Better Place new management promotes “beta test” Israel
Israelis notoriously have a hard time saying they’re sorry, let alone that they may have goofed big time. But that’s exactly what happened in an extraordinarily candid meeting last week between Better Place’s new management team and several hundred owners of the company’s Renault Fluence 100% electric vehicles.
Not only did CEO Evan Thornley, the genial Australian who replaced Israeli founder Shai Agassi in October, concede that the company had set unrealistically aggressive expectations and that too many target dates had not been met, but his CFO, Alan Gelman, who’s also the CEO of Better Place Israel, went so far as to give out his personal cell phone number and email address. Talk about transparency.
“I know you’re frustrated that we didn’t fight back enough,” Thornley told the audience, referring to the blitz of negative media coverage the company received last year when Agassi was ousted, layoffs were announced, sales dried up, and cash ran dangerously low. “The truth is, what was said in the media initially was basically correct. We had to make some very big changes fast.”
The backlash against the company, Thornley suggested, actually came about, davka, because so many people wanted Better Place to succeed. When it looked like that might not be the case, the public and the press turned. That said, Thornley assured the crowd that Better Place is beyond the crisis and now it was time “to return to the sense where people want us to win again.”
Despite the problems, Thornley said he believes that “the business strategy of the company is fundamentally sound. It’s just that when things don’t go right, it’s easier to blame the strategy rather than the execution of the strategy.”
Thornley may have spoken too fast. This morning, the Israeli press reported that Thornley has resigned, citing disagreements with Better Place’s investors over exactly that: strategy. We’ll provide an update later once we know better what’s now going on (assuming the company continues to come clean).
Despite this latest news, Thornley’s examples still make sense. He cited Better Place’s lackluster sales to date of less than 1,000 all-electric cars currently on our roads but insisted that Israelis will eventually flock to electric vehicles. It’s just that it was unrealistic to expect that they’d do that before the infrastructure was all in place, and that’s just happened now.
So while the media deemed Better Place a failure for sluggish sales, Thornley believes “we are now only at the beginning, not the end.” Current car owners should be seen for what they are: tech-savvy, risk-taking early adopters; the beta testers of the electric car industry, if you will. 2013 will be the make it or break it year, he stated, understanding the risks.
To get the word out, Better Place has hired a new Chief Marketing Officer, Peter Economides (a native English-speaker like Thornley, originally from South Africa but more recently living in Greece where he’s had an even more daunting task: re-branding an entire country that’s gone nearly belly up),
Economides, who will be leading a renewed marketing campaign in Israel, has an impressive pedigree. He worked directly with Steve Jobs on the “Think Different” campaign that turned Apple around from the verge of bankruptcy in 1997. And he headed up Coca Cola’s international marketing while living in New York.
“You are the heroes,” he cheered the crowed on. “You’re the people with the vision and courage and belief to say yes. This is where the ball starts rolling.”
Economides has been at Better Place all of three weeks but he was sold in less than ten minutes, he said, when he took a ride in his first electric car on a visit to Israel. He flew back home and got in his gas-powered car. “I thought I was driving ‘yesterday,’” he quipped. That car, he added almost as an aside, was a Porsche.
What’s gone wrong in Better Place version 1.0? Plenty, as Thornley, Economides and Gelman heard while fielding questions from their outspoken customer advocates. The swapping stations aren’t in the right places (“the algorithm for networking planning is very different for electric cars and we didn’t get it quite right,” Thornley said); the batteries themselves don’t get the range initially promised (“what works in the lab is not always achieved in the field”). One owner felt Jerusalem had been abandoned (the opening of the capital’s only swapping station was delayed for months). And parking spots with power plugs and are too often filled with gas guzzlers (“we need regulatory support from the government for this,” Thornley emphasized).
It wasn’t all doom and gloom. An equal number of Better Place customers took to the microphone to lavish praise on the company. Economides’ driving experience was roundly acknowledged (the acceleration on an all-electric vehicle, along with the spooky silence when stopped create a driving experience that’s uniquely exhilarating), and the company’s responsive Customer Service is on a level several notches higher than anything else available in Israel. Battery swapping is as fast as promised. And Idan Ofer, chairman of the Israel Corporation and Better Place’s prime investor, even made a surprise appearance, showing his commitment to the company he’s invested some $300 million in by arriving in his own Renault Fluence, which he parked in front to show off some special customizations he’d added (it was all tricked out with fully leather, electric powered seats).
All this, nevertheless, begs the question: how exactly is Better Place going to make a better go of it this time around? Here’s what Thornley said last week. Whether this plan is the reason he’s no longer the company’s CEO isn’t clear. But his vision (and that of the management consultants who worked with the company over the past months) was simple: Better Place wants to be the electric recharging network for every electric car made. That means applying its experience in building charge spots and a smart power grid that doesn’t overload when everyone plugs in at once to supply the growing number of Nissan Leaf’s and Chevy Volt’s, even if they don’t have swappable batteries.
To Israelis, that might not resonate so much because the only electric vehicles in this country are the Renault Fluence’s that Better Place sells. But in Thornley’s Australia, Better Place is already working with General Motors as the car manufacturer’s “preferred charge network.
Of course, Better Place would like all the other electric vehicle makers to offer cars with swappable batteries, which Thornley said he still believes is the future of electric and the differentiating feature between Better Place and other up and comers. That will come eventually, he insisted, once a network of swap stations similar to the ones in Israel and Denmark is built out in target countries (the U.S. and China are high on the list). That poses a not insignificant chicken and egg problem, but Thornley said that, once Israel is acknowledged as a clear “proof of concept,” the economics of electric cars will ultimately win out.
“The cost of manufacturing an all electric car is much cheaper than a hybrid,” he pointed out. “There’s only one power train versus two” as in a Toyota Prius, for example. And, he added, for many of today’s fixed battery electric cars, it would be fairly “easy to produce them in a swappable form.” Think 18-24 months for a factory to add that capability.
Better Place also wants to be more transparent with its software – so far, “a brilliant integration but a walled garden,” Thornley admitted. Why can’t Better Place’s OSCAR GPS system work with Waze, for example? It should, Thornley said.
The question remains, however: can Better Place convince the world that its Israeli “beta test” country is a success that can be applied elsewhere, before the company runs out of money again? It’s an imperative, explained Saul Singer, who gave a closing talk for the evening. Singer is the co-author of Startup Nation, the best selling book about Israeli entrepreneurship that featured Better Place in its first chapter as the poster child of the scrappy Israeli startup with global ambitions.
Better Place was Israel’s first attempt at tackling a problem affecting the entire world – reliance on a dwindling supply of oil – in the living laboratory of a small country, Singer said. The author envisions Israel doing the same now for other burning issues. “But Better Place has to succeed if we want to do it next for education,” he said, giving a perhaps improbable example. “The stakes for this are huge.”
Singer then shared a personal story. His wife, he said, hates it when they have to stop the car to swap the battery. But then his kids intervene from the back seat. “’Why are you complaining, Imma?’” they’ll say. ‘We’re the pioneers.’ Yes there are problems, but that’s the meaning of being a pioneer. We have to stick with it and win.”