Bill Gross, Idealab!

Bill Gross, 43, is credited with creating a new type of investment firm, the Internet "incubator," which provides office space and professional services to fledgling companies. Since it began in 1996, idealab!, based in Pasadena, Calif., has cranked out dozens of consumer e-businesses, such as CarsDirect and Gross opened offices in Silicon Valley, Boston, New York, and London. With others copying his methods, he was hailed as an Internet genius.

But lately, his incubator has hatched nothing but rotten eggs. On average, stocks of the seven public idealab! companies are 96% below their 52-week highs. Cosmetics site has gone belly-up, and cash-strapped eToys may be on the block. So Gross is now backing business-to-business Net companies, burning through $6.5 million a month in overhead to do it. He still believes in idealab!, but admits the model doesn't work "if you're not starting the right kinds of businesses." That's a lesson learned the hard way.

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