“Incubator” now is a four-letter word for ThinkTank LLC founder Scott Blum.
That’s a term for the folks who build companies on other people’s ideas. ThinkTank, which Blum started two years ago with $40 million of his own money, dreams up business ideas internally and helps them through the startup process. A razor-thin difference perhaps, but one that Blum wants the world to see.
But after two years of starting companies, ThinkTank is going to stop creating new ones for now and concentrate on getting the 10 it has up on their feet, according to Blum.
The main reason for the hiatus is Blum’s pending repurchase of wayward Internet retailer buy.com Inc., he says: “I’ve really got enough projects to work on right now.”
Blum can go ahead and downshift ThinkTank because he is its only investor. When ThinkTank launched, officials boasted that Japan’s Softbank Corp. would put in $200 million. Blum now says he turned that down.
The move gave Blum control over ThinkTank,a role he relishes and sees as a complement to his strength at starting companies.
“ThinkTank is all his investment,” said Brenda Sherry, the executive vice president of Thinkbig Marketing Group LLC, a ThinkTank company.
Blum also has his hand in the day-to-day workings of ThinkTank’s 10 companies.
Take Enfrastructure Inc., a ThinkTank company that provides companies with office space and technology services for a monthly fee. The company started with a grand plan to open up several campuses in new buildings across the country. But it was having problems filling its first campus, in Aliso Viejo, making the idea of opening other campuses risky.
Blum said he helped revamp the company’s strategy. Now the Aliso Viejo campus is expected to be full by year’s end,the original plan.
“I took them to Vegas over the weekend to congratulate them,” Blum said of the Enfrastructure team. “When you work for me, I’m a nice guy. I’ll take you to Vegas and pick up the tab for the whole weekend. But when you get here on Monday, you’d better be prepared to work.”
Still, for Blum, ThinkTank has been a virtual playpen. He and his partners, general counsel Neel Grover and financial chief Tom Ko, play around with different ideas on a weekly basis. When they develop an idea they like, they start putting the pieces together. They make some phone calls and bring in management. They invest some money and write up a formal business plan. They find business partners and customers.
But it’s not like things happen overnight. InternetMotors Corp., a ThinkTank company that’s developing gear to allow customers to communicate from a car, was in the making for more than a year. Blum plugged the company with $2 million in seed funding in September and named former Microsoft Corp. executive Pawan Gupta the new chief executive to handle the company’s development, which was far more conservative than Blum had originally planned.
“With my ego, I wanted to make the whole car,” Blum said of his original ambitions for InternetMotors. “But those I was working with convinced me to focus on the things we did well, which was the technology.”
But even with ThinkTank’s work, there are plenty who criticize the incubator model,even if Blum objects to that label.
“The concept is good, but it’s really tough to be a pure play incubator right now,” said Alan Alper, an analyst with Waltham, Mass.-based research firm Gomez Inc. “There aren’t a lot of incubators left, and it’s very hard for an entrepreneur to do an encore.”
But that’s Blum’s intention. A consummate marketer, Blum decided to pitch his travails of running ThinkTank and trying to turn around Aliso Viejo-based buy.com to Forbes magazine last month. The magazine is planning to spend every Thursday with Blum for the next few months.
Now Blum just hopes the Securities and Exchange Commission blesses his effort to buy back buy.com. Oddly enough, Blum started buy.com in the wake of an SEC investigation into accounting practices at Pinnacle Micro Inc., an Orange County company he founded with his father in the early ’90s. Blum settled with the SEC without admitting wrongdoing.
Buy.com’s mantra, “beat Amazon,” reinforced its audacious strategy: sell products at the lowest prices possible,even below cost,and make up the difference in advertising.
Blum’s decision to re-acquire buy.com has caused some head-scratching among industry watchers, who say that, like other Internet retailers who have gone before it, the company’s model has proved fatal. With the complexities of hemorrhaging losses, a tough economy and faltering investor confidence, Blum’s answer about what he plans to do with the company is simple.
“Fix it,” Blum says. “I believe in this business model and think it can work.”
Where exactly Blum plans to make changes is unclear. He says he still likes the management team that’s in place and that the company is lean enough as it is.
Blum declined to elaborate on his plans for buy.com pending the SEC’s decision. But this month the company began a large TV and print ad campaign that echoes the high-impact ads of its heady early days: stark white letters on a black screen, saying first “buy.com,” then after some seconds, “Lowest Prices on Earth.” n
