Eclipse Takes Off

Start-up successes in information technology and biotechnology are the stuff of the entrepreneurial revolution of the last 50 years. We’re all familiar with the stunning achievements that have been made in computers, software, biotech and related technologies. We know the companies that have rocketed from zero to billions in nothing flat and are now household names.

But if we flash back 100 years in time, what got creative juices flowing then among bright inventors were the then nascent automotive and aeronautical fields. Over a hundred new auto companies were formed to build cars powered by batteries, by steam, and by internal combustion engines. Aviation companies by the scores produced monoplanes, biplanes, even triplanes, and incorporated all sorts of engines, designs and construction methods.

Well, as they say, what goes around comes around. Cars and planes are back. Recently, I blogged about Tesla Motors, one of the expanding list of start-ups formed to produce alternative-propulsion cars. Tesla has raised over a hundred million dollars (so far) to put into production its Roadster, an all-electric sports car with Lamborghini-like performance. After five years of development, the first production Roadsters will roll off the line in March.

And then, a few days ago, I visited the Albuquerque headquarters of Eclipse Aviation, one of the most exciting (and expensive) start-up gambles in the aviation business. Eclipse has made a bet that there is a huge market for microjets – smaller, cheaper, twin-engine aircraft. A volksplane, if you will. Admittedly, at $1.6 million, the Eclipse 500 is for relatively well-heeled volks. But compared with competitive jet offerings, it sells at a fraction of their cost.
 
Donna and CEO Vern Raburn in final delivery area

Eclipse was founded 10 years ago by Vern Raburn. Vern is a well-known serial entrepreneur in the technology world. I first got to know Vern when he ran one of the world’s first computer stores in the mid-1970s. He then went on to become one of Microsoft’s first employees. Later, he let himself be seduced away by Mitch Kapor and me to become EVP for sales and marketing at Lotus Development (and thereby give up all his Microsoft options – but that’s another story). He went on to run Symantec, Slate, and Capstone Turbine, and also managed the technology investments of Paul Allen.

Most of these efforts were computer related. But Vern’s first love has always been flying. From teen-age pilot to accomplished aerobatic stunt flier to owning and flying a Lockheed Super Connie around the world, aviation has always been his avocation. So after a personal epiphany in 1998, the avocation became a vocation.

Following nine years of a somewhat tumultuous gestation period, 2007 marked the first full production year for Eclipse, with 100 planes shipped. Backlog is well over 2000. This year production could quadruple, with over a thousand scheduled for 2009. In a world where aircraft are typically custom manufactured in small quantities at high prices, Eclipse is gearing up to mass produce in large quantities at low prices.

It’s interesting to walk through the plant and witness globalization in action. Crates of subassemblies from Chile, landing gear from Italy, wings from Japan.

Landing gear from Italy and wing from Japan

Assembly now is moving along two lines, 24x7, at a rate of 20 per month. Eclipse has certainly come a long way from its start-up days. With 1,800 employees in 600,000 square feet, it’s small by Boeing standards but large by comparison with a-couple-of-guys-in-the-garage start-ups.


Eclipse 500 in production

In late 2009, Eclipse will start manufacturing in Russia (yes, Russia) to serve that market as well as western Europe. And in one of the great ironies of the post-cold-war years, the Russian factory will be in Lenin’s home town.

Today, the company leads a new industry that it created. And it is also responsible for helping create a new downstream industry – the air taxi. As being implemented initially by DayJet, a Florida start-up, the air taxi offers to customers an on-demand service for shortish hops. These are routes of hundreds of miles that are not served by airlines. Instead, the competition is the auto. DayJet has ordered over 700 Eclipse 500s, taken delivery on a few dozen, and has recently begun operating its air taxi service in the southeast. At least two other air taxi start-ups have announced, including one founded by former American Airlines CEO Bob Crandall.

Incidentally, DayJet was founded by Ed Iacobucci, another serial entrepreneur from the computer industry. An erstwhile IBM engineer, Ed started Citrix in the 1980s with funding by Sevin Rosen Funds.

To go from the idea to the reality has not been easy. It’s taken over $1 billion dollars in investment – so far. The company has overcome several near fatal challenges, including a very expensive two-year slippage when its original engine supplier failed to meet spec. Positive gross margins are still some time away, awaiting higher production rates.

The current model is rather petite, seating six (including one or two pilots). The interior is akin to automobile sedan. It’s also akin in that it’s potty-free. But with a three-hour range, that shouldn’t be a problem. (All right, Donna says that it might be a problem.)

Interestingly, the next plane from Eclipse is likely to be even smaller.
Not yet approved for production by the board, the Eclipse Concept Jet is a racy looking, single-engine four-seat plane. Based on the response after it was publicly disclosed last year, Eclipse has a chance of opening up yet another sizable unserved market.

Single-engine Eclipse Concept Jet

While I've ordered a Tesla Roadster, I've yet to purchase an Eclipse. Perhaps when they install a potty...

(Full disclosure: I made a modest investment in Eclipse shortly after its start. Because I didn’t participate in the many subsequent rounds – I didn’t pay to play – my investment has been so heavily diluted that I doubt it has much current value.)