INNOVATORS VS COVID 19
Berlin Space Technology: Sailing the Wind of Change
We talked to Tom Segert, Director for Business Development at Berlin Space Technologies, about small satellite systems and technology, and this is what he said about it.
First of all, how are you and your family doing in these COVID-19 times?
Tom Segert: Thank you for your question. My wife and I are safe and in good spirits, or as she puts it: “2020 was the year where we had the most quality time together thanks to no travel.” I think she is right. We are all learning new ways of organizing global collaboration without in-person meetings. Considering the adverse effects of intercontinental air travel on the climate, this is an important lesson to learn.
Tell us about you, your career, and how you joined Berlin Space Technology.
Tom Segert: I graduated from TU Berlin with an MSc in Aerospace Engineering and have been working in this field for almost two decades. Berlin Space Technologies, my current venture, was founded by Matthias Buhl, Björn Danziger, and myself in 2010. That meant that by then, we had already accumulated quite some experience. In fact, I have been collaborating with Björn since 2002 and Matthias in several projects and precursor companies since 2007. Some of these collaborations included fun things like demonstrating the capabilities of Berlin built real-time satellites (TUBSAT) to international customers, including the U.S. Department of Defense.
After that, real-time video satellites were all the rage! I am proud to say that we inspired many successful U.S. startups like Skybox and BlackSky who took our ideas further. We also pioneered deployable optics and called that the Dobson Space Telescope.
Deployable telescopes are another idea that has taken some steam lately, but I guess it was again too early. #Newspace, was simply not a thing back then. VC investment in space was uncommon in the U.S.A. or outright non-existent in Europe. The very idea that one could do a profitable space business independent of space agencies was a bit of an oddball in the early 2000s. Ultimately, we did what any reasonable entrepreneur would do: ditch ideas that do not work and keep those that do. In addition, all three of us had day-jobs. Matthias worked at TU Berlin as an assistant professor and lead engineer of the TUBSAT satellite program. Björn worked for Astro- und Feinwerktechnik Adlershof GmbH (Astrofein) as a project manager. I worked for the local government as a cluster manager for the space industry—organizing the local SME community, developing new business ideas for the community, and what is today the leading benchmark for capacity building using small satellites.
Those jobs paid the bills, and we worked additional nightshifts and weekends on grander things. All the money we made in our companies was re-invested, and so we steadily built our product and customer base. We learned a lot about resilience these days. Ultimately, none of this would have been possible without our mentors: Prof. Udo Renner, father of the TUBSATs, who introduced us to our first customers in Indonesia, and Prof. Klaus Briess, who provided our company rooms at the university in which we stayed in until our business took off. Both of them are now retired, but Berlin Space Technologies would not exist without them, and so we owe them great thanks.
Our breakthrough came around 2012/2013 when we were first trusted to deliver star trackers and IMU to be installed on the International Space Station (ISS). Later, in quick succession, we sold two full satellites—80kg microsatellites no less—to Singapore. It is these contracts that primarily built the foundation of what is BST today. With this, we grew, built our labs, rolled out our products, and established Berlin Space Technologies as a household name in the space industry.
How does Berlin Space Technology innovate?
Tom Segert: Unlike many others in the industry, we are truly commercial, which means that less than 1% of our annual turnover is dependent (directly or indirectly) on European tax-payer money. We also generally do not take on public R&D money. We believe that if there is a demand for a product, you should be able to finance its development without government help. Some people tell me that I am letting free money go to waste, but I guess this skepticism towards reliance on government funds stemmed from my first day-job. During my time as a space innovation manager, I have seen too many companies (locally and internationally) that my colleagues at the government would classify as subsidy zombies: year over a year, their commercial revenues were dwarfed by their R&D subsidies from DLR, ESA, and Horizon 2020. I never wanted Berlin Space Technologies to be this type of company.
The focus area of innovation from Berlin Space Technologies is satellite mass manufacturing. We call this the Henry Ford Moment of satellites. Since 2014, we have invested heavily in this topic in terms of technologies and in the form of a satellite factory. After realizing that a factory is too big to bootstrap it on BST resources, we looked towards other means. From 2014 up until 2016, we talked to banks, venture capitalists, and strategic investors. In the end, the best fit was to do it as a joint venture. This allowed us to keep control of our core identity in Berlin and created a vessel for the investment of our partner, Azista Industries. Together, we built a factory with an initial capacity of 250 satellites per year and can easily be scaled to meet any demand. In this joint venture, contract provisions were made to invest parts of the satellite factory’s proceeds in further R&D by BST. Those things, in turn, can then be mass manufactured. Business drives innovation, precisely the way we envisioned it upon founding of BST.
How does the coronavirus pandemic affect your business finances?
Tom Segert: Regarding the pandemic, Berlin Space Technologies is in a fortunate position. Both our customers and partners never wavered the slightest in their determination to see their respective projects successfully finalized. We are also especially fortunate with our Indo-German joint venture. It is incredibly advantageous during these testing times that the main business of the family that is behind Azista (our Indian joint venture partner) is pharmaceutical. Hetero Healthcare Ltd, part of the Hetero group of companies, is one of India’s largest pharma companies. With 20 factories and 20,000 employees, they are key players in response to the virus on the subcontinent. Market leader in several anti-viral medications already (e.g., for HIV), Hetero Healthcare Ltd, at the start of the pandemic, acquired a license to manufacture Remdesivir and is now one of the largest manufacturers of this key medication globally. Azista, on the other hand, used their know-how of filter fabrics to manufacture highly effective washable multi-use anti-viral masks. Therefore, unlike other players, they never felt the need to cut down on their commitment towards innovation. We are aware that we are in a somewhat privileged position. Because of this, we are working full steam to implement our vision of the Henry Ford Moment for Space.
Did you have to make difficult choices regarding human resources and what are the lessons learned?
Tom Segert: First, to get that out of the way, thanks to the support of our customers and partners, we did not have to lay-off anybody of our staff. In fact, in the middle of the second wave, we were actually expanding to meet the increased demand. That said, even if our business would be affected negatively, Germany has a different mentality than, say, the classical “hire and fire” economies. Like in the previous crisis, with the help of government support, German companies tend to keep their staff, their experience, and capacity so that recovery can happen faster.
Regarding what we have learned, we were warned by the first wave in Italy. A few weeks before the pandemic arrived in Germany, we prepared our company to transition to home office work. This was insofar challenging as a space company since we must comply with strict rules regarding the security of export-restricted technology. We got it off the ground just before the first lockdown hit. The initial weeks were admittedly rough as everybody was settling into the new normal. The questions we faced were: how do we deliver products if contracts require the customer to be present during factory acceptance? And how do we make sure that logistics function properly? All of this worked thanks to the enormous support of the whole team at Berlin Space Technologies. Nobody slacked; everybody delivered. A big thank you to the team! The collaboration over distance was enabled by mid-level leadership positions at BST, such as the department heads who were pulling extra weight. That said, the biggest strain, undoubtedly, was on those employees with little children, so we did our best to show great flexibility for them. After the end of the first wave, we enjoyed the summer in Germany with fewer restrictions. When the second wave hit, we already had a routine in getting things done under lockdown conditions. However, I want to express the hope that soon, things can return to normal with the distribution of the vaccines.
How did your customer relationship management evolve? Do you use any specific tools to be efficient?
Tom Segert: Acquiring new customers and managing relationships with existing ones was challenging during the pandemic. Given our PR strategy, we are ardent followers of “seeing is believing,” so typically, we convince people while they visit our labs in Berlin. We also have good experience with meeting people face to face at conferences and trade fairs. As one would imagine, this is not possible now. During the pandemic, like most, we found ourselves in uncharted territories. Virtual trade show booths do not really seem to work for us. Virtual industry round tables or panel discussions work better for customer interaction. We also used articles and videos that we published on LinkedIn under the topic BST-TV to interact with our audiences.
Internally at BST we regularly use Gitlab for almost everything (see BST TV episode 2 -> https://www.linkedin.com/pulse/document-did-happen-tom-segert/), including customer relationship management. Gitlab may not be originally invented for this purpose. Still, it works for us, and it’s nice to have everything in one unified system.
Regarding new tools, I would like to give a shoutout to my friends from satsearch.co. What I like about them is that they’re agnostic (not CubeSat focused) and neutral; this means they don’t have a manufacturing business themselves. You don’t need to fear that they will re-engineer your product, as I have seen with other online marketplaces for the space industry. They really help us to gather leads, especially for subsystems and services. If your readers from the space industry have difficulties, maybe they can give them a try.
Did you benefit from any government grants, and did that help keep your business afloat?
Tom Segert: We are not necessarily big fans of government grants. Companies should try to stand on their own feet and only take on external help if and when absolutely necessary. Since BST is doing reasonably well, we aim to hold back on taking in too much government support. To build our factory, we are currently in a growth phase. Since we finance everything internally, cash flow is extra important. This was the backdrop of why in the first few weeks of the pandemic, when we had our stores full of products ready to be delivered, but nobody knew how to actually get them across closed borders. We therefore felt the need to install an extra firewall. Consequently, we used the Corona programs of the German government to obtain an additional credit line worth three months of company operations. In the end, we did not have to use it much, but programs like this install confidence and lower the stress level in times of uncertainty.
Your final thoughts?
Tom Segert: The space industry is facing a watershed moment. The pandemic is accelerating trends that were there already beforehand. The big power struggle between the U.S.A. and China, which, like during the cold war, forces countries to take sides, has gained speed and will unlikely slow down with the Biden administration. In such a hostile water scenario with less international collaboration, we see more demand by various national governments on the planet. For commercial programs, the moment of truth is coming: once the VC money runs dry, we will see if they have a working business model or not. Therefore, we will see plenty of movement in the market, mergers, acquisitions, and likely a few big winners once the dust has settled.
On the government side, once we all wake up after the pandemic has passed, we will find ourselves in a situation where most countries will have to make their belts tighter, which necessarily will make them look more towards the innovations pioneered by #Newspace companies. I imagine it be hard to justify government satellites built by space agencies, each worth millions of Euros. However, since demand is still high, the trend for cost-effective satellites will accelerate. Hopefully, the understanding will grow that space agencies are best when new technologies are being developed but not really required once the technology is commoditized.
In this time of change where we sail towards the Henry Ford Moment, many truths of the space industry will be questioned. I personally try to document it under the hashtag #SpaceDoneWrong. In any case, Berlin Space Technologies is ready to take it on.
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