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.
I know many of you are with me when I offer a big round of congratulations to Jarred on his upcoming journey to the west coast and his new post at Google. Oddly enough I had this piece in my backlog of half-written posts that you may see in the coming weeks and decided this might be a timely reminder for Jarred and others about the possible frustrations of change and how they may not matter as much as you think.
