Monday, July 22, 2019
Interview with Matt Kozlov, Techstars Space Accelerator
This morning's interview is with Matt Kozlov, the Managing Director of the new Techstars Starburst Space Accelerator, which just got started in Los Angeles. The Techstars Starburst Space Accelerator just announced ten companies that have joined its program last week.
What are you doing at the Techstars Space Accelerator?
Matt Kozlov: We created this program, because there has been lots of recent advances in the growth of the commercial, military, and civil space economy here in our backyard in Southern California. There are lots of resources available to entrepreneurs in the industry, but they are not necessarily that easy to access, whether that's deep insight into how to work with the government or with NASA, or how to work with the big primes, we felt that we could help create that resource. We partnered with the Starburst Accelerator, which has spent several years helping aerospace and defense organization partner with startups at various stages, to create what I consider to be one of the most valuable ecosystems for space tech entrepreneurs in the world. We brought together Starburst, along with the US Air Force, NASA's Jet Propulation Laboratory, Lockheed Martin, Maxar, SAIC, and other companies in the aerospace industry in North America. It's an incredible mix of commercial, military, and vicil organizations to support all kind of the innovative technology that we can grow really quickly.
Is this the usual three month format for a Techstars accelerator?
Mattt Kozlov: Yes, it's a three month format. We invest both capital and an enormous amount of time and mentorship to help companies build the best businesses, as rapidly as possible. Right now, we're in the beginning of the mentorship phase, where our companies have moved here from all over the world to spend three months in Los Angeles. Our ten companies are meeting with over 100 executives and entrepreneurs, who are really accomplished from the space industry and adjacent industries, who can help them. At the end of three months, they will have realized two years of comparable creation in only thirteen weeks, both through those mentorships, commercial partnership, and fundraising. October 16th is our Demo Day, when they will share what they do, what they've accomplished, and the beginning of the next chapter for their companies.
It used to be that investors just wouldn't look at a space startup. What's changed in the last few years?
Matt Kozlov: That's an amazingly interesting question to ask on the fiftieth anniversary of the Apollo 11 mission. There have been a few major changes in the industry, which make space a compelling investment these days. One, is the renewed focus of the American government on space exploration and technology. You see a lot of news about the Space Force, about going back to the moon, and investments in our lunar gateway. We just put a rover on Mars, and we have so many promising and exciting initiatives happening in space. But, it's not just exploration or infrastructure now, it's our day-to-day economy. A lot of people are aware of surveillance and GPS, but most people don't know that every time you swipe your credit card, they are leveraging space communications and infrastructure to run the backbone of financial systems. So much of our daily experience is made possible through space infrastructure. What's also particularly compelling now, is private, commercial companies opening up new opportunities here that never existed before. Companies like SpaceX, Blue Origin, and Rocket Lab are making access to space easy, with private launch capabilities that never existed before. Techstars has actually invested in a company, Keplar Communications, which just put a satellite into orbit, in under three years and for something like less than 3 million dollars. You're now able to get a satellite into orbit in a very cost efficient way, and that's symbolic of what a lot of other companies are doing. If you look at SpaceX, they recently put 63 satellites into orbit on one rocket, which is a new record. Access to space is now cheaper and easier than before, and the electronics and components are faster and allow things that couldn't be done before.
What's the biggest hurdle today for space companies?
Matt Kozlov: Every company is looking at their own economic constraints. I don't think if you're active in space, or even just hardware, that you can expect overnight success. Investing in space is not something where you can expect to see a one to two year return on investment. However, unless you're building rockets and giant launch pads, we're not talking about massive capital outlays. We invested in a company which put their first satellite into orbit for single digit millions, and two companies in this cohort are building satellites. One of those already has enough capital and their technology roadmap laid out to have their first satellite launched by mid-2020. That launch is already booked, and that satellite is nearly complete. We also have companies where space is not the only commercial market for them. For example, we have a company using autonomous drones for both aerial and terrestrial, GPS-denied harsh environments. For example, nuclear power plants and oil rigs. Space is just another harsh environment, but their primary market is commercialization terrestrially. Quite a few of our companies are, in the near term, going to market commercially in parallel with their space applications. In some cases, these companies are already profitable and generating revenue, which just helps them go faster.
So how did you get into this?
Matt Kozlov: That's a good question. I've been working in tech in Los Angeles for about thirteen years, across a variety of industries. Most recently, I was helping run the healthcare accelerator Techstars ran at Cedars-Sinai. Before that, I was an executive at a cybersecurity company, which sold for $200M. I have worked as an entrepreneur in mobile gaming and an executive in the entertainment industry, and worked at Yahoo and also as a management consulting. I've done all kinds of different things across many different sectors across Southern California. What I love about Los Angeles, is the breadth of industries here, and you can really see how technology and software are eating the world, here in our backyard. It's transforming industries like entertainment, healthcare, and aerospace. I'm trying to stay ahead of the curve, and helping entrepreneurs in the region, regardless of the sector, and am focused on finding great talent and helping businesses. Here I am now, learning about a new industry, which is great as I was extremely interested in space and studied all sorts of stuff related to it in college, as a benefit of having been in liberal arts.
What's your biggest advice for a space entrepreneur?
Matt Kozlov: I would give the same advice to a space entrepreneur as I've given healthcare entrepreneurs, which is that the technology is not as important as the problem it's solving. There has to be value, there has to be a customer, and there has to be a compelling use of the technology you are creating, and it has to be significant enough to warrant the creation of a new business. A lot of companies come up with a better mousetrap which is just incremental, and even an exponential improvement on an existing product or solution. But, unless the pain point for the customer is significant, if they have to change their work flow or upend what they are doing, it's unlikely to be a business. Any entrepreneur thinking about whether they should start a company, it's not about the technology or the research, it really has to be iron clad as a business model. You have to do as much customer validation as possible, before trying to go out for venture capital. You really have to understand the market dynamics. You might have a better battery, but that doesn't mean there is a business in producing that battery at scale.
Thanks, and good luck!