SpaceX and Tesla boss Elon Musk's entry into the hyperloop business could threaten the ambitions of three start-ups that have raised $200 million so far
San Francisco: Elon Musk introduced his vision for a futuristic mode of tube-based transportation called the hyperloop in 2013. In an exhaustive white paper, he laid out a body of research conducted with his team at Space Exploration Technologies Corp. demonstrating the system’s viability and seemingly offered it as a gift to the entrepreneurial community. “I don’t have any plan to execute because I must remain focused on SpaceX and Tesla," he said in a conference call at the time.
He apparently changed his mind. Last month, the SpaceX and Tesla Inc. chief executive officer revealed on Twitter that he’d received “verbal government approval" to build a hyperloop capable of ferrying passengers between New York and Washington, D.C., in 29 minutes. The tweet came as a shock to executives at the various start-ups racing to develop their own hyperloops based on Musk’s specifications. Several of them initially expressed hope that Musk would simply dig the tunnels and perhaps choose one of their start-ups to create the physical infrastructure, which involves a tube-encased train travelling at speeds faster than an airplane.
Nope. A person close to Musk said his plan is to build the entire thing, including the hyperloop system. Musk also holds a trademark for “Hyperloop" through SpaceX, which could be used to prevent other companies from using the term, according to US public records.
The billionaire’s unexpected entry into the hyperloop business could threaten the ambitions of three start-ups, which have raised about $200 million combined from venture backers. “There’s probably a finite amount of capital willing to bet on this space—and bet against him," said Jonathan Silver, the former loan programmes director at the US department of energy. Silver learned not to underestimate Musk after overseeing a 2010 loan of $465 million to Tesla, which the electric carmaker paid back, with interest, nine years ahead of schedule.
Publicly, the three main hyperloop start-ups greeted Musk’s involvement with optimism, while also trying to demonstrate progress in their own projects. Shervin Pishevar, chairman of Hyperloop One, said on Wednesday that his company completed a second phase of testing in Nevada, with a pod reaching speeds of 192 miles per hour travelling a distance of 1,433 feet. (Musk’s original plan laid out top speeds exceeding 700 miles per hour over hundreds of miles.) Pishevar said Musk’s interest bodes well for the field because it brings more attention and credibility. “It’s going to take many, many brilliant minds and commitment from many people to push it forward," Pishevar said on Bloomberg TV. “I’m a huge believer in him."
In the past, Musk had repeatedly denied having any interest in building his own hyperloop. If he wanted to get more involved at some point, it seemed likely he would team up with Pishevar. The pair had a budding relationship. They travelled together to Cuba in 2013, posing for a picture with Sean Penn smoking cigars in a vintage convertible. Pishevar, a 43-year-old venture capitalist and early Uber Technologies Inc. investor, was enthusiastic about Musk’s idea for a “fifth mode of transportation" and encouraged him to publicize the plan. The next year, Pishevar teamed up with Brogan BamBrogan, a former senior engineer at SpaceX, to start Hyperloop One. Musk’s friend David Sacks joined the board.
Entrepreneurs said they discussed their plans with Musk’s deputies and took his public pledges not to compete at face value. Dirk Ahlborn, who runs a competing company called Hyperloop Transportation Technologies Inc., said his co-founder Andrew Quintero talked through his plan with SpaceX president Gwynne Shotwell before launching the business. Quintero drowned on Waikiki Beach in 2014, and Ahlborn said he can’t recall the details of his late colleague’s meeting. Ahlborn is complimentary toward Musk: “He’s supporting the community."
Both Hyperloop Transportation Technologies and Hyperloop One filed trademark applications for the term “Hyperloop" in 2015. But SpaceX had already applied for the name with the US Patent and Trademark Office shortly before the original research paper came out. The two start-ups’ applications remain suspended.
SpaceX also owns @ Hyperloop on Twitter and the website Hyperloop.com. The rocket maker unveiled plans in 2015 to hold a hyperloop design competition for students and said it would construct a test track. Musk followed up in a tweet, saying he’s “not trying to build Hyperloop itself" and noted that other companies were working on it.
Behind the scenes, Musk was becoming frustrated that his name was being associated with start-ups he had nothing to do with. Enough sensitivity surrounded the issue that when a magazine article published last year suggested Musk’s involvement at Hyperloop One, BamBrogan punched a wall at the start-up’s Los Angeles headquarters, according to a person familiar with the incident. BamBrogan, a flamboyant technologist who changed his name from Kevin Brogan in a romantic gesture, had a falling out with Pishevar last year, which resulted in a pair of lawsuits. They settled in November, and BamBrogan started a competing company called Arrivo. Sacks had moved on as well.
In December, Musk tweeted that he was fed up with Los Angeles traffic and would “build a tunnel boring machine". He explained his plan to Bloomberg Businessweek a couple months later for creating roads that run through underground tunnels. He named the venture the Boring Co. When discussing it, Musk occasionally hinted at the potential for an underground hyperloop but had always stopped short of committing to build one himself, until last month’s surprise tweet about verbal government approval.
Even with Musk supporting development, a commercial hyperloop is far from inevitable. No one has developed a prototype, above or below ground, capable of achieving the speed or distance Musk theorized. Securing written permission from officials is another major hurdle.
While Musk’s Boring Co. focuses on the East Coast of the US, competitors could still coexist. They may need to adopt a different name at some point, though. SpaceX was granted registration for the Hyperloop trademark in April. BamBrogan, the Arrivo CEO, said he chose not to include “Hyperloop" in the name of his new company, partly to avoid potential trademark conflicts. “We’re glad that companies such as the Boring Co. and others are advancing the state of the art," he said.
Musk plans to hold another hyperloop competition at SpaceX later this month. “We are interested in helping to accelerate development of a functional Hyperloop prototype," read a notice that used to greet visitors to the contest site on Hyperloop.com. “We are not developing a commercial Hyperloop ourselves." That message disappeared this year.Bloomberg
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