Bill Gross, founder and CEO of incubator Idealab, (who is speaking at our Green:Net conference on April 29) tells Business Insider in a fascinating 30-minute video interview, that failure is OK, as long as it’s fast, inexpensive and you learn from it. Gross, who has had a decent amount of failed dot com investments, says he looks at his smaller failures as a relatively expensive class he’s taken (see full video embedded below).
For example, some of the lessons he learned in the dot-com era have led to the more recent successes Idealab has had with solar thermal company eSolar, which relies on software and computing to reduce the cost of utility-scale solar, said Gross. And through the process of building eSolar, Gross says Idealab tried various things that ultimately didn’t work, like looking into technology to track the sun with no moving parts.
The Value of Failure:
Gross, quoting Bill Gates says: “Success is a lousy teacher because it makes smart people think they can’t do anything wrong.” If you learn from failure it’s valuable, if you deny it, it’s useless.
How to Fail:
Quickly. You don’t want to fail by making stupid mistakes, you don’t want to fail by making mistakes you made before, said Gross. You want to fail by making smart intelligent risks that don’t work out.
Give Greentech VCs Another Decade to Get Good:
An interesting note was what Gross said about a current bottleneck for venture capitalists funding greentech. A lot of green technology is still such a new area for many venture capitalists that the due diligence process that VCs have to do before investing in a company can be very challenging for them, said Gross. But over time, maybe in a decade, we’ll have enough VCs that have grown up in this industry to be able to do due diligence efficiently. Right now, however, Gross said that’s a real bottle-neck.
Genesis of Idealab:
The genesis of Idealab is that Gross likes creating businesses, and building companies, but he says he learned (painfully, he adds) that businesses do much better when the company and employees are focused on one thing. So Gross decided to build an incubator so that he could move around and work on a lot of things, but that each company would individually focus on its own product. Gross says there are 50 people at Idealab who make the incubator work, and in order to have a higher batting average than other incubators (it is notoriously difficult to run these things), Idealab uses the combined collective experiences of its staff that have witnessed companies failing and succeeding over many years. That experience provides “hundreds of millions of dollars” worth of failures and successes that can be applied to each new company, said Gross.
I don’t know how to teach someone those other lessons without that much loss. . . I wouldn’t recommend this to anybody, I don’t even know if I would recommend this to me. It’s just something I’m so passionate about that I love doing that we found a way to make work.
Gross’ 3 Tips for Entrepreneurs:
1). Passion: Only passion will get you through the inevitable rocky ups and downs of startup life.
2). Integrity. Have integrity with people you work with, investors and employees.
3). Upside. I believe in giving everyone in the company a stake. The result is much more motivation.