Titan Submersible: Catastrophic Pressure from Investors, Part 1-3

Pressure from the ocean's depths -- and from investors -- crushed it.

Author

George Pillari
September 16, 2023

James Cameron, Explorer and Film Producer/Director on what happened

On June 18, 2023, the Titan submersible was on a voyage to 12,500 feet below the sea to visit the remains of Titanic, which hit an iceberg and sunk off the coast of Newfoundland in 1912. More than 1,500 people lost their lives on Titanic.

Titan’s pilot was Stockton Rush, CEO of OceanGate Technologies, which built and owned Titan. Rush and four passengers climbed into the sub and Titan’s hatch was bolted shut from the outside. Titan then slid into the 45-degree waters of the North Atlantic Ocean. A short time later, Titan imploded, killing all aboard.

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My theory of how the Titan disaster unfolded is centered around money.

To gain perspective on the costs of deep-sea exploration, let’s look at a company in the industry called Triton Submarines. Based in Florida, Triton makes submersibles like Titan. The Triton product line starts with one-man submersibles that are classified to about 1,000 feet of depth and cost about $3.0 million. A cool toy for the owner of a large yacht. The top of the line is a three-person model classified to 36,000 feet, outfitted for scientific exploration, and costs about $40.0 million.

These numbers do not include the expense of support ships, permits, fuel, crew, and many other costly items required for successful missions. Deep-sea exploration is an expensive business.

By all accounts, Stockton Rush was a wealthy man from a wealthy family. But was he wealthy enough to fund the entire build and operation of a five-person submersible that could go to the depths of Titanic? I don’t think so.

Records indicate that OceanGate raised $19 million of investment during its 14 years of existence with almost all of it in a 2020 round of funding. This seems like a paltry sum when we look at the personal funds spent by other modern-day explorers like space-tourism company Blue Origin, into which Amazon’s Jeff Bezos has poured more than $7.0 billion.  Further, records indicate the $19 million came from 22 investors.  While $860,000 per investor is nothing to sneeze at, in the world of private equity and venture capital, this was a mom-and-pop, friends and family pool of capital.

If we go our posts on moonshots, there was a key take-away:  Elon Musk (SpaceX) and George Lucas (LucasFilms and Star Wars) maintained full control of their enterprises since they funded all the early, high-risk phases of the businesses with their own money.

When Rush needed money, he didn’t have a Bezos-sized bank account, so he took on investors and then had a completely different and new level of accountability. He needed to deliver results so his investors could eventually get a return on their money. No more exploring for the sake of science and humanity. It was more about reporting progress and delivering on promises made to his investors.

There are about 10 submersibles in the world that are classified to dive to the depths of Titanic. (A submersible or “sub” is different from a submarine in that a submersible must be launched from a support ship and hoisted in and out of the water.) A sub is “classed” by an outside agency to certify its integrity to a certain depth, particular type of operation, and compliance with international standards and maritime laws among other things.

The classification process is like the inspections that are done when you are building a home or doing a renovation. At each step of the way, different specialists verify components of the build. The electrical team checks out the wiring on the sub while the materials team tests the hull for integrity under pressure and so on.

Classifications slow down the time for a sub to get to market and increase the costs of the build. Rush and team wanted none of this and skipped the entire classification process. In industry parlance, Titan was an “unclassed vessel” and the only such vessel seeking to go to Titanic depths.

After a few years of trial and error, OceanGate raised its January 2020 round of funding.  From GeekWire in January 2020:

  • OceanGate will take advantage of lessons learned during the construction of its carbon-hulled Titan submersible, which was originally built for Titanic journeys. Rush said tests that were conducted at the Deep Ocean Test Facility in Annapolis, Md., revealed that the Titan’s hull “showed signs of cyclic fatigue.” As a result, the hull’s depth rating was reduced [by OceanGate] to 3,000 meters [9,842 feet].

  • “Not enough to get to the Titanic,” Rush said.

So, we have a situation where it looks like OceanGate’s original carbon-fiber hull was not holding up, was never classified by a maritime agency, and the company was running out of money. What could go wrong?

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