Startup Houston

Graham Randall is a regular contributor to Startup Houston on the topics of biotech, life sciences and entrepreneurship.

Newt Gingrich recently wrote an editorial in the WSJ [subscription required] calling for greater use of prizes to solve the world’s problems. Regardless of what you think about Newt’s politics, it’s difficult to deny that the current grants-based process of funding science isn’t meeting our needs. Grants are too risk-averse and too time-consuming. As a result, the visionary, but risky, experiments that lead to major breakthroughs have difficulty getting funded, and many future scientists are turned off by the prospect of spending a career writing grant applications. The success of the first X-Prize shows that prizes can work and can be much more cost-effective than the grants system.

Gates Dissatisfied With the Conduct of Science

Derek Lowe commented a while back on the dissatisfaction of the Bill & Melinda Gates foundation with the results of their Grand Challenges. These were grants awarded in 2005 to researchers to try to solve the biggest public health problems. Unfortunately, these grants produced no major scientific breakthroughs. So, the Gates Foundation is reissuing the grants, but this time ignoring the so-called “experts” and looking to other fields for ideas.

Derek isn’t surprised that the grants produced no results since the practice of science is so unpredictable. You can’t do science the same way you would build an operating system–set some deadlines, allocate resources, and draw up a Gantt chart.

Still, I’m not certain that the conduct of science wouldn’t benefit from somebody like Bill Gates throwing some money around and imposing some discipline. Science, and in particular academic science, is woefully inefficient. Part of this is because in academia, the worker bees (graduate students) are still learning their craft. But it’s also because, having accepted that science is unpredictable, hardly anyone puts any thought into managing the project. Few scientists even have training in project management. Experiments get done when they get done, and then the scientists move on to the next experiment. Science, today, is too much like a drunk man’s stagger.

What is generally missing is a project manager–someone to drive the schedule and hold the team accountable for meeting deadlines. By deadlines, I’m not suggesting “cure cancer by the end of the semester.” I’m thinking of shorter-term, measurable goals. What can be accomplished this week, this month, and this semester, and how do the results contribute to the ultimate goal? Nobody’s keeping an eye on these little details in an academic lab. Days turn into months which turn into semesters. Graduate students bang their heads against walls pursuing deadends because nobody set a deadline for pulling the plug.

All of this is allowed to go on in academic science because the focus is on the proposals and the subsequent publications, not the actual, real-world-affecting results. Come review time, anybody can say “Look at how productive we were, we published all these articles!” What Gates is realizing is that publications don’t cure diseases.

Prizes would bring the focus back to results–real-world-affecting results.

Gingrich’s Prizes

In Newt’s article, he suggest seven prizes with $2 billion awards for accomplishing the first three and $1 billion for the rest:

1) A low-cost vaccine or preventive intervention for malaria — possibly the single biggest potential improvement in the quality of life in poor tropical countries.

2) A modestly priced, mass-manufacturable hydrogen engine for cars, which would be the biggest single contribution to reducing carbon loading of the atmosphere and reducing subsidies through high oil prices to dictatorships.

3) A cheap method for turning large quantities of seawater into fresh water.

4) A reusable system that could get people into space at 10% of the current cost, thus enabling genuine space tourism and launching an age of exploration.

5) The first privately financed permanent lunar base.

6) A method for reusing nuclear waste to make Yucca Mountain, Nevada unnecessary as a repository.

7) A method of learning math and science that kids like, and that enables us to leapfrog India and China by breaking out of our unionized, bureaucratic curriculum. This would enable us to replace “No Child Left Behind” with a more effective education model that could be called “Every American Gets Ahead.”

This is a good starting point for further discussion, and I’m sure everybody has their own pet cause they believe is worthy of the list. I’d rather see more prizes for addressing disease. I also think Newt’s prizes are too big. There’s no doubt that the person who invents a mass-manufacturable hydrogen engine will make a lot of money just by licensing the technology to automobile manufacturers. So does that challenge also merit a $2 billion award? For $10 million, the X-Prize found a solution to fly us into space, so why should we spend $1 billion to reduce the cost of that trip by 10%?

We should differentiate between the two uses for prizes:

1. Spur innovation in a potential commercial market. Compel innovators and entrepreneurs to take the next step to commercialize the technology.
2. Incentivize innovators to develop solutions to problems for which there is no significant ROI. The mainly applies to orphan diseases, like malaria.

and then adjust the size of the prizes accordingly. Curing orphan diseases is going to require big prizes, but prizes designed to spur innovation in a potential commercial market should be just large enough to motivate people to get started–like the $10 million offered for the X-Prize.

So what do you all think? What causes do you think merit prizes? How big should those prizes be? Please leave your ideas in the comments.