After $150M Raised, What Went Wrong at Fuel Cell Startup Lilliputian

(Page 2 of 2)

so many things. For example, the charger needed a pump to suck fuel into the fuel cell to generate power. But there were no off-the-shelf products that had the reliability, low price, and small size needed for a consumer electronics product. So Lilliputian had to make its own.

“The beauty of a consumer product is that it looks very easy, but it takes a lot of innovation and technology to have it look like that to the end user,” Khan says.

Cracking the consumer electronics market isn’t easy, either. Anyone who has ever searched for a wall charger while away from home can appreciate the utility of having an auxiliary power source in a purse or backpack, particularly one that could provide dozens of charges. But owning a fuel cell charger still required a change in consumer behavior. A person would have to go buy or order cartridges, which would have been priced at about $10, and remember to have enough on hand with the mobile charger.

Lilliputian boasted of how well its fuel cell worked compared to batteries. But at $300, that’s still a relatively large purchase, especially when you consider that a tablet computer can cost less than half of that. Some people would consider buying a portable charger for camping or during power outages. Indeed, there are a handful of portable fuel cell chargers available now. But that’s a very small market, made even smaller by Nectar’s projected price tag.

Making a hardware product, rather than a Web service or mobile app, also gave Lilliputian higher capital requirements. Given recent advances in prototyping, hardware startups can design products more quickly than when Lilliputian first started.

But the company’s primary challenge has more to do with it being an energy startup, says Bill Aulet, who teaches entrepreneurship at MIT’s Sloan School of Management. Innovating in energy and materials, in general, often includes both technical and business risks, and many venture investors have exited cleantech. At least one other portable fuel cell maker, Mechanical Technology Inc., failed to deliver a commercial product.

“There will be successful hardware companies, especially if they are what we call hybrid innovations that combine software innovation and data analytics, but energy is just really hard,” Aulet says. “Too many people jumped in this pool naively and it is a credit to the Lilliputian team that they treaded water for this long.”

For his part, Khan is confident that Lilliputian’s technology will appear in some other form, even if the business itself is now fading away. That’s not much of a consolation for its investors—or the more than 100 employees the company once had. In the end, Lilliputian, despite its name, suffered not from poor engineering but outsized ambitions.

Single PageCurrently on Page: 1 2 previous page

Trending on Xconomy