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A winning innovation for philanthropy

Attendees at a recent X Prize announcement, this one for genetic research.

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BOB MOON: Google is expected to announce this weekend that it's joining with the X Prize Foundation. The Internet powerhouse is going to help raise money for 10 new X prizes to "benefit humanity."

Try Googling the X Prize Foundations and you'll learn that the idea got started as a way to encourage commercial space flight. And now other prizes for all kinds of technological achievements are popping up everywhere. Pat Loeb has her eyes on the prize . . . business.


strong class="name">ROBB WALTERS: When Jim types the command, the car begins moving slowly down the street.

PAT LOEB: I'm riding in a pick up truck with grad student Robb Walters. But he's not driving. This is a robotic vehicle.

strong class="name">WALTERS: And we come up to our target velocity — which is, in this case, 15 miles per hour.

Robb is a member of the Golem Group. The team is competing for a $2 million prize from DARPA, the Defense Advanced Research Project Agency. The mission? To build an unmanned vehicle that can drive through an urban area.

strong class="name">WALTERS: It's kind of like having world's largest remote-control toy, right?

DARPA is part of the Pentagon, which could use this technology in a war zone.In a way, the Agency is returning to an old model for finding new technology.Government-sponsored contests spurred some of the earliest scientific innovations. Take the 1714 Longitude Prize.

strong class="name">ADMIRAL SIR CLOUDESLEY SHOVELL: The navigation of his majesty's ships is the sole concern of his majesty's officers.

The English Parliament offered 20,000 pounds for an invention that would help sailors find their way at sea. It was so successful, the French government offered a prize for the preservation of food for its army. Canning was born.

But the heyday of the scientific prize didn't last. Robin Hanson is an economist at George Mason University. He studied why prizes lost favor.

strong class="name">ROBIN HANSON: Scientists became more organized into scientific societies and they lobbied a lot for more grant-like funding. And a grant, it doesn't come with much in the way of strings. It's just a pile of money you can do with what you want.

Grants became the dominant force in scientific research. But today, grants are starting to give a little bit of room back to prizes, thanks largely to the passion of Peter Diamantes.

strong class="name">PETER DIAMANTES: I've had a passion to travel into space myself since I've been a child. It's my mission in life.

Diamantes, the son of Greek immigrants, is the founder of the X Prize. When he realized he wasn't going to become an astronaut, he came up with the idea of offering a prize for inventors who could launch a private space flight.

In 1996, he convinced the Ansari family of wealthy entrepreneurs to put up $10 million to award the winner. The challenge inspired 26 teams from 7 countries and in 2004, Mojave Aerospace Ventures collected the prize.

strong class="name">DIAMANTES: Of the original Ansari X Prize teams, at least eight or nine are now privately building ships going forward. We gave birth not to just a single ship, but an industry.

Actually, Diamantes gave birth to two new industries: commercial space flight and what he calls "prize philanthropy." Diamantes convinces wealthy individuals to back his prizes.

strong class="name">DIAMANTES: They give money to a university or research, they might get 50 percent on the dollar spent towards their cause. But if they fund a prize, it's magical. They get ten-fold the amount of money spent trying to try and win their prize money. And they only pay upon success.

Diamantes has since launched an automotive X Prize for a super-efficient vehicle, an X Prize for genomic sequencing and tomorrow, he'll enter a whole new arena: he's enlisted Google as a corporate sponsor to begin raising money for 10 new prizes aimed at social problems such as poverty.

strong class="name">DIAMANTES: A prize changes the way we think about problems. It doesn't says can it be done, it says when will it be done.

Diamandes has inspired others. The Methusaleh Foundation is offering the M Prize for extending the human life span. The U.S. government is offering the H Prize for breakthroughs in hydrogen fuel. Sir Richard Branson of the Virgin Group is offering $25 million for scrubbing the air of greenhouse gases. A new heyday for prizes is here. And there is something undeniably alluring about the idea that anyone can be the next great innovator. The Golem Group proves it.

strong class="name">RICHARD MASON: We are the epitome of what the intended audience was: the sort of garage team that would come out of nowhere.

Engineer Richard Mason, who's 36, started the group with $50,000 he won on the game show Jeopardy. His partner, Caltech alum Jim Radford, has never even had a regular job.

strong class="name">JIM RADFORD: I'd rather work on something like this, even if it's a small chance of return, because it's more challenging and more . . . and I think there's something cool about it. Like . . . the cool factor really goes a long way for me.

In Los Angeles, I'm Pat Loeb for Marketplace.

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