July 08, 2012 | By David Sarno, Los Angeles Times
The gig: Gross, 53, is chief executive of Pasadena's Idealab, a business incubator that has spawned close to 100 companies since Gross founded it in 1996. Idealab companies span a range of industries, including renewable-energy firms like ESolar and Energy Cache, and well-known online services such as photo site Picasa, which was acquired by Google Inc. in 2004, and CitySearch, which merged with TicketMaster Online in 1998. Idealab is now developing nine separate companies at its headquarters on Union Street.
The first taste: Gross was born in Tokyo, where his father was a dentist in the military, and after an early childhood in New Jersey, he moved with his family to Studio City. His first venture was in the candy bar business; he figured out that by buying three candy bars for a quarter from the neighborhood Sav-On, he could undercut prices at the pharmacy near his junior high school, which sold the sweets for a dime. When he set the price at nine cents, "I started selling hundreds of candy bars a day," he said. Soon he was riding his bike five miles to Smart & Final to buy cases of candy bars at six cents each to boost profit margins.
A light bulb goes on: In 1973, the energy crisis hit California, gas was rationed, and cars began lining up at filling stations. Gross thought, "This is crazy," and that there had to be better ways to use and conserve energy. While in high school, Gross created a business selling kits to make solar-powered engines and advertised in the back of Popular Science magazine. In three years, he sold 10,000 sets, which helped pay his way through Caltech.
Programming success: After Gross started another business building stereo speakers as a college student, his eyes were finally opened to the first personal computers. In 1981 he bought an original IBM PC for $5,000 from ComputerLand and taught himself to program in early programming languages BASIC and Pascal. He wrote software to help his stereo business run more efficiently and started a company to develop software to improve the early spreadsheet Lotus 1-2-3. That company was bought by Lotus itself in 1985 for $10 million.
A lucrative adventure: After working at Lotus for six years, Gross tapped into the growing "multimedia revolution," where CD-ROM-enabled computers were growing more interactive. He founded Knowledge Adventure, which made educational software for kids, and sold 20 million copies of the software. In 1995, French media giant Vivendi bought that company for $90 million. Those early successes weren't enough, though — Gross had too many ideas and didn't want them to go to waste. "Every time I was working on those businesses, I was thinking about other things," he said. "I had these ideas that were all over the map, but I knew that to succeed, the companies need to focus."
A factory for companies: So in 1996, Gross founded Idealab, which was what he called "a company that makes companies," to experiment with starting 10 firms under one roof — sharing basic resources and ideas — and to see how many would last a year. Gross would flit around from one to another, helping them grow. "It was my first chance to be a parallel entrepreneur instead of a serial entrepreneur," he said. Seven of the original 10 companies survived for the first year, including four that later went public.
The right crew: Though 35 of Idealab's companies have gone public or been acquired, 40 have failed, and Gross says he has learned many valuable lessons from the flops. Among them: It's crucial for company founders to assemble a strong team of complementary talents — not just engineers but socially fluent networkers, logistical wizards, big thinkers. "Where there was strong leadership that came with different points of view, but with mutual trust and respect," he said, "those companies succeeded more often — it's shocking to me that that is the highest correlation" with a start-up's success.
The current environment: "Right now is the best time ever to be alive for an entrepreneur," Gross said. When he was in college, he said, people scoffed at the idea of starting a company. "They were like, are you weird? Is it because you can't get a job at Ford Aerospace or IBM? There hadn't been the fanfare and success stories we have now." These days, Gross said, it's far easier for entrepreneurs to do almost everything, whether it's recruiting people, raising money, advertising or getting in touch with their customers. "We're now at a point where there's a more democratic path for a good idea to be found by the planet."