XCOR and the Lynx rocket

[imprezive]

XCOR's ticket sales were supposed to go through operators. The 'operators' certainly took some deposits at some point, but

Xcor will not sell tickets directly, but will license sale of the 25-minute flights to existing space-adventure tourism companies, Greason says. The company has not yet revealed the price tag for flights aboard Lynx.
..
XCOR, though, doesn’t plan to operate the Lynx itself commercially, instead signing agreements with operators who would package the Lynx flights with training and other activities to sell to individual customers. Greason said that XCOR was in “quite advanced discussions” with one operator and has talked with several others

http://www.thespacereview.com/article/1095/1

https://phys.org/news/2008-12-rocketship-teams-xcor-aerospace.html

https://www.space.com/23757-space-tourist-training-per-wimmer.html

A year later, in 2006, XCOR Aerospace contacted Wimmer as well and offered him a chance to be the first astronaut to fly on their Lynx spacecraft, once it's ready to take to the sky. This ticket cost him $95,000.

Wait... So if XCOR was going to "license sale of the 25-minute flights to existing space-adventure tourism companies" - wouldn't there be money flowing to XCOR?

And then said tourism companies charged deposits from customers, so that they could pay XCOR....   

So at least that's the plan of record, based on the information above.

Do we know that this plan didn't go through?

We know the tourism companies got paid, and if they sold tickets and XCOR didn't raise a stink, then we know XCOR knew about it, and we know XCOR was going to license these companies to sell tickets...

You can still say we don't know the money made it to its destination, but extraordinary claims require extraordinary evidence...

I agree. Letting someone sell pre-orders for your product, collect money for those pre-orders, and have none of that money flow to you would be spectacularly terrible business management. Unless of course those space tourism companies were really just shell companies so that they and the XCOR executives could get paid regardless of whether XCOR survived.

[meekGee]

XCOR's ticket sales were supposed to go through operators. The 'operators' certainly took some deposits at some point, but

Xcor will not sell tickets directly, but will license sale of the 25-minute flights to existing space-adventure tourism companies, Greason says. The company has not yet revealed the price tag for flights aboard Lynx.
..
XCOR, though, doesn’t plan to operate the Lynx itself commercially, instead signing agreements with operators who would package the Lynx flights with training and other activities to sell to individual customers. Greason said that XCOR was in “quite advanced discussions” with one operator and has talked with several others

http://www.thespacereview.com/article/1095/1

https://phys.org/news/2008-12-rocketship-teams-xcor-aerospace.html

https://www.space.com/23757-space-tourist-training-per-wimmer.html

A year later, in 2006, XCOR Aerospace contacted Wimmer as well and offered him a chance to be the first astronaut to fly on their Lynx spacecraft, once it's ready to take to the sky. This ticket cost him $95,000.

Wait... So if XCOR was going to "license sale of the 25-minute flights to existing space-adventure tourism companies" - wouldn't there be money flowing to XCOR?

And then said tourism companies charged deposits from customers, so that they could pay XCOR....   

So at least that's the plan of record, based on the information above.

Do we know that this plan didn't go through?

We know the tourism companies got paid, and if they sold tickets and XCOR didn't raise a stink, then we know XCOR knew about it, and we know XCOR was going to license these companies to sell tickets...

You can still say we don't know the money made it to its destination, but extraordinary claims require extraordinary evidence...

I agree. Letting someone sell pre-orders for your product, collect money for those pre-orders, and have none of that money flow to you would be spectacularly terrible business management. Unless of course those space tourism companies were really just shell companies so that they and the XCOR executives could get paid regardless of whether XCOR survived.

The XCOR folks weren't the scheming type. I liked their conduct a lot more then I do that of the VG crowd.

But I think some ticket buyers got burned, and the split between XCOR and the ticket sellers is immaterial.

But hey - you buy a ticket on a nonexistent ship - you expect risk.  I mean, why would you?

[Lar]

maybe a little less badgering back and forth?

[Space Ghost 1962]

If we are doing a retrospective here, it's not for lack of engineering, talent, skill, or execution.

More like investors and investment thesis. Most aerospace startups lack the skill to deal with professional investment, and most professional investors don't have the skills to deal with aerospace startups.

Sometimes both trust in poor intermediaries that bollux things up beyond saving. Then all go off in a huff not getting anything.

(If you think that the personalities on this site are touchy/volatile, and the communications problems in getting them to "play nice" are hard, imagine what it would be like if they had a thick percentage of worth/profession on the line, where they couldn't walk away and yet would have to. Far worse, and sometimes for even sillier things.)

[ringsider]

More like investors and investment thesis. Most aerospace startups lack the skill to deal with professional investment.

This is the biggest gap for most of the space-geek companies. They are very enthusiastic and want to build something technically cool, but they don't understand how money works in the real world, and typically they underestimate costs/time and over estimate marketability. Companies like this will pick up a couple of SBIR / NASA / whatever grants, do some short-term work and then slowly fall away, because they don't understand how to take it to the level a professional investor needs.

For all the BS Harvard MBAs bring to the table they at least understand the lingo and ecosystem of finance.

[TrevorMonty]

They lost ULA engine contract hence layoffs.

http://www.parabolicarc.com/2017/07/07/xcor-lost-ula-engine-contract/#sthash.pB4aDox9.uxfs

[john smith 19]

Gibson managed find himself a nice passing ship to jump to. So much for captain going down with the ship.

ULA may have to step up if they want their ACES engine. Either buy rights to it and bring it in house or pass it on to likes of Masten.

Or they wait until they can buy the whole thing cents on a dollar from bankruptcy.

Not really their style. ULA is very much the "outsource everything" model used by Orbital, rather than pull things in house.

[john smith 19]

They lost ULA engine contract hence layoffs.

http://www.parabolicarc.com/2017/07/07/xcor-lost-ula-engine-contract/#sthash.pB4aDox9.uxfs

Too bad.    The comments about there being interest in Lynx is quite intriguing. I'm not sure anyone really knows how close to completion the hardware is.

I wonder what sort of financial shape Agile Aerospace is in?

My impression of XCOR was it was the founders second chance, and that to coin a phrase, "This time, we win"
Sadly it looks like that won't happen.  I think Doug Jones was still with the company, and I would expect he will be one of the people on contract. I'm still waiting for him to write the 21st centuries book on SoA rocket engine design.

This sort of recalls the story of Ryan Aeronautics, mfg of target drones. They were virtually shut down just before they received word of the USAF contract for reconnaissance drones. Like pool, the game's never quite over till the last balls down. 

[Archibald]

Links to the Forbes article linked by Parabolic.arc.
https://www.forbes.com/sites/alexknapp/2017/07/07/xcor-aerospace-lays-off-entire-staff-but-intends-to-keep-going/#4842d701167d

Smells like the company is dead. Losing Lynx was one blow, but losing ULA is far more serious. What's left now ?

[Elmar Moelzer]

The investors kicked out the founders. That NEVER works. Once the guys with the vision leave, the company is dead. Money does not make money. People make money.

[Lars-J]

The investors kicked out the founders. That NEVER works. Once the guys with the vision leave, the company is dead. Money does not make money. People make money.

And why do you think the investors kicked out the founders?

[Elmar Moelzer]

The investors kicked out the founders. That NEVER works. Once the guys with the vision leave, the company is dead. Money does not make money. People make money.

And why do you think the investors kicked out the founders?

Happens quite often. Investors don't understand the field or the company. They push for changes in direction. They think that because they have money, they know everything better.
Founders often are overly optimistic with their cost/time estimates. Together this results in a lot of conflict material. Investors often have the "only money makes money and people are expendable" mentality and then think they can just kick out key people and the company will continue normally. So they kick out the founders and people closest to them. I have seen that happen many times in my career and it never worked out well for the company.

[Lars-J]

The investors kicked out the founders. That NEVER works. Once the guys with the vision leave, the company is dead. Money does not make money. People make money.

And why do you think the investors kicked out the founders?

Happens quite often. Investors don't understand the field or the company. They push for changes in direction. They think that because they have money, they know everything better.
Founders often are overly optimistic with their cost/time estimates. Together this results in a lot of conflict material. Investors often have the "only money makes money and people are expendable" mentality and then think they can just kick out key people and the company will continue normally. So they kick out the founders and people closest to them. I have seen that happen many times in my career and it never worked out well for the company.

And sometimes founders have no clue about the business, or their ideas don't work out. It's convenient to blame the XCOR problems on those darn investors, but I would suggest that the majority of the problems with XCOR came from the founders.

Every company at some points is handed off from the founders to new leadership. If that hand off is not successful, that tends to indicate that the company is run more off the force of personality of the founders rather than a sound business model.

I don't know the exact details of what happened here, but this idea that XCOR was running fine and the villainous investors sabotaged the good company that the good saint Greason founded is not a credible one. The truth is somewhere in between.

[Katana]

... and where does it say that XCOR collected the money for these tickets? I don't even think they collected deposits. I know people who were eager to give money to XCOR and couldn't because of stupid US investment rules and they complained that they weren't getting deposits for tickets. I've not seen anything that says they were taking money for tickets, and it doesn't fit with what I know about the company. Happy to be corrected. Maybe this is simply a structuring issue... the "Amsterdam-based subsidiary" is on the hook for any money they've collected.

People who were eager to give money to XCOR and couldn't because of stupid US investment rules?
XCOR even collected investment from China, the most ITAR restricted major economic entity.

https://www.forbes.com/forbes/welcome/?toURL=https://www.forbes.com/sites/alexknapp/2015/05/26/chinese-venture-firm-haiyin-capital-is-investing-in-space-company-xcor/&refURL=https://www.bing.com/&referrer=https://www.bing.com/

[Katana]

If we are doing a retrospective here, it's not for lack of engineering, talent, skill, or execution.

More like investors and investment thesis. Most aerospace startups lack the skill to deal with professional investment, and most professional investors don't have the skills to deal with aerospace startups.

Sometimes both trust in poor intermediaries that bollux things up beyond saving. Then all go off in a huff not getting anything.

(If you think that the personalities on this site are touchy/volatile, and the communications problems in getting them to "play nice" are hard, imagine what it would be like if they had a thick percentage of worth/profession on the line, where they couldn't walk away and yet would have to. Far worse, and sometimes for even sillier things.)

And contractor problems, which messed up engines of SS2 and airframes of Lynx, after fading of Scaled Composites.
Maybe a "business version of X-15" needs too wide skillsets beyond the level of space startups.

Both SS2 and Lynx program are extraordinary famous, compared to normal "space geek companies" ( Masten, etc), the investor problem should be minimal here.

[TrevorMonty]

Sounds like engine development wasn't going smoothly and ULA pulled the plug. This would've been quite blow to both companies as ULA would of had their own engine not depended on another supplier ie ARJ or Blue.

Check out @george_sowers's Tweet: https://twitter.com/george_sowers/status/884076697045397505?s=09

[woods170]

Sounds like engine development wasn't going smoothly and ULA pulled the plug. This would've been quite blow to both companies as ULA would of had their own engine not depended on another supplier ie ARJ or Blue.

Check out @george_sowers's Tweet: https://twitter.com/george_sowers/status/884076697045397505?s=09

XCOR had a great team and incredibly promising technology. Would have been nice to see their 8H21 flying on ACES.

Agreed. Gave them every chance, though...

That's not my conclusion from the tweets.

Sounds like ULA went as far as they could with them.

Unrevealed in the above is the way in which things did not continue.

Could be an issue internal to XCOR or an issue ULA couldn't see resolved by XCOR.

Technical or non-technical. Financial. Liability. Loss of management.

Given that the company (apparently) failed on the ULA engine contract, failed on making Lynx a reality and had it's founders walk out, I don't see a Ryan-style miracle happen anytime soon. IMO XCOR is now the proverbial "dead man walking".

[ringsider]

Links to the Forbes article linked by Parabolic.arc.
https://www.forbes.com/sites/alexknapp/2017/07/07/xcor-aerospace-lays-off-entire-staff-but-intends-to-keep-going/#4842d701167d

Smells like the company is dead. Losing Lynx was one blow, but losing ULA is far more serious. What's left now ?

"The primary impetus for the layoffs, Acting CEO and XCOR Board member Michael Blum told me, is the loss of a contract for engine development that the company had with United Launch Alliance."

Is this the same Michael Blum who was CFO at Firefly?

https://www.crunchbase.com/person/michael-blum#/entity

[Jim]

Not really their style. ULA is very much the "outsource everything" model used by Orbital, rather than pull things in house.

No, ULA does more in-house than Orbital

[TrevorMonty]

Would ULA buy the IP and carry on the development inhouse?.