Lily, why a $43Million startup failed to launch.

Lily Robotics was the brainchild of two college students. 
The company had an amazing concept, a drone that you throw and it automatically launches and starts following you while capturing Chrystal clear videos.

The two students expect to get 5,000 pre-orders for their prototype drone, instead, they got 61,450 orders. Usually, this is fantastic news for a company, the market is not only ready for your product but it is demanding it.

However, there was a major problem. Lily didn’t actually exist, the pro-type they used for their promotional video was fake, the footage was from a go pro mounted on a competitors drone.


Part-1 Failing to launch:

So what happened? did the two young CEO’s intent on defrauding the public? There certainly is a lot of anger out there, even a criminal investigation and class action lawsuit again the company. 
However, according to court order documents the company set aside all of the money they received from pre-orders in “Cold Storage”.

Unlike the countless articles out there, I don’t believe that they intended to defraud anyone.

They certainly had a great idea, however, they failed to build a strategy for their company. Once they decided to go to the market and saw the overwhelming demand for their product they had to go to a reactive strategy instead of proactive strategy. An overwhelming amount of companies decides to go the market without a strategy and end up playing re-actively. I wrote about this in a separate post called “Breaking Down Strategy”.

Going back to Lily Robotics, the company didn’t intend on defrauding the investors or pre-orders. They simply could not keep up with demands, at one time their product was on the cover of the WallSt Journal.

With so much demand for your product, that you have yet to build, it creates a lot of pressure. From 2015–2017 the company went from two college kids with an idea to a full-blown startup hiring 69 employees and having $43 million in funding, in February 2017 the company filed bankruptcy without a single drone built or delivered.

“With so many expectant customers, so much hype, and so little experience, the pressure mounted,” the filing states.

Rory Jacob an amazon engineer spoke about the difficulty hardware startups face vs software start-ups in SInc’s podcast Strategic Rambling Ep: 2.

While the company was certainly well funded they could not secure a manufacturer to build their product, at the same time it seems the company was seeking additional seeding from venture capital firms, however, Silicon valley was undergoing a funding drought.

So, with no funding, no direction, no product, the company went under just as fast as they went to the market.

This does show however, the drone industry is ready for disruption. Currently, you can buy all kind of drones from all levels different kind of levels. However, these drones are designed for racing or piloting. The market demand is clearly there for an auto-follow drone that is easy to use, so the current drone industry is oversupplying the market with features the fast majority doesn’t want.

Lilys idea was amazing, it triggered the market demand and showcases the oversupply from the drone industry.

At SInc we have a saying “A goal without a plan, is just a dream.”

While it is good to be optimistic for the future, you should always plan to encase of worst case scenario. Here we see how two young men with a brilliant idea reached for their dreams but failed to plan. Now they may be facing criminal charges.


Part-2 The route to launch:
Lily Robotics should have focused more time and energy on R&D before going to market, their concept would have been good enough to seed some funding, once they started seeing a demand they should have implemented a strategic landing page for their website to build anticipation.

However, they should have limited their pre-order items to 5,00 that they had originally planned, Instead, they allowed the over hyped product get to them and distract from their planning focus. Before going to market Lily Robotics should have focused on getting their prototype up and running, once they had a developed prototype they could have released the beta version and taken the feedback data to continue to improve their product.


Part-3 Finding the Trend

This is all too common with start-ups, Skull helmets did the same thing, and let us not forget about the once startup of the year founded by the 19yr old Elizabeth Holmes.

Theranos was going to disrupt the way blood testing was done, Elizabeth homes managed to raise an astonishing amount of $64 billion. However, the company’s testing products were fake and they were using competitors products described as their own. All three companies may face criminal charge while investigations are pending.

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