Tag Archives: Paul Moller

About 4280 days ago Search Engine Optimization

Ideas For Sale

The Big Idea A handful of entrepreneurs are building marketplaces designed to hook up creative thinkers with businesses that need them. Is the world ready for an eBay of ideas? Anyone who has spent time hunting for his glasses only to discover them on the bridge of his nose can relate to Sanjay Goel’s feelings when he finally came up with the business idea for which he had been searching for half a year. The idea was this: to build a Web site for ideas. Ideas are now widely regarded as the lifeblood of the economy. By some measures the market for the transfer of intellectual property has hit $100 billion. Increasingly, organizations are looking outside the ranks of employees to find these ideas. Last year, for example, mining company Goldcorp Inc. offered a total of $500,000 for the best ideas for getting 6 million ounces of gold out from under a lake in Ontario. The incentive paid off so well that the Canadian company upped the ante in March, offering a total of $2 million for other stellar gold-mining ideas. You can’t even say it’s not rocket science: NASA recently called on the world at large to come up with a scheme for launching a probe to Pluto for less than $500 million, having scrapped its own, more expensive plans. Meanwhile, hundreds of thousands, and possibly millions, of people routinely generate ideas that could conceivably make someone a lot of money or otherwise improve the lot of some subset of humankind, but they’re clueless about what to do with them. Send them uninvited to a company? Call a patent lawyer? Hire an intellectual-property agent? Start a company? Take out an ad? All are avenues conventionally taken by those imaginative thinkers who don’t simply let their ideas die on the vine. But maybe a better notion is to bring the Internet’s aggre- gating capabilities to bear on idea matchmaking, in much the same way that eBay has brought together buyers and sellers of collectible goods. And so it was that the company Goel and Sharat Singh founded, called Ideas.com, along with a small pack of competing Web sites, intended to pull in orphaned ideas and funnel them to businesses willing to pay cold, hard cash for the best of them. “We’re creating a marketplace of ideas,” says Goel. “The ideas that are now being wasted are extremely valuable to companies.” Trafficking in ideas, of course, entails complexities that Beanie Baby traders never had to worry about, including the daunting difficulties in determining and valuing ownership of ideas. But, as with so many dot-coms, the biggest barrier faced by Ideas.com and its competitors has been having to struggle with unproved revenue models in an investment market that has turned its back on Internet companies unlikely to turn a quick profit. Indeed, time may have run out on Ideas.com. On July 31, Goel and Singh were seriously considering shutting down the company. But in bringing his company as far as he did, Goel managed to raise a question that may continue to beguile companies and individuals for years to come: can the Internet help transport ideas across organizational boundaries and in doing so render obsolete the entire notion of corporate boundaries? HIDDEN JEWELS: “The ideas that are now being wasted are extremely valuable to companies,” says Sanjay Goel, founder of Ideas.com. Sanjay Goel was born in Delhi, India, to parents who expected him to become an engineer or a doctor. But Goel was fascinated with business and by age 12 had cofounded a thriving neighborhood magazine-rental stand. He dutifully trudged off to the Indian Institute of Technology in 1984, where he studied electrical engineering and secretly planned to start a business when he graduated. But, like many of his classmates, he felt obligated to first grab a master’s degree in the United States, and he ventured to UCLA. After a stint as a robotics researcher in Japan, Goel returned to California in 1990 and reinvented himself as a programmer specializing in finance. “I had zero background,” he says. “My whole thing is I’d rather fail doing something very ambitious than succeed doing something that’s not ambitious.” After a year of programming, Goel decided it was Wall Street or bust, so he loaded up his aging Honda Civic and headed cross-country. In New York City he had several interviews, to no avail. His credit cards were maxed out, so Goel decided he’d drive a taxi to make ends meet — only to learn that a taxi driver’s license would cost $300 — $290 more than he had. Still, he wouldn’t budge from his goal. “I’m either going to do what I want or nothing,” he says. “There’s nothing in the middle.” He was counting his change to see if he had enough money for a meal when Citibank called and offered him a position in its investment-banking division. By 1998 Goel had already been named the division’s managing director — a career rise of unheard-of velocity in the staid world of big-time investment banking. Despite the success and his indulgence in on-the-edge hobbies — he carried his parachute with him on business trips, began flying airplanes and helicopters, climbed Mount McKinley, and started motorcycling and windsurfing — Goel became increasingly restless. In 1999 he realized that, for all his daring exploits, he had been keeping his back turned on the biggest adventure of all: building a company from scratch. Goel came up with a sensible course of action: develop a business plan, get funding, and then resign from his position. He then promptly rejected his own advice and quit on the spot. “It had to be a clean break,” he says. “I have enough confidence in myself to know that for the second time in my life I was going to restart my career.” Goel had already come up with what he thought was a golden business idea: an innovation marketplace. Now he had to figure out how to make such a thing work. He took to spending his days at the New York University Law Library, reading about innovation. “The books were telling me that companies understand the value of innovation, but that they haven’t found an optimal way to deal with it,” he says. But what sort of business could close that gap? For months Goel researched the problem and couldn’t nail down an answer. Then, as if in tribute to the adventitious nature of idea generation, the solution came to him in his sleep. “I woke up and said, ‘Now I’m ready for this,” he recalls. The idea behind Ideas.com was simple enough. Anyone could post to the site a brief description of an idea. Corporate executives in need of an R&D boost paid a fee to become affiliated with the site, along with monthly fees to maintain their affiliations. The executives perused the postings, and if they liked what they saw, they could negotiate directly with the poster. Postings described such things as a Web-based system for taking opinion polls; a laboratory bench that prints documents; and a heated, rollable pad for covering a sidewalk before a snowstorm. Companies paid commissions to Ideas.com of as much as 30% on ideas that they bought. (Neither Goel nor his customers will divulge how high any of those fees ran, except to say that the prices depended on company size and other unnamed variables.) Idea contributors paid nothing. If Goel had had any doubts about the plan’s viability, they evaporated when he shared his idea in late 1999 with Venky Harinarayan, a former UCLA classmate who had sold his own dot-com, Junglee, to Amazon.com in 1998 for $250 million. “I had been talking about it for 30 seconds when he told me to stop. I thought he was going to kick me out of his office, but he immediately offered to invest,” Goel says. Harinarayan brought in his two Junglee cofounders, and the three chipped in $1.2 million to get Ideas.com off the ground. It launched last November with 15 employees. Among the executives who joined the start-up’s board of advisers was John Seely Brown, the near-legendary former director of Xerox’s ultrainnovative Palo Alto Research Center. Things can get prickly in the field of idea vending when, for starters, a potential buyer notifies an idea poster that he or she wants to hear more about the idea. To sell the idea, the author must spell it out to the prospective purchaser. But once the idea is explained, the business could take it and run with it without paying. “How do you simultaneously advertise what an idea is while maintaining it as a secret?” asks Stephen Margolis, head of the economics department at North Carolina State University. For that reason, he says, economists call an unshared idea a form of “impacted information,” meaning that it is hobbled by a breakdown in market forces. Goel was well aware of the dilemma. “It was the first and main issue we had to deal with,” he says. To get around it, the site encouraged idea sellers to ask prospective buyers to sign nondisclosure agreements (NDAs). Sellers were urged to enlist the “principle of incremental disclosure” — that is, to unveil the idea in layers of increasing specificity. After each layer was revealed, the buying company could demonstrate its good faith with a payment or by upping the price it was proposing to pay for the idea. If negotiations broke down, the buyer left the picture, in theory without having seen enough details to implement the idea. Thus one Ideas.com contributor listed an idea for a “Computer Mouse (special type)” in this oblique manner: “It is a normal mouse with some very useful additional features.” More details were available to “serious buyers,” he or she noted. In fact, incremental disclosure is the means by which the business world has long handled the sale of trade secrets. Trade secrets are designs and processes that aren’t patented, typically because their owners fear that competitors will glean the secret from the patent file and find a way to implement it without violating the strict confines of the patent. (Think Coca-Cola recipe, which has never been patented.) Incremental disclosure became particularly popular in the 1970s, after Asian companies proved maddeningly adept at turning U.S. businesses’ own innovations against them. “Certain offshore organizations with far more experience than us would send armies of guys over to look at information on the pretext of evaluating the company for a joint venture,” says Kathryn Rudie Harrigan, Henry R. Kravis Professor of Business Leadership, at Columbia Business School. “These people were actually intellectual-property vacuum cleaners, and they got away with it until U.S. companies became more savvy and found ways to break their information into pieces with a pricing schedule.” Goel concedes that NDAs and incremental disclosure don’t offer ironclad protection against unscrupulous companies bent on stealing ideas. But he insists that most idea sellers recognize that unethical companies are the exception. “Individuals generally have a sense that companies will treat them fairly,” he says. “It’s in a company’s interest to reward someone for contributing an idea. The value of an uncooked idea is generally a small fraction of the value which the company is going to derive from it. Buying an idea isn’t a one-shot transaction, it’s a magnet for attracting the best ideas going forward.” In other words, the best way to make sure smart thinkers send you their most valuable ideas — as they come up with them — is to buy their half-baked ideas now. Ronald S. Jonash, managing director of Arthur D. Little’s Global Technology and Innovation Management Practice and chief of innovation at ADL, agrees that companies need to be cautious about leaving idea generators feeling exploited. Jonash has worked with the automotive-supply industry and says that employees at many supply companies are not inclined to share new ideas with General Motors because of its reputation for taking ideas and developing them on its own. Chrysler, meanwhile, paid some suppliers to develop promising ideas in exchange for the exclusive rights to the resulting product for two years. That — along with other creative relationships with suppliers — is why Chrysler became the preferred customer of more than 75% of all suppliers, says Jonash. HIGH RISK, HIGH REWARD: “I’d rather fail doing something very ambitious than succeed doing something that’s not ambitious,” says Goel. Even if an Ideas.com posting attracted a company that wanted to do the right thing, the formidable task of placing a value on the idea remained. Typically, the buyer and the seller would take their own shots at coming up with a value and then the negotiations would begin. “When it comes to assessing an idea’s worth before the idea is implemented, wilderness is a good word for describing the position you’re in,” says North Carolina State’s Margolis. In cases where a reasonable sales estimate can be made for products based on the idea, he notes, a royalty of 2% to 10% of revenues is a rough rule of thumb. But if the product couldn’t exist without the idea, he adds, the figure is frequently 30% of revenues and can go even higher. The amount may dip to a tiny fraction of a percent if the idea represents a slight improvement in an established product, such as a better knob in a car. Things only get more complicated from there. In most cases, it’s not clear up front whether an idea will end up being worth implementing at all, let alone how well the resulting product will sell. “Generally speaking, an idea by itself is worth nothing,” says Mel Lazar, managing partner of Lazar Levine & Felix LLP, a New York City accounting firm that specializes in business valuation. “The question is, Can you take that idea and put it into a business in a form that will generate income?” For that reason, Lazar thinks the chances that a company will pay much money for an idea it spots in a Web-site posting are small. And even if it is willing to pay, it will probably enlist a hardball negotiator to get it cheaply. “The average guy would get run over,” he says. Goel doesn’t argue with the suggestion that the majority of posters are unlikely to score big financially. But he points out that for many idea authors, money isn’t the main point. “A large number of people are very happy just seeing their idea taken to fruition, even if they never get paid for it,” he says. “If you come up with an idea for a new windshield wiper and it gets implemented by an automaker and before you know it millions of cars around the world are using it, that’s a very powerful experience.” Of course, the man who had that experience, an inventor named Robert W. Kearns, spent decades in court trying to get automakers to pay up, eventually receiving $30 million. Still, Goel has a point: the average person who comes up with a modestly good idea isn’t likely to hold out for big bucks at the almost certain cost of seeing the idea ignored. In any case, even if the site had been frequented by the most fair-minded of buyers, the vast majority of ideas posted there didn’t seem destined for the big time. Consider this posting, from “skankinARTboy,” for a “Wider Salsa Container”: Hey tostitos — i am a lazy college student. I buy nachos and chips all the time, and i personaly hate that i cannot dip my chips into your tiny containers. Half-way empty your container becomes impossible to dip into. I undestand you can pour it out but guess what? America is lazy, and convience is the key to marketing. So shorter but wider container, same glass cost, it hold the same amount and it is better for all lazy people who sit and eat your chips and salsa on the couch. To help idea buyers skip the junk and root out the gems, Goel worked on “reputation engines” that would have enabled at least some site visitors to rank idea sellers. But he warns that ranking ideas isn’t as reliable as ranking baseball cards on eBay. “It’s hard to say that an individual who in the past has not come up with good ideas will not come up with good ideas in the future,” he says. Conversely, he adds, someone who has had one good idea may not ever come up with a useful idea again. He would not allow sellers to rank buyers. “Everybody believes their idea is very powerful and that it deserves significant reward,” he says. Clearly, posting a random idea in the hope that a company will seek it out and buy it is a long shot. But Goel built some twists into Ideas.com that were intended to strengthen the odds. One was that a company could pay Ideas.com to allow posters to submit ideas for that company only. In fact, of the 50,000 ideas that the site received, 48,000 were such “dedicated” ideas. Unfortunately, many of them were addressed to companies such as Apple and GM that didn’t pay Ideas.com for the privilege of receiving ideas. But Goel didn’t mind. He used the homeless missives to entice those companies to join. Of course, corporations have always received unsolicited ideas from eager innovators, and in general it’s caused them giant headaches. Ideas from the public tend to be not only less than earth-shatteringly useful but also not unique. ADL’s Jonash explains that even in-house ideas typically aren’t original. For instance, after a recent productive brainstorming session that ADL had with a corporate client’s scientists and managers, research revealed that most of the resulting ideas were already known to the industry. But try telling that to the proud idea submitter who is promptly blown off by a corporate R&D manager, only to see his or her idea appear in a product the next year. Large companies are so routinely hit with lawsuits by such sincere but misguided idea producers that, notes Margolis, many have set up departments whose sole function is to ensure that over-the-transom ideas almost never make it to the desk of any employee who might be working on a similar project. From that perspective, a steady stream of unsolicited ideas doesn’t seem like the answer to the business world’s dreams. That’s one reason more-experienced inventors and idea producers often turn to intellectual-property agents who shepherd submissions to corporate buyers and negotiate deals. That’s all well and good, says Goel — if you don’t mind paying commissions of 15% or more and waiting a year to get an answer. Why not let the Internet do what it’s best at? Goel asks — which is avoiding the need for a middleman and eliminating the friction. In fact, Goel Offered an even more compelling use of the Internet than giving idea generators a chance to promote their ideas to corporate buyers. He helped companies put their problems in front of idea generators. When a fee-paying company wanted the public to try its hand at coming up with a winning idea, it posted an “Idea Quest.” Coca-Cola offered $5,000 each for two Idea Quests: “an energized packaging system” and “a new fun and healthy kids’ drink.” And Sears ponied up $5,000 for the best idea for “hand and bench tools for the 21st century.” Ideas.com also wrote its own Idea Quests. Those quests were by far the more interesting, including “new personal handheld devices” and “a better election process for the U.S.” The Idea Quests from outside companies, in contrast, had a public-relations feel to them. Which was exactly as it should have been, says Jonash. He argues that the real benefit of soliciting ideas from the public is not to get usable ideas but rather to make customers feel like part of the team and to provide market research. Steven Kirn, former vice-president of innovation and organization development for Sears, agrees that opening up a dialogue with customers is one of the big payoffs of soliciting ideas. “We wanted an effective and efficient way to make customers feel there’s a point of contact where they can tell us what they’re thinking,” he says. But Kirn also insists that Sears was pleased with the results of the Idea Quest. “Out of 130 to 150 ideas sent in, probably about 12 to 15 of them were pretty viable,” he says. “That’s not a bad ratio of ideas to ideas worth thinking about.” The winning idea — for an improved wet-dry vacuum attachment — might never have made it to the right person’s attention at Sears if it hadn’t been for the contest, he adds. “In the past Sears didn’t have a consistent way to deal with submitted ideas,” he says. “Some might have made it to the fast track, but some probably withered.” Not surprisingly, many entrepreneurs see potential in a marketplace of ideas. Some, like Rob Brazell, coauthor of a 1995 book called The Idea Economy, have focused on mass-market ideas — that is, ideas aimed at Joe Consumer. Brazell, who founded a site named Ideaexchange.com, says, “I wanted the everyday useful idea that would deliver immediate return on investment to consumers.” The ideas that appear at Ideaexchange range from the mundane (how to keep your shoelaces from untying) to the offbeat (how to improve your singing range) to the esoteric (how to double your cattle yield without cutting your wheat yield). Idea buyers rate ideas. I bought an idea for $5 about how to reduce the number of lost signals on cell phones. I’m prohibited from revealing the details. But I can report that the notion was simple and helped a bit. People can also post idea requests on the site. I found one from a businessperson looking for an idea for a Web company, another from someone seeking a shark repellent, and one pleading for antiwrinkle secrets. Brazell is convinced there is gold in such trivialities. He charges idea generators for listing an idea for sale; they name their own price for their ideas. The seller splits any revenues with Ideaexchange. Brazell won’t disclose revenues or profitability but says he has $22 million to work with, all raised from private investors. By this past summer Brazell had expanded his vision of the company and planned to eventually provide paid content of many kinds, including a deep well of how-to information. He recently purchased the assets of the bankrupt eHow, a site that offers thousands of tips on everything from how to feed an orphaned kitten to how to save money on taxes. But Goel’s more direct competition came from sites like IdeaDollar.com, BrightIdea.com, and NewIdeaTrade.com, all of which are gunning for business-oriented ideas. Those sites don’t seem as polished or as well stocked with ideas and idea solicitations as Ideas.com did, but each has its own twist on the concept. It’s too soon to say which of those sites will catch on. Niaz Ahmed, founder of NewIdeaTrade, says that his willingness to let businesses access all ideas on the site without paying any fees gives his advertising-supported site a competitive advantage — at least for the time being. Ahmed, who won’t disclose the company’s financial details, admits, “How long we’ll be able to continue to offer this service for free, I don’t know.” Ideas.com’s short life is, of course, just about over. Visitors had downloaded more than a million pages by the summer, Goel says. The company had raised a second round of financing but was unable to raise a third. At press time Goel and Singh had laid off all their employees, and Goel was jetting off to London to interview, once again, for banking jobs. But Goel, ever upbeat, still believes in his dream. “One day,” he says gamely, “someone’s going to make a lot of money from it. It’s just not going to be us.” Had his financial prospects allowed it, Goel planned to expand his services. He wanted to set up a branded version of the site accessible through Coca-Cola’s Web site; there, visitors would have submitted ideas only to Coca-Cola. Creating branded idea sites was supposed to become an important source of revenues for Goel’s company as more and more businesses recognized the value of soliciting ideas but didn’t want the cost and hassle of building their own idea-handling system from scratch. And he was working on offerings that would have enabled client companies to set up versions of Ideas.com accessible only to specific groups — employees, for example, or suppliers and customers or outside professionals likely to be useful contributors. “These companies already spend a lot of money to reach out to these groups for ideas, even though they might already be members of their commu- nity of interest,” he explains. In fact, Goel had recently changed the name of the company to Ideation Networks Inc., to emphasize that Ideas.com was just one manifestation of a grander plan to set up many different idea-collection engines. Steven Kirn, for one, thinks that’s the right way to go. “Where I think we’re headed is that there will be some problems that we’ll want everyone in the world’s ideas on, and others where we’ll establish relationships with communities of inventors,” he says. Jonash, too, believes that companies will want a portfolio of “idea banks.” Some of the most successful idea networks, he notes, involve large corporations’ paying for the expertise of small companies. Most of the large pharmaceutical companies now work closely with small biotech companies, he points out, and in the computer industry Cisco has created a successful model for providing generous funding to small enterprises and then acquiring them on friendly terms if their technology pays off. Coca-Cola, meanwhile, recently created a sort of in-house incubator called Fizzion to fund and support start-ups whose services could be of value to Coca-Cola. Other large companies are likely to follow those models, and online idea swapping could become a standard part of corporate R&D. Small companies especially may be big beneficiaries of idea networks, since they’re less likely to have experts in-house. And they typically don’t have an army of people that they can send to conferences and trade shows to scope out new ideas, although those are among the best places to find them. Consider Cirrus Design Corp., a small manufacturer of aircraft in Duluth, Minn. Dean Vogel, vice-president of research and technology at Cirrus, notes that some of the company’s ideas for aircraft features come from randomly encountered sources. As an example, he offers the fellow who was ogling one of the company’s planes at an aviation show. The man casually observed that a minivan-style sliding door would make it easier to get into and out of the plane. Vogel overheard him, and Cirrus execs have since been thinking about how a sliding-door mechanism could be made lightweight enough for the plane. “If you can reach out to the world, you’ll be harvesting a lot more brains than you could afford to hire,” says Vogel. Goel had been planning to push the envelope even beyond Ideation Networks. For example, he speaks of creating networks that would enable everyone in a company’s “value chain” — that is, suppliers through customers — to put their heads together not just to trade formal ideas but to interactively solve problems, meet needs, and create new opportunities. But he appears to have also discovered that his concept for commercializing ideas is one idea that the world may not yet be ready to pay for. Even if that’s the case, Goel is not likely to give up permanently on his ambitions. “I don’t like to dabble,” he says. “I like to take my adventures all the way.” David H. Freedman is a contributor to Inc. Hold That Thought When does a simple thought become transformed into something you can buy and sell? Reporter Kate O’Sullivan spoke with some inventors, investors, and experts who’ve struggled with that question. Steve Jurvetson, managing director of venture-capital firm Draper Fisher Jurvetson, invests in early-stage companies. Kevin Rivette is coauthor of Rembrandts in the Attic: Unlocking the Hidden Value of Patents. Scott Randall founded FairMarket, which builds online auctions for such businesses as the Miller Brewing Co. John Kowalski, CEO of Load Hog Industries, turned his unlikely invention into a product that attracted the attention of Ford Motor Co. (See ” The Pickup Artist,” June 2001.) And Paul Moller built a company around his own invention — a flying car. (See ” This Is Rocket Science,” July 2000.) Here’s what they said about idea marketplaces. Is an online idea marketplace a valid business concept? Steve Jurvetson: “At some level I do believe that there’s a worldwide marketplace for information. … But I’m not sure there’s a thriving market for patentable ideas.” Paul Moller: “In the early ’70s I could have benefited if I had had such a process available to me. It would have maybe been a great way to get exposure for some of the other products I’ve developed.” What would it take to make something like this work? John Kowalski: “They’d have to build some credibility. Any exchange of soft product is really hard to track. Who’s buying? Who’s selling? What’s been sold? I would think anyone with a substantive idea would be concerned about throwing something like that into the barrel. It might be knocked off, and then you don’t get paid.” What could cause such companies to fail? Kevin Rivette: “If I’m going to download my novel idea into somebody else’s database, that completely eliminates my ability to get patents in other places in the world. Once you’ve made a publication for sale, bingo, you can’t get patent rights. Once you’ve put it up on the site, you’ve published it for sale. That is the triggering event at which point you should have filed for your patent application in most of the world.” What do you think of the notion of corporations’ offering branded idea marketplaces? Scott Randall: “I love the democratization of the idea-collection process. This is the truest form of listening to your customers. The goodwill generated would be enormous. Consumers will shower tremendous loyalty on those companies that are perceived as listening best to their needs. The major caveats would be the legal ownership questions, the potential disputes around people submitting similar ideas but not getting credit, and the royalties associated with paying the inventors.” Is this concept ahead of its time? Paul Moller: “Oh, no. I don’t think it’s ahead of its time at all. I think, like a lot of things, there will probably be half a dozen [companies] that come and half a dozen that go, and I think there will be one who eventually separates himself from the pack.” Please e-mail your comments to editors@inc.com.

About 4707 days ago PCs, Laptops, and Notebooks

This Is Rocket Science

Paul Moller may have been working on his flying car for nearly four decades. But he’s no crackpot. Meet Skycar Inside a small, squat building in the interior farmland of northern California, a machine that can only be described as a one-man flying saucer sits next to a spacious workshop. It’s not the most interesting vehicle in the building. That honor has to go to the gleaming red machine in the corner, the one that looks like a race car circa 2025, all wicked curves and multiple jetlike engines. It’s a Skycar — a “roadable aircraft,” or a flying car, if you will — that is capable in theory of lifting straight up past rooftops and then zooming off over hill, dale, and traffic jams. Paul Moller believes he’s going to put one just like it in your driveway. It seems like a batty notion, but it’s one to which Moller has unwaveringly clung throughout a nearly four-decade odyssey that has left him and his company, Moller International, in Davis, Calif., constantly on the brink of crashing and burning. Moller, of course, is hardly the only entrepreneur to throw himself into a long-shot, long-haul venture that holds out the promise of great reward. But few have pursued as grand a vision against such daunting odds and with as much resiliency. The saga of Moller International is virtually a road map — or, rather, an aeronautical chart — of how to keep moving ahead with a dream when the world seems to offer nothing but wind shear. “I always believed I’d succeed if I could just survive,” says Moller. “It’s always been about surviving.” He just may pull it off. Child prodigies are usually associated with mathematics or music. Moller, who grew up on a farm in rural Canada, was gifted in mechanical engineering. At age 11 he designed and built a working four-person Ferris wheel. Four years later, after an inspirational encounter with a hummingbird, he built a primitive and partially functioning helicopter. Not interested in attending college, Moller attended an aircraft-maintenance trade school. But he never got over the thrill of building a machine that could hover, and he pored through engineering textbooks on his own and took a few night classes. In 1960, when he was 23, he randomly dropped in on Barry Newman, an aeronautics professor at Montreal’s McGill University, asking for advice on how he could take some college classes. Newman was so impressed that he pulled strings to get Moller into a graduate program there, despite Moller’s lack of a college degree. Upon obtaining his Ph.D. in mechanical engineering, a mere three years later, Moller got a job at the University of California at Davis, and it wasn’t long before he had created the school’s first aeronautics curriculum. But a question kept nagging at him. Why weren’t we all getting around the way the Jetsons did? In a world that was beginning to experience heady revolutions in computers, medicine, and even space travel, Americans were spending hours a day in machines that were essentially a 19th-century technology, stuck in traffic under wide-open skies. It was as if every element of science fiction were coming to life, except for the most ubiquitous — flying cars. “You can’t describe a future without a major evolution in personal transportation,” says Moller. Was there a way to combine the straight-up flight of a helicopter with the greater simplicity, speed, and lower cost of ownership of a light plane? The key, Moller decided, was the engine — usually the weak link in aircraft when it came to cost, performance, and reliability issues. What if an aircraft could be driven by smaller, simpler engines that each turned a small fan-blade-like rotor underneath the vehicle? In 1965, Moller built and flew a two-engine hovering platform he called the XM-2. The underpowered contraption struggled to make it inches off the ground and tended to wildly pitch to one side or the other with any imbalance in the two engines’ thrusts. But it was a start. By 1967, Moller was itching to spend all his time designing and developing a precursor to a mass-marketable flying vehicle that could challenge the dominance of the automobile. At that time he estimated it would take 10 years if he could get the right power plant. All that stood in his way were a complete absence of funding, enormous technical and regulatory hurdles, and a long history of flying-car failures. (See “It’s a Bird, It’s a Plane, It’s … History,” below.) On the plus side, an easy-to-own-and-fly family aircraft could create one of the largest new markets in history. Moller knew little would happen without investors. So he started talking up the idea to everyone of means he ran into. Soon the 30-year-old fell in with an eccentric but enthusiastic promoter who agreed to pay $15,000 up front and $85,000 in the coming year in exchange for 7% of Moller’s about-to-be-founded enterprise. Moller scaled back his university job in 1968, set up a workshop in a garage, and started ordering parts. About three months later, with his $15,000 depleted and his debt rising, Moller was stunned to learn that his lone investor’s business had collapsed. Moller had to scare up money, and fast. It would become a theme for the next 32 years. He quickly confirmed the obvious, which was that traditional sources of financing were not eager to throw money at a garage start-up with an unproven technology, market, and founder. Instead, he would have to play the passion card — that is, find well-heeled people who would be sufficiently revved up by the force of his creativity, ambition, and vision to fork over significant sums of money without any conventional form of assurance that they’d ever see a penny of it again. He struck gold later that year with Jim Fitzgerald, then the major owner of a private hospital near San Francisco. Fitzgerald not only was willing to put in some of his own money but talked Moller up to some doctors who always seemed to be looking for interesting investments to round out their portfolios — or at least to generate tax deductions. The group put up $25,000 to start. In the coming years they would put in more than $500,000. The bankrupt original backer helped bring in money, too, by introducing Moller to prospective investors. And former mentor Newman was good for $2,000. Those investments and others like them were sustaining in more than a financial sense. “If I ever had dark times and thought about how easy it would have been for me to walk away from the project,” says Moller, “just remembering how people like that had put their trust in me kept me going.” By the end of 1968, Moller had built and tested the XM-3, a more stable version of the XM-2, though it too was incapable of controlled flight. As work on his prototypes intensified, he was bolstered by help from a few employees and a parade of graduate students who had jumped at the chance to work on cutting-edge aeronautics technology. At that point Moller found himself wondering if there wasn’t an intermediate, far easier target he could pick off along the way with the tiny rotors he was developing. What besides vehicles might need a lightweight push from a blast of air? As an admittedly reckless skier, Moller had always felt that standing around waiting for a chairlift was as inefficient as forcing aircraft to use an airport. But if he could design a backpack containing a powered rotor… It probably goes without saying that the backpack thrust unit wasn’t destined to eliminate the ski-resort lift line. Of the many obstacles that arose, Moller wrestled most heavily with the requirement that peaceful mountain slopes not sound like Daytona when skiers were schussing uphill. So he developed his own muffler and tested it out on motorcycles, which were a passion of his. It soon occurred to him that the demand for motorcycle accessories far outstripped that for thrust-pack accessories. Eventually, the Supertrapp muffler, as he named it, would become one of the most popular aftermarket accessories ever made for motorcycles and would be a hit on the race-car circuit as well. Supertrapp was a $5-million business and was still rapidly growing when he sold it, in 1988, to free up time and money for his Skycar work. “I loved creating a physical product that was made on an assembly line and that made money we couldn’t have survived without,” says Moller. “But it occupied a lot of my best people.” Was that successful venture a fluke? Apparently not. When Moller had started searching for a larger work space in the mid-1970s, he recognized that the Davis area lacked the sort of research-and-development industrial park that was starting to thrive around many other major university towns. So he spearheaded the development of one and made millions more when he later sold his interest in it. For Moller those accomplishments were useful distractions. “Anything I did besides work on the flying car was to raise money for the car,” he says. “Everything was for the car.” To that end, the ancillary businesses were valuable not just for the cash but also for the credibility they gave Moller in the eyes of prospective investors. He might be a dreamer, but he was a dreamer who could make money. Never quite enough money, though. Everything Moller could scrape together from investors and his side business ventures was instantly gobbled up by flying-car R&D to the tune of as much as $3 million a year. Like the resulting prototypes, Moller’s finances were underpowered and lurchy. He owns the building he operates in, but he’s lost and regained it twice, once frantically negotiating to keep it while lying in a hospital bed with a broken neck from a motorcycle-trail-riding accident. (He also races go-carts, and he plays racquetball daily.) “I thought they were going to chain the door that time,” he recalls. Moller says that he’s been involved in about nine lawsuits, everything from disputes over distributor contracts — including one with a large investor and former board member of the company — to liability for allegedly faulty muffler parts. Moller sued one company for refusing to pay royalties on an engine design that he says violated one of the 43 patents Moller International owns on its technologies. All suits were resolved in his favor, he claims. One way or another, the work on the vehicles went on. By the early 1970s, Moller had turned his attention to a different type of engine, named a Wankel after its German inventor. Moller believed the engine’s ability to churn out high horsepower in a light, cheap, low-maintenance package made it perfect for a flying car. In 1974 the Wankel-powered XM-4 embarked on its maiden flight of a few wobbly feet. Moller realized there was little point in bringing out additional prototypes without first achieving quantum leaps in power and control. Doing so took him another 15 years — 12 years past the 10-year mark he had once set for himself. “We never felt discouraged about the slow evolution of the car,” he says. “The only thing that was disheartening was having to sometimes put the work on it aside to raise money.” Finally, in 1989, he smoothly piloted the eight-engine, flying-saucer-like M200X to a height of 50 feet alongside his building. In theory, 40 feet is as good as 10,000 from an aeronautical point of view. The M200X’s one-man design wasn’t a marketable one, but it proved the concept of a hover vehicle with multiple small engines. Moller flew the M200X more than 200 times in front of current and prospective investors and other potential boosters. To fund the Skycar, Paul Moller developed a muffler that he marketed to motorcycle and race-car enthusiasts By 1990, Moller was working on a new machine designated the M400. The lack of an X in the name was significant — X is generally taken to mean “experimental” in new aircraft. From the beginning, the Skycar, as the M400 would later be jauntily named, was intended to be the real deal. It would be Moller’s do-or-die project. “It was what I had been moving toward for most of my life,” he says. “Making it work was everything to me. Just accepting the possibility of failure would have been the first step to failure.” The Skycar’s outrageously sexy appearance is hard to reconcile with its creator. Moller doesn’t look or act like someone who would build the stuff of male adolescent fantasies. There’s something sturdy and utilitarian about his build and even his face, though the latter is softened by an extended Vandyke that gives him an incongruously thoughtful look. In fact, Moller shrugs off his supervehicle’s hot looks as an incidental by-product of the physics of airflow. “If you design something well aerodynamically, it will probably look good, too,” he explains. Appearances aside, the Skycar is an undeniably innovative machine. It seats four in its bubbled cockpit, can be driven for short runs on its three small wheels (by virtue of which the M400 is categorized as a motorcycle by the Department of Transportation), and fits in a two-car garage. Moller claims that the Skycar will in a decade or so be quiet enough to take off from a suburban driveway without unduly stressing the neighbors, but in the shorter term he envisions that owners will drive it to a local “vertiport” for a launch. Once the completed Skycar lifts straight up to a safe height, the machine will thrust forward to speeds of 300 miles per hour or more, under the control of 28 microprocessors running 27,000 lines of programming code that control devices such as those that readjust the flow of fuel to each of the eight engines every hundredth of a second to balance and steer the vehicle. The computers get their marching orders from the pilot by means of a pair of joysticks, but they won’t wait for the pilot’s slow reflexes to kick in before taking any necessary corrective action. “In a 300-mph vehicle, you’re the weak link,” says Moller. Anyone who visits Moller International with the idea that the Skycar was born in a slick, futuristic working environment will be disappointed. The facilities look a lot like the branch offices of a struggling insurance company backed up against a large auto-body shop specializing in interplanetary vehicles. The main giveaway that some kind of advanced high-tech wizardry is happening there is the 21-inch computer-aided- design display terminals tucked away in one set of cubicles. But you’d also have to wonder about the shrapnel holes decorating one small room off the main workshop floor. (They were created by an experimental engine that almost ripped itself apart during a bench-test explosion.) There are 25 employees at the company, and given the current shortage of skilled workers who are willing to work for down-to-earth salaries, Moller was happy to grab them any way he could. One electronics expert had dropped by to inquire about renting storage space when he was thrust into an interview and summarily hired; a mechanical engineer was recruited by another employee who happened to be standing around when the engineer was in a local U-Haul office returning a moving truck. Moller has at times been way ahead of other U.S. businesses when it comes to finding innovative ways to compensate employees, though he claims that he usually ends up regretting it. In the early 1970s, for example, he issued phantom stock — that is, he contracted to pay employees bonuses that corresponded to increases in the value of the company’s stock. He ended up paying out hundreds of thousands of dollars to Supertrapp employees under the plan, he says, before the company was sold. In the late 1980s he started issuing employee stock options with no strings attached, but after a key worker quickly cashed out and started his own business, Moller instituted an eight-year vesting schedule. Turnover has been a problem, Moller concedes. The main reason: fears about the company’s financial health. He recently lost his general manager to a dot-com. “He’s getting $3 million or $4 million in options there,” says Moller, “and here he had to worry about his next paycheck.” He means that literally — several times over the years the company delayed issuing paychecks because the money simply wasn’t in the bank. Moving ahead to the Skycar project had only increased the pressure to raise money, because of the vehicle’s added complexity and the need to make it a practical, certifiable aircraft. (Just building a one-twelfth scale model of the Skycar for dog-and-pony shows cost $20,000.) Before beginning work on the Skycar, Moller had tried to broaden his fund-raising efforts. “We’ve explored every option known to man,” he says. He contacted most major automakers about buying into his company, but they told him point-blank they had no interest whatsoever in flying vehicles. He tried aircraft manufacturers, which for the most part insisted they had enough problems getting ordinary planes and helicopters right. He made his way through much of the Fortune 500 without encountering a glimmer of interest. The only investment bank willing to get involved was Robertson Stephens, which put together a $1.5-million private placement marketed to a handpicked list of its clients. Robertson even had Moller present at a technology conference it sponsored for investors. Not a single nibble. Moller looked into an initial public offering but couldn’t find an interested high-quality underwriter. He trolled for investors through a full-page ad in Business Week. It drew a number of candidates, including a significant one: Jack Allison, an air-force colonel turned real estate agent who was also an enthusiastic pilot. After meeting with Moller, Allison gathered together 21 pilots, colleagues, friends, and friends of friends to come up with $150,000 in 1986. Allison was such a gung-ho supporter of Moller’s efforts that Moller later invited him to join the company. Allison’s title is vice-president of administration, but he serves more as an investor-relations specialist, especially when it comes to selling fellow aviation fanatics on the company. When the most recent tech boom hit, Moller expected to find backers among all the young corporate hotshots stuck in Silicon Valley traffic, who he thought would appreciate the electronic sophistication of the Skycar. “This thing should excite the hell out of the computer industry,” says Moller. “It’s a flying computer.” He wrote letters to the CEOs of all the major Silicon Valley companies he thought might be interested in the electronics behind Skycar . No one responded. Still, it’s not as if Moller has been a complete dud when it comes to raising money. He has done better with foreign corporations, attracting an investment of $300,000 from South Korea’s Samsung Techwin, as well as $700,000 from a Malaysian concern and $1 million from a Finnish company. A Middle Eastern company became an investor when an executive there heard about Moller through one of Moller’s stockholders. Overall, a majority of the company’s large investors are from overseas. And then there’s Moller’s affinity for profitably spinning off technologies. “I always try to find an element of the grand scheme to capitalize on,” he explains. He has scored government contracts for producing smaller and simpler hovering machines, for example, including an R2D2-like “aerobot” designed to inspect the undersides of bridges. And the latest incarnation of his Wankel engines seems to be taking off as a product in its own right. Moller claims to have received letters of intent for the purchase of a total of 500,000 engines worth $1 billion, for applications ranging from electric generators to fire-hose pumps to personal watercraft resembling Jet Skis. Meanwhile, with all that ancillary success, Moller has had to answer some hard questions from his third wife. “She doesn’t understand how I can make so much money and still be broke,” he says. “I’m like the farmer in the joke who is thrilled to inherit $6 million because now he can afford to farm for another 10 years.” To keep himself in the black, if barely and erratically, Moller has continued to turn back to many of the same individual investors who have supported him over the years. “I’m pretty good at hustling,” he says. “When I get desperate, I come up with something that would appeal. You can’t just keep leading them to the same trough.” Every company milestone, from a new contract to a technical breakthrough, is leveraged into an effort to ignite investors’ interest in buying more stock, as well to attract new backers. Last year, for example, Moller started up the Skycar Liftoff Association, whose stockholding members will receive options on more stock if and when the Skycar flies. The scheme brought $500,000 into the company. The engine was the key, Moller knew, in combining straight-up flight with the speed and simplicity of a light plane. There are now some 450 investors in Moller International, with individual investments averaging a little over $100,000. None of the investors have gotten rich on the company, but they could have done a lot worse; during the past 30 years, the price of a share of stock has increased by a factor of 50. Moller himself helps make a market in the stock by informally helping buyers and sellers hook up with one another. The company is currently in the process of registering as a public company — not because it plans an IPO anytime soon, says Moller, but so that the company can borrow against its stock. Prospects for the Skycar have received indirect boosts in recent years from surprising quarters. The Federal Aviation Administration tends to be tough on new aircraft when it comes to certification, and the Skycar might have been in for a particularly bumpy ride if it were forced to qualify as either an ordinary plane or a helicopter, since it combines features from both. But the agency recently created a new category for powered vehicles. the skycar is likely to be the second such vehicle after the v-22 but a certified skycar is more than two years away. the faa is also in the process of creating a new air-traffic-control system light aircraft that will in most cases remove one of the major hassles in the need to obtain traffic-control clearances. the new system will allow special transceivers aboard light planes to communicate with one automatically directing pilots away from traffic conflicts. I make a legitimate case for this vehicle without a major change in the airspace-control says moller. NASA has been helping the cause as well. The agency has long been interested in increasing its role in civil aviation, and chief Daniel Goldin has in recent years publicly predicted a boom in private aircraft that will annually deliver 10,000 vehicles within 10 years and 20,000 within 20 years. Moller points to that prediction as a vindication of his insistence that the Skycar market is out there. “Without that market, I’m just a maverick trying to turn a hobby into more than it is,” he says. “So many people are just pursuing their dreams, caught up in their wishful thinking, and that can be sad.” Now all he has to do is get the Skycar off the ground. The first big test will be a straight liftoff of 10 feet or so (a low-hover test) while the vehicle is tethered to the ground to avoid any control-related mishaps. The original target was April 1999, but that date has been pushed back several times. As of this writing, the test was set for late August. If it goes well, an untethered flight will be scheduled before the end of the year. The fact that the Skycar hadn’t so much as hopped two feet into the air didn’t stop more than 100 people from plunking down $5,000 deposits for the first Skycars. One woman in Austria has deposits on 14 vehicles, essentially establishing herself as a European distributor. The initial price of the Skycar will be $950,000, though Moller says he can steadily work the price down with greater production levels, ultimately reaching $40,000 to $60,000 — which may actually be affordable to many Americans on a lease basis, given the traditionally low depreciation on aircraft. Don’t even think about it, though; Moller has stopped taking deposits. “I don’t want a huge, impatient crowd of buyers waiting for the Skycar,” he says. With luck, he says, he’ll be able to produce 10 “preproduction” vehicles in 2001, though some or even all of them could go to military and paramilitary organizations that have expressed interest in the machine. What will it take for Moller to get the car into production? Another $45 million, he says, plus about $500 million more to get to volume runs. That’s a lot of money, he concedes, but he points out that 15 million new automobiles are sold each year, and if he could sell one-twentieth as many Skycars at $100,000 apiece, he’d be looking at a $75-billion market. “Ford spends $1 billion just to update a car line,” he says. Even if the Skycar does make it all the way into production, Moller’s story won’t be over. Just as he has built ancillary businesses to raise money for the Skycar, lately he’s been regarding the Skycar itself as a means to a new end, he says. Just down the road from his building he’s developing a 60-acre complex to house the world’s largest combined alternative and traditional health-care facility. Spurred by the debilitating illnesses suffered by his two sisters, Moller has become increasingly dedicated to promoting various health supplements and treatments. He himself takes some 75 pills a day and unprompted likes to tick off his cholesterol level (HDL 80), his blood pressure (100/60), and even his testosterone readings. In fact, though he is 63, he looks 45. The Skycar is still consuming him, he says, but he spends more and more time thinking about the health complex, which he hopes to complete within five years. “This has become where I want to end up in life,” he says. After all, he points out, the Skycar has been a long haul. “Who would have thought that something that was supposed to take 10 years would take 30?” he asks. But even if the Skycar takes off on test flights this year, Moller won’t be in the pilot’s seat — his investors won’t let him. “Ten years ago that would have bothered me,” he says, sitting in his office. “Now I’m not uncomfortable with the idea of not risking my neck.” He looks off into space when he says that. His gaze leads to a wall that’s unadorned except for a framed photograph of a hummingbird. David H. Freedman is a contributor to Inc. Starting point: In 1965 Moller built and flew the XM-2, a two-engine hovering platform that struggled to make it inches off the ground and pitched to the side. Phase two: By the end of 1968, Moller had built and tested the XM-3. It was more stable than its predecessor but was still incapable of controlled flight. Liftoff: In 1989, Moller piloted the eight-engine flying-saucer-like M200X to a height of 50 feet, which proved the validity of his concept. IT’S A BIRD, IT’S A PLANE, IT’S … HISTORY More than 75 patents for flying cars have been issued in the United States since 1917. None of the vehicles ever caught on, though, because most tended to be expensive and flimsy as cars and underperformers as aircraft. Enthusiasm for the concept peaked back when hordes of sky’s-the-limit young veterans returned to a booming economy after World War II. But interest seems to be picking up again — a 1998 World Aviation Conference, for instance, attracted papers from three developers working on “roadable airplanes.” Here is a brief history of the flying car: 1917: Glenn Curtiss’s tri-winged, aluminum-frame Autoplane debuted, sparking interest but going nowhere fast. 1926: Henry Ford rolled out a prototype for the “Ford flying flivver” but stopped work when a friend was killed testing it. Ford remained an outspoken proponent of flying cars but never again put his money where his mouth was. 1937: Studebaker funded inventor Waldo Waterman’s idea of sticking a propeller on the back of one of the company’s cars, along with wings and aviation instruments. After taking a look at the result, Studebaker said, “Never mind.” 1946: Robert Fulton designed and built the Airphibian, the first “roadable” plane certified by the Civil Aeronautics Administration — which also ordered 10 for its own reps. Eleven Airphibians would be built in the 1950s before Fulton’s company ran out of money. 1956: Moulton Taylor rolled out the Aerocar, the only other roadworthy plane to win federal certification. The Aerocar became a minor television star, making appearances on I’ve Got a Secret and alongside actor Bob Cummings on his show Love That Bob after he bought one. Taylor fell 222 orders short of the 500 he needed to start mass production of the vehicle, and only five Aerocars were built. That same year, Ford flirted with a later incarnation of the Aerocar, then backed out. Please e-mail your comments to editors@inc.com.