Close-up: Interview with John Spencer, CEO Red Planet Ventures, author with Karen Rugg of Space Tourism - Do you Want to Go?

Recently, we interviewed John Spencer, a space architect, entrepreneur, and industry visionary, about the rapidly evolving private space enterprise industry.

Why should entrepreneurs be interested in the private space industry?

Some of the wealthiest and smartest people alive today are investing millions of their own dollars into creating space tourism companies.  They were successful in the first place by seeing the future potential of emerging technologies and acted on the opportunity with great success.  Now they see the space tourism industry as the next great opportunity, and they are again acting. The space tourism and sports industry will become the most high profile and profitable industry off-world for the next 100 years.  It is an industry that will incorporate many of the most advanced technologies in nanotech, robotics, advanced materials, extreme design, and media. Those who are successful will have a good opportunity to go into space someday and possibly even visit the Moon as a real life off-world tourist.  By being involved in this exciting new industry, you can live a life making a real difference in creating a more progressive, peaceful, and healthy future. Participating in space business development assists the United States in its quest to return to the moon and to explore Mars.  Great countries explore and expand into new frontiers tapping into new natural resources, creating new industries and inventing technologies. Exploration inspires the next generation to also value exploration and have a positive view of the future.

What is the personal motivation of extremely wealthy entrepreneurs to invest in private space enterprise?

There are two basic answers to this question.  First they want to go into Earth orbit and some want to go the Moon.  To have that very special personal off-world experience.  That is why to date three wealthy and very smart entrepreneurs have each paid $20Mm to have a week-long space experience.  The second reason is that they want to be part of history - to make a real contribution to opening up the space frontier for exploration and development, and they see building successful space companies as a way of doing this.  Wayyyyyyyy down the line they see making a cash profit; but in their cases, this is not their main motivation.


What is the importance of the Space Tourism Society that you lead?

We are modeled after the National Geographic Society in that we do long-lead research on off-world tourism, sports, private exploration, and earth-based immersive simulation and learning experiences and promote our findings to the world public.  We are the only professional group totally focused on space tourism as the key financial and technical lead for developing space for all humankind.  We include space sports in our definition of off-world tourism.  Most of the key people involved in the space tourism industry are members of the Space Tourism Society and have been since I founded STS in 1996.  We are also conducting critical research in a wide variety of areas, which is needed to support profitable off-world tourism and sports.  And we are supporting the space business initiative at USC.  However, the most important thing STS does is produce our Space Tourism Pioneer Award event every few years.  It's called: “The Orbit” Awards and is modeled after the Academy Awards.  We recognize those people who have pioneered a part of the space tourism movement (including education) and industry. This year the Orbit Awards (http://isdc.nss.org/2006/gala.html)will be held on May 4 leading off the 25th Annual International Space Development Conference in Los Angeles.
  
What are the business models you’re seeing today in this emerging industry?

There are four space business models I have identified and have been promoting for over 20 years.  The first is modeling the space tourism industry after the ocean-going cruise line industry, for several reasons.  The cruise lines exist to make a cash profit by taking 13MM people a year out into one of the most extreme and dangerous environments on Earth,the oceans, to have a great and very safe vacation experience.  Their ships are amazing examples of advanced technology and sophisticated operations, and they make a profit.  The second business model is a real breakthrough in the way we look at space development.  It is modeling the near-term space tourism industry after the super yachts.  Super yachts exist not to make a cash profit but to advance social standing, for marketing, and to provide rewards. We will see orbital super yachts and yacht clubs before we see orbital cruise ships carrying the broader public.  The third model is the sports industry.  This is a huge industry totally funded by media sponsorships.  Off-world sports will be exciting and generate huge media interest.  I forecast that the first manned landing on the Moon by a private enterprise will be for “The Great Lunar Rover Race.” A billion dollar prize for the first team to race around the entire Moon.  Off-world sports will be the main funder of off-world development and business for the next 50+ years.  The final business model is the earth-based immersive simulation business.  It will market to the adventure vacation market place of 500k affluent people seeking something truly unique but safe and comfortable to do for a vacation.  Taking a week long fun and exciting simulated vacation on the Red Planet will be a great experience. All of the above business models and industry segments are in the works right now.

Note: See John Spencer at CTC's April 4 Event: Space Billionaires: Educating the Next Generation of Space Entrepreneurs.

Faculty and students should contact kallen@marshall.usc.edu for discount codes.

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Venture Exit Strategies Panel Closes Series on Entrepreneurial Finance

The Experts Series on Entrepreneurial Finance concluded February 21 with an excellent panel on venture exit strategies. Titled “Exiting the Venture through IPO, Merger, or Buyout," the panel was hosted by the USC Marshall Center for Technology Commercialization and sponsored by Alschuler Grossman Stein & Kahan LLP.

The panel was moderated by Rachael S. Wexler, a partner in Alschuler Grossman Stein & Kahan LLP in their Transactional Department, and included a discussion on mergers and acquisitions, public offerings, and management buyouts with an audience of MBA students, USC researchers, faculty, and entrepreneurs.

“Some of the mistakes or the things you cut corners on today will come back to hunt you five years from now,” asserted Ms. Wexler when talking about the importance of establishing processes and controls from the beginning of a venture to facilitate the evaluation of the business by outside investors and to protect the interests of the entrepreneur.

The panel included Richard Gammill, who serves as Managing Director of Transaction Execution for ARC Investment Partners™ LLC, Julie J. Levenson, a Managing Director and Head of Houlihan Lokey’s Private Equity and PIPEs Placement effort, Gary S. Rabishaw from Barrington Associates, and Jon Howe , a Managing Director in Wedbush Morgan's Investment Banking Department and a USC Marshall Alumnus.

“Whenever you do a private deal, the private money you take away always comes with strings attached”, said Richard Gammill. “It is not just a financial decision it is a personal decision. As an entrepreneur you need to ask yourself, are you ready to step away and let somebody else grow the business? What are your personal goals?”

The ninety-minute panel focused on answering questions submitted in advance by the audience. Afterwards the audience had the opportunity to approach the speakers and continue the discussion in an informal environment.

“We wanted to give USC students and researchers a clear picture of the different sources of funding available at each stage of a venture’s typical life cycle, and an opportunity to meet and connect with Angel Investors, VCs and Investment Bankers. At the same time, we wanted to create a channel for the investment community to get closer to our university and our students,” said Juan Felipe Vallejo, project manager for the USC Marshall Center for Technology Commercialization. “Thanks to Alschuler Grossman Stein & Kahan LLP for their sponsorship and Louis Dienes for his tremendous help with the creation of the successful Experts Series on Entrepreneurial Finance.”

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USC Marshall Team Wins Regional Venture Capital Investment Competition

Boulder, CO. (February 11, 2006) – Marshall edged out seven other top programs for regional bragging rights and $3,000 in prize money at the 2006 Venture Capital Investment Competition (VCIC®) Central Bracket at the University of Colorado. The team was comprised of PM Students Noble Acuff and David McCullagh, and full time students Todd Ammons, Jeff Brennan and Stephen Henry. Dave Grant was the team’s alternate and will captain the 2007 VCIC team. Dr. Darius Sankey, Marshall adjunct professor and Partner at L.A. based venture fund Zone Ventures, coached the team for several weeks leading up to the event and was a key component to the team’s success.University of Michigan Ross School of Business won second place and $2,000, while the University of Chicago University received the Entrepreneur’s Choice award and $1,000.

Unlike business plan competitions, the VCIC required the team to play the role of venture capitalists, assessing real companies in a high-stakes competitive environment. The team was challenged to use skills and theories learned across the functional spectrum and mirroring actual venture capital and entrepreneurial work.

"The VCIC event was a fantastic opportunity to meet and interact with entrepreneurial CEOs, venture capitalists, and our MBA colleagues at other top schools. The event was a very unique and valuable opportunity to see how venture capitalists evaluate and structure deals,” said Noble Acuff, MBA.PM class of 2007 and member of winning VCIC team.

Also participating in the VCIC 2006 Central region were:

• Kellogg
• Norte Dame
• Carnegie Mellon
• Washington University
• Wisconsin
• University of Michigan

The Central region was one of seven VCIC qualifying rounds taking place around the nation and in Europe. Other events were hosted by London Business School, New York University’s Stern School of Business, the University of Southern California’s Marshall School of Business, Georgia Tech University’s DuPree College of Management, Vanderbilt University’s Owen Graduate School of Management, and the University of California at Irvine’s Paul Merage School of Business.

The winners of qualifying rounds will meet in Chapel Hill, NC, April 5 for the VCIC international finals hosted by the University of North Carolina’s Kenan-Flagler Business School, which founded the event in 1998.

Encouraged by their initial success, the Marshall team is meeting weekly with their Coach, Dr. Sankey, to review business plans and further refine their process and strategy. They hope to bring the national title back to campus for the first time in school history.

About the USC Marshall Center for Technology Commercialization

The USC Marshall Center for Technology Commercialization identifies, encourages, and supports technology entrepreneurship activities at the University of Southern California and its broader Southern California neighborhood. For over seven years, it has been the central source of information, research, education, and services related to the commercialization of USC technology through new start-up ventures. CTC assists inventors and companies with IP issues, business feasibility analysis, business plan development, start-up financing, management team acquisition, and related issues.