It is conventional wisdom that the best way to start a
business is to find a problem and then solve it. The bigger the problem, the
bigger the potential solution and of course, the bigger the payoff. Simple,
right? Uh, maybe not. Sometimes even though the problem is huge and staring us
all right in the face it may not be that easy.
Take batteries for electric vehicles. We all know the chief
issue holding back electric vehicles is range. The best can only go about two
hundred miles before needing a charge. Plus, charging takes time. There are
literally hundreds of companies working on this problem, with a wide variety of
solutions or rather possible solutions.
Case in point, according to today’s New York Times: “The troubled battery
maker A123
Systems filed for bankruptcy on Tuesday, dealing a blow to the Obama
administration’s program to jump-start a domestic battery industry and spur
development of electric vehicles.
The company’s
bankruptcy filing was unexpected, since it struck a deal in August to sell a majority stake to a
Chinese auto parts manufacturer. That agreement, with the Wanxiang
Group, provided an apparent lifeline to the company. But A123, which has
received federal grant money, said the Wanxiang deal was never completed, and
on Monday, it failed to make a debt payment due on $75 million it had borrowed
from Wanxiang.” Oops.
A three year old startup, Better Place (http://www.betterplace.com/) decided to make
an end run around the problem. Rather than inventing a long range battery, they
mitigate the predicament by putting up a network of battery exchange stations. No
problem, just drive in and your batteries will be swapped in less than two
minutes. Great idea; they have even starting building their first set – in Israel,
a small, small country that obviously has issues when it comes to getting oil.
Will Better Place ever even come to America?
So, it is quite a challenge
to place bets on winning technologies. After all, the best venture capital firms
on Sand Hill Road are shooting for a one out of ten success rate. I would wager
that the success rate on batteries to solve the range issue will end up at one
out of a hundred, if that. Yet, we all keep trying, because when that special
someone hits it; it will be a home run that will change the world.
And that folks is one
of the key reasons why entrepreneurship is so cool.
Full article: http://www.nytimes.com/2012/10/17/business/battery-maker-a123-systems-files-for-bankruptcy.html?hpw
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