2021-12-29

Entrepreneurs play an important role in society – their ability to dream big and pursue ambitious projects drive life-changing innovations. That’s what Shai Agassi aspired to do back in 2007, when he dreamed of making electric cars mainstream and reducing the environmental impact of household vehicles. But despite this honorable mission and $900 million worth of investment, his company, Better Place, sold fewer than 1,500 cars.

Venturing into uncharted waters always encompasses an element of risk. Agassi’s problem? His vision was just a little too ambitious.

To pull off his project, Agassi had to rely on a multitude of factors outside his control. For instance, to make his electrical vehicle affordable, he needed enough customers to embrace it. He also needed them to have confidence in recharging and battery exchange stations. And he needed several car manufacturing partners to collaborate because not every customer wanted the same car model.

In the end, Agassi didn’t manage to create a product with enough market appeal and the required infrastructure at a price point that would yield returns. Initial research had shown that 20 percent of households in Israel, where Agassi was launching Better Place, would consider buying one of his vehicles – even if it cost 10 percent more than a regular car. Agassi had been banking on selling to at least half of those households, but he didn’t even manage that.

If your concept is high-risk like Agassi’s, there are steps you can take to mitigate some of that risk. First, keep in mind that humans are afraid of radical change, even when it’s for a good cause. Moderate your innovation so that customers don’t need to go too far out of their comfort zones to incorporate it into their lives.

Second, create nonfunctioning prototypes, and get feedback from focus groups. This will help guide the next stage of design while also gauging people’s interest in the product – always a tricky issue if you’re bringing something completely new to the market.

Finally, don’t fall into the trap of inflating market demand just to impress investors. All you’ll end up doing is setting sales targets you can’t reach. By being honest about your potential customer pool, you’ll make it easier to project how long it will take to recoup any investments.