Rocket plane venture star (part 2)
Tax credits and investments
TSR: You guys had some excitement around [HR] 5382.
TSR: It sounds like your senator is really in your corner there.
Urie: He is. We couldn’t ask for a warmer welcome than we’ve gotten from Oklahoma. The state senators and representatives created the salable investment tax credits to bring aerospace industry to Oklahoma.
TSR: Now you guys took advantage of that; did TGV or did anybody else come in?
Urie: No one else [not even TGV] qualified for it. It was a grueling process. The state officials did their job protecting the funds of the people of the State of Oklahoma. That is what they are getting paid to do. They did a good job.
TSR: If they are going to do venture capital, they better have a tough board.
Urie: They had a tough board. We literally qualified at the 11th hour. It was a sundown law. It was going to go away.
TSR: December 31st, you’re gone.
Urie: On December 31st in the evening. It was about nine in the evening my time, in California, when I got a call from George French. It was 11 in the evening here. He called and said, “We’re in business.”
TSR: Wow, talk about the 11th hour. There you are.
Urie: He was calling from the Oklahoma City airport. He said, “The job is done.” We put $30 million in the bank and they gave us the tax credits. That is essentially what it took. It was not that simple to do, but that is what it took.
TSR: Does that make it a $40-million program?
Urie: Plus, yeah… We’re fully funded to develop the vehicle. George French is now raising a second round to develop the business.
TSR: OK. So you can buy some national advertising for the space plane.
Urie: Yes, we have to set up all the care and feeding of our customers, the whole process. Make sure it is a five-star experience all the way.
TSR: It would have to be if you plunk down $100 grand or $200 grand or whatever the tickets are selling for.
Urie: It is not going to be luxurious, but it is going to be quality.
TSR: How is the airport doing getting a spaceport license? Or do you need one? Can you do self-ferrying like SpaceShipOne did?
Urie: We could, but we don’t want to.
TSR: Would self-ferrying require FAA certification?
Urie: Yes, but it would not if we operated as an experimental aircraft and had no paying passengers onboard.
TSR: I see a little bit of a problem with that as an economist.
Urie: We would have to relocate or operations to somebody that does have a certificate. We would have to ferry our vehicle some place that is certificated.
TSR: So you could go to Mojave or something, but Oklahoma would not like that.
Urie: Oklahoma would not like that at all.
TSR: What are the stipulations as far as operations?
Urie: It is not so much stipulations to operations. It is that we are obliged to spend a certain amount of money in Oklahoma. I think it is $30 million in five years or something.
We are working with them [the Oklahoma Spaceport] and so far they are doing very well towards getting their license. They have the Aerospace Corporation working with them, so they have a very, very competent contractor.
TSR: That is great. So what happens if you do not spend the $30 million? They get their tax credits back?
Urie: I do not know what happens. I am sure we will easily spend the $30 million. I am not too worried about it.
TSR: Are you half way there already?
Urie: Not quite. We are rolling.
Building a team
TSR: It is a pretty exciting time to be here with all the expansion.
Urie: It is fun. I am having a great time. The best thing is the people. I have got the best team. I have worked with excellent people all my life and this group is the equal to any of them.
TSR: So it is a plum thing to be working on.
Urie: Our board of directors is absolutely in love with my team. They think these people are just top notch. It has changed their perspective on the business I think.
TSR: How did you recruit? Mostly from people you worked with in the past?
Urie: No I did not. Because of my age, all my colleagues are dead. The people that we have got, a few of them are from the Skunk Works, but generally they are here as consultants. I had to get people. I wanted mid-career professionals. I have done very well at getting them. We have got a few consultants in my declining age group. Most of the people are around 40-something.
TSR: Where is headcount going max out before you start operations?
Urie: Our headcount for engineering is probably maxed out now. Engineering headcount, not counting consultants, is about 20. And then we have maybe five administrative helpers. And that’s it.
TSR: How does that compare to VentureStar or X-33?
Urie: It was hundreds.
TSR: So it is really not that hard compared to building the first jet airliner or building a new battleship or something.
Urie: No. My challenge now is I am already starting to think ahead.
TSR: Rocket science is not what it used to be.
Urie: It is not science, it is engineering.
TSR: In this case it is routine engineering I guess.
Urie: It is not routine because few of these guys have had a chance to work anything this exciting. And they love it.
TSR: You pay them half what they would be getting—
Urie: No, we pay industry salaries. Our salaries are very competitive. In fact they are on the high side because we are cherry-picking the best. My managers are absolutely first-rate. Two of them actually took compensation cuts to come here.
TSR: So is everyone getting free flights or stock options?
Urie: We have a stock option plan. That has just now been formally put in place. Everybody who is on the payroll qualifies to participate in that plan. The options will be awarded at milestones, as we pass critical design review (CDR), and roll out and first flight.
TSR: That is great.
Urie: Everybody. Not for the managers only. It is for everybody. I insisted on that.
Urie: In fact, I threatened to quit if they did not do it.
TSR: I am surprised you had to. I mean that is a Jeff Bezos kind of model.
Urie: We do not have a Jeff Bezos.
TSR: How many of your team are involved in the engineering and the building, and how many are involved in figuring out what the ground operations will be?
Urie: The people who are doing that are all located in Green Bay, Wisconsin. Our principal investor, George French, that’s his home base.
TSR: How did he make all his money?
Urie: In the advertising business; billboards. He is also a successful investor. He is an investor in space enterprises. He is an investor in Orbital Sciences. He is an investor in Kistler. He actually made money in Kistler.
TSR: Not too many people can say that.
Urie: He has educational enterprises that are space related such as Space Explorers. It is a package that’s sold to schools or private individuals if you want to lay out $4,000 for the privilege. It is phenomenal; an enormous amount of information has been accumulated under Space Explorers. It is all linked. You can follow any thread of inquiry to many levels. It is really beautiful.
TSR: So you were just talking about your engineering operation with your head count.
Urie: Absolutely. He probably has maybe four. There is a chief marketer. There is the woman who is designing the whole four-day experience. There are a couple of others who do all kinds of things. So I would say four. Then, of course, there is George himself, who just loves this. He is going to spend more of his time here because he just loves it. He loves talking to the people, looking at what they got on their scope—
TSR: If I had $30 million to put in a rocket operation, I would hang around too. Burt Rutan was brought to tears by the coolness of what he was doing. You have not had your first flight yet so you are not crying about it how it is. It is still really cool, no?
Urie: Everybody is really emotional about this. They have got their hearts and brains in this. That is great. It is fun to be on board with them. It is fun to lead them, coach them. I do a lot of coaching. That is mainly my job, coaching. I make them solve the problems. That is one reason they gave me the sign from my door. [“Nobody gets in to see the Wizard, not nobody, not no how!”] It is from The Wizard of Oz, you know. Because I am like the Wizard of Oz. I am a big fraud. I make them solve the problems, finish the quest.