Several months ago Jonathan Goff, CEO at Altius Space Machines, called me. ASM was preparing for a business plan “sprint” to compete in the 2011 Heinlein Business Plan competition in Silicon Valley (hosted by the Space Frontier Foundation). Could I help with the business stuff?
Jon had been pitching his new technology – “Sticky Boom” which is a really long tube with glue pads on the end of it. Only the tube can be rolled in or out and the glue can be turned on or off via an electric current. Altius knew Sticky Boom had space rendezvous and docking applications (think servicing satellite, grabbing lost wrenches during EVAs, etc.), but could we wrap a business around this cool technology?
Assisting on the Altius Business plan has been a big part of my life over the last few months which is my excuse for light blogging.
I am pleased with the result (yes, we won the $25K grand prize). Here is Jon Goff, Altius's CEO, pitching the plan (worth watching to get a better feel for what ASM is really trying to do as a company - about 6 minutes long).
Here are a few highlights the team at Altius and I kept discussing while developing this plan:
- Is there a problem people will pay you to solve? If not, you do not have a market.
- An attractive Market is even more valuable than an attractive technology. New space technology is cool to us space nerds, but markets determine how valuable company technology really is.
- Your customer is the organization that pays you – not necessarily the group that uses your product.
- Once you have found a market, be cautious before competing head to head with incumbents (those competitors already selling to your market) – how do you take market share away at the edges without drawing an incumbent response – a disruptive strategy .
- Management team – do you have the right team? This is so important. If you get the market and management right (and maybe a little traction), investors know that even if the product or technology changes over time, the company will have a good chance at success. There is no substitute for the right market and the right team.
- Money: how much do you need and how are you going to get it? Banks probably won’t lend to you (at least not at first). Investor money is an obvious choice but have you thought about govt contracting or strategic partnerships?
- Few investors understand NewSpace (if you find one that does, keep him/her happy!). The industry is small and in its infancy. It is not right to expect Tech and Biotech investors to immediately understand: ISS regulations, LEO vs GEO, terminator tethers, plane changes, lagrange points, etc. The question becomes how to present your idea in terms/images VC’s will understand while still being concise? I recommend pitching your deck to your spouse or your mom. If your Mom doesn’t understand your plan, VC’s won’t take the time to understand it either. Simplify. Simplify. Simplify.
- The “prize” in most public competitions is the publicity and connections made as a result of winning, not in a the few dollars at stake. This is what the Google X-Prize teams are fighting over – the media rights! To highlight the value of publicity, here are a few of the Altius Space Machines articles that have been written since winning the prize. Ask yourself how long it would have taken to generate this media attention without the win?
- Aviation Week
- The Space Review
- Business News Daily
- Plus the sites that published the press release or the many posts by NewSpace blogs (thanks guys).
Business plans are like going to College – professors push you to do what you probably could not discipline yourself to do on your own. This is why we have all-nighters finishing 20-page papers and cramming for tests. On your own, you would just go to bed.
Business plans are great forcing functions and entrepreneurs learn a lot through the process. I am glad I got to be apart this journey.
Here was some great advise we tried to follow when preparing the slide deck for the competition: