Flight School unites capital and aviation/space start-ups

 - October 9, 2006, 12:52 PM

Based on Flight School 05’s agenda, one could conclude that the one-day forum held earlier this year in Scottsdale, Ariz., was just another aviation industry gathering. From the first speaker, FAA general counsel Andrew Steinberg, to panels featuring CEOs from start-up air limo, very light jet (VLJ) and commercial space companies, little was said that savvy aviation and aerospace industry people hadn’t heard before.

But it was all new to this audience, since Flight School was not aimed at the aviation industry. Appended to the 28-year-old PC Forum, where information technology (IT) executives talk strategy among themselves and network with venture capitalists and other potential investors, this year’s first Flight School was aimed at educating those IT and venture capitalist people about new ideas and opportunities in aviation and space.

“The IT folks are seeing an opportunity,” Eclipse CEO Vern Raburn told AIN. Raburn, a former Microsoft executive who has attended nearly every PC Forum since 1977, participated on Flight School’s aviation hardware panel. “You’ve got people like me who get bored fast and want to do something new. Aviation and space have always been fascinating to these people and they see an opportunity to come in and do what they did in IT.”

Approximately 120 people attended Flight School, a smaller crowd than the 425 at PC Forum. The morning concentrated on aviation–specifically the expected opportunities in the air-limo business after certification of VLJs, which could happen as early as next year–while the afternoon panels focused on commercial space. The heads of several “paper” air-limo companies, including Donald Burr from Pogo Jet, Edward Iacobucci of the recently announced DayJet, and Gavin Steiner of Corporate Clipper, joined NASA researcher Bruce Holmes and FAA national resource specialist Katherine Perfetti on the air travel panel.

Rick Adam from Adam Aircraft, Dan Schwinn of avionics innovator Avidyne and John Wright of Pratt & Whitney Canada joined Raburn on the hardware panel. PC Forum organizer Esther Dyson moderated both panels, inciting debates about operational and marketing strategies among the air-limo representatives, and about manufacturing practices and potential markets among the hardware representatives.

“We were happy with Flight School,” Dyson said. “If the [air-limo concept] succeeds, it’s going to change living patterns, not just the airline industry. It will change real estate prices, how students come home from college and how people make sales calls. Several thousand airports will be available and big places like ORD and LAX will be recognized for the horrible places that they are.”

The forum’s mission, according toits Web site (www.release10.com/pcforum/flight.cfm), was to “foster entrepreneurship and bottom-up thinking across industries,” and one of the methods for fostering that entrepreneurship was to introduce venture capitalists to several start-ups that are in need of funding. Although Eclipse and Adam Aircraft, which both have private funding, do not fit that designation, many of the space companies highlighted in the second half of the forum did. This model has been apparently working at PC Forum for more than two decades and is now being applied to aviation and space ventures.

An Entrepreneurial Approach

“One of the primary purposes of PC Forum is that it’s a marketplace where the venture capital community can meet and interact with the best and brightest in the entrepreneurial community,” Raburn said. “There are at least six major [IT-related] forums where everything from technical standards to philosophical issues to financing get discussed. This [aviation] industry does not do that. This industry is done in back rooms and massively inefficient trade shows like Paris and Farnborough. And this is an industry that’s much more about who you know, the good ol’ boy system, to be blunt.”

“We wanted [aviation and space] entrepreneurs to meet investors to see how investors think,” Dyson told AIN. “It wasn’t a dating service for space entrepreneurs. But this is how [IT] people do it. You don’t wait for government funding; you go out and find people who are as excited as you are about your ideas.”

Both Raburn and Dyson compared today’s aviation industry to the computer industry of 20 years ago, likening theestablished OEMs and airlines tonow-vanished mainframe manufacturersand the new VLJ manufacturers and proposed air-limo operators to personal andmini computers.

“In the early days, the PC industry was divided between new companies and very large old companies,” Raburn said. “And if you look at what’s going on today, whether it’s Eclipse or [Scaled Composites’] SpaceShipOne, it’s pretty much along the same lines: new companies versus really old, big established companies…And today, [mainframe] companies like DEC and Wang are all gone. DEC was bought by Compaq, which was bought by Hewlett Packard. I’m not so bold as to predict that I’ll buy Cessna one of these days, but I think that the same dynamic is at work today.”

The influx of IT personnel into the aviation and commercial space industries may be primarily responsible for rekindling entre- preneurism to a level that these industries haven’t seen since the late 1950s. Besides Raburn, a number of former IT professionals are now leading aviation and space ventures, including Iacobucci, cofounder of Citrix Systems; Amazon.com’s Jeff Bezos, who launched a new suborbital spacecraft development company in Texas earlier this year; and PayPal cofounder Elon Musk, who started satellite launch company SpaceX in 2002.

These former IT executives not only bring new business models and experience from the continuously evolving computer industry but also instill entrepreneurial energy and can-do attitudes in an otherwise ultra-conservative industry.

Aviation and Space Panels

“When you analyze the criticism [against Eclipse], it ultimately comes down to ‘This won’t happen because it’s never happened and we can’t envision it happening,’” Raburn said. “It’s not because technically it can’t happen, or because there isn’t a market; it’s just because it hasn’t happened and therefore it can’t happen. You wouldn’t hear that attitude expressed in the high-tech business. In fact, in the high-tech business if somebody feels that he has divined a market and created a product using technology unique for that market and nobody else has it, that’s pure gold.”

On her Release 1.0 Web site Dyson wrote, “Like Internet entrepreneurs, those in the new world of flight will meet resistance from the old guard. Air taxis will be to the aviation old guard what PCs are to mainframes. And space tourism will appall the purists of old just as e-commerce annoys the scientists.”

Dyson plans to continue the Flight School forums in upcoming years, but she may split aviation and space into two separate forums. “The business models and the issues are really different for space and for aviation. Each market is big enough to sustain its own conference now that we’ve shown that it can be done.”