14 Ideas to Make Newspace Accelerators Better

14 Ideas to Make Newspace Accelerators Better

Sepatuads.com   Desember 12, 2013   Comment  

Business accelerators in Silicon Valley (CA), Boulder (CO), and across the US have been gathering the best young entrepreneurs, providing them the time, resources, and business connections necessary to start successful software companies.  These accelerators have helped such success stories as AirBNB: now worth $2.5B and DropBox: now worth $8B. 

Can the lessons from software-focused business accelerators be modified to benefit commercial aerospace firms (referred to here as “Newspace”) that need to develop physical hardware (not just software) with correspondingly longer product development cycles?  Are hardware-based accelerators possible?  If possible, what would these accelerators look like?  Below is an overview what accelerators are and my fourteen recommendations for enhancing the capabilities of Newspace accelerators.

For many, YCombinator wrote the definition of what an accelerator is.  Located in the Silicon Valley, YCombinator helps software startups succeed.  Twice per year they bring in a bunch of startups (from thousands of applicants) and invest in each firm ($20K for 3-7%).  In the early days, only a few firms were funded, recent batches have included over sixty startups in a single batch.  Over the course of three months (the length of the “batch”), YCombinator helps startups mature.  Some firms need help with an idea for a product, others with introductions (access to the YCombinator Rolodex), still others need help navigating the pitfalls of a growing software startup. 

Each batch culminates in Demo Day where each startup pitches to venture capitalists (and occasionally, Ashton Kutcher).  Both Air BNB and DropBox (mentioned above) were accelerated via YCombinator.  Many of the companies in each YCombinator batch…FAIL.  But the YCombinator assumes this failure will happen.  The compensation from wildly successful firms more than compensates YCombinator for the cost of the failed companies.  Since YCombinator does not know who will be successful at the outset, if the entrepreneur team is accepted into the YCombinator program…they get funded. 

YCombinator combines:

• an “accelerator” (the advice and maturing services) with
• a “startfund” (the capital that gets invested in each firm). 

For simplicity, I will use “Accelerator” generically throughout this post to mean the combination of both advice and capital.

Is a startup - a startup regardless of industry?  Sadly, no.  Although the YCombinator/Techstars accelerator model can serve as a template, important work still needs to be done to modify the software accelerator model to better fit hardware startups, particularly Newspace hardware startups.  The table below highlights a few of those differences:

Organizations have already begun the good work of porting the software accelerator model over to Newspace hardware startups.  Two examples include: Silicon Valley SpaceCenter and Space Tango.

Silicon Valley Space Center is a Newspace accelerator in the heart of software country (Sean Casey, Managing Director).  They provide frequent events (Hackathons) and networking opportunities.  But although SVSC makes introductions to angel capital, they lack a startfund of their own.  Space Tango is a more serious attempt to mirror YCombinator.  Space Tango has three month “batches” where participants relocate to Kentucky for a 12-week training program.  Space Tango has a startfund ($20K for 5% equity), with follow-on rounds possible.  Space Tango offers mentoring and accelerator services, but is a young organization, having only raised a $100K startfund to date.  The announcement of Space Tango’s initial batch should be made in the next few weeks.  

Below are a few recommendations for ways to build on these efforts.  My recommendations are influenced by:

• Interview with Jon Goff, Founder &  CEO of Altius Space Machines on what he would have wanted in an accelerator for his own startup.
• Interview with Jeff Lints, Director of Operations, of the Energy Fellows Institute – working to provide accelerator services to Clean Tech (a sister industry similar to Newspace in many ways)
• Discussions with a series of space advocates/friends who helped mature these concepts
• The book, LaunchPad (Success of YCombinator) 
• The book, Makers:The New Industrial Revolution

I posit that Newspace ventures succeed faster with four accelerants:

1. Low Capital to Start
2. Speed to Market
3. Capital and Liquidity Opportunities
4. Industry Awareness

1.  Low Capital to Start.  Reducing the Capital requirements necessary to successfully fund a Newspace startup is a goal that both focuses the mind of Newspace entrepreneurs and focuses the efforts of support organizations like business accelerators.  For most entrepreneurs, proposing the business plan that requires hundreds of millions of dollars to execute and needs only one starry-eyed billionaire to agree is NOT a good recipe for repeatable success.  Even when the entrepreneur proposes a manageable business concept, accelerators add value by reducing costs for infrastructure services (e.g. office space, etc.) or access to capabilities that startup would normally not be able to afford (e.g. vacuum chamber for testing prototypes).  YCombinator has brokered a deal with Comcast to provide each startup extremely fast internet connection for their three-month stay in Silicon Valley.  What are the services from which a Newspace startup would most benefit?

2.  Speed to Market.  Minimal Viable Product (MVP) is a term common in software startups thanks to the work of Steve Blank and Eric Ries.  Like the name suggests, MVP’s push a startup to get a product into the hands of customers as soon as possible.  The MVP joke is if you’re not embarrassed by your MVP, your MVP is too mature.  MVP’s give entrepreneur early revenue and, more importantly, they give startups feedback from customers.  Although you don’t hear pharmaceutical entrepreneurs or nuclear power plant startups talking about MVP’s very often, the advent of Cubesats, NanoRacks-based ISS applications, and greater use of Commercial Off-The-Shelf (COTS) technology on space projects enable the MVP concept to be added to the Newspace startup lexicon.  Two-year projects are preferred to five-year projects.  Are their ways the startup can commercialize a subcomponent of their “Two-Year Project” and get to market in one year?  As a general rule, faster to market is preferable.  Note that faster to market will reduce capital requirements also (linking #1 and #2).

3.  Capital and Liquidity Opportunities.  How do we get Angel investors in an industry?  Altius’ Jon Goff said something profound in a Thruster issue about a year ago that has stuck with me.  In other industries like tech, a good-sized portion of the industry’s Angels are created from successfully exiting entrepreneurs that now have experience and capital and still want to be involved in the industry.  However these successful entrepreneurs are not ready for the hard work of starting a second startup.  The profound part of Mr. Goff’s article is acknowledging how few exits Newspace has to its credit – thus the number of industry Angels may also be reduced compared to other industries.  While industry loyalists wait for the Angels to arrive, an accelerator could be very helpful here, introducing Angels from other industries to Newspace.  This work would supplement the good work the Newspace Global and many others are already working in this arena.  As discussed above, YCombinator not only offers capital from their startfund, but also brokers countless introductions between startup and capital sources.  With each introduction, YCombinator’s capital rolodex grows.  With each successful startup to graduate the program, YCombinator’s alumni network grows as well.  Both are important.

4.  Industry Awareness.  Newspace, focused on commercial aerospace projects, would greatly benefit from a higher industry profile.  Many still are unaware of the unshackling from Government contracts that is underway within the aerospace industry.  Accelerators can help significantly here.  By aggregating Newspace startups into a single effort, accelerators may be more influential to news organizations and those peaking over the fence into Newspace from the outside.  In the same way #1 and #2 are linked.  Note how #3 (capital and liquidity) are linked to #4 (industry awareness).

Here are Fourteen Ideas for enhancing a Newspace hardware accelerator:

1. Makerspace (free tools, supplies, and office space) run by the Accelerator.  Because the cost and time to develop a prototype, aerospace firms have a tendency to develop elaborate PowerPoint files, predisposed to take contract money before engaging in any significant prototyping.  And when the industry does build, they over engineer since “this has to work” and often the project lacks prior iterations to leverage.  Chris Anderson, in his book, Makers: The New Industrial Revolution  illustrates how accessible manufacturing technologies are to the average person.  Jon Goff reinforced this point when describing the makerspace Altius uses in Denver and the 3-D Printer they use in the office.  Make these tools available to startups within your Accelerator.  I envision a facility that combines co-working space with a common makerspace area to access shared tools for R&D manufacturing.  What would you do if a laser cutter were as accessible as PowerPoint?  The ethos of the startup changes from talking to doing, from PowerPoint to building hardware.
2. Small product/service.  Accelerator advisors should HIGHLY encourage their teams to think smaller.  Less to develop – reduced capital requirements - faster to market – probably faster to exit.  I like the story Jon Goff tells. He wanted to develop an orbital propellant depot (gas station in space) so he focused on tugs which could be a major component of depots (depending on the architecture) and could be developed much less expensively than a depot.  But tugs were still too big, too expensive for a startup develop, so Jon evaluated what elements of a tug he could make better.  Believing rendezvous and docking technology was ripe for disruption, Altius invented Sticky Boom. 
   
   Accelerator startups should be asking the same “downsizing” questions.  
3. Greybeard Mentor/Labor Team.  Unlike software startups where a coder could be one of the world’s best before age 25, it takes time to develop as an aerospace engineer.  And the aerospace engineers with real-world experience are highly prized.  Under most scenarios, this type of experience is not available to Newspace startups.  Accelerators could offer each batch access to a team of semi-retired “Greybeards” – engineers with hardware roving on Mars or orbiting Jupiter.  Greybeards could review/critique plans by joining a firm’s advisory board or even play a more active role on startups that interest them.
4. Partnership with local universities provide low cost graduate work force.  Another cost-saving method would be to offer the batch access to competent part-time workforce to help move the MVP to Demo Day.  I am not necessarily saying these same students would build the flight hardware that flies on the International Space Station (although some could).  I am saying that free competent labor can help enhance a startup’s product offering by Demo Day.  Good for the student.  Good for the entrepreneur.
5. Shared Admin Services.  Using my Makerspace/co-working space as a model, batch-mates could share the cost of an administrative assistant.  Jon Goff laments the number of hours he spent, in the early days of Altius Space Machines, doing “non-CEO activities.”  They had to be done and there was no one else to do them.  An admin assistant could help alleviate this problem and make Accelerator-empowered CEOs all the more productive.
6. ZeroG Partnership – free/discounted parabolic flights.  If YCombinator gives Comcast Business-class internet service to their batch-lings, then a Newspace accelerator could offer services like those listed below to help Newspace startups: (1) Suborbital Partnerships (Armadillo, Masten, etc) – free/discounted suborbital flights (2)NanoRacks Partnerships – free/discounted ISS flights (3) Access to major aerospace testing facilities (Boeing, a major university, etc.) (4) Low cost business solutions offered at a discount – even Newspace startups would like to have Comcast Business internet.
7. ITAR Lawyer services FREE.  Worth mentioning here, unlike most software startups, Newspace startups need to be aware of International Traffic in Arms Regulations (ITAR) and develop strategies to not run afoul with the State Department.  Many of these startups would benefit from lawyer services to help navigate the ITAR swamp.  An Accelerator can help facilitate this.
8. Market Analysis and Biz Model Development Support (Newspace Analytics, Newspace Global, etc.).  Another service that would help young startups would be assistance in developing a business model with profit potential.  Firms like Newspace Analytics and Newspace Global or accelerator in-house services would be very valuable to the entrepreneur.
9. Lessons from Clean Tech.  In preparing this post, I interviewed Interview Jeff Lints, Director of Operations, of the Energy Fellows Institute.  The Energy Fellows Institute looks to bring accomplished C-Suite executives or second-time entrepreneurs from other industries into Clean Tech.  Recognizing the challenge in attracting the best and brightest innovators to clean tech, the Energy Fellows are influencing the quality of the entrepreneurs in their industry through a similar accelerator-type program.  Newspace shares many of the same challenges to Clean Tech.  Newspace entrepreneurs may value greater participation from accomplished C-Suite executives and successful second-time entrepreneurs.  Imagine preparing for Newspace Demo Day where the entrepreneur is not only trying to woo potential investors but is also interested in attracting a COO/CFO/CEO from a stable of qualified candidates.  These C-Suite candidates have been watching each firm in the batch throughout the term.  Convincing one of them would, not only help your startup make better decisions, but also help close on the next round of funding.
10. $200K up-front investment.  In the early days of YCombinator, they traded ~$20K for 3-7% equity.  Recently, they have increased their funding levels via a convertible note.  Space Tango is also talking $20K of capital offered to each startup (although Space Tango has hinted at the possibility of follow-on financing for those Newspace startups with promise).  So what is the appropriate capitalization level to enable startups to develop/test real products?  Jon Goff helped considerably here.  Mr. Goff recommended $200K for each startup.  This would cover early hardware R&D work and labor costs (the two largest expenses for early hardware startups) at least through Demo Day.  The $20K offered by several current accelerators is too small, if the intend of the capital was to truly produce a near-term MVP.
11. Six-month Batches.  Both YCombinator and Space Tango offer an intense 3-month on campus experience for their batches.  A six-month cycle acknowledges that hardware takes longer to create then software code.  The six month batch also gives time to schedule testing via zero-g, suborbital flights, and local universities and large aerospace firms.  Such testing would be much more difficult to include if the program only lasted 3 months.
12. Demo Day.  Without the lure and threat of a room of VC’s/Angels waiting for each startup’s presentation at the end of the batch, startups within the accelerator lose a strong forcing function.    A Newspace accelerator should put special emphasis here – the accelerator’s value to each startup will be heavily impacted by the quality of VC’s and Angels the accelerator can attract to Demo Day.  For most startups within the program – every decision should be made with Demo Day in mind.
13. Newspace Accelerator for a better Newspace industry.  Although not required to be an accelerator, using the accelerator to promote the industry as a whole is strong way to grow the pie.
14. TV Documentary/Reality Show for each batch.  Again, not required.  But with the success of ABC’s Shark Tank there appears to be an appetite for shows about entrepreneurs striving to make to succeed in business against all odds.  This may be one area where Newspace actually has an advantage over Silicon Valley and YCombinator.  Watching a startup team operate an welder, see a 3-D printer manufacturing parts and watch real hardware get tested on a suborbital rocket flight is much more satisfying television than overseeing a twenty year-old writing code in his apartment while eating Raman noodles and drinking Red Bull.

These ideas are expensive.  If an Accelerator offered $200K to five ventures per batch, that is $1M per year in equity capital investment.  Plus another $1M in operational costs to maintain the makerspace/co-working space, staff salaries, testing assistance for startups, etc.  $2M in annual obligations may be challenging to achieve.  However, an underfunded Accelerator loses much of its value and thus loses much of its appeal.

*********

Dream with me.  After months of interviews and intense deliberations, SpaceCombinatorselected its latest batch of Newspace startups.  Co-locating to Boulder, CO was an issue for some, but in the end the value of the six-month program, the access to all of the major aerospace firms along the corridor to Denver (and the occasional trip to the mountains) made the co-locating rule manageable.  $200K for 15% equity stake gave each selected firm an immediate $1.3M valuation.  SpaceCombinator chose the majority of firms for their ideas, but a few firms were selected because the selection committee was impressed with the founders (even while the product idea needed to be rethought).  Over the six-month batch, the firms worked with staff to develop products customers will buy.  A few firms switched products after R&D efforts indicated a needed pivot.  

SpaceCombinator provided a steady stream of guest speakers from both small and large aerospace firms at the weekly dinners.  NASA spoke one night.  DFJ’s Jurvetson spoke one night.  The in-house makerspace enabled a quick validation of design assumptions, and made conversations with customers more productive with tangible prototypes to discuss.  The teams were constantly iterating (iteration has always been the best type of failure).  Hardware tests were conducted via partnerships with the big aerospace firms.  One firm even flew suborbitally (twice).  Another batch-mate is on the manifest for an upcoming NanoRacks flight to the ISS.  SpaceCombinator’s alumni list is growing.  With a handful of successful exits and several dozen going concerns, alumni firms share a special bond with the current batch and look for ways to help these startups in the same way they were helped by even earlier batches.  Greybeards, SpaceCombinator’s group of seasoned veterans, taught several founders to weld, helped two startups understand the complexity of ISS-based deployments and introduced at least one firm to those within NASA’s ISS-utilization office.  The separate group of C-Suite executive veterans made the rounds to each of the startups.  They gave advice, asked questions, listened to Pre-Demo Day pitches.  One exec did not wait for Demo Day, she accepted an offer to join one of the firms as CEO.  The firm’s founder was only too willing to move to the CTO role to make room for the more accomplished CEO.  An unforeseen benefit has been the amount of cross-fertilization of ideas and methods that has come from co-locating the startups at the makerspace.  Teams come out of their offices to see what their batch-mates are working on.  All are motivated to build more and do more when others are watching.

And it all culminated in Demo Day.  NASA, Angels, VC’s, Lockheed Martin, Boeing, Northrop Grumman, Ball, NanoRacks, and others were all there.  Each firm in the batch took turns sharing slides and demoing hardware.  One firm had only that – a vision and limited HW model to show for their six month effort.  But several had strong stories of flight-demonstrated hardware, paying customers, and a plan for growth and profits.  One firm could already announce true revenue with presales from an upcoming commercial rocket flight.  SpaceCombinator took the concepts pioneered by software accelerator and made them work for hardware startups going to space.

When It’s Darkest Men See the Stars

When It’s Darkest Men See the Stars

Sepatuads.com   November 26, 2010   Comment  

"When It’s Darkest Men See the Stars."  ~Ralph Waldo Emerson

Steve Blank is optimistic entrepreneurs have created the, "dawn of a new era for a new American economy built on entrepreneurship and innovation."  His excellent post focuses on why startups have fundamentally changed and are changing the business landscape by serving as the process incubator for the business world. 

Although Steve uses Silicon Valley for his examples, New Space can learn from and be encouraged by his perspective.  Read Steve's post for some rational optimism and insight on the coming decade of the entrepreneur.  I especially like this (long) quote from Steve (emphasis mine):

When James Watt started the industrial revolution with the steam engine in 1775 no one said, “This is the day everything changes.” When Karl Benz drove around Mannheim in 1885, no one said, “There will be 500 million of these driving around in a century.” And certainly in 1958 when Noyce and Kilby invented the integrated circuit, the idea of a quintillion (10 to the 18th) transistors being produced each year seemed ludicrous. 

Yet it’s possible that we’ll look back to this decade as the beginning of our own revolution. We may remember this as the time when scientific discoveries and technological breakthroughs were integrated into the fabric of society faster than they had ever been before. When the speed of how businesses operated changed forever. As the time when we reinvented the American economy and our Gross Domestic Product began to take off and the U.S. and the world reached a level of wealth never seen before.

It may be the dawn of a new era for a new American economy built on entrepreneurship and innovation.  One that our children will look back on and marvel that when it was the darkest, we saw the stars.

5 out of 100 - Deal with It!

5 out of 100 - Deal with It!

Sepatuads.com   Juli 26, 2010   Comment  

If you invested in 100 start-up companies, how many would you expect to be “winners”?  A recent study by Right Side Capital Management consolidated seven recent Angel Investment reports to ask that very question. RSCM's consolidation shows interesting trends:

• Only 5-10% of a portfolio’s investments provided the majority of the returns (most of the remaining firms were a total loss) – 5% winners/95% losers.
• Average IRR (Internal Rate of Return) was 27% across the portfolios (in spite of the fact 95% of companies within the portfolio were losers)
• Portfolio size: at least 100 investments to mitigate risk.

What about space firms? So if you were managing a Space Angel Fund, could you find 100 quality space firms in which to invest? In an earlier post, I encouraged young space firms to develop their companies less like defense contractors and more like Silicon Valley startups by establishing separate companies for each product/service.

For example, New Space Ventures (NSV) invested $$ millions in their micro-launch vehicle system and a year ago also started work on low-cost TPS solutions. With the micro launcher now complete and flying successfully, NSV has attracted several interested buyers for the technology. NSV partitioned the firm into two separate companies, one continuing to pursue micro launch vehicles and one investing in TPS solutions. NSV eventually sold one company and used the proceeds to fund TPS research with additional cash in reserve.

This multi-company approach will grow investment/liquidity opportunities in the industry, but is such an approach really feasible for firms so heavily influenced by their contracting cousins?

Attractiveness:

• Liquidity events generate cash for the business selling allowing them to reinvest in future projects (providing an alternative to additional outside investments or loans).
• More frequent liquidity events are good for investors, and as such make the industry as a whole more attractive.
• More interest from investors encourages entrepreneurs to start companies within the industry further enhancing a virtuous cycle.

Challenges:

• This approach assumes firms have a second product/market they wish to pursue which they believe attractive enough to forfeit a cash payout to their investors and instead reinvest their funds in a subsequent effort (doubling down effectively)
• With many young space firms under-capitalized, they supplement their income through Government contracting. Such an income stream delays the development of even an initial product/service because through contracting you are largely developing the Government’s toys and not your own. 
• Do date, the value of young space companies is arguably the experience and knowledge base of its people and less in company products or IP. If this is true, buyers will want to keep the core team intact when making a purchase. Internet startups often begin this way. Many of Google’s acquisitions over the last few years are companies with an interesting technology demonstrator and a small core team of employees. Google bought the companies’ potential – the product potential and people potential. For example, if a suborbital provider like Masten or Armadillo were purchased right now by Boeing or Northrop Grumman, I assume these industry giants would want to purchase both the IP and the engineers behind the IP. Both firms have demonstrated interested technology, but their real value (since none has yet reached 100KM) is in the risk-taking innovators at both firms. I hope to see this “people-focus” change over the coming year as suborbital firms reach 100KM and begin the switch from R&D shop to operations. At this point, the IP becomes much more valuable as a stand-alone (and marketable) item.

To grow the industry, we need to help new space firms overcome these challenges:

• Guard against income streams too heavily polluted with Government contracting
• Cross-train to ensure the loss of a person to sale is not the loss of a company skill-set
• Develop more than one product line (perhaps not all at first) to prepare for the eventual sale of the company. 
• Start companies with the sale in mind (stop starting firms intending them to grow and prosper for a century!) – this is one of the top questions investors will ask: “where is my liquidity event?”

For the New Space Industry to grow, we need more firms in which to invest. Only 5-10% will be successful. Deal with it. And then start another company…

Space App Store

Space App Store

Sepatuads.com   Maret 27, 2010   Comment  

In an earlier post I discussed 7 Signs of a Growth Industry. Let's compare the Aerospace Industry to Internet Startups from Silicon Valley.

With large cash needs, long development cycles, significant regulations, limited liquidity opportunities and a lack of businesses started in student’s dorm rooms, entrepreneurs face significant hurdles starting a business in this industry. So how can New Space change this paradigm? Or if that is too daunting a question to solve in one blog post, what businesses/organization can be started that would defy these industry norms and encourage the industry to behave more like an internet startup?

Here is one humble idea.

The Space Industry needs an App Store similar to the one Apple created for iPhone and iPod applications or Google is creating for its phones. Similar to the way apps have spurred the development of a new “app entrepreneur” for software, such a store would serve as a marketplace for small space-related components that could then be integrated to create larger Space products. What could these components look like? Components are anything from a motherboard to a high def camera to an ozone monitor to a vibration monitor, to a battery, to a live specimen container, to a star tracker, to a solar sail for a CubeSat. Here is how an app store could help the industry look more like Silicon Valley:

1 – Low Barriers to Entry: 3rd party businesses could be created developing only components for the Space App Store similar to businesses created that only make Apps for Apple’s App Store. The capital and expertise to develop one component would be significantly less than the capital and expertise necessary to develop full vehicles.

2 – Many Exit Strategies: Since these components could be brought to market relatively quickly, these small component companies would generate revenue earlier than those firms developing full systems. Earlier revenue usually equals more cash on hand and cash is a business’s life blood. Earlier revenue could generate more opportunities for these component companies to be sold increasing investor liquidity opportunities and creating industry momentum.

3 – Competing Firms: Low barriers to entry, low capital requirements, short time to market: all ingredients for competition. Incidentally, increasing the number of competing firms may increase liquidity event opportunities as well (see #2 above).

4 – University Participation: A subset of the components offered at the Space App Store could be CubeSat or CubeLab components. Utilizing the free or discounted labor, Universities could offer some of their more unique CubeSat components for sale. Having spoken with Aerospace professors for past posts on this blog, one of their biggest concerns is maintaining adequate funding levels to make satellite manufacturing a regular part of the curiculum instead of a special project which could be afforded twice a decade. An additional revenue stream from components sold on the app store could be an incentive for these universities to participate with the app store.

5 – Young People’s participation: Although hardware will probably always be harder to develop than internet software, Aerospace students would be able to break large systems down into small pieces (components) to offer their creations on the Space App Store. The assumption is that shortening the time from idea to market will increase student/young professional participation since students would be able to more easily see the results from their efforts. The Space App Store would provide a market for those student-built components. I expect strong synergy between #4 and #5. In addition to the Space App Store helping universities by adding a revenue stream, universities could also help their students by validating student-owned components on their CubeSat/CubeLab missions (validation is so critical, see more on this further down in the blog).

6 – Short Product Dev Cycles: Components could be brought to market much faster than whole systems. Perhaps in months instead of years.

7 – Low Government Regulations: Maybe not. Any one business may not be able to change the nature of what is being sold or how the government views these products. However, duplicating how the CubeSat standard was rolled out to the world may serve as a model for the Space App Store to follow. CubeSats have already passed significant ITAR hurdles and international universities and companies are building their own CubeSats based on this standard. The app store could help facilitate the development of similar standards to the CubeSat for the benefit of the whole community.

For an Space App Store to work, here are a few prerequisites:

1. Standards. Apple provided software developers both the standard “bus” (the iPhone or iPod hardware) and the standards for how to integrate with that bus (the STK). Although there is a propensity within the space industry to design everything from scratch, CubeSats and the CubeLab standards have been well received by both industry and universities, both within the US and internationally. CubeSats could point the way for new standards to come. Good standards define the edges and the connections freeing developers to focus their creativity. But wait, you tell me, “It will take years to agree to industry-wide standards for larger satellites, launch vehicles, or other space related hardware.” Okay, so let’s start with Cubesats and CubeLabs and grow from there. With success (and profit) from these smaller standards, standards could grow to include ever larger satellite Buses and experiment buses. As I mentioned in this post, I encourage Bob Twiggs of Kentucky Space to grow his CubeLab experiment Bus to include larger sizes. The same can work for CubeSats as well. For long-term success, the Space App Store must make standards creation a strong priority.

2. Manufacturers. “But who builds all of these components?” If every component designer wanting to leverage the Space App Store needed first to invest in the expensive equipment necessary to manufacture their own components, the benefit to universities and young startups is greatly reduced (larger capital needs, slower to market, etc.). Who would participate in the Space App Store with that kind of barrier to entry!? The other extreme would be to manufacture nothing and just sell glorified CAD drawings. But that would just transfer the manufacturing responsibility from seller to buyer and the demand for Space App Store's products would be greatly reduced. Plus if one sold the CAD drawings one would have the issue of intellectual property rights, product liability, etc. Instead, I envision two Manufacturing Methods for the Space App Store developing:

• Utilize existing manufactures offering their own products. In the early days of the Space App Store this may be the only option. Understandably this would limit those components offered on the Space App Store to those manufactured by companies with existing manufacturing equipment and skills. 
• Develop a cadre of in-house manufacturers willing to manufacture the designs of others. Components would need to comply with a set of quality criteria (perhaps including on-orbit verification, but more on that below). In some cases, the manufacturer may wait to create your component until you place the order at the Space App Store (see just in time manufacturing). In other cases, the manufacturer may have several on hand for immediate shipping. The Space App Store approved manufacturers would sign appropriate paperwork ensuring the component creator’s secret sauce would not be stolen by the manufacturer - protecting IP. I see a dual benefit with this model: (1) The component entrepreneur benefits by avoiding the up-front manufacturing costs.  (2) The young manufacturer benefits by increasing his revenue.

Manufacturers are already serving the CubeSat/CubeLab market. Pumpkin and Clyde Space are two companies offering components. Pumpkin has an expanded list of manufacturers here. Probably the closest thing to the Space App Store I have found is CubeSatShop. Many of these manufacturers may be interested in expanding their business by becoming one of the Space App Store’s approved in-house manufacturers.

3. Component Validation. How do we know the components offered on the Space App Store are going to work as advertised? This is a big risk. Launch opportunities can be expensive with limited launch windows (wait times for Cube Sats can be as long as seven years). Space App Store users need to know every product offered at the Space App Store will work correctly. Here are a few ways to promote quality products:

• Only allow products that have flown in space to be offered. Here is where Universities could really step it up for the benefit of their students. In addition to the university flying their own components (built by students), by flying components designed and built by students, Twenty-two year olds could be starting their own Space App Store developing companies offering their flight-proven components via the Space App Store.
• Offer a testing service via the Space App Store to validate component functionality in a simulated space environment (maybe certs for LEO/GEO/Moon/Others?). I could see a great partnership blossoming with Zero-G and their new research service. 

Here are a few Examples of components which could be offered on the Space App Store:

Example #1. Cornell has taken the cubesat model and added a new component for attitude control called “flux-pinning” See video below.





Assuming their experiment is successful on orbit, Cornell could utilize the cadre of App Store manufactures to offer this technology to a wider App Store marketplace. Now any authorized university or private company could purchase “flux-pinning” units for their attitude control while bringing in revenue for both Cornell and the App Store manufacturers. And what of the students that participated in this mission during undergraduate or graduate studies at Cornell? Are they not well positioned to take their knowledge and start companies of their own offering competing flux-pinning products competing against their own alma mater?

Example #2. This video shows how one group of students used the LEGO programming language, an iPhone, and $3600 to develop a working satellite. Imagine if this group could profit from their innovations. What a virtuous cycle this could be. Profits from App Store sales could spur on further innovation by this group of students.

It all comes back to Standards, Manufacturers, and Validation. I could see one model where the users of the App Store could make recommendations to a standards board to influence new standards being considered by the group, make requests for components they would like to see designers create, rate component designers and manufacturers, and help design component validation requirements.

Could such a system really change space development as I have outlined?  Thoughts?

7 Attributes of Silicon Valley

7 Attributes of Silicon Valley

Sepatuads.com   Januari 30, 2010   Comment  

Why do VC’s and entrepreneurs love Silicon Valley? According to the United State Department of Labor, the Information Technology industry grew at an average of 8% between 1994 and 2004.  If you are good at picking winners (Google, Amazon, Zynga), this growth rate would be even higher.  All things being equal, starting a business in a high growth industry provides the greatest potential for significant returns (10 to 1 or better). Here is my theory: If your favorite industry can behave more like Silicon Valley, your favorite industry can promote its own growth.

If I’m right (which can be debated in the comments), what are some key Silicon Valley behaviors or attributes worth emulating? Here are a few ideas:

1. Low barriers to entry: Businesses are inexpensive to start and can be scaled over time.
2. Many exit strategy options: Active mergers and acquisitions and the occasional IPO provide entrepreneurs and VC’s multiple opportunities to cash out.
3. A large number competing firms with a healthy variety of company sizes: this is key since the large wealthy businesses usually acquire the innovative small businesses – without firm-size variety, an industry has a hard time generating the deals that provide the cash to start the next generation of innovative companies.
4. Universities leveraged as “idea incubators”
5. Young people armed with the tools, skills, and knowledge necessary to have an immediate impact on the industry’s products and services.
6. Short inexpensive product development cycles allow companies to aggressively pursue innovative solutions knowing the costs of failure are low
7. Low Government Regulation

To emulate Silicon Valley’s growth, your industry doesn’t have to have demonstrate all of these attributes to be growing, but it would seem logical to be pursuing them all, IMHO. Next, I would like to lay out a few ideas of how we get the Space industry to start behaving more like Silicon Valley. The fun part is, I think there may be some money to made in helping the industry transform.