While downtown rivals Hyperloop One and Arrivo are raising tens of millions of dollars from investors and hiring dozens of engineers in a race to build the futuristic vacuum transportation system, Hyperloop Transportation Technologies is riding a different track.
Chief Executive Dirk Ahlborn said the Culver City company will continue to spurn traditional management and fundraising methods, relying instead on a radical attempt to crowdsource the design of its own hyperloop system using more than 800 professionals from around the globe who are working in exchange for stock.
It’s an uncommon model that Ahlborn said allows the firm to sustain itself on much less cash while being able to quickly harness the knowledge of a vast pool of experts.
“We can’t be killed,” Ahlborn said. “If tomorrow we don’t have money, I know that these people are still here and our team is still working.”
It is a structure that can allow a company to quickly tackle tasks and reorganize itself as needed, agreed Doug Kirkpatrick, a San Francisco-based organizational consultant with NuFocus Strategic Group, who said it is a model that could be sustained indefinitely.
“The advantages are speed and flexibility,” he said, noting fewer managers on the payroll also saves cash. “The average span of control is one manager for every 10 workers. Bureaucracy costs in and of itself.”
While Hyperloop One is testing a track in the Nevada desert, Ahlborn pointed to progress at his company such as a feasibility study signed with the Indonesian government as well as a just-opened research and development center in Toulouse, France.
Between the company’s launch in 2013 and December, Hyperloop Transportation’s workers have put $26 million worth of services into the project in exchange for equity, according to the company. It also received a $30 million investment in December from private equity firm Edgewater Capital of Shanghai. Hyperloop One, on the other hand, has raised $141 million in cash. Arrivo was founded in January and is in the process of raising venture capital.
Hyperloop Transportation’s 800 equity-paid employees work a minimum of 10 hours a week. The company also has 32 full-time salaried employees, the majority of whom are based in Culver City. The business is divided into about 50 teams of four to seven people, including a project leader. Project leaders can either be salaried or equity-compensated employees, Ahlborn said. In addition to email, the company coordinates its workforce through a suite of basic software applications including Google Docs and Facebook Workplace.
“We don’t differentiate between paid or stock-option (employees),” he said.
The company also contracts with about 40 outside businesses to do work in exchange for equity, such as British engineering firm WS Atkins, German vacuum system manufacturer Leybold, and downtown law firm Paul Hastings.
The amount of work put in by equity-paid employees ebbs and flows based on the needs of the company, said Mahilani Akiona, Hyperloop Transportation Technologies’ head of human resource operations.
“Think about consulting with Deloitte or Accenture,” she said. “You have consultants who are put on a project based on their skills and abilities. They tackle the project and then they are at home when they are done, waiting to be reassigned.”
She did note that an equity-based system is not for everyone.
“Generally, it’s someone who has an entrepreneurial attitude, that takes initiatives, that likes really challenging goals,” she said. “(It takes someone) that can work in a pretty chaotic environment and help bring it to organization.”
But Ahlborn acknowledged that managing a battalion of workers remotely – particularly those who are not on a salary – can be challenging.
“You need to make sure that you have the people, that the project management is there, so that the people are not idle, the communication needs to be there,” he said. “The driver here is passion.”
