Idealab a Good Example of a Bad ‘New-Economy’ Business

Thanks for the article on Idealab (“Inside Idealab: A Confusing Fiscal Formula,” June 19). I believe they epitomize the worst example found in the “new economy.” How else do you explain their involvement in over 30 companies with little foreseeable profit potential?

Excuses of bad luck, or that they are the hapless victims of unforeseeable market forces, can only go so far. After 30-plus start-ups, only incompetence can explain this pattern of failure. Idealab seems to be essentially operating on the “greater fool theory.”

Consider their pattern of business development. Find a believable concept for a Web-based business. Next, quickly generate some revenue, increase the hype and then come to market with an IPO.

Their last step is to pocket millions of dollars on the sale of stock options, management fees and other services, at premium prices.

Idealab’s only real talent seems to be the remarkable ability to find investors.

Now Bill Gross and his [Idealab] team have the nerve to want to go back and ask investors for another $300 million.

BRUCE LEE

Lawndale