The Race for a 100 mpg Car

Stephen DeAngelis

April 09, 2008

Last month I wrote a post about Google teaming with the X Prize Foundation to sponsor a contest to send robots to the moon [Reaching for the Moon]. The X Prize Foundation, a Los Angeles-based nonprofit group best known for offering the Ansari X Prize — a race between teams to send a manned rocket craft into suborbital space which was won in 2004 by a team led by Burt Rutan, has announced another prize. This time for creating a car that gets great gas mileage [“‘The Amazing Race,’ as Played in the Lab,” by G. Paschal Zachary, New York Times, 16 March 2008]. Zachary claims that the X Prize Foundation uses the same motivation to achieve technological breakthroughs that reality shows like “Survivor” and “America’s Next Model,” use to get contestants to test themselves on television.

“Popular reality shows indeed provide a way to understand the logic behind a new wave of contests in technological innovation. Both types are driven by head-to-head competition among unknowns. And the winner takes all — and is celebrated in the process. A research agency for the government is using the model to spawn a new generation of driverless cars. Google is sponsoring a $20-million-grand-prize race to the moon and back for commercially feasible spacecraft. And this week, the newest contest — for a drivable, affordable car that gets 100 miles a gallon — will be formally started at the New York International Auto Show. Sponsored by the X Prize Foundation, which is also running the lunar contest, the car contest is really two in one. In 2010, there will be a winner in the ‘city’ category, which permits three-wheelers, and another in a category for four-wheel, four-seat cars.”

The chairman of the X Prize Foundation, Peter H. Diamandis, believes that head-to-head competition is the only way to achieve breakthrough innovations.

“‘Human beings do some of our best work under the pressure of competition,’ says Peter H. Diamandis, chairman of the X Prize Foundation, based in Santa Monica, Calif. ‘Cooperation is wonderful, but it doesn’t lend to breakthroughs or true innovations.'”

I’ll have to give that statement a lot more thought; but my initial reaction is that it is too narrow a theory to be correct. Long-time readers of this post know that I’m a fan of the Medici Effect — getting people from different sectors together to work out innovative solutions to challenges. I suspect that Diamandis has no grievance with this kind of cooperation on a team — he probably even encourages it. What I think he is saying is that faster and more innovative solutions are created by having teams (made up of cooperative individuals) compete against one another than they are by simply assembling a single cooperative team. Diamandis uses the same argument as Arata Kochi, a veteran of the global public-health scene, who insists that the enormous influence of the Gates Foundation is “quashing independent thinking by sweeping up the best scientists and keeping them locked up in a cartel.” [See my post Venture Capitalist Philanthropy.] I didn’t warm to Kochi’s assertion because I feel that whenever the “best minds” get together they generate natural tension and competition even as they cooperate. In the end, I’m convinced that a healthy mixture of cooperation and competition is required. Achieving the right balance is a challenge. Back to Zachary’s article and his explanation of why people think that contests can achieve this balance.

“The usual way that companies — and sometimes even government agencies — spawn advances is to employ staff members or contractors to create them. The market then rewards the winning products. The problem, however, is that the market sometimes delivers just incremental improvements, especially in areas of energy, transportation and health. Breakthroughs are imagined, but not mass-produced. Contests, which come with a deadline, aim to create a sense of urgency, conjuring up a ‘race’ mind-set that harks back to the cold war. After World War II, competition between the United States and the Soviet Union fostered races in space and weapons, for instance. In 1927, Charles Lindbergh made aviation history winning a $25,000 prize for being the first pilot to fly nonstop between New York and Paris. Why have contests proliferated in recent years? ‘Tycoons have come into it,’ says Stewart Brand, president of the Long Now Foundation, which aims to raise awareness on solving long-term technological problems. The X-Prizes, for instance, are funded by such wealthy people as Elon Musk, a co-founder of PayPal, and Stewart Blusson, who made a fortune in diamonds. The sponsor rewards only the winner. The contestants invest their own money, thus expanding the pool of capital devoted to the field. Taking a page from the playbook of professional sports, contestants can often attract sponsorships from those who want to benefit from publicity generated by the competition — publicity that flows even to the losing contestants.”

Not everyone is enamored with contests Zachary reports.

“Skeptics say that prizes often merely confirm what has already been done in the lab — and that too often they shower attention on the contest’s founders. Look at all the free advertising Google receives for its role in the moon-travel prize, for instance. ‘Creating useful innovations ought to be self-rewarding,’ says Robert Friedel, a historian of technology at the University of Maryland. ‘If you need a prize, then maybe it’s not an invention worth pursuing.'”

I’m not convinced that contests “merely confirm what has already been done in the lab.” If contests encourage people from different fields to collaborate and combine their technologies in new ways, then they are creating a process where intersectional innovation can take place. Zachary asserts there are other benefits as well.

“Although the contests have flaws, they bring innovators into the open. That can inspire young inventors — and tip off venture capitalists to the next big thing. Indeed, V.C.’s watch these contests to get leads on whom to fund. ‘These contests and prizes become a quality-control mechanism,’ says Yogen Dalal, a managing director of the Mayfield Fund, a venture capital firm in Menlo Park, Calif. ‘Often the winners — and losers — don’t have a fundable plan, but they’ve done enough to entice a V.C. to help them.’ To be sure, the devil is in the details. The creation of a great contest echoes the lesson of the Goldilocks story: make the goal not too difficult, but not too easy, either. ‘We have to find the intersection of audacity and achievability,’ Mr. Diamandis says.”

The entire list of rules defining what the 100 mpg car must accomplish isn’t provided, but from the implication from the article is that contestants don’t have to invent an internal combustion engine that can achieve 100 mpg on its own.

“In the case of the car competition, contestants must enter vehicles that are safe to drive and affordable to build, through means defined by a dense set of rules. The guidelines run 37 pages. As more innovation contests are introduced, the more obvious goals may already be met. For instance, there is an all-electric car made by Tesla Motors of San Carlos, Calif. — going into production Monday — that promises to achieve more than 100 miles to the gallon. But the Tesla car is only a two-seater. The complexities of creating the auto prize illustrate a wider problem of how to come up with ever more novel tests of human ingenuity over time. Mr. Brand of the Long Now Foundation predicts that contests will soon pursue ‘things we truly think of as impossible.’ Mr. Brand’s wish list includes machines that defy gravity or that allow us to read the minds of other people.”

Older readers may well remember Dick Tracy and his cohorts flying around the city in their anti-gravity buckets. I suspect a lot of kids back then couldn’t wait until such things were available — they’re still waiting. Anything that spurs innovation is worth trying — including contests. I, for one, will be interested in reading about the winners.