At both startups and big companies, the magic word of 2014 is “lean.” The lean approach to creating a new product or service focuses on getting it to market quickly, collecting feedback from early customers, and refining it so it will have broader appeal. Once you have something that works, you pour on the gas — whether that involves raising money from investors or putting money into marketing campaigns.
On the exact opposite end of the spectrum — let’s be kind and call it “chunky” — is Lilliputian Systems, a Wilmington company founded in 2001. I still remember my first lunch that spring with the founder, during which he sold me on the vision of integrating miniature generators into laptops and other portable electronics. Instead of constantly hunting for an outlet and waiting for the battery to charge, you could pop in another fuel cartridge and keep going.
Thirteen years and about $150 million later, the company has yet to sell its first product. Lilliputian’s long-time chief executive left in 2013, along with several engineers and its vice president of business development and marketing. A new CEO was installed. And now Lilliputian is trying to raise millions more to get its product, a portable battery-boosting system dubbed Nectar Mobile Power, to market.
Boston is very good at what I think of as “moonshot” entrepreneurship: a big vision, lots of smart people, a sheaf of new patents, and several years of development in the lab. Pretty much any biotech company is an example: Developing a new drug and getting it approved routinely takes a decade or more. But sometimes moonshots can get so expensive, and take so long to launch, they miss their targets.
Lilliputian was born before smartphones, but former chief executive Ken Lazarus tells me the company saw more sophisticated — and power-hungry — devices on the horizon. So it designed a very small fuel cell that uses hydrogen from butane and oxygen from the air to generate electricity; the exhaust consists of small amounts of water vapor and carbon dioxide.
A single “pod” of butane can produce up to two weeks of power to keep devices like phones, wireless speakers, or digital cameras charged via a USB cable. “It’s like having a wall outlet in my pocket,” Lilliputian vice president Mouli Ramani told me in 2010. (He left the company last year.)
But the company’s Nectar product can’t feed more power-hungry devices, such as laptops, at least in its initial incarnation. And it is one more accessory to schlep around, since it’s still too big to be built into most devices.
Getting a new kind of fuel cell to work reliably and safely — the chemical reaction takes place at about 1,400 degrees Fahrenheit — has been no small engineering challenge. “It was way harder than we thought,” says Lazarus.
Lilliputian also had to band with other companies and trade groups to persuade the Department of Transportation to allow its product to be carried onto planes, in both carry-on and checked baggage. (The latter issue still hasn’t been resolved.) One of the companies that joined Lilliputian in that battle, Albany-based Mechanical Technology Inc., shelved its own portable fuel cell in 2011, after investing about $60 million.
Over its lifetime, Lilliputian attracted money from top-notch venture capital firms. It signed a partnership with Intel to produce components of Lilliputian’s Nectar system at an Intel plant in Hudson, as well as an agreement with New Hampshire-based Brookstone to sell its products. But time marches on: Brookstone is reportedly facing bankruptcy or sale, and Intel’s Hudson plant is slated to close this year.
When last I visited the company, in September of 2011, I got a little juice for my iPhone from a Nectar prototype. But a planned launch in late 2012 didn’t happen. Nor did one in mid-2013, which the company announced at the Consumer Electronics Show in January that year.
The price of the Nectar system crept up from $100 (Ramani’s estimate in 2010) to $300 (the latest figure announced). The fuel cartridges will cost $10 each. At the electronics show this January, the company cut a low profile, conducting private meetings with prospective partners and investors, without mentioning an on-sale date for the product. Sohail Khan, Lilliputian’s current CEO, wouldn’t comment for this piece.
Part of the problem with moonshot projects is that the world changes a lot over a decade. Rob Day, a Boston-based partner at Black Coral Capital, which invests in clean-tech startups, says many people already own an auxiliary battery pack for their phone, sometimes built into a protective case. Plus, he says, “lithium ion batteries for electronics have seen dramatically falling prices, and some are saying they could be two-thirds cheaper by 2020 than they are today.”
In 2014, creating a new consumer device typically involves inexpensive design software; a $3,000 3D printer to create a prototype; and a crowdfunding site like Kickstarter to see if anyone wants to buy it. “In the old way, you didn’t get the validation from the market until you’d spent a lot of money,” says Scott Miller, founder of Dragon Innovation, a Cambridge crowdfunding and consulting startup. With today’s leaner approach, he says, “you can get a first product out into the world much sooner. You can target with laser precision what people want.”
Lilliputian is a bit of a time capsule from another era. The company could successfully raise more money, or be acquired by a larger player that wants to roll out the technology itself. I’m not rooting against Lilliputian — who doesn’t love an unexpected victory? — but it will be interesting to see what happens when the time capsule is finally opened and consumers can vote with their wallets.
This year, perhaps?