Business Stripped Bare

things progressed well. Both sides were conscious that the Ansari X Prize was looming, and we needed to complete the deal quickly if the new company was to get the benefit of the publicity. Eventually Virgin negotiated with Paul Allen to buy the rights to use his technology — just three weeks before the X Prize! It was a terrific deal for us because the Virgin Galactic branding would now be on SpaceShipOne during the ceremony in the Mojave in October. This would give us worldwide exposure — and it would deliver a message that we were now a serious player.

The last week of September 2004 is one I will always cherish. We launched our 125mph Pendolino tilting service in the UK. We gained plaudits from the President of Nigeria for the launch of Virgin Nigeria. And I was on the platform at the Royal Aeronautical Society in London with Burt to announce the launch of Virgin Galactic. We signed a historic $21.5 million deal for the use of the technology with Paul Allen’s company, and announced that we had developed a $100 million investment plan to develop a prototype commercial six-seater spaceship at Burt’s factory in Mojave.

Burt Rutan is an engineering genius, years ahead of his time. Do you remember Voyager, a plane that looked like a flying catamaran and flew around the world on a single tank of fuel in 1986? That was Burt’s design. It was the largest all-composite aeroplane ever built, and the father of much of Scaled Composites’ later work and of SpaceShipTwo. That plane was woven from glass, graphite and aramid, and bonded with epoxies and resins. Once heated in an autoclave, the compound became immensely strong and far lighter than pressed aluminium.

SpaceShipOne was constructed from equally exotic materials. In fact, there was very little about its design, fabric, execution and flight behaviour that wasn’t exotic. Take the engine: a revolutionary rocket-motor design that will be used in SpaceShipTwo, and one without which commercial space tourism simply wouldn’t be possible for us.

It was Burt’s unique take on an old idea, of course: a dual-propellant system with a liquid oxidiser and a solid fuel. The solid fuel lines the case of the rocket. The liquid oxidizer is injected at the head of the motor and then ignited. The surface of the solid fuel reacts, combusts and turns to gas. And because the propellants are separated they cannot mix in the event of a leak. Consequently, they cannot explode. Most serious systems failures on rockets over the years have been fatal. Not so here: Burt’s spaceships are very failure-tolerant.

And they’re cheap. Once all the engineering and design has been done, cranking them out on a production line is a relatively simple business. The solid fuel is rubber. Once the igniter motor starts the rubber burning, nitrous oxide is added under pressure, producing a flame. The gas expands through the nozzle and provides instant thrust.

The rocket motor will give us just enough push to tip the craft into suborbit. After this the motor shuts down, and the spaceship coasts into space for a few minutes. It reaches the top of its arc and then starts to fall back down again. Just like tossing your keys in the air, once they reach the top, they start to come down.

And another lovely thing about this engine. It’s green. Well green compared to any other form of rocketry from the ground. Fly into space with Virgin Galactic and we’ll be releasing less CO2 than the equivalent of a person flying from London to New York and back on an upper-class ticket. NASA’s Space Shuttle has the same environmental output as the population of New York over the average weekend!

Mike Melvill, a long-time friend and associate of Burt, was the pilot as SpaceShipOne, tethered to its mother ship White Knight, took off from Mojave Airport’s Civilian Aerospace Test Center on 29 September 2004. It was a shaky ride, which required brilliant skills from the pilot. SS1 reached its apogee of 337,600 feet, or 103km. This was space.

On 4 October 2004, SS1, with test pilot Brian Binnie at the controls, was launched from its mother ship and soared into suborbit, reaching 367,442 feet above the Earth. For Binnie, it was a flight and a day to remember for the rest of his life. He had become an astronaut.

For Burt Rutan, it was the culmination of his life’s work. SS1 had won the Ansari X Prize.

At Virgin, we believed the success of this tiny spacecraft revealed commercial possibilities, and so we decided to license the technology of SS1 and its mother ship, White Knight.

On 27 July 2005, at Oshkosh, Wisconsin, Burt and I announced the signing of an agreement to form a new business. It was agreed that the new company would own all the designs of SS2 and the White Knight Two launch systems that were being developed at Scaled Composites. The new business, the Spaceship Company, would be jointly owned by Virgin and Scaled. Burt’s company would undertake all the research, development, testing and certification of the two craft, with Burt heading up the technical development team.

I believe Virgin’s work with Paul Allen and with Scaled Composites is a great example of capital and inventiveness working together. From day one, we have, every one of us, been singing from the same song sheet. Our symbiosis is nigh on perfect. Burt’s genius is being challenged and stretched and will be well rewarded, even as our investment of capital produces a fantastic return. I think — setting aside the huge financial risks involved in doing anything new — the relative ease of doing business in this sector is due partly to the environment; the enthusiasm is tremendous. I also think it has to do with the fact that Virgin considers everyone involved, regardless of their capitalisation, as an entrepreneur. We’re all, in our own way, moving into unknown territory, and so we’re all sharing the same experience.

The commercial success of White Knight Two and SS2 will open doors for our business. A single shuttle mission can carry 23,000kg into orbit at a cost of around $450 million. We are working towards the day when White Knight Two will be able to take 12,500kg of payload to 50,000ft, and then blast it into low Earth orbit. This will give it the highest drop capability in the world, and opens up a whole array of commercial possibilities for localised weather satellites, carbon-emission measurement and cheaper zero-gravity training for tomorrow’s astronauts. In the future, SpaceShipTwo and its successors may be able to take payloads further out into space. While Virgin Galactic must concentrate on its original plan, these are all options for our business to grow its revenues and technology base.

While I want to take nothing at all away from the importance of prizes, I’m glad that in this instance, we chose to develop a company, rather than sponsor a cup. I think this emerging market benefits from Virgin’s spirit of branded market capitalism. Virgin brings the public on board, it brings serious capital into play, and it keeps the field inclined towards small entrepreneurial ideas. We stand to make money by doing good, and in business, things don’t get much better. And believe me, cheap access to space matters enormously if humankind is to have any hope of solving its problems here on Earth.

Even the most rarefied and exotic-sounding business environment works to familiar principles. Once our systems are proven, and our first space travellers are talking enthusiastically about their experiences, I believe the floodgates will open. A major reduction in costs will come when the insurance industry sees how safe space travel is becoming. More venture capitalists will sense that there is a buck or two to be made; their funds will, in turn, support further expansion. We might even see some commercial space companies listed on the New York Stock Exchange or in London.

Frankly, space — outer space — is there for the taking. The risks of failure are high and you will need to churn ideas at high speed to attract funding. On the other hand, there are plenty of ideas to explore. Materials science and biotechnology are both throwing up possibilities faster than businesses can find applications for them, so an appetite for learning is vital if you are to take advantage of new opportunities in these areas. That, in turn, requires you to take a real interest in people, and what they’re up to, and how you might be able to help. You are not going to strike gold in this sector on your own.

Reality shows about business are becoming much more popular. Dragons’ Den, in particular, makes excellent viewing, not least because it focuses on the more exciting side of business — coming up with, assessing and testing new ideas. The business panel is comprised of successful millionaires, and while the programme makes some token gestures towards how scary these people are, I think it’s pretty clear to everyone that they’re a courteous, lively bunch who bring a sense of adventure to their work. Some contestants are well prepared and have worked out their pitches; others are thrown to the Dragons, gobbled up and spat out. But it’s a wonderfully positive show: it’s amazing the number of interesting ideas and schemes that people come up