Bill Gross compares business ideas by weighing humanitarian impact against profit potential. He tested Duron Power, a cheap solar kit for Indian and African villages, and CarsDirect, which validated online car sales with a $1,000 deposit MVP. His method: quantify impact, forecast the business model, and build the smallest test possible before full development.
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How do we objectively compare ideas? It's very hard and it's very emotional for sure. Now, because I said one of our metrics is impact, sometimes we look at two ideas, one that has a better business opportunity, but we look and we say, you know, I think this is going to change the world more. It's going to be better for people, better for humanity, let's do that. We have a company we started called Duron Power and it's a company that is making very small-scale solar solutions for villagers in India and Africa. It's a little $99 product with a solar panel and battery and lighting and cell phone charger and fan. We're not going to make very much money on that. We're selling it for maybe a few dollars more than we make it for. But if we can have a million families have that, it will have a great impact. So, we chose to go with that one even though it wasn't maybe the best economic one. So, measuring that is one way. The other way we try and compare is we do business models and projections and forecasts. We, of course, do that. We do focus groups. We test on people. The thing we really like to do and probably the thing that— I don't know if we're known for this, but it's the thing that I'm most proud of what we do is we try and find ways to come up with the absolute minimum viable product and test it. I think you guys have heard that variation of that theme before, but I'll give you one specific story. So one thing that I wanted, going back to things I want, it was like 1997 or 1998, I think, and people were starting to use credit cards online. Amazon was taking off, but still A lot of people were scared about putting credit cards online. I wanted to get a new car and I didn't want to go to a dealer. I just hated the hassle of going to a car dealer. I had been so messed up by all the lies and everything that I got from going to a car dealer. So, I wanted to go to a website and I wanted to do the whole transaction on the website. I wanted the car to show up at my house on a flatbed truck. I thought that's the way the whole transaction should occur. But I told people that idea and they said, "That's crazy. I don't think people will do it. People aren't going to buy a car online. No one is going to use a credit card. No one is going to put a deposit of $1,000 down without seeing the car." I said, "Yeah, I think they will because I'll do I'll do the research and I'll figure out what car I want and I know what I want and I'll configure it and I just want to buy it. So that was the concept. It was called Cars Direct. We had a lot of disbelievers. We had a budget of $100,000 in 90 days. I gave a particular CEO that we found a budget of $100,000 in 90 days to see if someone wants to buy a car online. The idea was to make a website where you could configure some cars and we'd see if people would put in a $1,000 deposit to do it. Then if they did, we would sell them the car. He kept on coming back into me, 30 days in, okay, we're talking to car dealers about this and getting supply. I go, what are you talking to car dealers for? I just want you to make a website. He's talking to find out how to become a dealer for Ford and dealer for Honda and all that. We're not going to do that. We're just seeing if someone wants to do it. Then he'd come back in 60 days and, well, I'm working on this. On the 80th day, I said, just put the site up and if someone buys a car, put it up at the end of the day. If someone buys a car by the morning, We'll turn the site off and we'll go buy them at the Honda Auto Mall down in Monrovia and we'll deliver the car to them. We are not trying to actually sell a car. We're trying to— So he finally put the site up on one Thursday evening. I remember coming in on Friday and he came up to me excitedly, "We sold 4 cars." I said, "Hurry up and turn the site off." But we saw that people wanted to buy a car. They didn't know that we were driving down to pick up the car. That didn't matter. but then we turned the site off and then we built out the system because the test worked. We found out that someone actually would do that. So I really, really try and do that all the time with our companies. Like, how can you find out in some fake kludge way, do people really like what you have? And then go build the whole thing if they do, but don't build the whole thing first and then find that out afterwards.
