William Pomerantz (1): We are in a phenomenally interesting time in the space community

VL: Can you compare the Orteig Prize of the 1920s to your efforts at the X PRIZE Foundation? Orteig's prize was one of many in the early 20th century, but it had perhaps the longest lasting impact--Lindbergh's success soon resulted in first international and intercontinental airlines.
WP: The Orteig Prize was the direct inspiration for the Ansari X PRIZE. Peter Diamandis, our founder and CEO, was reading through Lindbergh’s book The Spirit of St. Louis, and was fascinated by some of the statistics about Orteig's Prize. At first, he was thrilled with the idea that nine teams spent more than order of magnitude more than the prize purse in pursuit of the prize—which is a stunning ratio for anyone trying to stimulate research and development. But just as importantly, the number of passengers flying in airplanes went up by a factor of 30 within the year and half following Lindbergh’s flight. Given that we’ve only just had our 500th person ever fly into space, we could definitely use an increase like that 30-fold boom.
We have certainly patterned our Foundation after Orteig’s effort. Even though we’re still young as an organization, we are starting to see some results that echo the statistics of the Orteig prize and other similar efforts. For example, both the Ansari X PRIZE and the Northrop Grumman Lunar Lander Challenge have matched the historical statistics for cumulative team expenditure, with all of the groups combined spending about ten times the prize value.
The modern day impact of Lindbergh's victory and of Orteig's prize is certainly enormous--aviation is a trillion dollar industry, and it's difficult to say it would be that way without Lindbergh. We're doing our best to emulate that.
As a side note, Lindbergh's book is actually a very good read. It won the Pulitzer in 1954. It's impressive that he manages to make the book exciting even though a substantial portion of it covers Lindbergh trying not to fall asleep while flying. It's amazingly exciting. Spirit of St. Louis and Dava Sobel's Longitude are good first purchases for anyone looking to build a prize-related library.

VL: Do you expect that private initiatives in spaceflights resulting from the Ansari and the Google Lunar X PRIZE will flourish in the same way that the aviation industry did after the Ortieg Prize? Will we see a vast of new array of space carriers, just as Pan-Am, TWA, BOAC, and Lufthansa emerged after Lindbergh's flight? Do the contestants in these two competitions have the potential to become major commercial players in the near future?
WP: That is absolutely our hope, and our expectation. As we design prizes, we do so in an explicit effort to start a revolution that will last far beyond the reaches of our own activity. If a team were to win one of our prizes and then stop—either because they went out of business or because they lost interest—we would almost certainly view that as a failure. In order for our efforts to be effective, the teams attempting to win our prizes need to have lucrative back-end markets that they can either open or access by virtue of their participation in our prizes. That’s what motivates teams to spend some much of their own money—in addition to their blood, sweat, and tears—in pursuit of the prize program.
So yes, we certainly expect that the teams that have grown out of the Ansari X PRIZE, the Northrop Grumman Lunar Lander Challenge, the Google Lunar X PRIZE, and our other prize programs will have significant and sustainable business success in the near future. It's certainly started to happen already in the suborbital spaceflight industry that was spurred by the Ansari X PRIZE. It seems now like a billion dollar market is emerging there, and we're seeing major world players like Sir Richard Branson and Aabar Investments getting involved. Aabar's valuation of Virgin Galactic at about $850 million was huge--and not just for Virgin. That's great news, and serves as a great validator for the other new entrants who are still seeking their investment.

VL: Nowadays, everybody is talking about space tourism, both suborbital and orbital. But space tourism is just for pleasure. The idea of an international business traveler from North America Europe being able to reach Tokyo in less than one hour in suborbital flight seem more business-oriented. Is that capability feasible? Is it something you are pushing for? Is it too expensive or too difficult?
WP: You are absolutely right that the so-called ‘tourism’ market is just one of the opportunities that these commercial spaceflight companies are going to pursue. It’s an important one, and we suspect it is quite a lucrative one, but it is not the only market. Suborbital point-to-point travel is certainly of significant business interest, as you suggest—though it also presents some extremely challenging technical and logistical challenges. Another market that is very important but which doesn’t receive the level of popular attention enjoyed by the tourism market is the one for science—either for payloads being flown suborbitally, small orbital payloads launched from boosters carried by these suborbital spacecraft, or even science experiments that fly to space alongside a human experimenter. Each of those opportunities has the potential to generate substantial amounts of revenue, while simultaneously allowing for cutting-edge research that will be important to a wide variety of disciplines.
As we try to write the rules for our prizes, we do our best to be as open as possible to truly innovative ideas. Innovation sometimes comes in the form of the technical solution—but just as often, innovation means new business plans, new markets, and new management structures. We never want our teams to be limited by the scopes of our imaginations, so we seek to find fields where we can stimulate an impressive demonstration that will potentially open up multiple lines of business that can be pursued by multiple teams.
Personally, I'd love the option to buy a point-to-point suborbital spaceflight ticket. I think it will happen--but if I had to guess, I don't think it will happen for quite some time. It's quite a bit harder than the Ansari X PRIZE style trajectory, and maybe not even much easier that orbital.

VL: Correct my impression if I am wrong, but it seems that some of the contenders in Google Lunar X PRIZE intend just to reach the goal--to meet the requirements of the prize--and don't have any further vision or intention to progress beyond that. Or perhaps they are just facing the fact that without financial backing, they won't be able to build upon the progress they have made. Even government space agencies have lost the momentum they had in the 1960s, when they were able to successfully manage expensive but not impossible goals. Do you have a responsibility when you are designing the goals and the rules of a prize to make it attractive to potential investors, to avoid such entropy after the prize is over? Is the need to attract investors to at least the most credible contestants a perhaps less visible layer of contest design?
WP: Competing for the Google Lunar X PRIZE--or for our other prizes--is certainly capital-intensive. Most Google Lunar X PRIZE teams will need at least $20 million to operate their mission, and some teams are projecting capital requirements closer to $100 million.  Now, our teams can and do sometimes start from very low cash reserves, but all of them will need to raise those significant amounts of money in the early portions of the prize--before the expiration date gets to close, and before the other teams establish too great of a head start.
In order to make that a possibility, we absolutely take into account what we expect will be the reaction of the investment community as we write our rules. This isn’t easy—if making field immediately desirable to venture capitalists were easy, there probably wouldn’t have been a need for the prize in the first place—but it is certainly important. We involve a number of potential team financiers as we design prize rules. If investors don't see a return that will vastly exceed the value of the prize purse itself, the prize program probably won't work.
Also, I should note that the vast majority of our Google Lunar X PRIZE teams are concerned with ongoing operations and profit at the end of their prize-winning mission—they get excited by the lofty goals of the program, but also by the prospect of lucrative financial rewards.