Online Extra: A Second Try at Solar Energy
Bill Gross, founder of Idealab, is a Cal Tech geek-turned-financier who invested in software companies and then a slew of dot-com companies including CitySearch and eToys. Now, for Act III, Gross is plowing into solar power at a venture called Energy Innovations. Why solar power? Here, the 47-year-old serial financier tells his own tale:
When I was in high school, I lived through the 1973 energy crisis. I used to read Popular Science magazine, and there were a lot of starry-eyed people hoping for an alternative energy source back then. So I began working on my own solar projects, making concentrators and thinking up other cost-effective solar ideas, but only on a high school student's budget.
Still, I made enough things that I began to sell the kits and plans for them in the back of Popular Science. I paid my way through college with that small business, which I called Solar Devices.
DUSTING OFF IDEAS
I got accepted into CalTech probably because of the work I had done on that. I continued my work through freshman year. Then the load became too great. So I stopped the business. When I graduated in 1981, the IBM (IBM ) PC came out, and I got swept up in the PC revolution, developing software and starting software companies. I had a 30-year run of making software companies through Idealab and then the Internet.
Then in 2000, there was the beginning of the rumblings of an energy crisis because of the electricity outages in California. I began thinking: "Boy, I wonder what would happen if I dusted off my old solar ideas. I wonder if now, with the new resources I have—a mechanical engineering degree, connections with CalTech, the ability to build a shop, the ability to do research and development—I can go back and look at the solar space and come up with a new angle."
I began researching everything that had happened in that 30-year window when I had dropped my interest in solar power. I used to be really up on it. I would go to the library every day. I'd read every magazine, periodical, and scientific paper. And back then, there wasn't the Internet.
Now I had the full tools to research the space, and I found out that not that much had happened. After the oil crisis, when oil dropped back down below $10 [a barrel], almost all of the research and development stopped. It was sort of in a freeze mode.
I thought: Oil prices will continue to go up. This is a solution we have to come up with this century somehow. And I felt this was probably the time to start. No one else will buy into this idea because everyone will think it's too early. But I think it's time to start, and I'm willing to commit Idealab capital to do it.
It's a tricky problem to get solar energy to be cheaper than fossil fuels, because fossil fuels are like solar energy concentrated. They had a million years to bake. So they get the benefit of being heavily concentrated, whereas solar energy is striking the Earth in real time. I thought if we could come up with a solution to this, it could really be world-changing. And I felt this was the most important thing Idealab could be doing.
NEW MANHATTAN PROJECT.
Many people will dream of this. But few people will have all the things in place to make it happen. We have the capital now. We have the talent. We have the connections to CalTech. We have the researchers. We have the lab. I think we should take our skills and apply them to this problem.
It's become a complete and total passion of mine to solve this and push others into this space, because it's going to take a distributed Manhattan Project to solve this problem. It's got to be a lot of people working on from different angles to solve it. We're selling [solar panels] right now. We think that, as we scale our business over the next year or two, we should be able to take the company to profitability. Then we will scale it to be very, very large.