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Elon Musk’s crowdsourced Hyperloop project: A transportation breakthrough?

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By Andrew Deck

In the barren plains of Quay Valley, CA — between Los Angeles and San Francisco — a revolutionary transportation system is about to break ground.

Quay is the site for the 5-mile test track of Hyperloop, a high-speed transportation technology proposed by Tesla and PayPal Founder Elon Musk.

Dubbed the fifth mode of transportation, after boats, trains, planes and automobiles, Hyperloop will feature large elevated tubes that shoot passenger-filled capsules at high speeds.

Musk promises Hyperloop can complete a Los Angeles to San Francisco trip in 35 minutes flat, with pods capable of reaching speeds of 760 miles per hour, according to a white paper published by Musk’s company SpaceX in 2013 to garner attention for the project. That is just shy of sonic speed at 768 miles per hour.

The track will reach this unprecedented speed by eliminating all environmental factors. Winds, hazardous weather and drag — the Hyperloop will evade natural reductions in speed by literally operating inside a vacuum.

The envisioned Hyperloop track contains two climate-controlled tubes, one for each direction. Climate control is expected to reduce air resistance inside the tubes 1,000 times over, matching the resistance of commercial flights flying at altitudes of 15,000 feet.

With solar panels lining the tubes, the entire system will be energy clean, bringing sustainability and efficiency elements to the project.

With construction set to begin in 2016, the pilot track is expected to cost upwards of $100 million to build. Some 400 engineers, architects and designers from top organizations, such as Boeing and NASA, are working on it.

Surprisingly, the company behind the Hyperloop, El Segundo, CA-based startup Hyperloop Transportation Technology (HTT), so far hasn’t made a dollar and hasn’t paid its employees a dime. 

Currently the main source of investment for the pilot track is online crowdfunding. And in exchange for remote, part-time work, the employees of HTT are receiving stock in the company, investing in the project they will help to build. In effect, HTT is crowdfunding and crowdsourcing technological innovation on a massive scale. 

How crowdfunding enables innovation

Beyond its jaw-dropping technologies, HTT stands out as a company changing the way we innovate.

Musk’s white-paper publication coincided with the beta launch ofJumpStartFund, an online platform that seeks both money and ideas from “the crowd.” Musk, who had said he was unable to take on the Hyperloop project full time considering his other business commitments, found apartner in JumpStartFund CEO Dirk Ahlborn. The two agreed that Hyperloop was the perfect project to test the platform’s model.

Ahlborn later founded HTT as a subsidiary of JumpStartFund with the goal of crowdsourcing Hyperloop from conception to construction. In addition to venture capitalist funding, HTT is raising money for the project through a crowdfunding model.

Although crowdfunding is tested and true, HTT really stands apart for its crowdsourcing of design and engineering. In exchange for 10 hours of work per week, HTT gives all contributors to the project — from a UCLA architecture student to a seasoned General Dynamics engineer — initial stock in the company.

An early stage startup, HTT doesn’t have the funds to invest in top talent. This stock model allows HTT to avoid expensive payroll fees and entice employees who are excited by the social mission of the project, but don’t want to leave their full-time jobs. 

The result? About 400 part-time employees from around the world are collectively, and remotely, making Hyperloop a reality, turning HTT into just about the largest startup around.

“On this level, on this scale, I haven’t seen this before,” said Marcel Bogers, associate professor of innovation and entrepreneurship at the University of Copenhagen.

Why crowdsourcing and crowdfunding works for Hyperloop

“I think this is a case study in intrinsic and extrinsic motivations,” added Bogers, explaining why there must be an intrinsic value in HTT for workers to flock to a company that does not pay a salary. “The social value of Hyperloop contributes on the one hand, and the excitement of the technical challenge contributes on the other.”

The added market share in the company both drive workers to make HTT a success for their own financial gain and holds out the promise of an extrinsic reward, according to Bogers.

But despite its initial success, HTT has roadblocks ahead. At this point, the biggest challenge might be infrastructure, according to Bogers.

“The whole ecosystem around this technology needs to be in place. As much as Tesla is about building a sustainable car, it also is about building the infrastructure around that car,” Bogers said, referencing the lack of charging stations for Musk’s other major transportation endeavor.

With regard to crowdsourcing, HTT may eventually need to change its open innovation model. When HTT’s operations expand, it will likely begin hiring salaried, full-time employees, according to Bogers.

But that doesn’t mean closing the company off entirely to an external exchange of ideas. As Hyperloop faces the inevitable challenges of sustainable technology design, continued crowdsourcing may be the key to success.

“When you want to solve a particular problem, increasing your solution space increases your potential to find that solution,” Bogers said. “Value lies in open innovation.”

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