Practical Dreamer

Practical Dreamer

by Justin Martin
Fortune Small Business, January 2005

Paul Moller hasn’t built a flying car yet. But as he chases that goal, he’s selling off other ideas.

(FORTUNE Small Business) MOLLER INTERNATIONAL Founded by Paul Moller

The company’s headquarters are an anonymous low-rise building in a nondescript Davis, Calif., industrial park. So there’s no way to prepare for what you’ll find lurking inside: a ferocious, eight-engine space gizmo on steroids, complete with a Jetsons bubble cockpit and searing red paint job—the lone existing prototype of the M400 Skycar.

Developing it has cost inventor Paul Moller, 67, bigtime: some 40 years of his life, $70 million, and two marriages. For all that effort, outlay, and anguish, he’s still nowhere near his goal. While the Skycar looks really cool, it doesn’t do much sky-ing, nor is it capable of much car-ing. Moller has done a handful of quick test flights but has never gotten higher than a child’s kite. As for driving, a person could realistically travel about 35 mph on the Skycar’s spindly three-wheeled landing gear—not ideal for the morning commute.

But don’t mistake Moller for a garden-variety UFO kook. He’s considered a brilliant engineer by legitimate aerospace types, and the Skycar has paid some unexpected dividends, largely in the form of inventions Moller has dreamed up and then spun off to continue financing the venture. In trying to get his flying car off the ground, he has become one of the world’s foremost experts on small rotary engines, and next year he will launch several potentially lucrative projects. For example, he has a contract with Madami International of Russellville, Ark., to begin manufacturing engines for use in all-terrain vehicles. Moller will also team up with Thermo Fan of Arlington, Ohio, to begin producing small auxiliary engines for use in 18-wheelers. He even has a strategic partnership with a defense contractor (which preferred not to be named) to explore how much power can be packed into the smallest engine possible.

Moller is that rare entrepreneur who can pinpoint the genesis of his idea. At age 5, growing up on a farm outside the Canadian town of Trail (pop. 8,000), he helped free a hummingbird that was trapped in a shed. It gave him an opportunity to observe the animal up close. What struck him in that moment: “Flying would be a great way to get to school.”

Thanks to farm living, young Moller had ready access to saws, boards, bales of wire, and anything else you’d need to build stuff. He tried his hand at primitive helicopters and rockets. But his imagination always stayed one step ahead of his engineering ability. In high school physics, he designed a car that would run on water. One problem, explained his teacher: It would require more energy to convert the water into fuel than it would to run the car.

In 1963, Moller received a Ph.D. from McGill University in Montreal. Then it was off to the University of California at Davis to teach engineering. The space race was gearing up, and a lunar landing seemed imminent. After his classes Moller would rush home and work into the night on his initial idea for a flying car, the XM-2. “He tried to include me in his interests, but I really didn’t share them,” says first wife Jeanne LaTorre. “I have always been repelled by engine noise and exhaust fumes.”

The XM-2 had a perfectly round design, like a flying saucer, and consisted of a skeleton of 7,500 short steel tubes covered in a tight Dacron skin. A pair of 75-hp drone engines provided the power. Moller built it straight out of his mind’s eye, without a single blueprint. The XM-2 even flew, kind of. He was able to pilot it to a height of about three feet, after which it began to pitch and wobble, like a spinning top losing steam. Still, it was enough for Moller to start fielding business offers of varying legitimacy. One of the best came from an investor named Bernardo Majalca. “I told him to quit the university,” says Majalca. “With his brains, I thought we could build something the size of GM.”

Moller quit, and Majalca proved to be a tenacious rainmaker. Over 37 years he claims to have raised around $10 million, mostly one investor at time, hitting up wealthy doctors and retired pilots. Once Majalca thought he had the Bee Gees lined up, but that fell through. Other times he’s had to tap into such off-the-beaten-path funding sources as Finnish venture capital. Still, for a money pit like the Skycar, no amount is ever enough. Even $10 million represents just a sliver of what the project has required so far.

Turns out, Moller traded a teaching post that promised a comfy tenure for what he calls “perpetual impending doom.” It has forced him to be endlessly innovative, finding various sidelines to feed his Skycar project money—always more and more money.

Back in the early 1970s, Moller was an avid skier. He began thinking about putting a lightweight engine in a backpack to create a personal transportation device, allowing skiers to fly up the sides of mountains. It would certainly eliminate the hassle of riding the lift. But it would also be noisy, he reasoned. Quiet resorts would start sounding like Daytona tracks. So he began working on a very small muffler for his backpack engine.

Moller also used to be a dirt bike enthusiast. When he tested his invention on a motorcycle, it muffled like a wet blanket. Between 1971 and 1988 he sold roughly $100 million worth of SuperTrapp mufflers and siphoned every penny of profit, some $20 million, back into his Skycar venture. He then sold the muffler to Dreison International of Cleveland for another $3.5 million. The SuperTrapp is still manufactured.

Then there’s the almond farm. Moller grows three varieties (mission, neplus, and nonpareil) and even sells organic almond butter on eBay. Since he began farming in 1972, he has had flush years and lean years but on net has managed to funnel another $200,000 into the object of his obsession. “I wish I could focus only on the Skycar,” says Moller. “Business demands that you be pragmatic about survival. I’ve had to get into these other things because Skycar is a bottomless pit of money requirements.”

Yet the various sidelines don’t begin to cover his costs. With interest rates low, Moller has refinanced both his home and headquarters multiple times. His wallet is thick with credit cards, and he often runs the cumulative balance as high as $150,000. As part of his endless quest for cash, he even took Moller International public in 2002. The company is listed on the Pink Sheets (ticker: MLER) and recently traded at $1.50, down from a high of $8.25. For its latest fiscal year Moller International had a $2 million loss. “Our finances are basically awful,” says Bruce Calkins, general manager of Moller International.

Calkins is part of a skeleton crew of roughly 20 Moller loyalists who continue to toil in the 34,500-square-foot headquarters. Abuzz this place ain’t; the loudest sound is the thrum of traffic on nearby I-80. A poster hangs on the wall, extolling the inevitability of “radically new technology.” Below it is a sign, out of order, referring to the drinking fountain. Boxes of toy Skycars, 1:38 scale and manufactured in China, are arranged in neat stacks, waiting.

But follow Moller back into the “fabrication center,” and there it is: the one, the only, the real deal. The current iteration of the Skycar seats four, weighs a svelte 2,400 pounds, and flies with the aid of eight rotary engines, scaled-down versions of the Wankel motor used in a Mazda RX-8. The invention is controlled with a joystick. Press forward, fly forward. Pull back, go in reverse. Take your hand off the joystick, and you hover in the air, like a hummingbird. And yes, Moller has actually done this in ways that are limited, but promising.

He has managed about 20 test flights, never for more than a minute, never going higher than 30 feet, always tethered to a rope for safety. But from a strictly definitional standpoint, the Skycar has flown. Those brief flickers of flight are what keep him going. One day soon, he hopes, it might be possible to untether the Skycar, cruise to 350 mph, and soar to a ceiling of 29,000 feet. “You’ll be able to punch in a code for your office, unfold the morning paper, and when you next look up, you’ll have arrived at work,” he says. Of course, the cost of the first production units will be high, around $1 million. But maybe he can cut a licensing arrangement with a biggie, perhaps GM or Boeing. Sell 500,000 units a year, he calculates, and the price comes down to something in the range of a midsized Caddie.

On Monday mornings, in particular, Moller admits that this all sounds crazy, even to him. But on optimistic days—apparently he has plenty of those—it simply seems inevitable. “I think I’ll be there in another ten years,” he says. Meanwhile, he claims to have 100 standing orders for the Skycar. Wes Moffett, 88, placed his way back in 1974. Moffett, a retired inventor, says he holds 30 patents, including one for a cannon that can fire bales of hay from an open field through the window of a barn. Moffett lives in Bristol Harbor, N.Y. For many years now he has made a point of selecting homes with flat roofs, the better to land a Skycar. “I think it’s going to change the world,” he says.