Effectuation Stories

Driving the Future - The Story of Better Place

Written by Effectuation Team | May 10, 2016 7:33:54 PM

Clean Solution
Depending on whom you ask and where you look, automobiles account for at least one fifth of the CO2 we emit into our planet's atmosphere. Combine that with the fact that only 7% of the world's population owns a car today, and it is clear that to meet future transportation aspirations, and aspirate ourselves, we need to rethink the fossil fuel car. This should pave an easy route for electric vehicles. Except for a few small bumps in the road. Like that today's few electric cars have short range. There are no charging stations. And even if you do find a station, charging an electric car takes much more time than filling up a fuel tank.

Dirty Job
So what is it going to take to drive electric vehicle adoption? Massive government legislation prohibiting automobiles with tailpipes? CO2 levels so high there is a broad-based market for bottled oxygen? We suggest something even more extreme - - the entrepreneur. By definition, the job of the entrepreneur is to create novelty from the things he has to work with and the people who join him on the journey. Enter Shai Agassi, founder of Better Place. In devoting his startup to servicing electric vehicles, 42 year-old Agassi has positioned himself the mechanic fixing the business problems associated with electric cars. And like any good entrepreneur, he already has his hands dirty.

Local Limitation
Most electric automobiles today can travel a maximum of 150 miles on a charge, or about a third as far as their fossil fuel peers. Without the immediate means to create an electric car with greater range, Agassi has focused on what he can control. As an Israeli, he chose his geographically constrained home country, where 150 miles is a long way, as the first rollout of Better Place. And he is adding new geographies according to both size and commitment of Better Place partners. Just about anywhere in Denmark is within about 200 miles of just about anywhere else in Denmark. And DONG, the local energy provider invested US$140 million in Better Place. Denmark will host the second Better Place rollout.

Pricey Placement
But in tiny Israel or sprawling India a Better Place charging station for electric vehicles costs around US$500,000. Here again, Agassi has combined what he knows with whom he knows to generate a solution. Prior to launching Better Place, Agassi founded TopTier Software, a provider of enterprise information portals acquired by SAP in 2001. Using his knowledge and credibility in building cash flows around an emerging business, Agassi successfully attracted US$350 million in investment into Better Place early this year. (This represents the largest investment to date into clean-tech, the second largest of US$300 million going to NanoSolar, covered in January, 2009 of this magazine.) One of the major money sources was HSBC, promising to partner with Better Place to expand into cities in China.

Slow Current
Agassi has brought the power of partners to problem of battery charging time as well. Together with electric vehicle manufacturer Nissan, he announced a plan to enable battery exchange at Better Place vehicle charging stations. In less time than it takes to wrestle the hose to and from a fossil fuel pump, an automated process would remove an exhausted battery from the bottom of a car and install a fully-charged one.

Spark of Creation
Whether Better Place will turn out to be the future of driving or lose its charge remains to be seen. What is evident is what it takes to drive the future. In addition to being a transformation of the entrepreneur's resources together with his committed partners, Better Place is guided by something you might not expect. Flexibility. Agassi's vision is simply to make the world a better place by the year 2020. But whether that amounts to renting batteries, building service stations, renting electric cars, selling them or installing home vehicle charging equipment, seems secondary. By being open to a variety of possible goals, Agassi expands the ways he can steer his company. Is it time for you to move over to the drivers seat?

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 Stuart Read is professor of marketing, IMD, Lausanne, Switzerland. Robert Wiltbank is associate professor of strategic management, Willamette University, Oregon.

Publication: British Airways Business Life
Author(s):
Stuart Read

 BABL_BetterPlace_0.pdf