Five Control Loops

Starting a new business has been an eye opener for me. As several people have expressed interest in hearing more about what it’s like, I wanted to do a quick post about the five “control loops” I’m trying to keep in my mind at any given moment.

#1: Project Management
The first loop is managing the projects we already have. This includes doing engineering work, making sure that we recognize potential problems early in the game, that we have the bandwidth to handle the tasks we have, and that things are progressing smoothly. Fortunately, Ian’s also very good at this, so at least some of this has been taken off my plate.

You’ve got to deliver on the contracts you’ve landed, or you’ll have a hard time getting more.

#2: Business Logistics
The second loop is managing all the nitty gritties of running a business. As Jeff Greason said at my first Space Access Conference–if you’re going to run a space business, you need to actually run it as a business. This includes stuff like budgeting and money management, running payroll, paying taxes, getting shop space, keeping the books straight, getting good legal and accounting advice, managing a web presence, getting basic software and office equipment, figuring out insurance (business insurance, workers comp, and health insurance plans), etc. It’s all the kind of stuff that if it’s being run properly you don’t really notice, but has been taking a decent amount of time setting up. Fortunately on this end, I’ve been able to find some help in the form of payroll services and bookkeepers to take care of the stuff that I know I’d drop on the floor otherwise, and to free me up to focus more on the other loops.

You’ve got to run your business as a business.

#3: Tactical Business Development
What I mean by this loop is finding paid work to help keep together the core team we already have. For instance, right now we’re doing well through the end of the year, but if you don’t keep business constantly lined up, you can have a really erratic “feast-or-famine” situation that makes it hard for people to be productive. So, I’m always on the lookout for projects we can sub-contract on, RFIs to respond to that I think could reasonably lead to a good shot at future work, proposals to send in, partnerships to build, etc. Right now with our background, I’m mostly looking for opportunities related to GN&C, rocket propulsion research, propellant tank design and fabrication, and rapid prototype flight demonstrator work.

If you don’t keep the pipeline full, you end up with long dry-spells.

#4: Team Building and Strategic Business Development
This fourth loop is the real challenge right now. In order to compete in the markets I want to compete in, we need to build up a core team of engineering capability. We’ll have a more precise list today or tomorrow, including a request for resumes, but right now we’re talking skills like mechanisms, electromechanical systems, electronics, propulsion, and aerodynamics. The challenge is that since we’re bootstrapping from almost no initial capital, and aren’t actively seeking investors yet, we need to find new projects that enable us to hire the people we want. The challenge there is that before we have the person on, it’s harder to sell their abilities for a contract, but once they get on-board, you want them bringing in revenue right away so you’re not having to float them. It’s a tough nut to crack, but should be a fun challenge.

If you want to avoid pigeon-holing yourself based on current capabilities, you have to be proactive about growing the team.

#5: Moving Beyond Contracting
My goal for Altius is not to be just a consulting shop. While I think that will always be a part of our identity, I want to start moving as soon as I can towards developing actual product lines (things like nanosat launchers, microreentry vehicles, micro-tugs, etc). This involves doing a lot of market analysis, finding partners to team with, raising investment capital, etc. This is longer-term, but if we want to avoid becoming yet another SBIR farm, this will be a critical piece down the road, and managing this transition is one of those things that gives me a bit of heartburn.

If you have a long-term vision you’re pursuing, at some point you have to figure out how to get there from where you’re at.

Anyhow, those are some of the things on my mind right now. The area that I’m most interested in at this phase is #4. The first three are going fairly well, and I’m having a lot of success with them, it’s the team-building part that will allow me to really start moving forward.

2 Responses
  1. David

    In my experience the most difficult control loop was phase 5 — going from contracting to a product based income has been the hardest transition as it affects the hard work for all the other phases (control loops). There is always the thoughts that it might not be the best time or approach – this does put the business at risk. Though 100% worth the transition once you are there – in fact its not really worth any value until you are through that phase.

    In general, the other aspect I have found hard it managing the growth of the company. Each step there are points that are transitional, e.g., the way the company is run changes. You might need further staff,.alternate software or business systems in place, and then the changes in cash flow management.

    You will make many sacrifices so you will need to balance work, play and family. This is paramount (and difficult to get right). Once you get into Control Loop 5 (products) make sure you reward yourself for your efforts. It is great following along in your efforts – I would like to know what you learn as you go through the phases. I look forward to rwading more as you move forward.

  2. PrairieKirk

    What is the possibility of finding any good qualified staff on “spec”? With the upheaval at NASA now, there might more than the usual folks “on the market.” (Of course, it is an entirely different subject as to what habits of mind and action might have been inculcated in the government environment, or might have been preselected for — say, job security, or rules-based environment with very distributed responsibility — by people who have previously selected NASA over a more Silicon Valley-like startup culture, and might therefore make many candidates not the right fit for Altius. But that’s a discussion for another time.)

    But wherever such candidates might come from, my question is this: is there a potential win-win here? One where you prequalify and select someone who might then agree to be available to Altius for a period of time on a first right of refusal basis? This could conceivably give you the ability to rep that skillset as an Altius capability in one or more of your contract bids, without any (substantial) cash outlay for the salary/benefits until such time as the contract closes, say one to three months? Both you and the candidate know, in advance, that if the contract doesn’t come in, the deal is not culminated and the RFR terminates.