Interview transcript: Bill Gross
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Interview transcript: Bill Gross
TEXT OF INTERVIEW
Kai Ryssdal: Bill Gross, good to have you with us.
Bill Gross: Thank you very much.
Ryssdal: Give me the layman’s definition of what this company does.
Gross: Well, we’re a technology incubator, and what we like to do is research and development on important problems that the world has where we can invent technological solutions to those problems. When we come up with something that we think is viable after prototyping and experimenting and killing off a lot of bad ideas, we then spin it off into a separate company. The idea being that by putting it in a separate company, we can attract people to it, motivate them, give them a big equity stake in it, attract outside capital to it, and build a separate entity that can tackle that problem.
Ryssdal: What’s your yield rate? How many bad ideas do you keep and how many do you chuck?
Gross: Well, we are trying to be very selective so we probably come up with an idea a day, maybe filter that down to one a month that we want to take forward, and then maybe turn only one or two of those a year into a company. So it’s a very narrowing process but we are trying to pick the ones that are going to have the biggest chance of actually succeeding as stand alone companies.
Ryssdal: I confess I am a little surprised to hear you use the word incubator because it’s so closely linked with the dot-com era and dot-com incubators and that really is not what this company is anymore; I mean it does many, many different things than what it did fifteen years ago.
Gross: Well I would say the word incubator means many different things to many different people. And we’re an unusual beast that is very hard to make work and we’re not perfect at it, but we feel that we have found a way to make this company work, where we’re really a company actually . . . we’re a technology company that has an “R&D” department that spins off companies. A lot of other people have incubators where they just offered space or some shared rent or other things. And we’re very different from that. But I think all of us are lumped together in this one category of incubator, which is not a very descriptive word.
Ryssdal: Just to clarify . . . you have people here who think up these ideas and then you have another set of staff that devotes marketing and PR expertise and perhaps facilities and technological help to those companies that you decide then to spin off.
Gross: Exactly. We have fifty people under the roof here at Idealab in different departments: from PR, to engineering, to recruiting, to legal business development. And we are coming up with the ideas internally and then actually building them; so we have a full machine shop even to do rapid prototyping of them. So it’s very different than I think what people might traditionally think of as an incubator but it works for us. And I wouldn’t say it scales very well; we have a hard time even doing it in other locations; we’ve only been able to make it successful in Pasadena. But it’s a very successful way for us to try and solve these technological problems.
Ryssdal: You are, for better or for worse, in many strains of conversation synonymous with the dot-com boom. I mean, you were very successful with a lot of the companies that you guys created, so it seems to me you’re a perfect person to ask this question: What the hell happened?
Gross: Well, it’s very interesting that the Internet usage that started before the dot-com boom, that started basically with the Netscape IPO in 1995, all the way up through today, and the amount of time that people spent on line has grown dramatically and continuously. The only thing that was a hiccup was the market cap of companies. But the impact that the Internet has had on our lives has been continuous and monotonically increasing solidly every single day and every single year since the first browser. And I think people got excited about the potential, or over-excited about the potential, and that momentarily peaked the valuations. The valuations came down in the crash, but they’re back up again now and maybe above in most cases, what they were before the crash. It just was a mania that people had too high of an expectation.
Ryssdal: When you were walking down that street the day in 1996 when you had the idea for Idealab, did you say to yourself (snap) “This is going to be an Internet incubator?”
Gross: I did, actually and the reason why I said that was I saw an opportunity to build companies with very low start-up capital because you didn’t have to go into manufacturing. And I subsequently learned that that is a good formula for success but not a necessary condition for success. You can still build companies that make things as long as they have good proprietary, intellectual property and have a competitive advantage against what else other people are building. So we started off with Internet only because we had actually started, specifically with 2.5 million dollars to do ten ideas. So we could only spend $250,000 per idea and that was only possible in making websites back then.
Ryssdal: How did you get that two and a half million dollars? Did you go out to people you know and say listen, I have this kind of crazy idea about starting this incubator thing.
Gross: Well, literally I felt that my whole life I had been starting companies. Ever since I was 13, I was starting companies, and I always ran them serially. I would have an idea, I would start building a company, I’d build it up and I had other ideas along the way, but I couldn’t start those, because I had to stay focused. So Idealab was really a chance to start multiple companies in parallel. So the plan was get ten great people together, raise about a million dollars for operational expense for the first year, and two and a half million dollars to start ten companies. So we went up and raised three and a half million dollars just for one year. It was a one year experiment really – it was wildly successful – but it was a one year experiment to see if we could make multiple companies in parallel.
Ryssdal: And here you are!
Gross: I never imagined it would turn into something like this. It’s like I said, it’s been very challenging. We have had big ups and downs like everybody has. But the fundamental premise of looking for big problems in the world and coming up with technological solutions to them is a very viable one. And we have taken all the learnings we’ve had, especially from the failures – we learn much more from the failures than from the successes – we’ve taken those learnings and applied them to each new company we make.
Ryssdal: This is a question that’s as relevant for the early dot-com Internet technology work you did and the work you’re doing today in alternative energy. How do you choose which ideas to keep and which ones to relegate to the scrap heap?
Gross: Well we definitely have evolved our criteria for selecting companies. A few of the criteria are: Is it an important problem? Will it make a difference to the World? Can it be a big business? Is there a large enough market for it? But a very big one for us actually, which is only unique to us – and I wouldn’t recommend it necessarily to other people: Is it disruptive, and is it something that other people might not do? We feel that one of our specialties actually, is to do things a little bit against the grain, to do things that other people might not be willing to take a risk on. So we actually started making an investment in solar energy back in 2000. That was very against the grain. It was not popular like it is today. But we felt it was an important enough problem that we had the capital to invest in, that other people wouldn’t invest in, and we started then. Today, green investing is very, very large. But it’s seven years later, eight years later, and we think that’s good. We think that’s a good thing, and we like to lead like that and we are willing to take the arrows at our back to take the leadership.
Ryssdal: I wonder if, looking back at the history of this company and its previous incarnation doing Internet technology based companies, whether companies like Net Zero and E-toys are difficult and important challenges for society to face?
Gross: Those companies exactly have led to the lessons that cause us to make our selective process now. So for example: E-toys . . . E-toys was a really great company. They had a wonderful, wonderful service – incredible customer satisfaction. But fundamentally, the differentiation wasn’t that great, the margins were relatively low, and I agree with you: it didn’t solve a fundamental world problem. So I would say some of the experiences of our earlier companies did lead to the selection criteria we have now and does cause us to focus on things like solar energy or high mileage vehicles – things that can really make a big difference for the world.
Ryssdal: Do you remember a moment in 2000, 2001 where you said to yourself . . . You know what? This ride is over.
Gross: Well it was very tough in 2000 and 2001. We definitely knew that the ride was over in terms of nobody was going to invest in companies for a long time. Certainly nobody was going to invest in Internet start-ups.
Ryssdal: Which is your life blood?
Gross: Yes. It was critical for us to get other investors to support us for our very early companies. We were very fortunate that post 2001 we actually had capital that we could invest in our own companies and take them forward. We basically came up with a new theme which was: we can only start a company that we ourselves are willing to invest all the capital required to get all the way to profitability because probably no one is going to ever invest again. Not only in Internet companies but even in us. And that led us to much tighter criteria which is: you can’t start a company a month -which is what we were doing in the early days. You have to be very selective. And I think that was a good thing because that forced us to think in companies that we were willing to invest for the full long-term. We took more of a ten or twenty year outlook as opposed to a one, two or three year outlook. And that was very difficult, but it’s been very successful for us.
Ryssdal: This Company is in very large measure a creation of your personality and your drive to be an entrepreneur and as the company has changed due to circumstance, I am wondering whether you, personally have become leaner and more humble perhaps, in your thoughts about what’s possible?
Gross: Oh absolutely. I actually think, one of the best things that happened to us – I would never wish it the way it did – one of the best things that happened to us was the crash because it gave us a great deal of humility . . . caused us to be much more thoughtful about the things that we do . . . caused us, I think, to be much better about the way we treat people, set expectations for people much better. We’re much more open and honest about the chances of things succeeding and not so wildly optimistic. I have to admit and confess I’m still a big optimist, but I think the experiences of the crash have tempered that a greatly and taught us a lot.
Ryssdal: Are you a better CEO for being more humble?
Gross: I gather I’m a better CEO. I still would not say I’m a great CEO. I think a CEO is a very, very tough position, it’s a very lonely position, and it’s a very . . . very difficult to balance your convictions with the teamwork needed in a company. So I would say that’s why I tried not to be CEO’s of our companies.
Ryssdal: Do you think the CEO role is a good position for an entrepreneur to be in?
Gross: I think the CEO role is an extremely tough role and requires complementary skills that are very, very rare to find in a single individual and are very, very rare to find in an entrepreneur. So I think if an entrepreneur can team with some other people, either one person or some other people that they have unbelievable mutual trust and respect in, to try and get the balanced skills that a CEO really needs, that might be the only way to succeed. We really try to encourage in each our companies, great teams of people at the top because you’re just not going to find all of the skills in one person.
Ryssdal: Describe the process through which this became an incubator that didn’t focus on Internet technologies anymore.
Gross: Well we had started with Internet technologies, as I’ve said because they were very fast to take to market and very inexpensive to bring to market. Turns out, actually that it is even more inexpensive to bring an Internet company to market today because of the open source tools that are available. It was much more expensive back in 1996. But the evolution to make companies that were not only Internet companies was the result of realizing that a company needed strong, intellectual property protection to be able to have defensible margins. And what I mean by that is . . . some of the companies that people were starting, and we were starting as well, were me-too companies that didn’t have a distinguishing competitive advantage to be able to earn the profits necessary to make the company succeed.
Ryssdal: Did you get greedy during the dot-com boom? Not in the monetary sense, right? Because everybody was making money and there was plenty of money to be made, but in the entrepreneurial sense.
Gross: I would say we got greedy in the sense that we thought we could make companies at an unbelievable rate. And we probably thought before, maybe a taste of humility, that everything we touch would turn to gold. And it was great to be corrected on that because it led us to be much smarter.
Ryssdal: There’s a great quote actually, about this company from somebody who is fairly highly placed at the time and still is, and she said . . . the market wanted crap and so we gave them crap.
Gross: I don’t know that was a quote from us but . . . I think the market wanted speed to market and the market was rewarding companies that could launch very quickly and we were very good at that. So we did a lot of that. And the market wanted page views and the market wanted eyeballs and everything the market rewarded, we learned very, very well how to make. But we learned that long-term fundamental value was the only thing that was ever going to hold up. And we learned and shifted our company to only focus on that.
Ryssdal: What is it that you do now?
Gross: What I do now personally or what this company does now?
Ryssdal: No, what this company does?
Gross: Well, we’re very heavily focused on solar energy and clean-tech efforts. And what we try to do is look at places around the world, where we can come up with technological solutions that will get people to shift to a greener lifestyle. I don’t think you’re going to get people to a greener lifestyle by just begging them. I think you have to make it in their economic self-interest. So we are trying to come up with ways that people will actually switch because they want to, because it’s either cheaper or better or more convenient to. I think that’s the only way we are going to save the planet. That’s a very, very hard problem but we are very excited about working on that.
Ryssdal: Did you wake up one day and have a catharsis and say, oh man. I have to do green tech right now because that’s the way of the future.
Gross: Well I did. It’s very funny. I actually woke up with that a long time ago. In the 1973 energy crisis, I was in high school in California; and there were gas lines. You had to buy gas on odd and even numbered days based on your license plate. And I was reading Popular Science at the time as a fifteen year old in high school learning about science. And I thought . . . wouldn’t it be incredible if we could come up with a way to solve this; both reduce our dependence on oil and solve this energy problem we have right now, using science. And I was very, very passionate about that, and I spent five years of my life working on that back then on a high-schooler’s budget. And after I graduated from Cal-Tech, the energy crisis had ended and there was no more interest in that. So I took a 25-year detour in software engineering and software development and built some successes there. And now all of a sudden, 2000 comes around. And there is a new need for energy, I feel, and I finally have the resources to actually tackle the problem. So I really re-awakened my earlier interest in this and said . . . look, I’m in a position now where I have a company in place, I have a shop in place, I have a team in place, and I have the capital to actually pursue that dream. So it was an “Ah-hah” moment that this is really what I should be doing.
Ryssdal: Do you worry at all that the popularity of “green technology” and “green energy,” the rush to money there is making it a little bit risky in a business sense?
Gross: I think it’s risky in a business sense in that it’s hard to determine which things will be winners. It’s not risky in a business sense in that the market is absolutely enormous. The size of the market is so staggering, it’s probably the biggest opportunity in history to actually build clean-tech companies that can make an impact on energy solution around the world. But it is very, very hard to figure out exactly what is going to win. Cost matters so much. Execution matters so much. It’s very, very hard to look at a team, a business plan, an idea, and figure out . . . is that going to actually make the economics work? But that’s exactly what entrepreneurship is about. To spread the risk to a bunch of companies that can all pursue some very, very big opportunities and let the market answer which ones are the real winners.
Ryssdal: Where do you find your talent?
Gross: It’s very difficult to find talent but we actually are very lucky. We have a bunch of great colleges around here. We recruit a lot of people from Art Center [College of Design], from Harvey Mudd, from Cal-Tech. We have recruited a lot of people from across the country, from MIT. But we are looking all over at great people who really are passionate about the same space that we are, who can dive into the problems in an “out-of-the-box” way. And it’s not that hard to find people because it’s such an exciting area right now. People feel so passionate about working in this space, that people are willing to leave other industries to come work in this one.
Ryssdal: Let’s get back to “green tech” for a second. You mentioned a moment ago that you’re not in a position to be a CEO of a lot of the companies that you guys created around here. The one you are, though, is a company called Energy Innovations. Why are you running that one and what is it doing?
Gross: Well, Energy Innovations is focusing on making the cost of solar panels significantly cheaper, dramatically cheaper by concentrating sunlight. And I think there is an amazing opportunity there to drive the cost of solar for your rooftop down so that the mass market can adopt it. Right now, solar is not being adopted at a fast enough rate because it’s just too expensive.
Ryssdal: Make me smart here. What is the cost differential between a kilowatt hour, or I guess a kilowatt of solar verses coal powered energy?
Gross: Well right now you can buy electricity from the power company for probably about 13 cents a kilowatt hour on average around the Unites States. And solar energy costs about twice that. So maybe 26 cents a kilowatt hour. And there are rebates and subsidies in some places that bring it down to almost parody, but not quite. We would like to bring it down to the same price that you would pay for the power company, but with no subsidies. That’s a very tall order but if we could do that, that would allow many, many people to choose solar over their power company, over coal produced electricity without paying any penalty. A few people will pay a penalty. A few, passionate people would be willing to pay more, but the only way you’re going to get mass conversion and effect the whole globe is if you make it cheaper. And that’s what we’re focusing on doing at Energy Innovations.
Ryssdal: All right. So you come up with this company and you decide to call it Energy Innovations, and our business task will be to reduce the cost of solar energy. Then what do you do in house here, I mean how does that work?
Gross: So we start out with that mission . . . reduce the cost of solar electricity. And we look at the problem and we figure out how can we add some value to that problem and tackle it. And we decide that one of the bottlenecks in low-cost solar is the expense of photovoltaic material. So if we can concentrate the sunlight, cost-effectively, we can reduce that expense of photovoltaic material maybe by 50 to 1, maybe by 100 to 1, maybe even by 500 to 1 . . . and thereby drive the price down. So we get together a team of engineers to explore that problem . . .
Ryssdal: A team you have in house . . .
Gross: A team in house at first, and then we start recruiting from the outside second. And then when we saw promise with that idea. This is about 5 years ago now that we spun that out to a separate company. Now the company has almost 100 people working on that project, and we’ve made great progress on driving down the price through concentration.
Ryssdal: Mirrors basically, right? Concentrating sunlight.
Gross: Yes. Absolutely. Mirrors or lenses can reduce the amount of area of expensive material needed. And you have to track the sun. Once you do that, but we’ve come up with great techniques to do that.
Ryssdal: How is it possible that you are the first guy to think of this?
Gross: We are not the first guy to think of this. Many, many people have thought about it. The unique thing that we bring to it is a design and some patents around that design that allows us to do it inexpensively enough and reliably enough so that it will last 20 years . . . a very important part about this. If you are going to put a small solar power plant on your roof, on your house, on your business . . . you want this to last a very long time because you want the investment to pay off. So we have to make things ultra, ultra reliable. We have to make them very inexpensive and we have to make them reliable at the same time. So really, the unique thing that we bring to it is a great engineering design and a discipline to make that economics work.
Ryssdal: How much of your time would you say you spend running Idealab and how much running Energy Innovations?
Gross: Well, I’m probably focused, I would say 80 percent effort on the solar companies . . . and that’s Energy Innovations and some other companies we have . . . and about 20 percent on running Idealab. There’s a great team of people that really run the rest of Idealab. And the whole management team of Idealab allows it that I can focus so much on the solar energy companies.
Ryssdal: How does the board feel about that?
Gross: Well the board is very excited about that. We are very committed to the companies that were focused on this clean space and they support my allocation of time in that fashion.
Ryssdal: If you walk around here in this huge bullpen that’s around, where all the Idealab employees work, there aren’t a whole lot of people, I gather, working on e-commerce anymore.
Gross: A very small percentage of our effort goes toward e-commerce. I would say we are working on Internet companies still. But straight e-commerce companies… there just isn’t enough margin and it isn’t enough protectable, competitive advantage. If we come up with a new e-commerce idea, that we feel is very differential and protectable, then we will absolutely pursue it. But some of those are very few and far between. And some of those categories are very won right now by existing players. So we’re not pursuing that as much.
Ryssdal: I wanted to ask you about something that’s in the news, especially today and the last week or so, and that is the Microsoft and Yahoo deal. You are the guy widely credited for the idea of sponsored search or pay per click advertising. What are your thoughts as it becomes THE business model in the Internet space in a lot of ways . . . this search-based advertiser or ad-based searching?
Gross: Well we’re very flattered and honored that it’s taken off way beyond what we ever could have envisioned and we do see it as a fundamental business model of the Internet. We think that it still has huge promise and huge legs to continue to grow. The fundamental premise behind it was . . . why not charge people based on the click or based on the visitor as opposed to based on the impression? And that has proven to be very, very valuable.
Ryssdal: You’re a very bright guy, so I have to ask you why you didn’t think of the Google business model first?
Gross: The Google business model is fantastic. The Google business model, I think is . . . the business model part is the one that we did at Overture. But the brilliance of Google is the incredibly relevant search results that drive you to use the search over and over again. And it’s not that we didn’t think of that, it’s that Google came up with a brilliant method to make that incredibly useful. And the fundamental idea that Larry [Page] and Sergey [Brin] had has led to one of the biggest value creations maybe in history, but certainly in the last 20 years.
Ryssdal: You are a serial entrepreneur. The company you founded is called Idealab. What’s the best idea you ever had?
Gross: Well, I think that the pay per click idea was probably the best idea we ever had . . . based on its success. I’d like to think that we’ll be remembered for some of the stuff that we do on solar energy. We just need some more time. So hopefully, if we have this interview again in 5 or 10 years, that will be the best idea we ever had.
Ryssdal: We’ll call you and we can figure it out.
Gross: That would be great.
Ryssdal: What is the worst idea?
Gross: The worst idea . . . oh boy that’s difficult. Well most of the ideas that we’ve had are worst only because they were too far ahead of their time. So it’s good to be a little bit ahead of your time, that way you can be early, but you don’t want to be way too early. And I would say, I wouldn’t say this is our worst idea but an example of that would be . . . we started an on-line entertainment company in 1999 well before people had any Broadband connections. There was only 10 % Broadband penetration and now there is basically 90 % Broadband penetration. And that company could’ve been YouTube . . . it was just seven years too early. So, many of our ideas fall into that category of just having been so far ahead of their time that they’re actually useless. And that’s actually a problem. It’s not good to be that far ahead.
Ryssdal: So do you spend time at night going “Aw man! I should’ve done something about that!”
Gross: Well absolutely! What we do now in response to that though, is that we have an idea that’s either too far ahead of time, is that we either don’t do it and wait . . . or do it but do it slower so the company can sustain itself until the market is ready for it. And that’s very, very hard to do because you always want to rush; but that was one thing that we learned from the companies that were unsuccessful.
Ryssdal: Why are you still here ten, twelve years after you started this company and all the ups and downs you had? I mean, it’s not like you need to work anymore.
Gross: Well I don’t need to work but I don’t know how I could go without working in the sense that all day long I walk around life and look at problems in the world and say, “Couldn’t there be a technological solution to that problem?” So it is so exciting to try and do that. It’s one thing that I am good at and I like assembling people around those things and I like creating value around those things and I think that we could make a big difference. So I couldn’t imagine not doing this.
Ryssdal: Where is this company going to be in ten years?
Gross: Well, I would like to think that ten years from now, we would have taken some of the things that we are working on now, the things we started this decade in particular some of the things that we started working on after the crash, where we learned a lot of our big lessons and turn them into wildly successful, long-term, profitable companies. And I hope that we can get together again and reflect back on that and especially, I hope, that the companies make a big impact.
Ryssdal: If you could have one do-over in the past 12 years of your business life, what would it be?
Gross: I would say the biggest do-over would be . . . learn the lesson of going slower and learn the lesson of humility without having to go through the pain of the crash. And I don’t think it’s possible, I wish we could have had it, but I am so glad that we had that lesson now.
[Interview moves to roof]
Ryssdal: So we’re up on the roof of the Idealab building and what we have is a series of, I don’t know, maybe two dozen or so things that look like floodlights, really, that you would see on a theatre stage or something. But obviously, that’s not what they are. What are we seeing?
Gross: These are tracking concentrators. Each of these units wakes up in the morning when the sun comes out, turns directly towards the sun, tracks and concentrates the sunlight to a receiver; and this is how we get the cost of solar energy lower. By concentrating the sunlight, we can reduce the amount of expensive photovoltaic material to make electricity for a building.
Ryssdal: So as this goes into production, I would have one of these “gizmos” on my house . . . this bank of these three, sort-of floodlight looking things . . . and it would drive power directly to a photovoltaic cell that would then power the house.
Gross: This unit here is designed for commercial rooftops. There would be a different unit that would be designed for residential. Right now we’re focused on commercial energy and innovations. But this is actually connected up to our building and it’s providing power for our building.
Ryssdal: How much?
Gross: The units that you see on the roof here are providing about a third of the power for our building.
Ryssdal: That’s pretty neat!
Ryssdal: Is this, not to oversimplify, but basically, what you’re doing here is building a better mousetrap.
Gross: This better mousetrap is primarily about price. Everything in solar energy is about cost. If you could drive the price down low enough, then people would switch to low-cost solar as opposed to buying power from the power company. In California, and in many states, you could connect this up to your home or business right in parallel with the power company, so you don’t have to say goodbye to the power company; you can use this as a supplement to the power company. And any power you produce would be fed into your home or business, and any extra surplus power you produce would be fed back into the grid for other businesses.
Ryssdal: Why did you pick solar and not, say wind or bio-mass or something else, to concentrate Idealabs efforts on?
Gross: One of the great things about solar energy is that you can put it right on your own rooftop. You don’t need separate land to put up a big tower for a windmill. You can even make it, like on this commercial rooftop, where you don’t even see anything from the street. It’s completely invisible. That’s one reason. The other reason is: solar energy comes at its peak time right when there’s peak load. Right when your air conditioner is on in the afternoon when it’s hottest, that’s when the solar power is the most. Wind power often comes at its peak in the evening when there is not much demand for energy. So solar is very . . . very matched to your energy needs.
Ryssdal: This is one model . . . the energy concentration, Energy Innovations Company method that you’re doing. You have another company called E-Solar, which is doing a whole other thing. What is that?
Gross: Yes. E-Solar is building big fields; big fields of solar for utilities, maybe out in the desert. And E-Solar puts up a large tower, concentrates sunlight to the tower, and then makes steam and runs a steam turban just like a traditional power plant would, except there’s no coal involved. So we run a steam engine, provides electricity into the grid, and it can have a very, very big impact on the power usage in a big state. And we are looking forward to rolling those kinds of plants out all around California, all around the southwestern United States.
Ryssdal: What might make this not work?
Gross: Well, this is all about price. The only way people are going to adopt solar on a big scale is if you can make it for a lower price than they are paying from the utility company right now. So we’re working very, very hard at both Energy Innovations and E-Solar to drove the price down so we reach a point called “grid parody” or even better than grid pricing.
Ryssdal: So, spit-ball a number for me. What might it cost me when this is on-line and ready for home use and however many years it is; my initial investment, and then follow-up costs.
Gross: Right now the typical costs for electricity in the United States and in California, is around 13 to 15 cents per kilowatt hour. And we’re looking for beating that price in the next two or three years. That you would be able to put a system on your business or we could be able to put a system out for utilities that would beat that price and actually be lower cost to end users.
Ryssdal: Yeah, but what’s the insulation going to cost me to put it on my roof?
Gross: Well, the up-front insulation costs could be financed so that your actual outlay would be lower than your utility bill every month. And that’s the way that we want to make it: that people don’t have to pay any more for their power than they do right now.
Ryssdal: So you don’t know yet? Or you’re not telling me?
Gross: No, the typical cost for a resident might be a $5000or $10,000 insulation. But the actual price might only be paid in a $100 or a $200 monthly payment, which would hopefully be lower than your payment for the electric bill. So the up-front cost would be zero, because it would be financed.
Ryssdal: As you sit in the CEO’s office at Energy Innovations and you grapple with your biggest problem . . . price . . . how do you market? How do you distribute? How do you take this new technology to customers in a way that makes them say, “Oh, this is the way that it’s got to be?”
Gross: We are focusing right now at Energy Innovations on larger customers, larger commercial customers. And we go to them; and we take a look at their power bills. So we look at a history, backlog of what their expenses are. We look at the sun in their area. We have national renewable energy laboratory data for the last 30 years on how much sunshine is in their particular area. And we can put forward a projection for them that will show them exactly how much money they would save. When we take a customer a savings plan like that, it really becomes a no-brainer for them to do an installation.
Ryssdal: These things are geared, right? So they follow the sun as it rotates.
Ryssdal: Or I guess we rotate, right? The sun doesn’t rotate.
Gross: Yes. Actually, solar energy would be very, very easy if the earth weren’t turning. Because the earth is turning, to actually concentrate the sunlight, you have to face the sun all day long, and the sun is in a slightly different position every day, all year long. We’ve come up with a tracking algorithm that keeps these things pointed exactly at the sun that allows us to drive down the price of solar energy.
Ryssdal: Do you think you have any engineering problems left?
Gross: Right now, we’re scaling production; driving the price down through scaling production, getting more and more efficiency out of the system. We think this is going to be a no-brainer in a couple of years to actually beat the price of electricity.
Ryssdal: So when can I get one on my home?
Gross: Right now, as I’ve said, we’re focused on commercial installations, because they are large and we can make the actual installation costs low. As we come up with ways to drive down the installation costs, then you absolutely will be able to get one on your home.
Ryssdal: Bill Gross, the CEO of Idealab and Energy Innovations we should say. Mr. Gross, thanks a lot for your time.
Gross: Thank you very much.
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