is not the only way, it is the best, most logical and affordable way to achieve the goal Shai has set out to achieve.”
Related electric vehicle story on MNN: 60-second electric battery changes on display in Tokyo
MNN tease photo of Agassi: Jack Guez/AFP/Getty Images
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