How do we most effectively send satellites into space? And how do we make the best use of the volume we have in rocket launchers?
Spaceoneers spoke to Mike Lawton, CEO and Founder of Oxford Space Systems, an early-stage space company in the UK that is designing and building light, less complex and cost competitive deployable structures for space. With their novel unfurlable technology such as their AstroTube™ boom, they’re providing highly scalable, stowage efficient structures targeted at the global satellite industry.
Spaceoneers: Tell us a bit about Oxford Space Systems and how you got started.
Mike Lawton: Oxford Space Systems is an award-winning upstream hardware business. We’re developing a new generation of deployable structures, so things like antennas, boom systems and panel arrays targeted at the global space industry. And what sets us apart is the use of our own novel, proprietary materials that we’re developing in-house. Ultimately our structures are lighter, more stowage-efficient and lower cost than those in current commercial demand. Because of our use of proprietary materials and novel design techniques such as origami, it means we’ve managed to secure some fairly significant venture capital. We’re coming up to three years old, so maybe we’re not quite a start-up anymore! I think we’re best described as an early-stage VC backed business in its growth stage. OSS was founded in September 2013, but we only really got going when we secured seed investment from our lead investor, Longwall Ventures, in January 2014.
The background to starting the business: in fact, this is my third technology business. I started, grew and exited two previous tech businesses – nothing at all to do with space – but they were in high-technology R&D fields. I grew those and exited them. I then worked for a space business called ABSL Space Products that was focussed on making batteries for the space industry. I was hired by ABSL as a sort of ‘entrepreneur in-residence’ to try to help grow the business. The idea was to find and grow a complimentary product stream. So, in the same way that every satellite needs a battery, I pondered what else does a satellite always need? Every satellite that has ever flown has required some form of deployable structure. Even Sputnik deployed four little dipole antennas. I thought there’s an interesting business here. If we could provide what every satellite requires but find a way of providing step change improvements in terms of cost, size or performance, then that would be an interesting commercial proposition.
I established a small deployable team within ABSL and secured some initial funding from the European Space Agency (ESA). However, at roughly the same time ABSL was acquired by EnerSys, a large American battery company. It didn’t take long to realise that one battery company buying another battery company probably wasn’t too interested in deployable space structures. It was relatively easy to exit from ABSL with freedom to operate in the deployable structures domain. A couple of the ABSL team shared my vision and quickly joined me after I secured VC seed funding for OSS, so we hit the ground running in early 2014.
Spaceoneers: What were the biggest challenges to starting your business?
Mike Lawton: I guess because I already started two tech businesses, I already had a few battle scars and knew what the journey ahead entailed! I knew the sorts of questions investors would ask. I think the biggest challenge was convincing investors that space presents an attractive commercial opportunity that could rival a terrestrial investment. To package a space hardware business as an attractive investment opportunity against every other opportunity a VC might see was quite a tough challenge. I recall the opening line from Longwall Ventures was, “We don’t do space because it takes too long and costs too much”. Clearly I convinced them otherwise! We’re now been fortunate enough to have been able to decline a couple of investment offers.
Spaceoneers: How did you get investors behind your idea?
Mike Lawton: Well, it’s about understanding what investors look for in a business case and how they seek to evaluate a return on investment. So if you understanding the questions they are going to ask and the sorts of returns they are looking for, then it’s a case of positioning a credible business case to resonate with those needs.
For instance, I would not go to an investor and propose being involved exclusively ESA science missions because they’re financially unviable for a typical equity investor. Science missions normally take 10 years or more to come to fruition, you make one very bespoke product and you only have one customer, the European Space Agency. There’s really no chance for a repeat sale. What you have essentially told an investor is you want to be a high-end consultancy. VCs don’t invest in consultancies. It’s about finding opportunities where you can show the R&D phase is ultimately a small portion of the business, that the technology can be replicated in commercially attractive volumes and makes decent returns. And of course time to revenue and break even can never come fast enough for investors!
Spaceoneers: How did you get a team together to develop your product/ service?
Mike Lawton: I guess I am pretty good at convincing people to come and work with me. I established a good reputation at ABSL and a couple of guys became interested in my past. A few of them said, ‘if you want to start another business, Mike, we’d be interested in coming with you’. Then it had a kind of snowball effect. It’s only very recently we’ve used a recruitment agency to fulfil a specific role. The current team of around 16 people came from referrals or people just approaching us because they’d heard of OSS. We enjoy a great profile in the UK and online and are seen as one of the success stories for the UK Space Agency and Innovate UK (UK Government funding body). We’ve become a UK ‘poster child’ for NewSpace. Having a great profile has been fantastic in terms of attracting some really smart talent to the business – we get sent interesting CVs literally every week from around the globe.
Spaceoneers: You recently launched this AstroTube™ boom as a demonstrator programme. Tell us a little about how that came about.
Mike Lawton: That’s correct. Part of keeping investors happy is about achieving tangible inflexion points where you can show you’re moving ahead in a significant way. The whole idea of flying an AstroTube™ boom was really just the quickest way on-orbit we could demonstrate the viability of the proprietary material we are developing – our novel flexible, rollable, composite material. It also helps validate the proprietary mathematical ‘tool kit’ we have written that underpins our boom designs. Rather than expensive and time-consuming iterations, our software gives us a material layup and predicted performance pretty much out of the box. This is a powerful differentiator for us.
The actual flight opportunity on the AlSat-Nano 3U platform came about by OSS winning a national competition run by the UK Space Agency. They were looking for a number of commercially focussed, disruptive UK technologies that could be showcased. OSS was one of the winners of that competition which basically gave us a free ride into space.
But it not just products we’re developing: OSS is interested in developing proprietary materials. The first we’re talking about publicly is our AstroTube™ material – this provides a scalable foundation material for a range of space products. It hit’s a number of the key requirements for the industry: lightweight, stowage efficient and cost competitive. This first mission on AlSat is simply viewed by us as a lab bench in space; it’s allowing us to validate the AstroTube™ under a range of orbital conditions. We’ll carry a number of deployments and retractions – both full and partial under hot and cold conditions.
Our next OSS AstroTube™ boom is due for launch on a commercial mission in late summer 2017. We are currently speaking with a number of overseas satellite builders for much larger variants of our boom technology.
Spaceoneers: What technologies and trends, do you think, will drive the biggest changes in your industry over the next two years?
Mike Lawton: Predicting the future is notoriously a tough game but it’s hard to see a time when satellites won’t need some form of deployable structures. So even if SpaceX and their competitors give us lower cost access to space, we’re never going to launch fully-deployed satellites. You will always want to cram as much in a launcher as possible. You’ll then unpack at destination as we currently do.
Take a terrestrial example; it’s cheap to send items in container ships. We have containerised the way we send items globally yet we still send furniture, a simply commodity, in a flat-packed form. It’s still needs to be unpacked at destination, as the economics of transportation demands stowage efficiency. It’s very hard to see a day when we’ll cease to ‘unpack’ on-orbit.
As in every industry, there is a trend to do things faster and cheaper. It’s just the way technology is. I think those companies who are able to build satellites faster and cheaper than their competitors will be the winners. Companies supplying payloads, such as OSS, will also need to rise to the challenge. We aim to do it faster, cheaper and be more stowage efficient than our competitors by exploiting our novel materials and design expertise – plus proprietary tools that allow us to move quicker than competitors.
Spaceoneers: Who and what would you say are your influences in space and getting started in your company?
Mike Lawton: That’s a good question. Well, my wife would probably say I’m unemployable so I’ve got to run my own business! I have always been at my happiest when working for myself, being in charge of my own destiny. So ABSL was kind of an unusual career move for me. When I sensed an opportunity to spin out a new entrepreneurial business, I leapt at the chance to return to my old self with a renewed sense of purpose and drive.
But in terms of inspiration, the obvious people would be Richard Branson and Elon Musk, guys who are really leading the charge. On one level I’d say they’re very colourful characters and great for the media to raise the sector’s profile, but they both started their space businesses with a large fortune behind them. As the saying goes, “your first million is always the hardest!” Money attracts money. For Musk and Branson, getting co-founders to the table is a significantly easier task than say a young graduate with a killer idea trying to attract his first investor.
That’s not to detract from what Musk and Branson have achieved. I’m simply saying I don’t inherently find them as inspirational in the way perhaps some people might think because they started their space businesses from a very different place to me. Like me they didn’t come from the industry but have spotted opportunities and have attracted investors to the industry.
Spaceoneers: What important advice would you give to others who are interested in starting their own space start-up?
Mike Lawton: I think it’s not just confined to being a space entrepreneur but any budding entrepreneur. It’s a case of convincing yourself that this really want you to be doing and getting evidence a business case exists. Everything flows from the fact you’re solving a problem and delivering a product or service that has commercial value. You’ll find it relatively easy to raise money if a strong business case exists.
The problem I see too often with smart technical people is the fact they spend way too much time locked away in the lab perfecting their widget or software, rather than getting in front of potential customers. Understanding what it is the market wants and making sure your product or service hits that mark is critical. The idea of generating revenue with the minimum viable product as soon as possible seems alien to some. If you ask an engineer when a product is finished, it never will be! They will always want to continue tinkering and improving – I know from being an engineer at heart myself. But there’s no quicker way to run out of cash. Products need to get to market, be sold and then improved upon.
For hardware entrepreneurs it’s a tougher challenge: software is inherently quicker to develop, test and commercialise. Investors naturally gravitate toward these potential quicker returns and exits. Therefore hardware entrepreneurs need to show they understand the art of “fast and frugal innovation” – the ability to develop and exploit quickly. Hardware does tend to have a great advantage over software in as much as the barriers to entry are much higher and there’s excellent opportunity to establish significant IP & know-how at the material and product level.
Spaceoneers: What have you found is the biggest barrier to growing your business?
In Europe specifically, and at fear of being called a heretic by the European Space Agency, I actually think the Agency is the biggest challenge to growing VC backed businesses, such as Oxford Space Systems. What ESA does incredibly well are large science missions; missions that have a long gestation period and require many nations to come together. If you want to fly a science mission with the highest chance of success you can’t fault ESA, it is truly world-class.
Where I think ESA struggles considerably is understanding pressures on SMEs and start-ups and being able to support them in an agile and entrepreneurial way. The Agency has a very ‘linear’ and ultra low-risk way of thinking, borne out of their historical big mission approach. ESA’s timeframes and appetite for risk is significantly disconnected from that of a start-up and especially one that is a venture-backed. This is a huge gulf that needs to be addressed. My fear is that it’s simply not in the DNA of some of the key decision makers at the Agency to understand that there’s a problem and how to address it. It is regretful to say, but Oxford Space Systems has to actively seek the majority of its opportunities away from the Agency; it’s the only way we can grow the business.
So one idea I hope the Agency will consider is an ‘ESA Innovation Works’. Why not carve out a tiny part of the Agency, unshackle it from the bureaucracy of the “mothership” and man it with commercially hungry folks with experience of life in SMEs / running their own business? Projects would be co-funded that focus on disruptive (e.g. high risk) innovation with preference given to those with private equity backing. Output is measured in product TRL – not how much documentation or theoretical analysis is produced. The focus is on “fail fast, fail cheap” – the classic maverick approach of rapidly iterating toward a working solution. Successful projects could then feed into the more traditional ESA system – not hamstrung at low TRLs by excessive risk averse bureaucracy and painfully slow execution. There’s huge potential for ESA to turbocharge the SME NewSpace scene – but they have to genuinely want to do it and accept they don’t as yet have all the right folks in the right places to make it happen.
Spaceoneers: What can the UK do to improve upon skills and resources?
Mike Lawton: In terms of resources, I think in many ways the UK is becoming a victim of its own success. For example, OSS is developing space hardware and we need the appropriate test facilities to validate our technology. Access to thermal vacuum chambers, vibration tables and clean rooms is increasingly a challenge. We find ourselves competing against very long-duration science projects and other commercial entities to access test facilities. We might only need a chamber for about a week at a time, whereas a typical science mission can tie up a facility for many, many months. It means we need to plan test campaigns very carefully to avoid letting down customers. So far, we’ve managed to keep the bulk of our testing in the UK and locally with excellent support from RAL Space at Harwell but it does look like we’ll need to do more overseas in the future.
Lack of human resource is another challenge. I’m sure most niche engineering and technology businesses flag this up but for a start-up or early stage business the problem is further compounded: we need smart people who want to work in an entrepreneurial environment. This is often perceived as too risky when compared to more traditional employers in the sector. When I recruit people to the OSS team, I ask them, ‘Were you ever encouraged or made aware of entrepreneurial start-ups? Did you ever consider starting your own business?’ The answer I get universally is, “No”. As an engineering undergrad, you’re only ever profiled companies like Rolls Royce, Airbus, OHB or ESA to work for. Joining a small entrepreneurial company had never crossed their minds because they were never presented as credible and rewording alternatives.
Unless we start promoting “newspace” and an entrepreneurial way of doing things, I think we’re missing a trick that might just make a critically important contribution to NewSpace. One thing I’m really proud of is the OSS team and their level of motivation. Customers often comment on the energy in the company when they visit. The best comment I’ve received from a colleague who joined us after leaving a large company was “coming to OSS has reminded why I studied engineering. OSS has restored my faith and I’m really enjoying being an engineer again!”.
Spaceoneers: Finally, how do you think Brexit might affect your business model and the industry at large?
Mike Lawton: It’s hard to see any immediate impact in the short-term but I think consistent with every other industry it’s causing uncertainty. The one thing any market and any investor hates is uncertainty, so it’s that lack of clarity that causes problems. As you know, ESA is independent of the EU. We have countries such as Canada and Switzerland who aren’t members of the EU but are members of ESA. In terms of the framework of collaborative space, I think we’re largely intact. Certainly for a UK SME or a start-up engaging with ESA, I think Brexit will be a negligible effect.