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/