iinnovate 11: Alex Tai, VP of Virgin Galactic
 

Matt and Julio – Episode 11: iinovate - Alex Tai, V.P. of Operations, Virgin Galactic 
 

(Being recorded on a train from Copenhagen to Stockholm).  In this Episode, Julio goes to London to interview Alex Tai, Vice-President of Operations for Virgin Galactic, Richard Branson’s exciting new company that is looking to put you into space!  Julio has promised some exciting video on the website when he gets back into town, so check back to iinovatecast.com sometime around Christmas.  Enjoy the podcast – Happy Holidays, and thanks for listening. 

Julio:  So, we’re here in London, England, with Alex Tai, V.P. of Operations for Virgin Galactic.  Alex, welcome to the podcast. 

Alex:  Good to be here. 

Julio:  So, tell us a little bit about Virgin Galactic – what’re you guys doing, what’s the vision? 

Alex:  Virgin Galactic is about the democratization of space.  It’s trying to give access to space to the man on the street. 

Julio:  And what does that access to space look like?  What’s the product look like, that I could go out there and buy? 

Alex Well, in essence, where we’re starting is sub-orbital space travel, so we’re developing a system that’s both Rutan’s and Scaled Composites flew in 2004, which was the first commercial space flight – they made three flights into space that year, and won a prize that’s called the Ansario X-Prize for the first reusable vehicle to go into space.  That vehicle has now been developed, which was Spaceship 1 and 2.  Spaceship 2 – instead of them having the capacity for one pilot and two passengers, it’s two pilots and six passengers.  And we’re going to be using that system to bring to the market a commercial offering, and we believe sometime in the middle of 2009, or so. 

Julio:  So, how much is this going to cost me to fly up to space? 

Alex:  It’s a $200,000.00 ticket – but that’s, we believe, is for an experience of a lifetime, it’s not just the flight into space, our founders that are buying those tickets from us right now are, ah, living a dream for the next two or three years as they wait for that product to evolve.  We’re involving them in the development program, we’re bringing them along to events, we’re helping them – we’re asking them to help us craft what the product’s actually going to be.  But then, when it gets down to it, three days of training, there’s a medical screening – probably a few months out – just to make sure that they’re not disappointed when they come along.  The good news about the medical screening is that we believe that over 80 percent of the people on the planet these days will be able to make the space flight.  But after the medical screening, when you come along for three days of training, we’ll go through a procedure which we hope to…will alleviate sensory overload – people that take these space flights are going to be experiencing things that they’ve never experienced before and their senses will be overloaded, so we want to help train against it.  Things like the zero-g – people get to float around, and, uh, the incredible acceleration as the vehicle accelerates from quite slow speeds, flying speeds, gliding speeds to supersonic speeds – and, in less than ten seconds.  Then there’s the positive-g on re-entry, again, that’s quite high.  And then, just the incredible noise and the view, in the thunderous quiet of space – that’s going to be really quite incredible.  All this will happen over a very brief period of time, it’s a 2-1/2 hour space flights, so it’s a lot to take on board, so, the $200,000.00 is going to be well-spent preparing you to take the most from your 2-1/2 hours.   

Julio:  So that out of those 200 – sorry - out of those 2-1/2 hours, how long are you actually in space, how long are you floating around? 

Alex:  Oh, it’s a brief period of time and right at the peak of this, there’s 4 minutes of weightlessness and about 7 minutes of black sky. 

Julio:  So, describe to us what those 2-1/2 hours entail – I just saw this amazing video, people going up in space, you know, there’s a craft that comes out of another one – you can describe it a lot better than I can – maybe you can walk us through what that experience is going to be like. 

Alex:  Maybe you can do a better job of it as a journalist than I can as a project leader, but, the um, basically what we have is two vehicles that comprise the system.  There’s a mothership, which is a very large aircraft, under which the spaceship is berthed.  The mothership has got an incredible capability of lift and altitude, so it lifts a very high weight, the spaceship, to a very high altitude, about near 50,000 feet, then releases the spaceship.  The spaceship – then pilots will then check out the systems and make sure they’re happy that everything’s fully functional and they’re fit for a space flight, and then they will ignite the rocket motors and it all happens very, very quickly after that.  The vehicle accelerates to the speed of sound in less than 10 seconds and it carries on accelerating to almost four times the speed of sound, and the pilots will direct the vehicle straight up, so it’s traveling almost four times the speed of sound, going straight away from the planet.  As you can appreciate, at four times the speed of sound, it doesn’t take much time at all to go anywhere, so you’re very soon at a velocity and an altitude which, when you shut down the rocket motor, you will eventually end up in space, and that happens at around 170,000 feet, we can just cut the rocket motors off at that stage; we still have complete controllability of the vehicle through a reaction control system, and we will then be on a parabola which will take us into space, which is, the official definition of which is 100 km above main sea-level.  We’ll actually go well above that; I have to make sure that there’s at least a 10% margin so people will be, probably flying to 110 km, so, well into space. 

Julio:  That’s great.  So, tell us a little bit more about the Founders, how many tickets have you pre-sold? 

Alex:  Our aim is to sell around 500 seats before we fly.  Now, this is the first year of space flight, so what we’re doing is an incredible offering, you know, there’s only been 450-odd people that’ve gone into space.  We’ll double that in a year, just through Virgin Galactic, which is quite incredible.  And what we’re asking those people to do is to be one of the first 1,000 people to have left the planet, so, you know, they’ll be on the same board that Alan Shepherd and Uri Gagarin were on, and that’s quite something.  That’s going to be divided into three separate areas, there’s Founders, Pioneers, and Voyageurs.  The founders are the first 200 – first 100 people, sorry – that will fly into space, and we’ve pretty much sold out, whether it’s atypical of luxury goods, but it’s always the high-end things go first.  And ALL of the tickets are $200,000.00, but people seem to love to put the entire thing up front.  Then, we go down from there – the next grade, we’re asking people to put down $175,000.00, then $150,000.00, $125,000.00, $100,000.00 – depending on whether you want to be in the next 100, 200, 300, 400 – and then the Voyageurs, everyone beyond this initial level, the first 500, you can make bookings, so, beyond 500 – and put down a place-holder and this is just a 10% deposit, so, $20,000.00.  And we still have quite a few people who want to do that, so they can say, “I bought it to go into space, to secure a position,” as it were, but the main people that have put down are Founders, the first 500. 

Julio:  So, tell us a little bit about how the idea for Virgin Galactic came about? 

Alex:  Richard Branson has wanted to have a space line for a long time.  His vision, I think, is to go from A to B, rather than A to A, which is what we’re doing with the tourism level, and we’d like to effect, say, a means of transportation that can get you, for example, from London to Sydney in less than an hour – that is groundbreaking stuff, and it’s something that lots of people have been trying to do for a long time.  So, he started the company overall and adopted the name of Virgin Galactic Airways in the late 1990’s and, but, looked around at the technology and couldn’t find it at that stage.  I became involved in special projects and was working on a project in the Mojave Desert with Scaled Composites for the Virgin Atlantic Global Flyer, which was the aircraft that Steve Fossett few around the world, non-stop, and then Steve said, “While you’re there, I’d like to check that out, check out one of the hangars next door because they’re building a spaceship” and so, obviously enthralled by this, I went to have a look and Burt showed me around and I said to him, “Look, what’re you going to do with this spaceship after you win the X-Prize?” and he said, “Well, you know, nothing, because Paul Allen doesn’t want to take it any further and there’s no one else with the pockets – you know, the ambition to do anything,” so I said, “Well, is there the capability for this thing to develop a flight from London to Sydney?”, aligning with the Virgin Galactic project.  He said, no there wasn’t, and I said, “Well that’s a real shame because if there had been, maybe I could get Richard Branson involved.”  So, he said, “Well, maybe there’s a way.”  So, anyway, that’s how it started, and we ended up here.  We think this is a stepping-stone for us to get from point-to-point, but at this stage it’s an incredible way of giving people access to space when they didn’t think it was ever going to be done. 

Julio: Can you tell me a little bit about how you foresee Virgin Galactic evolving?  What your 5-year, 10-year, 15-year, 20-year vision is? 

Alex:  Okay.  Well, clearly, in the next five years we have to focus on getting the sub-orbital system going and you have this sort of chasm that some business analysts have looked at where, you know, these early doctors and people are going to want to go on doing things, and then there’s the pragmatists that are a little way behind, then you have to bridge the gap in between those two areas, so lots of – maybe our first 500 people, they’ll come, but we need to make sure that the business is something that’s sustainable, so we have to prove reliability and we have to prove sustainability by reducing costs.  So, during the next 5 years, we’ll be building, testing, and then flying our early doctors and then, beyond then we’ll be working on the economics to try and bring the price down and, you know, hopefully we’ll get right out of the box with very, very safe levels, but we have to improve on those to reach the pragmatists, which is where the real market is, beyond that. 

Julio:  How low do you think that price can be? 

Alex:  We have to…the most expensive element of our system at the moment is the rocket motor.  It’s rather like a razor, a disposable razor, you throw the thing away, but rather than, you know, throwing it away after seven days, you have to throw this thing away every day, or every time you use it.  It means it’s exceptionally safe, BUT, it means that it’s costly.  And we won’t be able to drive the prices down much with the system that we have.  I think we’ll be able to make some efficiencies if we mass-produce some things like this, but we won’t be able to significantly reduce the pricing until we have a complete redesign of the motor.  We can produce, I think, a bi-propellant or a mono-propellant rocket motor system – it’s rather like being in a motor car, you just fill it up with fuel, and that’s just the cost of the fuel.  So, if we get there, then the cost could really tumble down.  We would HOPE to be able to offer this thing for less than $50,000.00, you know, maybe 10 years out. 

Julio:  This is actually a very natural segueway to one of the things that we’ve been trying to do with our podcast series, allowing current interviewees to ask future interviewees questions – we’re actually going to be interviewing Geoffrey Moore, who wrote Crossing the Chasm, that you just referred to – 

Alex:  Right – 

Julio:  …in a couple of weeks, so I want to give you an opportunity to ask him a question 

Alex:  Okay!  Where is Virgin Galactic making a mistake? – and email me! 

Julio:  Well, we’ll get his answer and we’ll send it to you! 

Alex:  Okay. 

Julio:  So, on that same note, we actually interviewed Heidi Roizen, who’s over at Mobius Venture Capitalists out in Silicon Valley, and she has a lot of expertise on consumer products, and we gave her the opportunity to ask Virgin Galactic a question about your strategy, about what you’re trying to do today in the market, and her question was – How much of this is going to be integral to Virgin’s business going forward as opposed to more of a brand-play and something to get media attention? 

Alex:  To be honest with you, it’s when I first brought the idea to Richard.  I had, you know, I had a keen eye to the fact that it WAS very, very good news for the brand, it said a lot about what we were as a company and as a group, and the sort of things that Richard was able to do, or WANTED to do, not able to do – have the drive to do, so it does say great things about the group, BUT…I was actually very, very comforted to find all the way through the process that Richard wasn’t just interested in getting his name on the first spaceship, which is important to him as well, but also it was to make a viable business from this, and that also what he wanted to do was go point-to-point in the future. He has, now, five airlines around the world – Virgin Atlantic, Virgin Express, Virgin Blue (in Australia), we now run the national airline of Nigeria, and so we’re accustomed to risk, and we’re just about to start Virgin America, which hopefully will get going sometime in March next year.  With five airlines – we understand transportation – we understand operations and implementation and also packaging – we understand the efficiencies that we would like to gain by doing things a little bit more quickly, and what people want.  We believe that there is a HUGE market for people wanting to go from New York to Singapore in 45 minutes, or from London to Sydney in the same timeframe.  This also creates some incredible dynamics with the economies that you get from the investment we have in the hardware.  At the moment I fly an A340 600 – it takes 24 hours for a return trip from London to Los Angeles.  We employ $140,000,000.00 aircraft to do that.  If I’m going there in an hour, turning that vehicle around in an hour, and coming back an hour later, I can effect eight times the efficiency from one craft, doing exactly the same trip.  That’s quite a different dynamic.  Anyway, we’d love to find out if we can do this and it’s not just a grand-play – this could very, very – the program is about to change the face of transportation on the face of the planet in the future.  Not only that, because that’s the stepping-off point, as it were; if we can do that and get people around the planet and work into the world economies – and they’re already existent, maybe we can tap into some other economies that aren’t existing at the moment.  For example, by creating a vehicle that does this – it’s not much of a stretch to go because you’re at orbital space, to just take the vehicle into orbit – Now, if you can put manned-access to space, way low, then you can reasonably start doing things off-planet – it’s about mining asteroids, it’s about having hotels in space, having a hotel on the moon – all of these things become possible when you effect cost reductions in the way that we will. 

Julio:  So, how does Virgin Galactic relate to Virgin, the company.  I know you’re operating very much in a start-up field, something very new and innovative, you know, how’re you held accountable, how do you fit into the company? 

Alex:  Okay.  We have the attention of the board, the main Board of Directors, this is a – as far as they’re concerned, we’re a highly risky, not-for-profit endeavour – Richard is completely, you know, he has this Board of Directors that just make sure that, you know, we’re kept sane and we capture the mood of the company.  The company’s operating companies, of which there are now 440 of us, I mean, it’s the Virgin Group, that we’re kept in line.  So, we get to report to them all the time and I have to submit weekly reports and monthly reports and then I get called to the board meetings, and report about progress.  So, it’s very straightforward; I told them how much it would cost, I told them what the benefits were, and now I have to prove that that’s working to plan. 

Julio:  That’s great.  So, this model of – one of the topics we try to cover a lot is general innovation within established corporations – so I’m really interested to hear a little bit more about how the Virgin model for driving innovation was something that is a really long-term view in terms of commercializing space travel – could you describe to me what that model looks like and how Virgin fosters innovation internally? 

Alex It really is…I know it’s pretty bizarre to say it…in a company that has 50,000 employees and, you know, well in excess of 20 Billion dollars worth of turnover, but it’s Richard – you know – Richard sees something and he wants to do it, and then he has a vision, he’s incredible.  He is able to spot a market, and lots of people take things to him and he will continue having them scrubbed up – I have to analyze many, many space-related projects all the time, and some of them he’ll ask me two or three times, until we’re sure it’s not been something that’s overlooked, and we, I brought the Virgin Galactic project to him and it was very, very thoroughly scrubbed before we went ahead with it.  Then, we moved exceptionally quickly, which we were able to do because it’s Richard’s money, he doesn’t report to a board, it’s his own direction, and the board reports to him! 

Julio:  Ah, that’s great!  I mean, I’ve read so much about him, I mean, he just sounds like a very amazing character – 

Alex:  I can get you a podcast this afternoon, if you want – 

Julio:  Really?  

Alex:  No. [Laughter]

Julio:

Well, Alex, we’re just about out of time.  I just want to thank you for being on the podcast – it’s been a pleasure. 

Alex:  Well, it’s been my pleasure, as well.  Thank you. 

Julio:  Thank you.