Commentary

X-Prize Proves the Power of Entrepreneurship

By Edward L. Hudgins
October 7, 2004

On October 4, 2004, on the 47th anniversary of the launch of Sputnik, humanity again made spaceflight history. SpaceShipOne, designed by Burt Rutan and his company Scaled Composites and built with money from Microsoft co-founder Paul Allen, won the privately funded $10 million Ansari X Prize by becoming the first private vehicle, capable of carrying three individual, to fly into space twice in a two-week period.

SpaceShipOne’s triumph teaches us four lessons:

First, it reminds us of the power of competition. Entrepreneurs who compete with one another generate the dynamism of free enterprise. They cannot simply offer adequate goods and services when competitors might offer the excellent. Competition pushes entrepreneurs to strive to satisfy and thus keep their customers. Whether it’s automobiles, personal computers, the Internet, consumer electronics or airline flights, only entrepreneurs can commercialize goods and services, making them available to all. The X Prize stimulated competition in spaceflight, which has for too long been dominated by government. The result is SpaceShipOne’s triumph.

Second, it shows us the power of pride. Rutan’s team, as well as the other two dozen competitors for the X Prize, struggled with limited resources to develop new, innovative and ingenious ways to travel 100 kilometer above the Earth, into space. They called upon the best within themselves and gave themselves something no one else could give them: the knowledge of a job superlatively done in the face of great challenges and a manifestation of their creativity and rationality, which made the achievement possible.

Third, it demonstrates the motivational power of profit. Private cash prizes were heavily used in the development of civil aviation; Charles Lindbergh won by $25,000 Orteig prize in 1927 when be became the first individual to fly nonstop across the Atlantic. In the wake of the X Prize success, Robert Bigelow, the founder of Bigelow Aerospace, which plans to place a private station in space, has offered a $50 million prize for the development of a vehicle capable of carrying as many as seven individuals to an orbital outpost - hopefully, one of Bigelow’s.

Rutan used some $20 million invested by Allen to win $10 million. That doesn’t sound very profitable, but Rutan’s efforts aim at long-term profit - he plans a business carrying passengers on sub-orbital trips and eventually orbital flights into space. In fact, billionaire Richard Branson, founder of Virgin Atlantic airline, is partnering with Rutan and Allen in hopes of carrying 3,000 private astronauts into space in the next five years. Prosperity is a good thing and, in the process of pursuing their own economic and spiritual well-being, these space entrepreneurs will create a commercial revolution as Allen did with Microsoft and Branson did with Virgin.

And fourth, SpaceShipOne marks a paradigm shift. For nearly five decades, most people thought of space as a government program and believed that travel beyond the atmosphere simply was too costly for the private sector to provide. Of course, it was because the government was providing the service that the cost stayed high, and government regulations helped to discourage private entrepreneurs from trying to create their own space businesses. But Peter Diamandis, president of the X Prize Foundation, sought to create a revolution not only by sparking entrepreneurial competition but by changing the way people think about space - it can be a place to which private providers can take you to private facilities for your own private edification.

Rutan was the man who designed the Voyager, the first plane to fly around the world without stopping or refueling. That craft now hangs in the Smithsonian Air and Space Museum in Washington, along with Lindbergh’s Spirit of St. Louis, the Wright Brothers’ 1903 flyer, Chuck Yeager’s X-1, and the Apollo 11 craft that carried the first men to the Moon.

SpaceShipOne should one day hang beside those pioneering craft, in tribute to the private entrepreneurs who opened space to all of mankind.

Edward Hudgins is a Cato Institute Adjunct Scholar and editor of the Cato book Space: The Free-Market Frontier (2003).