X Prize Foundation will crowdfund three new prizes. How it's a game-changer.

The X Prize Foundation announced this week that it will launch three new prize competitions before 2020. All of them, for the first time ever, will be crowdfunded, a possible game-changer in how the foundation's projects are selected.

The X Prize Foundation announced this week that it will launch three new prize competitions before 2020.

The announcement comes just one month after the foundation said it would launch the $2 million Wendy Schmidt Ocean Health X Prize for the development of a pH sensor to measure ocean acidification, and the three new projects will also be ocean-oriented.

But the exact goals of the new competitions, and the amount of cash that the winners will receive, is unknown – because it’s all up to the public.

“The grand challenges are problems of big importance for humanity,” says Paul Bunje, Senior Director of Oceans at X Prize, in an interview with the Monitor. “It’s critical for us that we are involving as much of a swath of humanity as possible.”

This is the first time that the X Prize Foundation, famed for its generous cash prizes to the winners of its competitions pursuing scientific breakthroughs, will crowdsource its prize purses and competition goals. Concurrent with the announcement of the new prizes, the foundation also launched the Ocean Ambassadors Program, though which participants can access educational content from the foundation and, in the future, contribute both dollars and ideas to X Prize.

The program will help the foundation to better outline which scientific problems are the most pressing and what form solutions to these problems should take, says Dr. Bunje.

“Innovation can come from anywhere,” says Bunje, “and the intelligence to design these prizes can also come from anywhere.”

The X Prize Foundation, founded in 1994, rocketed to fame in 2004 when it awarded its first prize, of $10 million, to Scaled Composites for the development of a commercial spaceship. The foundation has since expanded beyond aerospace development to bankroll the invention of more fuel-efficient cars, oil spill cleanup techniques, advanced lunar technologies, and now, ocean research.

All of X Prize's competitions, as well as similar contests from NASA, DARPA, and others, have operated on the same model: the prize organizer identifies which problem is worth addressing. It then outlines what a solution to that problem should look like: How high must it fly? How fast must it go? How big? How small?

After that, companies and individuals will spend millions – in total sometimes five to ten times what the competition awards to the winner, says Bunje – to answer the problem. At the end of it all is a cash prize for the winner, as well as probable contracts and other opportunities for all the entrants.

It’s the first part of the contest – identifying which problem to tackle and how competitors should tackle it – that has raised questions from analysts in recent years.

“One of the tricks of these prizes is getting the specifications for how to win the prize right,” says Molly Macauley, Vice President for Research and Senior Fellow at Resources for the Future.

What X Prize or other cash-flush organizers ask for can in effect shape the direction and goals of scientific inquiry, spurring vast research momentum toward a narrow goal, she says.

That’s because, unlike conventional funding methods, where a government or investor that fronts cash to scientists will lose out on the investment if the invention never comes through, competitions are a no-risk game for the organizer. Prize sponsors don’t have to hand out the prize reward at all, if no competitor comes up with a suitable answer to the problem at hand.

"You don't have to pay for it unless it works," says Macauley.

So, unburdened from financial risk, X Prize and others are able to propose fabulous goals: space tourism, autonomous robots, and other technologies at lower costs or higher speeds or better efficiencies than had been dreamed possible, says Dr. Macauley. The public rallies to the romantic cause. And, if an invention comes through, investors tumble in to develop it.

“These contests generate a lot excitement from the public about a problem or an opportunity,” she says, “and they’ve spurred a lot of major industries.”

In the US, the late 1800 and early 1900s were flush with numerous individuals and companies promising heaps of cash to the inventors of ever better cars and airplanes – cars that were faster and quieter; planes that could fly higher and longer.

In perhaps the most high profile contest, New York hotel owner Raymond Orteig announced in 1919 that he would award $25,000 to the first person to make a nonstop flight between Paris and New York. Not until 1927 did pilot Charles Lindberg arrive in Paris, via New York, to claim the prize, as well as international fame. His win went on to jumpstart the entire commercial aviation industry.

And so it went, too, in 1996, when X Prize announced a prize similar in tune to the Orteig competition, but loftier in scale: the Ansari X Prize, awarded for a flight 70 miles above the Earth and, critically, a return trip home. Since Scaled Composite’s SpaceShipOne took the prize in 2004, an entire space tourism industry has unfolded out of the prize. Just this week, a new competitor called World View, tossed its hat – or rather, capsule – into the proverbial ring.

With possible outcomes like the advent of whole industries, it’s becoming more important that X Prize consult the public for input, says Bunje.

“There are other experts out there who may be able to tell us where our priorities should be,” he says. “Having more brilliant people helping is always a boon.”

Of course, it’s not clear if crowdfunding will furnish the winnings pots to X Prize's millions and millions of dollars standards, says Bunje.

“This is exciting for us, but it’s also scary,” he says.

If the project is generating obvious interest and enthusiasm, but not enough dollars, the foundation may make up the difference with its normal, sponsored funding scheme, he says. Or, if the dollars just aren’t flowing in, that might be a sign that the project just isn’t right, he said.

Peter Andras, a professor of computer science at The University of Newcastle, agreed that crowdfunding X Prize's awards could be valuable in ensuring that the competitions pursue goals that are important to the public.

“Only truly popular ideas will be able to raise sufficient funding to make the prize work as a catalyser of research,” he said, in an email to the Monitor.

Still, he noted that what the public backs as the most compelling goal is not necessarily the best goal.

“This means that popular beliefs will have an impact on the practical selection of prized research topic,” he says, noting that this is not “necessarily the best way to find the most challenging research topics.”