The New York Times writes:
The potential for fire in a lithium-ion battery is a result of its chemical composition. Contained in that small package are all the elements needed for a fierce blaze: carbon, oxygen and a flammable fluid. The battery is made of a thin layer of lithium cobalt oxide, which serves as the cathode, and a strip of graphite, the anode. These are separated by a porous insulator and surrounded by fluid, a lithium salt electrolyte that happens to be highly flammable.
When the battery is charged, lithium ions on the cathode migrate to the anode. As the battery is used, the ions migrate back to provide the energy. In the charged state, the cathode without most of its ions is highly unstable. If a spark occurs, the temperature of the cathode can exceed 275 degrees.
Hindsight 2.0 has an article about the failure of Kiko, a Web 2.0 calendar company:
1. Google Is The New Microsoft: Back in the day, lots of software companies made sure that their business models kept them out of the cross-hairs of Microsoft. They didnt want to get stomped on. Today, though this is still the case in some sectors, Google is a much more formidable (and scary) competitor. Google has all the power of a multi-billion dollar company, but a lot of the nimbleness and energy of a startup. With Googles introduction of Google Calendar, Kiko really didnt have a chance with its original business model. Of course, they didnt necessarily know this was coming, but if I had been them, Id given this decent odds. That is, it shouldnt have been that big of a surprise.
2. Be Realistic: When original news of Google Calendar came out, the Kiko founders didnt seem particularly worried. This is ok. You dont have to look scared to survive. But you do have to be scared and make some adjustment in the light of an oncoming train. Chances are, there was something that could have been done with the Kiko business that would have shifted them away from competing with Google Calendar. They likely needed a small dose of reality.