Bill Gross is far from being a household name — at least not in the sense that Mark Zuckerberg is, or Steve Jobs, or Bill Gates — but he came up with at least one idea that everyone knows about, even if they don’t know who invented it: His company GoTo.com pioneered the pay-per-click advertising model that has made Google hundreds of billions of dollars over the past decade. Now Gross wants to help crowdsource and crowdfund new breakthrough ideas with a venture called IdeaMarket, which launched on Monday.
In an interview prior to the launch, Gross said he doesn’t regret the fact that most people probably don’t associate his one big multibillion-dollar idea with him, but instead assume that Google invented it (Yahoo acquired GoTo — then called Overture — for $1.6 billion in 2003, and Google later settled a lawsuit over a number of related patents in exchange for shares that were then worth about $350 million). Instead of being bitter, Gross says he’s just happy that something he thought of eventually reached the market and changed the world:
[blockquote person=”” attribution=””]I’m actually pretty thrilled that an idea I came up with has had this much impact, to be honest. People hated it at the time, because they thought it was crass and obscene, but I thought it was better for users. I’m just looking to have a positive impact on the world, so I’m very honored that idea has had the legs it has.[/blockquote]
Seeding the market for great ideas
Since GoTo/Overture, the venture fund/incubator that Gross runs — called Idealab — has launched more than 100 different companies, most of which have either gone public or been acquired, including names such as CitySearch, eToys.com and UberMedia, a venture that was initially aimed at building a media company based on Twitter. But the entrepreneur says he still has far too many ideas than he can work on, so he has been trying to think of ways to give them away.
At first, Gross says he tried to put lists of startup ideas on the Idealab website, but his lawyers were worried about future intellectual property or trademark issues, and advised against it. So he came up with Idea Day, which took place earlier this year and involved 100 entrepreneurs coming together to choose from a list of 10 ideas — the event produced almost 50 worthwhile entries, he says, of which Idealab chose four, and three of those have gone on to raise outside funding.
One of the entrepreneurs who contacted him around that time with a startup idea, VJ Anma, asked why Gross didn’t just turn the whole concept of Idea Day into a company/venture fund/incubator, so that’s what the two have done with IdeaMarket. The site launched Monday with several ideas that have already been suggested, both by Gross and others such as Shervin Pishevar of Sherpa Ventures — who has proposed a power belt with flexible batteries built in for charging wireless devices.
[blockquote person=”” attribution=””]There’s a lot of startup desire, but there’s also a lot of friction in getting a company started — you can have the idea, but then you need to find the right investors, so I came up with the idea of using the crowd to help remove some of that friction.[/blockquote]
Crowdsourced incubator plus venture fund
In a nutshell, ideas are contributed by the crowd, and also by startup veterans or VCs like Gross, Pishevar and Don Dodge. Then entrepreneurs compete for the right to turn those ideas into companies, with IdeaMarket making the final decision based on submitted business plans, track record, etc. — and anyone can refine the idea or suggest changes, or commit to buying the eventual product. The originator of the idea gets a 5-percent equity stake in the eventual company and can also invest further, as can any backer including IdeaMarket.
Gross says he sees the venture as being equal parts Kickstarter, Quirky, Y Combinator and AngelList. Like Kickstarter or Quirky, he said, the model allows people to show that they are interested in a future product or service, which gives both investors and entrepreneurs confidence that it’s worth doing — but unlike Quirky or Kickstarter, it’s companies rather than products that are being funded. And like AngelList and Y Combinator, it’s part incubator and part venture fund.
[blockquote person=”” attribution=””]It’s a little like Kickstarter in the sense of assessing demand for the idea and getting money raised before they actually start the thing, and it’s a little like Y Combinator in that it has an open call for teams and then we pick the best ones, and it’s a bit like X-Prize because we’re stating the idea up front and asking for participants.[/blockquote]
Ironically, the name IdeaMarket was also the name of one of Gross’s previous failed ventures: an online e-commerce site for content that he launched in 1996, which was designed to be a one-stop portal for content about a host of different topics from business to entertainment. The idea was that writers and journalists could post their submissions and then be paid through micro-payments, but Gross admits that a decade and a half ago was too soon for such a concept.
Over the years, Gross has been criticized for having too many ideas but not enough focus on the execution of those ideas — especially when some of his ideas flamed out during the popping of the last bubble, which vaporized close to $1 billion. But the startup veteran’s energy is undeniable. “I’m just looking to do things that have a positive impact on the world,” Gross said. “I’d be very glad if IdeaMarket came up with ideas like [pay-per-click advertising] that could create jobs and companies that would never have existed otherwise.”
Post and thumbnail images courtesy of Pinar Ozger