Another would-be Valleywagger does our job for us, with a report that Bill Gross, CEO of Pasadena business incubator Idealab, is still paying for his sins during the dot-com bubble — or, well, his shareholders are.
Is Bill Gross broke again? Gross and Idealab became the icon for the internet bubble riding the crest up and then way down, ultimately resulting in a billion dollar lawsuit in 2000 by shareholders who claimed misuse of funds and other improprieties by Gross. The hangover from that time is apparently not over.
Shareholders of Idealab last week received a Proxy from the Idealab Board of Directors asking them to approve Idealab buying out Bill Gross $50M loan from Bank of America. Gross apparently borrowed the money in 1999 to fund his lifestyle, including buying a house, a plane and Idealab stock. Now according to the Proxy he can t afford to pay it back.
You might ask how the Idealab BOD throws common sense and accepted corporate governance out the window in proposing such a transaction. The justification given in the Proxy centers around the claim of Gross invaluable and irreplaceable ideas and business leadership.
Kind of humorous when coupled with the fact that Idealab raised over a billion dollars and now according to the Proxy is worth only about $300M. That is quite a negative IRR.
And rumors from VC s and entrepreneurs in Idealab companies persist of how difficult Bill and his wife Marcia, who happens to be President of Idealab, are to work with. The most common used phrase is family run business , and it s not used in the kindest sense. Also insiders say that due to the financial distress Idealab won t be incubating any new companies until they can get some liquidity events to pay off Bill s debt.
Photo: David Strick Photography [DavidStrick.com]