Listen in as the former Boeing CEO and his new business partner Kirsten Bartok Touw discuss plans to invest in transformational aerospace technologies—and why the next 20 years could be the best ever.

Don't miss a single episode. Subscribe to Aviation Week's Check 6 podcast in iTunes, Stitcher, Spotify and Google Play. Please leave us a review.

Rush transcript:

Joe Anselmo:

Welcome to the Aviation Week Network's Check 6 Podcast. I'm Joe Anselmo, editorial director. Dennis Muilenburg has kept a low public profile since he left his job of CEO of Boeing at the end of 2019. But that's about to change. Muilenburg has teamed up with AirFinance founder Kirsten Bartok Touw, and other aviation luminaries to fund a special purpose acquisition company called New Vista Acquisition Corp. They're aiming to raise $240 million through public offerings to acquire businesses focused on transformational technologies in areas such as space, defense and communications, advanced air mobility and logistics. What does that mean? Well, we'll let you hear directly from Dennis and Kirsten, who have joined us today. Also with us on my side of the table, so to speak, is Aviation Week's technology specialist and urban air mobility guru, Executive Editor, Graham Warwick.

Just one note, we will not be talking about Boeing past, present or future. If you're interested in that, I'd refer you back to our January 29th podcast. So let's get started. Dennis, tell us what you're up to and why.

Dennis Muilenburg:

Well, Joe, good morning and thanks for the chance to talk about New Vista. We're very excited about this new endeavor and that excitement starts with a tremendous opportunity that we see right now. As you know, I had the privilege of being the CEO of Boeing back when we celebrated our centennial in 2016 and we did some work together on the age of aerospace. And when we look back on the history of aerospace, the opportunity in front of us right now, I think, is the greatest one in that 100-plus-year history of aerospace. We're seeing this convergence of technologies in a way that we've never seen before. Technologies that span artificial intelligence and autonomy, new manufacturing techniques, satellite technologies, new types of vehicles and propulsion systems, that set of emerging technologies all at once has never happened before.

Combine that with mega scale changes in the markets you mentioned; air mobility, new ways people are moving, logistics, e-commerce capabilities, that revolution in space in the build out of the lower earth orbit ecosystem and next generation defense systems. That combination of technologies and mega scale market shifts creates an unprecedented opportunity. And that's what we're focused on at New Vista.

Joe Anselmo:

Kirsten, let's hear from you. What brought you in to team up with Dennis and how are you approaching this?

Kirsten Bartok Touw:

Thanks, Joe. And as you know, I've been pretty focused on advanced air mobility for the last four or five years, having been based in Silicon Valley and kind of lived through the internet growth and doing venture capital back then, realized early that this transition was going to happen. And just from the basic technologies whether you talk about them, electrification, which led to distributed propulsion, which then goes to autonomy. And then add in hydrogen, which has come on the game and the radar lately, these technologies are going to completely change aerospace so that the next 20 years is going to look completely different than the last 20 years. And even as you know, the aircraft designs will look entirely different. So I'm lucky enough. I've been working on this, trying to figure out the right vehicle to invest.

I've been doing a lot of my own personal investing, some through our finance, and then got on the idea of a SPAC, realized that could be the optimal solution to help these emerging companies cross the chasm of death, the valley of death that we call, where you got early stage venture capital money, but they needed that large amount of growth capital. These are deep tech companies, hardware and software, they're capital intensive. And then add to that they've got the regulatory component of the FAA. And they needed some good opportunities for large amounts of crossover capital. Groups like SoftBank could have been that or sovereigns, but the SPAC product has really come in to help these company cross the valley of death and make it to the next level where their commercialization occurs and they are operational.

So I couldn't be more lucky to partner with such an incredible operator as Dennis, someone who really pushed Boeing to be more entrepreneurial, created a HorizonX, and we put together a great team here and we're excited to make a positive difference in the landscape.

Joe Anselmo:

So what are you thinking? I mean, how do you take these technologies that we write about all the time, I guess our listeners want to know, and apply them into a real product? What out there is really exciting? You talk about this change in the next 20 years. What can we see in practical terms? What are we going to see that excites you?

Dennis Muilenburg:

Well, Joe, I think you're going to see transformation in these four market segments that we're talking about that's way beyond what we've ever seen before. I take what's happening in the low-earth orbit space ecosystem and it's extraordinary the number of technologies that we're seeing that are coming into places, real applications now. The build out is satellite infrastructure, nanosats, microsats. We see a market for 50,000-plus additional smallsats on orbit over the next decade. We see a number of companies who are working on breaking the cost curve for access to space, new launch capabilities that are coming to bear, and then new applications in terms of how to use those satellite networks to create information and useful data, earth observation, new kinds of reconnaissance and surveillance capabilities, conductivity and communications.

I think the low-earth orbit ecosystem build out that we're seeing now is just one example of the kind of massive transformation that we're going to see. That's going to create economic value, it's going to create new companies, new jobs, it's going to create a new technologies that are on the innovation edge that are now going to ripple out into other business sectors. So it's an exciting time to be working on this leading edge of aerospace.

Joe Anselmo:

Graham, they're talking about transformation, and you write about this all the time, a new era of transformation, the 2020s. Maybe not unlike what we saw a hundred years earlier in aviation in the 1920s, a real Renaissance.

Graham Warwick:

Yes, absolutely. I keep going back to the two sets of post-war years, after the First World War and then after the Second World War, where there was a lot of technology unleashed of its time and we saw this massive sort of growth in... There were hundreds of companies in aviation that were formed after the two wars. And then obviously over time, you had a lot of infant mortality amongst those companies. And we shook down to the sort of more established companies that we see today. But also if you actually look, if I go back to the jet age, the British developed the jet engine and they brought it here to the U.S., and in fact, the largest jet engine manufacturer, GE, was not a jet engine manufacturer until that happened. So the largest jet engine manufacturer in the world came out of a disruptive technology, the jet engine.

And so I think you have to look at the technologies we're looking at today and say that something like that, multiple things like that are going to come out of this disruption. We are going to see the new players come out of this, which is why I spend a lot of time looking at these sectors.

Dennis Muilenburg:

Graham, I think you raised a great point and I love the way you're thinking about it. And when we look back on history, even including the jet age transformation, the space age transformation, I think something even more significant is happening right now. And some of that disruptive technology will turn into new companies. Companies that may be re-vectored from where they're at today or new companies created altogether. That's why this SPAC endeavor through New Vista to me is so exciting because not only are we investing in these technologies and these new innovations and finding a way to now commercialize them and scale them up, we also have the chance to invest in these companies, to invest in the talent and the leaders, to help these companies be successful and turn into great public companies in the future.

So it's really a combination of harnessing the technology and the market shifts, but also being able to invest in the company and talent infrastructure. And that's something that I have a lot of passion for, is helping to develop that next generation of talent in the aerospace and defense sector, and through our New Vista SPAC, that's something we get to do. So this is a transformation in multiple dimensions, as you're pointing out.

Joe Anselmo:

Kirsten, we had you on a webinar last May where we were talking about concerns about foreign entities, some not allied with US interests, acquiring some of these advanced technologies through sovereign funds and such. There's a national security angle to all this too, isn't there, from the U.S. point of view?

Kirsten Bartok Touw:

There is, and SPACs are coming in at just the right time. And if I tie it to what Dennis and Graham said, we had a period where we weren't investing in the country, we had a dearth of capital. Money was coming in, we sold Rockefeller Center to the Japanese. You watched a lot of our strong aerospace companies, Cirrus, go to the Chinese. And they came in and looked at many other of our strong assets. We have a great base, especially in aerospace and defense, but we lacked investing in it for a period of time. We either had the early stage venture capitalists that were looking at all software type of things, or we had the private equity firms that were really interested in turning around distress companies or thinking maybe they shouldn't be here. Well, now we've got another chance to build a Tesla and a SpaceX.

I mean, what Elon Musk did there is showed us what innovation can be done if you're willing to invest in it and you're laser focused. I know you guys have heard a lot about our government and certainly our DOD, but also the State Department being extremely focused on economic security in terms of our basic industries. We lost 5G. We have no 5G companies in the U.S., so we now have to rely on Europeans or the Chinese. Same thing with the semiconductors, we're in danger of losing. I mean, you saw a deal come in where we invested in a semiconductor to go, so we have a [inaudable]. It's important that the same things don't happen to aerospace and defense. We need to continue to reinvest and keep this knowledge base, this technological innovation here domestically, so it's a fertile bed and it's a virtuous cycle. And we believe the SPAC product is perfectly designed to do that.

Unlike many other countries, we don't have a sovereign fund. We don't have a Temasek, we don't have a GIC, we don't have a CIC China, we aren't like Qatar, Saudi, that has an investment fund to invest in these technologies to encourage them to be here domestically. But what we do have is a vibrant capital market system and the innovations that have occurred in the stock markets to allow it to be the next iteration of growth capital are huge and will enable us to use the fertile capital investment, the great institutional, highly intelligent, knowledgeable institutional investors we have here to invest in these emerging technologies and help them bring them forward the valley of death, and be that growth capital.

Where other countries are using a centralized system of their sovereign investment funds, we are using a capitalistic system where we're having our capital markets come in, our institutional investors who focus on these areas serve that area instead. And it's a huge innovation. And we always wonder, can we do it better? Should we more command and control centralized? Well, what we've shown here with the development of the SPACs is that capitalism can be the solution and it's just an iterative process that we go through.

Dennis Muilenburg:

And if I could just add to Kirsten's comments there, that economic impact includes manufacturing impact. One of the great things about the aerospace and defense world is it's a manufacturing intensive kind of business. And so as we spin out these companies, as we harness this technology, as we create this transformation, we're going to create manufacturing jobs as well through these target companies. And manufacturing jobs translate into economic security, they translate into broad economic value, and they also translate into national security. So I think the interrelationship here between the manufacturing jobs generation, the economic benefit and the national security benefit is really clear. And that's another part that we're excited about in terms of our New Vista endeavor.

Graham Warwick:

I just wanted to ask, we're seeing quite big amounts of money flow into individual companies as the SPAC process goes on. So how do you want to go forward? The reason I ask is that, Dennis, you said it when you were talking about the low-earth orbit ecosystem build out. There are many pieces to this, there's a stack of pieces that go together. If you look at advanced air mobility, it's not just the vehicle, it's a stack of pieces that go to enable advanced air mobility. So does a SPAC like New Vista really want to connect those pieces as it invests, or does it want to just pick a winner? And what is it you want to do?

Dennis Muilenburg:

Graham, we're much more focused on the network, the connections of opportunities and putting a longterm value proposition around that. So we didn't form New Vista to do a single SPAC and then we're done. We want to do a series of SPACs and build that out in a platform. So we're building a platform for the future with a strong technology base, with a team that has the breadth and depth to harness a number of different technologies and to connect the dots and to create unique value as a result. And what we want to do is over time, be able to do a series of staggered SPACs, which will be complimentary in nature and in many cases could invest into some of these same markets that we talked about, but invest into different components of those markets and create unique value through that combination play of different SPAC vehicles.

So that long-term value proposition is really important to us. That's been our mindset in terms of establishing the foundation of our SPAC. And that's the way we want to operate for the future. Think of it as a platform, not a single SPAC.

Kirsten Bartok Touw:

And to follow on with what Dennis says, I mean, Graham, you bring up a good point. What we're seeing in this next revolution is that we might have full stack companies in front of us just as you pointed out. So instead of a Boeing or a Textron that just makes aircraft and maybe maintains them, these advanced air mobility companies are likely going to be the operators, they're going to be the Part 135s, they're going to be the maintenance, they're going to have the ecosystem. They're going to have to have the software package that manage it. Just as you saw Tesla disrupt how autos are sold and take over the dealership system, I think we're going to see that for the advanced air mobility companies as well. They're going to have to build a UTM, a software infrastructure. They may have to do the vertiports ports as well.

And the other thing that occurs with full stack companies which we've seen in Silicon Valley is that they're much more capital intensive, because they have such audacious plans that these are capital intensive. And that is why you're seeing such large sums of money being raised for these leading companies, because to build that full stack, to build out the infrastructure, to build all the things you need to make this ecosystem, these aircraft work, you need to be full stack. Now I'm not one to tell you in the next 10 or 15 or 20 years, what it's going to look like, that all these companies are control. They're going to control the entry point, the software in which you get these. I'm not that smart, but what I will tell you is in the first couple years, partly for safety reasons, they are going to control it in the beginning, and it's the only way to kind of advance interoperability in the early years.

Dennis Muilenburg:

And to that point, part of what you're going to see here is the fundamental transformation in how transportation occurs and linkages between these different areas as we've talked about, advanced air mobility, urban and flying taxis, if you will, one component of that marketplace linked up with high speed transportation, potentially supersonic or hypersonic airborne transportation, linked up with low-earth orbit transportation and tourism. You're going to see new end-to-end transportation solutions that go beyond the current boundaries or spans of different marketplaces. You're going to see integrated solutions that span the urban environment, global airbase travel, and space-based travel. That's an exciting future. And it's not quite clear how that's all going to sort out yet, but it's clear that there are new integration points being created, new transformation opportunities that add value, economic value and value for people. And that's part of what we hope to be part of.

Kirsten Bartok Touw:

One last point. We see a little bit happening in space as well, just to make that transition. It's evolving in a different way, but you've got a lot, whether it's Earth observation, whether it's the data they collect. Now, they're moving into the data analytics and the way they analyze that and how do they provide that information to help companies sort through it, and do they want to go back to being the constellation provider as well? Do they want to be in satellite? So we are seeing that. I think the next trend we're going to see on the space side is while they aren't developing as full stack companies, except for SpaceX right now, you are seeing people broaden what their product offering is and expand it. And I think in that sector, you'll see some of the SPAC money used for acquisition and kind of a roll-up strategy that occurs in that sector.

So again, two very different advanced air mobility, how they're approaching it and the space ecosystem, but they both are requiring large amounts of capital to really bring this technology through to fruition.

Joe Anselmo:

Dennis, you both have noted all this capital flowing in. I covered the whole dot.com boom and bust early in my career. I remember writing about when some of these dot.coms had a greater market cap than Lockheed Martin. Are we getting a little too ambitious here in terms of valuations? Are the valuations getting too frothy? Does that worry you at all?

Dennis Muilenburg:

Well, Joe, I think it's something we're all paying attention to. Obviously, the SPAC market has been hot and even hotter over the last few months. We want to maintain a very disciplined focus here. And while I'm sure there are parts of the SPAC marketplace that are overheated to a degree and eventually you're going to see some pull back in those areas, I wouldn't be surprised. I think what we're looking at is a very differentiated approach. First, we want to focus on this aerospace and defense sector, these emerging technologies that we know are real and substantive, and they have both hardware and software content, they produce real value. And we feel very confident in the substance of that aerospace and defense sector, perhaps more so than some other sectors. And I think we're also being very disciplined about our approach, thinking through what's going to create longterm value, finding companies who are reasonably mature in terms of their technologies and are now ready to make that transition to production and scalability and make that transition to commercialization.

And that discipline's going to be important too. And then maintaining that longterm view, right? We don't want to do a SPAC on a company that has an immediate splash and creates a lot of noise in the marketplace, but then doesn't have lasting value. Our intent is to invest in these companies, help them be successful public companies upon de-SPAC, and then continue to be with them beyond that, help them be successful public companies for the long run and generate longterm value. And I think that long-term perspective is really important and that may be counter to a lot of what you might see in the marketplace, but I think longterm value proposition will be our differentiator.

Joe Anselmo:

Got you. I'm going to give Graham the final question, but right before that, I wanted to pass on a question from Michael Bruno, our business editor, who wants to know, Dennis, what's your role going to be in this organization? Are you going to be the CEO running it day to day, or are you more of an advisory board-like role? Where do you fit in?

Dennis Muilenburg:

Yeah. Joe, my official role is chairman and CEO. So I'm very engaged, very much part of the effort and very much part of the team with Kirsten and Travis [Nelson], my two co-founders. So Kirsten is our COO, and Travis is our CFO. The three of us as co-founders are all vested in the effort and putting risk capital into the effort as well. But I expect to be very engaged, very much a part of the team. This is a technology and innovation area that I love and the opportunity to invest in these companies and invest in people is something that I have a passion for. So you can count on me being very engaged, both in this upfront process, as well as throughout the effort and that long-term value proposition that I talked about.

This is just a great opportunity for me personally, but even more so I'm just really excited about the team that we've assembled and what we're going to do together.

Joe Anselmo:

Graham, I'll let you have the last question.

Graham Warwick:

Well, it's less a question, more of an observation that you can comment on. I think you've already touched on it. My concern when I look at some of these SPACs is I've seen them investing in companies that to me, they've not demonstrated very much. So therefore I kind of feel, and I'm assuming you agree, that really the type of SPAC you're trying to do, technical due diligence, understanding the technology, understanding the regulatory environment, understanding what actually needs to be done to make this real has to be a big part of what you do, I assume.

Dennis Muilenburg:

Graham, absolutely. That's right at the core of what we're doing. And as I tried to describe earlier, we're really looking for companies that are at that inflection point where their technology is solid, they've demonstrated capability, they've largely retired their technology development risk, and now they're ready to make that transition to commercialization and production. And we built a team to help with that. As you might've noticed, we've got the previous CTOs of Boeing and Airbus and UTC on our team. We've got people who have spent their lives working in the regulatory environment. The previous head of the FAA, Marion Blakey, as an example, is part of our team. We're bringing deep technical capacity, certification capacity to these companies. We're going to be able to help them find their way into that production and commercialization environment.

But that is a differentiator for us in terms of our discipline. We want to find companies that are at that right technology point, that right horizon in terms of their evolution, and then help them make that next step and help them create longterm value.

Joe Anselmo:

Kirsten, did you want to wrap us up?

Kirsten Bartok Touw:

I think we're excited about this next phase and we're excited to build a platform and work with these companies and help bring this revolution possibly sooner because now they have the capital to do so and with the mentoring and the experience. I've always said, if you can combine the old world and the new world, bring in the expertise, the aerospace manufacturing base with the Silicon Valley bravado and inspiration. And that really is what we at New Vista want to do. We already believe that's being done at a lot of these companies, but if we can help them bring some that corporate government, some of that manufacturing insight, some of that labor insight, all of that, that you understand large companies, then hopefully we can accelerate this revolution and avoid some of the missteps that young companies experience just because they don't have the plethora of talent.

Joe Anselmo:

Dennis, Kirsten, thanks so much for taking the time to share a little bit more about what you're doing with our listeners. And we hope to have you back and look forward to following you guys as you move forward. That is a wrap for this week's Check 6 Podcast. Now available for download on iTunes, Stitcher, Google Play and Spotify. Special thanks to our producer in London, Guy Ferneyhough. Join us again next week for another Check 6 and stay safe