Friday, June 8, 2007
Interview with Bill Gross, Idealab
Bill Gross is CEO and Founder of Pasadena-based Idealab (www.idealab.com), the company that created Overture Services, CitySearch, Picasa, and a number of other high profile, successful high tech startups in Southern California. Bill is keynoting next week's GreenTech 2007 (www.greentech2007.com) conference on green technology next week in Pasadena, which will feature presentations from clean technology firms, panels of venture capitalists, and other speakers from the field. We thought it would be interesting to catch up with Bill about his companies and focus on clean technology in advance of the conference. Ben Kuo spoke with Gross.
Tell us a little bit about your efforts in the clean technology area?
Bill Gross: Right now we have 4 different companies in the clean technology space. Energy Innovations, our biggest company, is focused exclusively on low cost, rooftop solar electricity--for commercial rooftops, not residential rooftops. The focus is on large scale commercial installations, we just finished the Google installation, and a bunch in Southern California. We're quite excited about the company. Another company we have in the solar space, but in a different market, is eSolar, and that company is going after the grid scale utility market. They are building big arrays out in the desert, to provide power for the grid. That's a different customer altogether, which is putting wholesale electricity into the system, as opposed to retail. The third company we have is Aptera Motors, which is making a super-streamlined aerodynamic vehicle, which is getting 250 miles-per-gallon. We have a prototype of that car, and plan to make a gas version that gets 150 miles per gallon, and an all electric that has the ability to travel a long range on one charge. The cars are cost effective, it's so streamlined it doesn't require lots of energy to move. It's built from a lightweight composite, and at about $20,000 for a vehicle is relatively inexpensive. Unlike the Tesla, a $150,000 sports car, this is much more mass market, at $20,000, with performance and a low energy footprint. The fourth company is called Stirling Cycles, which is working on a low cost Stirling engine used in all sorts of markets for making electricity in your own home, for power in developing worlds, or remote power applications, for camping, or for military use. It's useful anywhere you have different fuels and need clean energy. It's a great application for a Stirling engine, and we've been developing that for a long time. Those are the four companies we have right now, and we'll have more in the future.
Why did you decide to focus on clean technology, and what's the opportunity you see here?
Bill Gross: There's a few different reasons. I've been interested in clean technology since I was a teenager. I had a small company, the first company I started, when I was 15 years old, which developed solar devices during the 1973 energy crisis. I ran that in high school until college and my first year at Caltech, when the course load became too hard to continue it. By the time I graduated in 1981, the world was flooded with cheap oil by OPEC. I've always been fascinated with it, and have always felt it's important. When 2000 came around, the beginnings of the energy crisis in California, I started looking at the energy space over the last 20 years, and saw that not much has happened, and saw that it would be a huge problem this century. This was long before the stuff on global warming, An Inconvenient Truth, and before clean technology became popular. I realized this century, we will need to wean ourselves off fossil fuels. Now that I have the resources, I decided to put a big percentage of Idealab's resources into the area, which led to four companies over the last few years.
You were known for your many Internet companies during the last boom, but now it looks like you've been investing in companies in clean technology and hardware. Has that been part of a strategy?
Bill Gross: It was definitely strategic. Both, because it's important for the world, but also because we have a lot of expertise in this area, and finally we felt it met a specific criteria. We were creating Internet companies because the market was great, we could start a company and ramp it really fast, and it was exciting to make a company without too many employees, and not have to deal with physical product, or have to deal with production lines, assembly, quality assurance, test, and all that stuff. We found after starting fifty Internet companies after five years, the ones which succeeded were the ones with protect-able, intellectual property. It was not time to market, it was not how fast or lightweight the company was. It was how deep a reach, how proprietary, and what differentiation and barriers to entry those companies had so that others wouldn't copy our idea. It led us to say--that building stuff was not bad. It wasn't that assembly lines were a bad thing, it's just that building things without protect-able differentiation is bad. We thought we should start companies in all our areas of expertise, as long as it meets the criteria of making an important difference to the world, that it meets the criteria of having fundamental demand, as well as meeting the criteria of company structure--protect-able, differentiable barriers to competitive entry. All our energy companies have that all in spades. In all aspects, they are large opportunities, with big potential impact, and also have patent protection and trade secrets that make it hard to copy the idea. We'll continue to start Internet companies, too, but put them through the same test -- big impact on the market, big potential, and intellectual property.
It sounds like these investments will take a longer time to get to market?
Bill Gross: The strategy at Idealab, back in 1996 when we started, was more like start one company a month. See how fast they grow, and which ones succeed. The strategy at Idealab now is we'll start a maximum of one company a year, make it a really big company, and put a lot more resources into the company. We'll be making more clean tech companies, more companies in general, but at a slower pace and with larger successes. So far as we've deployed them, we've had a much higher success rate with companies with selective intellectual property and scale.
Given your new strategy, what's your opinion on Web 2.0?
Bill Gross: We do have some things in Web 2.0, for example our Snap search engine, which is taking off very fast. We think that Web 2.0 has some great opportunities. It does allow some companies which wouldn't have worked in 1998, 1999, or 2001 to work now, because there's been a huge adoption of technology online, broadband penetration, cell phones with Internet access, more time spent online, and improvements in browser technology like AJAX and other tools, and social networking. All those things lead to new business models. We're very active in the Internet space, but we're only creating one great company a year, not a company every month.
Looking at Aptera, it's interesting that you're looking to take on the automotive industry. Will you become a car manufacturer?
Bill Gross: It is a bold effort to develop something like a car. However, we think the technology we are developing is so useful and applicable across other vehicles that we can become another car company, or we can license our technology to car companies. As long as we're building something very proprietary, we think we're creating a valuable asset, even if you don't become a traditional car company. We went forward with our criteria--it has valuable IP, which doesn't have to be monetized by building vehicles, and also meets the criteria of being important. The opportunity for reducing our reliance on fossil fuels is so large, if we can show how aerodynamics and other technology can reduce that by a significant amount it will be adopted by many other car makers.
Are there other things you're looking at in the clean technology area?
Bill Gross: There are probably other things we'll be doing in the future. We're thinking about wind, we don't have an idea there yet and have been thinking about it. We've got two solar companies--one commercial, one for grid-scale utilities, and we're thinking maybe something in residential. We'll be looking at these things analytically.
Thanks for the interview, and good luck at the conference!