Leif Capital's Tom Whitehouse interviews the head of Boeing HorizonX Ventures, Brian Schettler, April 2019
Brian, before we talk about HorizonX and Boeing’s venturing strategy, could you tell me, on a personal level, your favorite mode of transport? Do you enjoy mobility (advanced or not) as an experience?
Since I can remember I’ve always been an aviation junkie. My earliest memory is my first flight when I was three years old. And I remember, aged five, telling my parents I wanted to be a pilot. Aviation has been a key part of my life, and love, from early days. I am still excited every time I get on a plane. I just love being in the air.
Did you fulfill your ambition to be a pilot? Do you have a pilot’s license?
Not yet, but I’m working on it. But a random hobby of mine is hot air ballooning. It’s slow, but it’s great fun. I first went ballooning when I was five, much to my mum’s disapproval, and I’ve enjoyed it ever since. My dad was a balloon pilot too.
Is some slow time in the air the antidote to the pace of the job? It’s only two years since your venture unit was established. In this time, you’ve already disclosed 18 investments. You’ve been busy.
Yes, and when you factor in the non-public deals and many follow-on investments, we’ve been averaging more than one investment per month. Before we established the venture unit, we were aware of the criticisms that start-ups make of corporate venturing – that it can be too slow. That was a mistake we weren’t going to make. We knew we needed to work at start-ups’ pace, not a big corporate’s. So, we got buy-in from CEO level down on what our process needed to be. We had a lot of pent up demand for Boeing to get into venturing and were inundated from day one with deals. I’m glad to say we’ve been able to move quickly and grow our portfolio.
Will you be keeping up this pace of investment?
No one is telling me to slow down. We’re being meticulous about what we’re looking for. We’re getting maximum buy-in from strategic development within Boeing. But we’re still moving fast on growing the portfolio. We’ve not made any pre-determinations as to its optimum size and we will keep on growing as long as we’re delivering value to Boeing and to our portfolio. We plan to scale the resources and the team.
What is Boeing looking to achieve through venturing?
The strategic dimension is at the forefront of our venturing. We want to identify and partner with a broad set of innovative startups that can contribute to and enable the future of aerospace. We want to identify platforms and capabilities that can make us better. That means improving on manufacturing, costs, safety, and creating an ecosystem with the best minds in the world, connecting them with Boeing and with each other.
What are the particular challenges for startups in the aerospace market?
Aerospace is tough. There are big barriers to entry and it’s a risk averse industry. Our role is to help companies get through both to Boeing and to the aerospace industry at large, to get over the barriers and bring their innovation to bear. So, after an investment is made, we have a portfolio development organization in my team with the sole responsibility of helping the portfolio company connect with different parts of Boeing. It’s a very important job.
How does your venturing sit within the overall advanced mobility theme? For example, what do you have in common with the automotive industry? To what extent are the aerospace and automotive industries looking for the same advanced mobility solutions?
We have some things in common. But we’re not the only industries looking to shape the future of transport. In fact, I can’t think of an industry that isn’t preoccupied with the shifts to greater autonomy and electrification, and that isn’t focused on the challenges and benefits of far greater volumes of data, and of ensuring safety and of improving manufacturing processes. We’re all in this together. Sure, it’s going to be competitive because there are big markets at stake, but from a venturing perspective, we are co-investing with corporate VCs from other industries in startups for which aerospace is just one potential market. We think this model is great for us and the startups. We can drive an aerospace vertical, someone else can drive automotive, and another partner can drive energy, etc. And we all benefit from the economies of scale from the mass application potential.
Our key motivation for investing in Cuberg was to help drive the capabilities they were developing in advanced battery cell chemistry and technology in aerospace applications. Every industry stands to benefit from safer, cheaper, and more energy and power dense battery technology but each industry has their unique requirements. Our investment allows as to tailor the designs that will best enable the future of electric flight and other aerospace applications while benefiting from the great successes they have achieved with oil and gas and other industry partners to greatly boost the performance characteristics of lithium batteries.
I doubt you need reminding of the expectations placed on Boeing of the highest levels of safety. How does this inform your venturing?
It’s fundamental. No one will compromise on safety. And it’s not just about safety from a hardware perspective. It’s about how systems integrate. Airspace integration is the key enabler of a wide range of innovations in advanced mobility on the ground and in the air.
Can you give examples from your portfolio of how you’re advancing safety?
We have several. I’ll mention just three. Isotropic Systems Ltd. is a British company we invested in recently that we regard as a world leader in space-based connectivity, which will be key to safety. SparkCognition is a Texas-based AI company that is advancing the development of cognitive computing analytics for the safety, security, and reliability of information technology. Near Earth Autonomy is a US company from Pittsburgh that is enabling safe and autonomous flight. It can adapt to unpredictable factors such as obstructed landing zones. Together we’ve helped Near Earth Autonomy mature their capability and helped them get the certification they need.
Do you think that autonomous flight will be able to compete with autonomous cars? Which do you think will be the first to fundamentally disrupt urban and intra-urban transport?
There’s a place for both us. Autonomous vehicles have made great progress. There’s more to be done. The same is true for autonomous flight. Our view is that as society continues to grapple with congestion, the opportunities of opening up the third dimension, opening up new layers in aerospace, will be seized.
Ok. Talking of new layers in aerospace, let’s talk about the highest level, space itself. How are you venturing here?
We think space is a frontier ripe for disruption. New space startups are probably the area of technology where we see most activity, from new satellite constellations to propulsion and launch. It’s a competitive and quite fragmented area. Boeing has a great legacy here which we want to protect and grow. We have three or four portfolio companies that are space-focused, but I’ll draw attention to just one seeing as they will be joining me at the GCV London conference in May. Reaction Engines is a British business that is developing an advanced form of propulsion which will disrupt space travel and intercontinental flight. Our CEO has been very bullish about his desire to see us become a leader in hypersonic flight. Reaction’s capabilities will be a key enabler of this future. But we need to also pay attention to the other roadblocks of achieving a reliable hypersonic transportation ecosystem – materials technology, navigation and aeronautical structures. We’re looking for other companies in this area.
Looking to the future, what do you expect to be investing in? What’s top of your list?
We are always looking for technology that will unlock the possibility of mobility. This could be new business models, technologies like autonomy or aerospace-grade AI. It could be sensors and key components. We’ve already invested in materials and manufacturing businesses that enhance flight capabilities and increase safety. We take the view that innovation can happen anywhere. We’re tacking all of the innovation ecosystems and in the next six months will be establishing accelerators that will further help drive aerospace innovation globally.
Can you imagine investing in a car?
If it’s a platform oriented for ground-based transport, no. But what we’re pleasantly surprised by is that what works for us has initially had its validation in other industries. Our job is to ask how technology could be adapted for aerospace. If there’s an aerospace angle to what is currently on the ground, we’re interested.
What has been the most difficult work you’ve done?
To me, one of the more difficult pieces is just ensuring that there isn’t a confusion internally about why we’re doing venture. Very smart people have been solving problems at Boeing for 103 years. We are trying to augment the R&D and not to replace it. Our work was harder in the initial stages when venture was viewed as a threat, but as we’ve communicated the rationale, we definitely now have a partnership with a great group of internal stakeholders.