Money Talks: Cash Prizes Spur Innovation


In the glorious Past Before Television, adventurous men and women gained fame and fortune by testing their skills in competitions designed to expand the limits of human knowledge and innovation. Several organizations are bringing back this kind of “innovation prize” in a big way, with competitions designed to solve some of humanity’s greatest challenges, and expand its horizons beyond terrestrial limits.

One of the greatest scientific breakthroughs in history was the result of a prize offered by the British government in the 18th century. At that time, many ships were being lost due to the inaccuracies involved in calculating their longitude at sea. The previous method, dead reckoning, introduced greater errors the farther the ship got from a known point, usually ending in loss of life and heated discussions about the velocity of various types of swallows. The British Parliament offered the modern equivalent of $4.56 million for a solution to the Longitude Problem.

One of the potential solutions to the problem required invention of a marine chronometer of such high accuracy that even Sir Issac Newton doubted that it could be created. But, in 1730, clockmaker John Harrison set himself to the task, and effectively solved the multiple problems of corrosion, temperature, humidity and durability within five years, (although it took him another thirty to collect his prize) a task which has been compared to the landing of men on the moon in the 1960s.


Other famous historical prize winners have included Nicolas Appert, who answered Napoleon’s challenge to invent a new food preservation method; Charles Lindbergh, who won $25,000 for flying solo across the Atlantic, Louis Pasteur, for his work in physiology; and a team from IBM, whose chess computer, Deep Blue, was the first to beat a human being in chess.

More recently, the X-Prize Foundation, the brainchild of serial entrepreneur Peter Diamandis, has been offering prizes, in the $10 million to $30 million range, for solutions to big challenges, in areas like space exploration, genomics and energy. Mr. Diamandis believes that by offering huge prizes for people to take extraordinary risks, he can harness our competitive nature and drive major breakthroughs just where we need them most. His most famous venture to date, the Ansari X-Prize, awarded $10 million to aviator Burt Rutan’s team for being the first to achieve a private suborbital space flight, and then repeating the task two weeks later. The success of the Ansari prize rekindled public interest in space flight, and has lead to numerous successors, not to mention founding the space tourism industry.

Mr. Diamandis envisions a new model for philanthropy, with a return on investment of 10x to 40x the amount invested (the prize money). Unlike traditional philanthropy or venture capital, the X-prize model doesn’t require the investor to bet his entire investment on the winner to get a return on his investment.

The X-Prize Foundation is currently sponsoring the Progressive Automotive X-Prize, for the fastest vehicle with 100mpg efficiency and a 200-mile range, the Archon X-Prize for Genomics for the first team that can build a device and use it to sequence 100 human genomes within 10 days or less for under $10,000, and the Google Lunar X-Prize for the first privately-funded team 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.

The company envisions potential future competitions, may include an entire suite of prizes dedicated to energy and environment: a Village Utility X-Prize, that leverages technology-based innovation to develop more effective ways to deliver power, water and connectivity to communities in need in the developing world, and life sciences X-prizes aimed at diagnosing tuberculosis and improving overall healthcare in the U.S.

But prize competitions are not limited to the X-Prize foundation. The Defense Advance Research Projects Agency (DARPA), has sponsored several competitions, including the DARPA Grand Challenge (robot vehicles in the desert), the DARPA Urban Challenge (robot vehicles in the city) and the DARPA Balloon Challenge (wide-area team building using the Internet). NASA sponsors its Centennial Challenges including the Astronaut Glove, Power Beaming and Lunar Lander Challenges and also co-sponsors the Space Elevator Games.

More environmentally-focused competitions about as well. The DOE sponsors the L-Prize and H-Prize for innovations in lighting and hydrogen technologies. The Smart Gear Competition, developed by the World Wildlife Federation seeks “to inspire and reward practical, innovative fishing gear designs that reduce bycatch.” Of course, no article about innovation competitions would be complete without mentioning the DOE’s Solar Decathalon, where college and university teams compete to design solar-powered houses, or the upcoming American Solar Challenge, a cross-country race featuring solar-powered cars.

Further Reading:

Peter Diamandis: the joy of taking risks (

An Interview with Peter Diamandis, Founder of X PRIZE: On Colonizing Space and Reinventing the Philanthropy Model (

Video: SpaceShipOne: Prize Flight #2 (

Electric Vehicles: The News Keeps Coming (

Marc Gunther: The Strange Power of Prizes (



Steve Puma is a sustainability and technology consultant. He currently writes for 3p as well as on his personal blog, ThePumaBlog, about the intersection of sustainability, technology, innovation, and the future. Steve holds an MBA in Sustainable Management from Presidio Graduate School and a BA in Computer Science from Rutgers University. You can contact Steve through email or LinkedIn, or follow him on twitter.


5 responses

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  2. Steve enjoyed reading your article about the Smart Gear competition. Prize philanthropy is an emerging model. Idea Crossing (a company I founded 7 years ago) has powered several philanthropic innovation prizes. One was a $300K prize for increasing physical activity in kids and most recently a $2.2MM prize for renewable energy for Masdar City in Abu Dhabi. Just three days ago, the US Gov't issued a letter on the the Open Government Directive, page 5, section D said that the gov't will issue(in 90 days) guidance how gov't agencies can use challenges, prizes and incentive backed strategies.

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