On Prizes and Progress

Last month John McCain made a campaign promise that, if elected, he would champion a $300 million prize to develop an inexpensive and powerful automotive battery that could “leapfrog” current available batteries. While the announcement garnered some press coverage, it was covered with fervor in the political as well as technology blogosphere. In fact, it seems to have been one of the most polarizing political announcements in technology and clean-technology investment spheres since a number of candidates promised to make changes in laws regarding carried interest. Tech investors left a number of interesting commentaries on the McCain battery plan. Many deemed the intentions of the plan as noble, but the logistics poor. One of the major arguments, among others, was that the development of such a battery would have a monetary upside that would far outweigh the $300 million prize. Others argued that such money would be better used in some kind of federal R&D program that could foster emerging battery research.

These commentaries got me thinking about prizes and the inherent “carrot and stick” issues that surround such achievement-based prizes. While the clean-tech detractors certainly make interesting and very true points, they’re forgetting the intangible inspiration factor that such a prize could create. An excellent example of such inspiration success could be the $10 million Ansari X-Prize awarded in October of 2004. In the the nine years from introduction to its presentation to the Paul Allen-backed winner Mohave Aerospace Ventures, the prize inspired over twenty-six teams made up of both amateurs as well as professionals to create and successfully launch a reusable manned spacecraft in two separate flights within two weeks. What many fail to point out is that over $100 million was invested in technologies leading up to the two successful Mohave flights.

Wait, isn’t something off here? Why would Mohave and Paul Allen put up ten times the financial muscle into winning a prize that doesn’t even cover the costs of research and development? In the typical investment world such ideas are shear lunacy. In this case wouldn’t it make sense that the prize money merely inspired the group towards the end goal? Why can’t the same true for battery improvements, or wind power, or any other publicly available prize? Isn’t the mere possibility that such a prize could inspire a talented scientist or engineer to shift their efforts towards developing new technology worth forgetting a few logistical shortcomings in a plan?

There however is another important fact that many clean-tech investors have left out. Beyond talk of batteries and prizes, recent campaign statements by both major party candidates illustrate the fact that both candidates are actively interested (at least for now) in making some serious changes to federal energy policy. Placing individual candidates positions aside, if promises from both candidates hold true into a new administration shouldn’t clean-tech investors (as well as the general public) be excited about the possible sea change such policies will bring?

Image used under a Creative Commons license courtesy of Flickr user AndyArmstrong.

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Taylor 3 months ago 1 point
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I hear your points, but I still fall back into the "whoever invents this battery is going to receive the credit, fame, and fortune they well deserve" camp.

I like that McCain's signal with this prize idea is at least "I think these technologies matter," or "we need next generation battery technology to move forward on clean energy for automobiles," but the difference between the space X-Prize and this idea is (and this is arguable, but I think it's true) that nobody needs to light a fire under would-be battery inventors. I think the pace of change in aerospace technology HAD declined a bit prior to the X-Prize, and you're absolutely right that it produced a great deal of positive investment well beyond the prize amount. Whether that's needed here is unclear.

Bottom line: I'm not opposed to the battery prize per se, I'm just not convinced that it's necessary and I worry that it'll be seen as the end-all, be-all. In other words, I fear the attitude of: "we can't make any progress on clean energy until somebody solves that battery problem...guess we should go drill for oil off the coast."

As an interesting corrollary, many in philanthropy are aflutter about "prize philanthropy" exemplified by the x-prize. It's a cool model for change and something to watch for. The X-Prize Foundation, the organization that administered the space x prize, has a few other open "contests":

"The $10 million X PRIZE for Genomics prize purse will be awarded to the first Team that can build a device and use it to sequence 100 human genomes within 10 days or less, with an accuracy of no more than one error in every 100,000 bases sequenced, with sequences accurately covering at least 98% of the genome, and at a recurring cost of no more than $10,000 per genome."

"The Google Lunar X PRIZE is a $30 million international competition to safely land a robot on the surface of the Moon, travel 500 meters over the lunar surface, and send images and data back to the Earth."

And the still-developing Progressive Automotive X Prize: "To inspire a new generation of viable, super-efficient vehicles that help break our addiction to oil and stem the effects of climate change."

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Stevens_Dr_and_Diplomat_Dr 3 months ago 1 point
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To piggyback on Taylor, didn't McCain's original release also fail to acknowledge all of the current work in the battery realm? The batteries we have right now are pretty amazing ... and they'd be much less expensive with economies of scale.

The partisan in me wants to think that this is another way to tell the American public that the electric car is some sort of far-away dream when they could be mass-produced by 2009 if misinformation about their abilities didn't deflate potential demand. Tesla will have a $50,000 sedan by 2010, and if rising gas prices fuel demand that price will go down. What does a prize really do aside from deny the progress we've already made?

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