Small Business

One Giant Leap for Entrepreneurs


To jump-start the space race with private dollars, Google's Lunar X Prize hopes to spur ordinary citizens to land on the moon

This November, Carnegie Mellon robotics professor William "Red " Whittaker and his team's radar- and laser-equipped Chevy Tahoe are top contenders for the $2 million first prize in the DARPA Urban Challenge—a series of races with driverless vehicles sponsored by small companies and universities. The Defense Dept. has already held similar challenges twice in the past three years in hopes of drumming up ideas for sophisticated, unmanned vehicles for use in urban combat zones. Soon another government agency will be eyeing Red's robots: NASA.

Whittaker was the first to enter the Google (GOOG) Lunar X Prize, the search giant's competition to land an unmanned vehicle on the moon and complete a series of tasks. Like the Ansari X Prize —the $10 million bounty that aerospace engineer Burt Rutan and Microsoft (MSFT) co-founder Paul Allen nabbed in 2004 for flying the first humans out of Earth's atmosphere in a privately funded spacecraft—the Google competition is an incentive for the emerging private space industry to build exploration technologies faster and on a tighter budget than the government. But this time around, there's reason to expect more involvement from wily entrepreneurs like Whittaker and less from deep-pocketed tycoons like Allen.

"The Ansari X Prize created this whole new industry of suborbital space tourism, a market that even a company who didn't win the prize could pursue," says Jeff Foust, senior analyst with Bethesda (Md.) aerospace industry researcher Futron. For the Google Lunar X Prize, all contestants will still retain the rights to their intellectual property. But, as Foust points out, "It's not clear what the market is for one of these rovers."

To the Moon

Many space veterans are simply too busy to shift gears to a moon landing, points out Michael Belfiore, author of Rocketeers: How a Visionary Band of Business Leaders, Engineers, and Pilots Is Boldly Privatizing Space (Smithsonian, 2007) (BusinessWeek, 8/6/07). "Burt Rutan would be the one with the biggest chance of success, and he's locked up doing work with Virgin Galactic," he says, referring to the space offshoot of Richard Branson's Virgin Group which will begin shuttling passengers to space in 2009.

That leaves the door wide open for academics, hobbyists, and enterprising small businesses with enough drive and enough know-how to get to the moon. And while robotic moon landers may not be worth much to large private space companies like Virgin Galactic and rocket maker SpaceX, there could be even bigger customers—government agencies—waiting in the wings.

"If a company or team is successful, and they can do it for more than $20 million, but less than $100 million, they now have an inexpensive platform for exploration that they can take to NASA," says analyst Foust. NASA, which plans to return a manned vehicle to the moon by 2020, makes no secret of the fact that if private entrepreneurs can build better technologies for cheaper, it will adopt them. Since the agency launched its Centennial Challenges in 2004 for this purpose, it has awarded $200,000 to Peter Homer, who designed a better astronaut glove; and $250,000 to various entrepreneurs who engineered Jetsons-like personal air vehicles.

The Legacy of Lucky Lindy

Getting to the moon won't be cheap. X Prize founder and organizer of the soon-to-launch Rocket Racing League (BusinessWeek, 9/24/07), Peter Diamandis, admits that the high cost and relatively short timeframe of the moon challenge are daunting, but he believes that placing the bar so high is necessary to get great innovation. "The day before something is considered a breakthrough, it's considered a crazy idea, and the traditional industry will react against it," he says.

Diamandis draws inspiration from Raymond Orteig, the hotelier who in 1919 offered a $25,000 reward for anyone who could fly a nonstop flight across the Atlantic. After eight teams spent some $400,000 trying and failing at the challenge, Charles Lindbergh succeeded in 1927, and his accomplishment breathed life into the then-infant commercial aviation industry.

While Lindbergh is believed to have spent less than the prize amount building the Spirit of St. Louis, that may be harder to do for Google Lunar X Prize challengers. The grand prize is $20 million for whichever team lands and performs the required tasks first, dropping to $15 million if everything's not completed until 2013 or 2014. A second-place team will earn $5 million, and either can earn an additional $5 million for performing extra tasks such as roving longer distances and surviving a lunar night.

Looking for Corporate Sponsors

Diamandis believes most potential challengers will have to spend that amount or more developing and launching their vehicles. "I think the ultimate cost will be $20 to $40 million," he says.

A profitable lunar mission, then, will be one that finds funding from a variety of sources. First, there are sponsorships. "There are companies that will have a great interest in flying their computers, sensors, their communications, and their cameras with us," says Carnegie Mellon's Whittaker, who has in the past tapped such big-name sponsors as Caterpillar (CAT), Google, and General Motors (GM) to fund and equip his DARPA Grand Challenge teams. "As in any enterprise, the trick is not to spend your own money," he says.

The Carnegie Mellon Moon Prize Team will also look for opportunities to sell the novelty of having a robot on the moon. For this, Whittaker has reunited with David Gump, his former colleague at LunaCorp—a company formed in 1989 with the goal of landing a rover on the moon and selling it as entertainment to Earthbound spectators. A visitor to an amusement park, for example, might take a turn driving the rover around the lunar surface like a remote-controlled car. But LunaCorp fizzled out in 2003 because, according to Gump, it lacked credibility in the eyes of potential backers.

Bidding War Among Nations

That, he believes, has changed overnight. "With Google's announcement, you now have a credibility factor and an interest factor that didn't exist," says Gump, who now heads Reston (Va.) Transformational Space, a company which contracts vehicles for NASA.

An impressive Google Lunar X Prize contender may even find itself in a bidding war among nations: Japan, China, India, and Russia have all announced plans to fly to the moon and, according to Foust, any one of them "might see this as a shortcut to lunar exploration."

Flip through a slide show detailing more big-buck competitions that could create new industries or change existing ones.


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