Power of a prize: Can contest push Elon Musk's Hyperloop forward?

Teams from across the United States are racing prototypes of Elon Musk's futuristic transportation system. In recent years, events like these have yielded some high-profile innovations.

In 1927, flying solo from New York to Paris earned Charles Lindbergh a $25,000 prize from hotelier Raymond Orteig. Ninety years later, another well-heeled entrepreneur, Elon Musk, is bankrolling competition in a different mode of transportation: Hyperloop.

In 2013, Mr. Musk, founder of PayPal, SpaceX, and Tesla Motors, first proposed Hyperloop as a “fifth mode” of transportation. The technology consists of a tube with most of the air pumped out; inside, a pod holding passengers or freight levitates magnetically, enabling it to travel faster than an airplane.

A competition this weekend shows how far the concept has come already. The 26 teams who won a previous competition to design Hyperloop pods will put them to the test on a mile-long track at SpaceX’s test facility in Hawthorne, Calif.

The contest reflects a growing belief in Silicon Valley that prizes can spur innovation and solve major challenges.

A group well-known for this approach, the X Prize Foundation, cites Orteig’s prize for a New York-to-Paris flight as its inspiration. “Eight decades after Charles Lindbergh made history in one of the most famous incentivized prize campaigns ever,” the foundation’s 2016 prize book says, “the concept is alive and well with more and more organizations adopting the model that XPRIZE reignited in 2004.”

The X Prize Foundation isn’t affiliated with SpaceX and plays no role in this weekend’s events in Hawthorne. But its first award, the Ansari X Prize for Suborbital Spaceflight, popularized the concept of awarding breakthroughs. Created in 1996, it promised $10 million to the first private spacecraft that could carry three people and fly to the edge of space and land twice within two weeks.

A spaceship built by the California-based firm Scaled Composites claimed the prize in 2004. Since then, the company has granted seven other awards and is currently running competitions for nine more, in fields ranging from adult literacy to lunar landings.

By offering these awards, the foundation targets "market failures" – problems that investors otherwise wouldn’t devote capital to solving. But the fate of its first awardee shows that victory doesn’t guarantee success in the marketplace. Richard Branson’s Virgin Galactic has faced several delays and setbacks – including a deadly 2014 crash – in its effort to introduce passenger service on Scaled Composites’ spaceplanes.

But the knowledge gained in pursuit of the prize may not have gone to waste. The last decade has seen other companies – including Mr. Musk’s SpaceX – successfully develop and fly spacecraft.

Competitions have also spurred innovation in other sectors. From 2004 to 2007, the US military’s DARPA Grand Challenge held three competitions for robotic vehicles, a program that paved the way for today’s self-driving cars.

"That first competition created a community of innovators, engineers, students, programmers, off-road racers, backyard mechanics, inventors and dreamers who came together to make history by trying to solve a tough technical problems," Lt. Col. Scott Wadle, DARPA’s liaison to the US Marine Corps, told Live Science in 2014. "The fresh thinking they brought was the spark that has triggered major advances in the development of autonomous robotic ground vehicle technology in the years since.”

The various entrepreneurs who see Hyperloop as the future of transportation hope to achieve something similar. Earlier this month, The Christian Science Monitor’s Steven Porter wrote that Hyperloop One, another startup developing the technology, had selected 35 semifinalists in its Global Challenge, a competition that attracted over 2,600 proposals for routes connecting various cities around the world. The firm will partner with the winner to build its first line.

This weekend’s competition in Hawthorne will focus more on nuts and bolts – literally. As Business Insider’s Danielle Muoio explains, “The pods will be subject to a variety of tests, like a structural test and vacuum chamber test, and those that are eligible will get to compete in the final phase of the competition, which is slated to take place this summer.”

SpaceX’s rules for the second Competition Weekend have already been published. Whoever emerges victorious from Hawthorne will be judged on two traits at the heart of any successful transportation system: “maximum speed and successful deceleration.”