Elon Musk and the Long Range Foundation

In Robert Heinlein’s 1956 novel, Time for the Stars, mankind’s most important scientific work is financed by an organization called the Long Range Foundation.  The Foundation invests in research so speculative, expensive, and slow that governments, corporations, and sensible people want nothing to do with it.

Naturally, the projects keep succeeding.  A sustained and diversified portfolio of research usually pays off in the long run, even though most individual research projects do not.

Weather control and other improbable ventures make enormous amounts of money, so the Foundation invests in even more improbable ventures.  Eventually, it becomes fabulously wealthy and can afford to finance interstellar spaceships, telepathy experiments, and anything else that strikes its directors as potentially useful to humanity.  It is the ultimate virtuous circle: invest vast sums of money on unlikely research, accidentally make a fortune, and use the fortune to investigate something even crazier.

This was science fiction when Heinlein wrote it.  Today, we call it the Elon Musk business plan.

Musk made his first serious money from Zip2 and, then, a much larger fortune from PayPal.  He could have purchased several islands, a respectable collection of yachts, and enough politicians to start his own congressional caucus.  Instead, he put much of his fortune into electric automobiles and rockets.

At the time, neither investment looked particularly sensible.

Electric cars were slow, unattractive little vehicles with limited range.  They were marketed chiefly to people who believed smugness should be classified as an alternative fuel.  Rockets, meanwhile, were built by governments and gigantic defense contractors.  Starting a private rocket company sounded approximately as reasonable as announcing that you intended to build your own aircraft carrier in the backyard.

Musk did both.

SpaceX was founded in 2002 with the modest objective of reducing launch costs, making rockets reusable, colonizing Mars, and saving the human race.  Most new businesses begin with more manageable goals, such as surviving until Friday.

The first three Falcon 1 launches failed.  Spectacularly.  SpaceX was running out of money, and Musk was simultaneously trying to keep Tesla alive.  Had the fourth launch failed, SpaceX probably would have collapsed.  It succeeded.

SpaceX subsequently developed the Falcon 9, Dragon spacecraft, and reusable booster systems.  Landing an orbital-class rocket vertically had long been considered technically possible but economically doubtful.  SpaceX turned it into something approaching routine.  Boosters now return to Earth and land upright on platforms at sea, looking like something Heinlein would have rejected as a little too theatrical.

SpaceX also created Starlink, which required launching thousands of satellites before the system could produce anything resembling an adequate return.  A conventional company would have balked at the cost.  A government program would have required years of hearings concerning orbital debris, rural broadband, environmental impact statements, minority contracting requirements, and whether the satellites were being launched from a politically equitable selection of congressional districts.

Musk ignored all of the problems and just launched them.

Tesla followed a similar path.  Musk did not create the original company, although he became its largest early investor and eventually its dominant executive. Tesla began with the Roadster, proved that an electric car did not have to resemble a golf cart with doors, and then gambled heavily on the Model S.

The company came close to failure more than once.  It nevertheless built factories, developed battery systems, established a charging network, and forced nearly every major automobile manufacturer to take electric vehicles seriously.  One need not believe that every Tesla is perfect—or that every prediction from Musk arrives on schedule—to recognize that he changed the automobile industry.

Then there is Neuralink.

Neuralink is attempting to produce a practical interface between the human brain and computers. Its current experimental implants have allowed people with severe paralysis to control computer cursors and other devices through thought.  The company is also developing Blindsight, an implant intended to create visual perception by stimulating the visual cortex directly.

Musk has suggested that Blindsight could eventually allow blind people to see and might someday provide vision extending into ultraviolet or infrared wavelengths.  For the moment, that portion remains a promise rather than an accomplishment. Musk’s predictions are frequently delivered according to a calendar that has only a casual relationship with the one hanging on everyone else’s wall.

Still, the research is real.  It requires neuroscientists, surgeons, engineers, custom electronics, experimental robots, regulatory approval, years of testing, and an astonishing amount of money. There is no guarantee of success. There may not even be a clearly defined path to success. That is precisely why ordinary investors are reluctant to finance it.

There are, of course, caveats.

Private capital did not accomplish all this by itself. SpaceX received hundreds of millions of dollars in NASA development payments and later billions in government contracts. NASA provided knowledge, facilities, technical standards, and—most importantly—a dependable customer.

Tesla received a $465 million Department of Energy loan that helped finance the Model S and its Fremont manufacturing plant.  Tesla repaid the loan early, but the government assumed a risk that private lenders were unwilling to accept.  Electric-vehicle tax credits also helped create a market.

Neuralink stands on decades of neuroscience and brain-computer-interface research conducted at universities, hospitals, and government laboratories, much of it financed by taxpayers.

Musk did not invent rocketry, electric motors, lithium-ion batteries, satellites, or brain implants.  What his companies have done exceptionally well is combine existing scientific knowledge, take it out of the laboratory, and force it through the long, expensive, humiliating process of becoming a useful product.

Nor does a large fortune automatically produce technological miracles.  Jeff Bezos has invested billions in Blue Origin without matching the accomplishments of SpaceX.  Musk’s Boring Company has yet to transform transportation, and the Hyperloop appears to have been placed in the same imaginary warehouse where we keep flying cars and household nuclear reactors.

Money is necessary, but it is not sufficient. It must be accompanied by technical judgment, disciplined management, persistence, and a willingness to look foolish for a very long time.  Musk exhibits a remarkable tolerance for failure, steadfastly continuing to financially support projects long after a board of directors would have cut their losses and pulled the plug.

Government certainly can conduct great research. The Manhattan Project, the Apollo program, the internet, GPS, jet engines, nuclear power, and much of modern medicine demonstrate that beyond dispute.  Government is particularly good at financing basic science because the benefits are widely dispersed and may not appear for decades.

The difficulty is not that government lacks money.  The difficulty is that government lacks patience under public observation.

Imagine a federal rocket program exploding three vehicles in succession.  The first explosion would produce an investigation. The second would produce televised hearings. After the third, members of Congress would demand resignations, refunds, criminal prosecutions, and perhaps a constitutional amendment prohibiting rockets.

No administrator would be rewarded for saying, “Yes, we destroyed $100 million today, but we learned a great deal.”

A private investor can call that research.  A newspaper calls it a scandal.

Government programs must survive elections, annual appropriations, changes of administration, hostile committees, inspectors general, environmental lawsuits, and the evening news.  A project that will require fifteen years of failure before producing a breakthrough must be defended repeatedly to people whose next election is never more than two years away.

Public pressure demands visible results, predictable schedules, and an explanation for every failure.  Genuine experimental research offers none of those things.  It advances through wrong turns, broken equipment, embarrassing mistakes, and discoveries that were not included in the original PowerPoint presentation.

A large pool of private capital provides something more important than money: insulation.  It gives researchers time to fail without having the project canceled by a congressional committee or converted into a campaign issue.  It allows one generation of profits to finance the next generation of speculation.

The ideal system is, therefore, neither government nor private enterprise. Government should finance basic research, absorb risks that society as a whole must bear, establish reasonable regulations, and become the first customer for valuable new technology.  Private capital should perform the frantic experimentation, integration, manufacturing, and cost reduction that government manages poorly.  There are some projects that are only feasible if large pools of capital are in the hands of relatively few people. 

Heinlein understood the essential point. The Long Range Foundation succeeded because it possessed enough money to ignore short-range thinking.

Musk has not created Heinlein’s Foundation and he certainly has not succeeded at everything he has attempted.  But he has demonstrated that civilization occasionally benefits from having an enormously wealthy eccentric willing to spend a fortune on ideas that respectable people consider ridiculous.

Some of those ideas remain ridiculous.

A few become the future.