Prizes reward solving the problem, not credentials

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 36:17

   topic that has been at the root of XPRIZE for some time, which is incentives, right? I'm always fine of saying you get what you incentivize, and we humans are driven by our incentives. And so when I think about what incentivizes us, what drives humans, I have four answers there. Fear, curiosity, greed, and then kind of love as well. I'll add that as a fourth one. And so, you know, So unfortunately, fear is a very strong motivator, and curiosity is far behind.

2. 36:50

   And I calculated the ratio of fear to curiosity. It's the ratio of the defense budget to the science budget, right, which is vastly different. And then greed, of course, you know, if I put them in order, I would say fear is the strongest motivator. Greed comes next. Curiosity comes next. And love, you know, depending upon the subject or the person, sort of varies in there. um and and it's interesting uh to take a second and look at incentive prizes as a model so we all know the nobel prize which awards someone for work that was done typically anywhere from like the earliest was 10 years ago and typically 20 30 even 40 years ago and incentive prizes say i don't care who you are what you've ever done where you've gone to school if you solve this problem you win um and you know some of the classics here was in 1714 the british parliament offered 20 000 pounds to anyone who could find

3. 37:48

   longitude at sea it was called the longitude prize and interestingly enough it was won by a a british clockmaker john harrison who solved it with a marine chronometer And so when you put up a prize, you get, you know, non-conventional people coming in from an orthogonal angle. Another example is in 1795, the French government, Napoleon's armies were basically invading into Russia. And the supply line was so long, they were starving.

4. 38:18

   And so they offered up a 12,000 franc prize for food preservation. And it was won by a guy named Nicholas Appert who invented canning. Tim Tantz, yeah. And this guy was a confectionary. You know, he made sweets and he came up with this idea. So you get very unusual approaches. I love the story of Harrison because they were so sure an astronomer would win the longitude prize. They refused to pay him.

5. 38:46

   Didn't he have to sue them for ages to get the money out? What a horrible outcome because they just couldn't believe that somebody who wasn't in the field could actually solve that problem. And what we've seen repeatedly is the people from outside the field that solve these problems. These are coming in with a beginner's mind. And, you know, my frustration at wanting to be an astronaut led to the XPRIZE.

6. 39:07

   You know, I grew up on Apollo and Star Trek. I've told that story a thousand times. And, you know, I became clear when I interviewed a whole bunch of astronauts. I used to be at MIT's Man Vehicle Lab with astronauts coming through. And I would say, tell me about how I become an astronaut. And they would say, well, first of all, your chance at one in a thousand. Secondly, if you're accepted in the astronaut corps, half the astronauts have never flown.

7. 39:27

   They're called penguins because they have wings, but they don't fly. And then if you do fly, you'll fly maybe once or twice during your career. And I was like, I want to go every weekend. And so it was like, okay, there needs to be a different way. And that's when I became focused at commercial space. And then a dear brother of mine, a friend of Anusha's, myself, all of us, Greg Maranak, gave me The Spirit of St. Louis, which was Lindbergh's autobiography, chronicled his flight.

8. 39:54

   And in that, I found out that Lindbergh didn't fly from New York. to leverage on a whim. There was a $25,000 prize offered by a gentleman, Raymond Orteig, and that $25,000 inspired nine teams who spent $400,000 to win the $25,000. And ultimately, he didn't pay any of the losers. He only paid Lindbergh as the winner, who was the most unlikely guy to pull it off. And I said, wow, that's a great business model.

9. 40:23

   You only pay for success after it's successful. And that launched the Ansari X Prize. But let's talk about, like, what happens when incentives go wrong and you get perverse. I found a few that are interesting. So in Hanoi in 1902, the French paid a bounty for every rat tail that was collected during the plague. And people ended up cutting off the tails, letting the rats go and breed and started rat farms to get more rats to collect more money.

10. 40:58

    uh wells fargo um had a sales quota uh driven by employees to open about um so the sales quota a quota from wells fargo got employees to open 3.5 million fake accounts to get the sales quota so you got to be careful about your incentives well we're seeing that today in real time right they've incented folks at ice to arrest as many people as possible to deport as many people as possible. And the idea was, let's just arrest the criminals. But the targets are such and the incentives are such that they're arresting everybody. And that's causing political backlash of enormous magnitude. It goes back to the motive. At X Prize, almost every prize we have, the motives are love and curiosity. I cannot think of anything that or anyone who's competed in an X Prize that was motivated by greed, for example. Definitely not fear, but not even greed.

11. 41:52

    The prize money is great if they win, but even if they don't win, they end up helping other teams. They end up continuing on to build the company. So the winning is not the only motive for them. They want this problem solved. They want the problem solved. It's their passion for that. And I think that's when you get real good incentives. If you put greed like quotas, then that's when you really get all those opposite results.

12. 42:19

    you know those prizes those prizes that were more execution than inspiration yeah it's a good point yeah so uh i take a second and talk about some of the prizes we've had in your show