Searchme may remind some of Apple's iTunes Cover Flow feature, but if it's more likely to succeed than Snap that's not why. Snap was search-ad innovator Bill Gross's brainchild. Good genes. But Searchme's Sequioa roots are better. Sequioa funded Google, which is known to return the favor from time to time.

Remember when Bill Gross launched the search engine GoTo.com, later Overture, and shocked the industry by ranking listings by how much advertisers were willing to pay? At the time, his pay-per-click model was ripped apart as cynical and sleazy. But paid search ads, it turns out, were the right idea. The willingness of an advertiser to pay, among other factors, was actually a useful criterion for determining whether an ad might be effective, and it's a practice that's making billions of dollars for Google.

I think there's a similar effect here. There was no downside for TechCrunch40's presenting companies; if they gave a lousy presentation, all they wasted was the audience's time. One of the best-received startups was MusicShake. Note that MusicShake is based in South Korea, which means that its founders flew across the Pacific to make their debut, at considerable expense. They may not have paid Calacanis and Arrington anything, but unlike most of their peers, they actually had skin in the game.

Contrast that to the sloppy demos given by some Bay Area startuppers who only had to roll out of bed to get there — and looked like they just had.

By contrast, every company at Demo had some money at stake. It might not have been a big risk, but it was enough to make them take the event seriously. Shipley told me earlier this week:

Demo is involved in helping companies launch their products, and there are costs associated with that. That doesn't remove the hurdle of qualifying and being selected to participate. The fee is a commitment for a small company. It does signal a seriousness of intent — it is a bit of a bar for a company, and if you're able to clear that hurdle, that means that there's more at stake and the company is perhaps more viable.

The irony is that when I reported that DemoPit, TechCrunch40's for-pay sideshow that required startups to buy a ticket to the event, Calacanis blusteringly defended his event along much the same lines as Shipley, citing the costs of putting it on. Of course. But by making startups share those costs, Shipley is putting the invisible hand of capitalism to work as a useful sorting function. You know her companies won't waste your time. Why? They have money on the line.

By the way, congrats to the L.A. Times for catching up to Valleywag's March 7 post.

Slope-shouldered photo source: David Strick [davidstrick.com]
Downsized and in Debt, Idealab Chief Still Pitching [LAT]

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]