David Rosenthal: belief

Transcript context

…Yup, and it wasn’t just Branson. This is a massive list. Everybody who you would think would fund this thing basically looked at it and didn’t. Paul Allen looked at this thing and turned it down. Although that was for more strategic reasons that we’ll get into later. He even approached Elon Musk in 2001—let’s just say 1995–2001. The funding was not secured for quite a long time after having the idea for this and ultimately launching it. Elon also said this is really interesting, but I have a certain amount of money, it’s finite, I want to do my own thing, I want to be specifically focused on mars. It’s a little digression but a great Elon quote that said, “Yeah, we want to do something that significant, but something at a reasonable budget. Not $10 million, just a couple of million. Not $10–$15 million to spend, but we want to start with an order of a $1- or $2-million project.” If you’re Peter and you hear that from Elon, this guy that’s starting to get some traction as an entrepreneur in this ecosystem, and then you go and watch how they do end up spending money, it must just be like, ‘Are you kidding me?’ As we covered on the SpaceX episode, the idea originally was they were going to spend not that much money, but of course, that changed. Some of the notable early donors that they do get to the prize are Tom Clancy (the author) and also the Limburg Family Foundation comes in and donate some money to the cause. There’s actually quite a cool story that I think that you hear about how they fund about half of it, but the biggest donor ends up being the Ansari family, which is a super cool story on its own. It’s a family of Iranian immigrants who founded a telecom empire in the early 90s, I believe—late-80s early-90s—and made a lot of money through that. They end up becoming the title sponsors and it becomes the Ansari XPRIZE at that point, but that was only for about half of the $10 million, right? Yeah, it’s less. The way it basically worked is they raised $2 or $3 million, and then before the Ansaris came in—I think their initial pledge was $1.75 million—the way that they got from that $2 or $3 million up to $8-ish million was that they approached First USA who eventually became Bank One, and then finally JPMorgan Chase. Everyone ultimately lands either there or Bank of America. Basically, after raising this few million dollars, a huge chunk—$5 million—was actually filled by a hole-in-one insurance policy. In a sense, the $10 million was never actually raised, but rather, they found a price out which First USA was willing to bet against anyone ever actually successfully winning it. That price was $50,000 a month insurance premium that Peter and the XPRIZE team had to be paying in overhead in order to keep the prize alive, to hopefully get that hole-in-one cash out. It’s totally wild, and you think about the motivation there of First USA. Their biggest motivation was that the XPRIZE, while it was underfunded, was a really cool sexy brand and they saw a market to be the credit card issuer to people who were space enthusiasts. They wanted to do this multifaceted deal that included being the provider or underwriter of the policy that would reward the prize winner but also to be able to issue XPRIZE-branded credit cards. It also came with some other strings attached. In addition to the $50,000 monthly payments for the $5 million insurance policy, first of all if no one won by a certain date or if the full $10 million wasn’t raised, the $5 million from First USA would never have to be paid out at all. Second, that certain date was not very far in the future. It was actually just December 17, 2003 which (I think) this point was 1999–2000 right around there, so it really set up the XPRIZE for quite the photo finish because anybody who wasn’t already working on it had to throw their hat in the ring very quickly.…

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