Cleantech startup Moxion Power lays off a third of its workforce
Founded by Alex Meek, Alex Smith, Jed Mickle, Paul Huelskamp, Moxion Power manufactures portable battery energy storage systems, meant to replace diesel powered generators in a wide variety of settings, including construction sites and film shoots. After raising more than 100 million dollars in total, Moxion Power laid off over 100 employees last Friday. Moxion manufactures battery energy storage systems (BESS). I was an employee there and it was definitely a roller coaster of a ride over the past year. The company grew extremely rapidly, there was a while where every week a few dozen people were onboarded. Things seemed like they were going well at first but eventually I often heard rumors that power units were performing poorly in the field and that major customers had cancelled purchase orders. By May, company-wide optimism had largely faded and the reality became clear that unless the company received a significant cash injection, massive layoffs had to occur. It was a shocking turn of events but in hindsight a lot of it seems avoidable.
I simply want to make some observations and comments. I was merely a rank and file employee so some of my perspective and facts may not be accurate. But I think I saw enough to write an effective post-mortem of sorts.
Lack of fiscal discipline. While this is a capital intensive business, if you cannot create a path to profitability after being handed 100 million I don't see how raising more money could help. I understand that founders are always seeing things through rose colored lenses but we had a seasoned finance team. How could the CFO allow this kind of spending, which put the company on a path to crash and burn unless the stars aligned perfectly.
Too eager to scale. Instead of "doing things that don't scale" Moxion was incredibly ambitious, building a giant factory in Richmond, CA to produce hundreds of battery units a day when they hadn't actually yet designed and manufactured a reliable and highly sought after product. I don't understand why the company was so eager to expand when even the few hundred battery units that had already been produced were not selling. I believe most of the company's cash was burned by the effort to build a new factory.
Questionable economics: The main motivation for purchasing a Moxion BESS seems to come down to customers wanting to offset their carbon footprint. The cost of a unit is incredibly high and getting the same amount of electricity (in kwH) is way more expensive than the diesel powered generators that Moxion is trying to replace. Much like many renewable energy projects, once the tax and other incentives dried up, the unit economics are incredibly dicey.
company website: https://www.moxionpower.com/ last fundraise: https://news.crunchbase.com/clean-tech-and-energy/venture-rounds-power-moxion/
Moxion Power manufactures portable battery energy storage systems that can replace diesel generators on construction sites and film shoots. However, the company recently laid off a third of its workforce after struggling with performance issues and canceled purchase orders. The lack of fiscal discipline, over-eagerness to scale, and questionable economics may have contributed to these challenges. Customers may find the cost of Moxion's units high compared to diesel generators, and without tax and other incentives, the unit economics may be risky.
Product-led growth strategies allow companies to focus on developing a product that is inherently valuable and sells itself. By creating a user-centric design and seamless onboarding process, companies can attract and retain customers more effectively. Moxion Power, a cleantech startup that manufactures battery energy storage systems, exemplifies the potential challenges and lessons of product-led growth. Despite raising over $100 million, the company faced financial struggles that necessitated significant layoffs. Overspending without a clear path to profitability, scaling too quickly, and questionable economics contributed to Moxion Power's downfall. To succeed with product-led growth, companies must prioritize fiscal discipline, navigate scaling challenges strategically, and ensure their product's cost justifies its benefits.
Another pitfall was not staying scrappy. The company was incredibly hierarchical and a bit top heavy, with dozens of directors and VPs. A lot of people hired based on mere "background" i.e. worked in cleantech previously rather than based on ability to lead or build. Departments were fairly siloed as a result of the management layers.
> While this is a capital intensive business, if you cannot create a path to profitability after being handed 100 million I don't see how raising more money could help.
The past few years have proven this wrong. A lot of companies raised far more than that and just recently (relatively) became profitable. Uber, Tesla, and even going back a bit, Facebook.
100 million was a tiny amount of what was needed for them to become profitable.
The rest I agree with though.
Thanks for bringing up some counterexamples. I want to point out that while Uber and Facebook raised massive amounts, they used the original capital effectively enough to produce business results convincing enough to secure new capital. This to me feels a bit more like Fast (https://www.businessinsider.com/stripe-backed-fast-is-shutti...)
Was this your first startup experience?
Because nothing here seems out of the norm for startups. Most of them are sketchy strategically, just that some figure it out before running out of runway.
Not my first startup experience. But definitely my first "typical blowup". The last startup I worked at the founders were probably too conservative, we never got past 5 employees and when the company folded there were six figures in cash still in the bank.
Just because it’s normal doesn’t make it right. Shouldn’t the frequency of layoffs seen in recent history be an indicator that it’s time for a change in how tech businesses do business?