What’s Another $20 Million?

Question: Is the X Prize a useful tool to get people to innovate?

Burt Rutan: I certainly want to like the X PRIZE because my customer Paul Allen got 40 percent of his money back on one flight or actually two flights. I’ve always been a proponent of prizes, but if you back off and look at say the NASA prize.  They’ve got these little prizes to promote breakthroughs of commercial folks.  I think from an overall standpoint if you’re a research agency that you ought to structure you’re overall annual budget somewhere between 15 and 25 percent of that budget ought to be for prizes, in other words, a substantial amount of money, big money.  If you did that you would have a lot of investment goes into solutions commercially because they’d have a return of investment.  Gee, you’d find folk going out and spending 100, 200 million dollars to win a prize because the prize is one and a half billion dollars.  That would really get the big advantage of what you can do with prizes.  In general the prizes that have been out there have been, at least the government prizes, I included also there the DARPA prize, the first one that they put out.  It was a million dollars and DARPA itself spent 6 million dollars overseeing the prize.  What? What?  But anyway, you know I’m a big fan of putting out a goal that you think is impossible and it should be because a prize ought to be for research, not for development.  You shouldn’t give somebody a prize for doing something that everybody believes can be done.  You need to put a prize out for things that at least half the people think can’t do that

Question: What are some of the challenges to crowd sourcing a groundbreaking idea?

Burt Rutan:  Only a very small percentage of people are really innovative.  In other words, they really come up with new ideas and a smaller number are people that come up with new breakthrough ideas and have some capability to go out in the shop and build it and fly it, so that’s why there is not a lot of Rutan like companies.  We don’t have much competition in the work that we do.  Our main competition is the aerospace primes themselves and we always beat them because they have enormous overhead and they have a risk adverse thinking so that it takes them. They won’t do some of the things that we will try and it takes them a lot more time and money to get up the courage and actually go out and build something that may not work and in general they tend to not go out and build something that may not work. I believe there is real breakthroughs out there for orbital access, but if you come up with an idea and there is a lot of ideas floating around, if there is a feeling by half or more of the people that hey, that won’t work you’re almost guaranteed to not be able to attract investment and get it paid for and go out and try it.

What’s interesting is I think the people who are aggressive to fund breakthroughs and the innovative breakthrough people themselves I have a theory that they were inspired when they were kids. An age group might be 4 to 14. “Aviation Week” asked me to name the real breakthroughs in the first hundred years of aerospace and this on the hundred year anniversary of the Wright brothers, so they’re saying hey, 1903 to 2003, who were the big movers and shakers and I started you know Von Braun of course and Kelly Johnson and Howard Hughes. I named all these folk that I thought were the ones who were really the movers and shakers in breakthrough and I found out that all of them were kids during this wonderful time period of just a few years between 1908 and World War I and that was just you know a short period of time when this enormous amount of improvement was done.  1908 there were only 12 people that had flown an airplane and only 3 of them could make a turn in early 1908 and by 1912 there were hundreds of new types of airplanes being built in 139 countries.  There were factories in Europe building 500 airplanes a year in a 4 year time period, from nothing.  So I think kids then were inspired by enormous accomplishment that they saw happen around them and they happened to be the ones that innovated. 

Now go look at who is funding commercial space.  I’m not talking about government funding, the taxpayer.  Richard Branson, Paul Allen, Elon Musk, Bezos, Amazon.com guy, the Bigelow and you know Carmack, these guys they were all kids during Apollo and as a kid they saw this wonderful amount of accomplishment and they remember that and it gave them the courage as adults that when they got money that says hey, I’ll go out and spend money for that.  And you know it didn’t cost Paul Allen much to do this.  I mean when you’re worth that much money, what is 20 million dollars?  So the thing is it was done because he thought it would be fun and he wanted to be part of something if it did work and he had had essentially no downsides except some you know people criticizing him for wasting money and essentially no downsides if it didn’t work.

Recorded on January 25, 2010

We would have made progress on space travel if the NASA budget had allotted 20 percent for prizes that at least half the people thought couldn’t be done.

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