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Lily Robotics - The Thin Line Between Hype and Lying

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Startup drone maker Lily Robotics had the wind at its back. A concept that was an immediate hit with prospective consumers, an enormous block of preorders, robust funding, and the requisite visionary co-founder team.

Sadly, promotional enthusiasm gave way to lying, and the company was forced into bankruptcy in February 2017, less than three years after receiving its initial round of funding.

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Lily Robotics - The Thin Line Between Hype and Lying

  1. 1. Abraxas Group LLC www.abraxasgp.com Lily Robotics TheThin Line Between Hype and Lying August 2017
  2. 2. At a Glance $15MM Abraxas Group LLC www.abraxasgp.com 2 Funding raised 61,450 Preordered units $38MM Total preorder value Source: Wired
  3. 3. “I think we should be extremely careful if we decide to lie publicly.” ‒ Co-founder Antoine Balaresque Abraxas Group LLC www.abraxasgp.com 3
  4. 4. Situation • Startup drone maker Lily Robotics thrilled prospective consumers with a dazzling promotional video, but failed to develop a product that met the company’s bold claims. • A civil suit by the San Francisco district attorney’s office claimed that Lily’s promotional video had been faked, and utilized a drone by made a competitor. • Despite robust funding and considerable preorders as a result of enthusiasm around its promotional video, the company was unable to control a burn rate that reportedly reached $1 million per month. Abraxas Group LLC www.abraxasgp.com 4
  5. 5. Situation Cont. The company’s February 2017 bankruptcy filing proved yet again the adage that “hardware is hard”. Abraxas Group LLC www.abraxasgp.com 5 Source: Wired
  6. 6. Lessons Learned Abraxas Group LLC www.abraxasgp.com 6 # Lesson 1) Product market fit can be squandered if the product’s features have been exaggerated. Companies must take care to balance promotional enthusiasm with honesty and integrity in their messaging. 2) Inexperienced leadership teams often need help in executing their vision. Vision without execution often leaves customers, founders, and investors with nothing but broken dreams. 3) Lack of financial discipline can, and sometimes does, outrun robust funding. Creating value requires not only sufficient funding, but the discipline to manage resources with an eye toward strategic objectives.
  7. 7. David Johnson, founder and managing partner of Abraxas Group, has a 20- year track record of driving organizational change. David has served as an interim executive or financial advisor to dozens of middle market companies in turnaround and restructuring situations. Throughout his career, David has demonstrated a commitment to thought leadership, with numerous speaking engagements and articles on the topics of change management, performance improvement, restructuring, turnaround, and value creation to his credit. David received his MBA from the University of Chicago and completed his undergraduate studies at Fairleigh Dickinson University. David Johnson Abraxas Group LLC www.abraxasgp.com 7 Email: david@abraxasgp.com Ph: 312-505-7238 Twitter: @TurnaroundDavid Speaking Engagements Publications • “Driving Value When Funding Runs Low” • “Strategic Planning in 5 Steps” • “Interim Management: The Missing Piece to an Effective Growth Strategy” • "The Data Driven Turnaround"

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