Fireside Chat with Mark Thomas from Reaction Engines
We were delighted to recently welcome Mark Thomas, CEO of Reaction Engines, for a fireside chat at the ATI Boeing Accelerator. Reaction Engines is known for its Synergetic Air-Breathing Rocket Engine (SABRE), a hybrid engine blending jet and rocket technology that is capable of Mach 5 in air-breathing mode and Mach 25 in rocket mode for space flight. Reaction Engines is also a Boeing HorizonX Global Ventures portfolio company — in 2018, HorizonX invested alongside Rolls-Royce Plc and others in a £26.5 million Series B funding round.
Mark’s lifelong passion for engineering and technology means he relishes the chance to do things never done before. Before joining Reaction Engines, Mark spent 25 years at Rolls-Royce working on multi-national aero-engine programmes. He led cutting-edge technology developments aimed at the future of sustainable aviation.
The idea for Reaction Engines came about in 1989. How did it go from idea to product?
The company was founded off the back of an existing spaceplane project that was being pursued by Rolls-Royce and BAE Systems. Called HOTOL: Horizontal Take-Off and Landing, the project was cancelled in 1989. It was hugely ambitious and way ahead of its time — the engineering challenges could not be solved. This all happened at the end of the Cold War. One of the reasons for having a spaceplane being developed by Rolls-Royce and BAE Systems was that it had defence appeal, but the Cold War ended and the project was cancelled.
The three engineers that were leading the engine development decided to continue, and they were able to set up Reaction Engines. They continued under the radar with a real pioneering spirit. Then a private investor stepped in to fund the work and later on the Company moved towards bigger financial institutions. But it was really that pioneering spirit that was the secret.
For some of the technology breakthroughs other companies developed, the engineers involved had hundreds of attempts at getting it right. Reaction Engines had the same can-do spirit but the really brave move the early team made was to bet the Company on a single demonstration in 2012: demonstrating the cooler technology that was needed to enable a hypersonic engine or reusable launcher. This is a technology that enables you to cool from a thousand degrees centigrade to zero, or sub-zero, in a fraction of a second. It involves megawatts of heat energy transfer and it is really unique to do this in an ultra-lightweight, ultra-efficient way. They poured all of the Company’s resources and funding into a single demonstration: a real make or break moment. It was successful and it was truly game-changing.
My principle was pretty simple: hire smart people, set them in the right direction, and equip them to do what they need to do. Then get out of the way and let them go after these big challenges and really difficult technology developments, with the right support.
If I take the six years I’ve been at Reaction Engines, we’ve done three successful fundraises. They’ve all been off the back of significant demonstration activities. We promise a series of trials, they will or won’t be successful, but people back the company and back those trials and they look for those successes. We’ve done six investment rounds since 2012. The company valuation from 2012 to today has gone from £20 million to nearly £300 million.
The key learning for us was to build the right team. I made sure that everyone that joined the business was bringing something of value and that they had the right experience and the right attitude. They also had to be up for the risk because frankly, it was risky. My principle was pretty simple: hire smart people, set them in the right direction, and equip them to do what they need to do. Then get out of the way and let them go after these big challenges and really difficult technology developments, with the right support.
We are a 200 person business. The majority of our employees are early career and they are very high potential, high energy individuals that want to change the world. Given direction, no challenge is too big for them, and they constantly amaze us with their achievements! To that, you add experienced people: who have been involved in big programmes, who’ve had real customers, who’ve dealt with government agencies, who know how to construct a programme and deal with risk management. If you mix that energy with experience, it works really well. If you overwhelm people with experience, then it stops the innovation in its tracks.
Some of the teams on the ATI Boeing Accelerator cohort consist of co-founding teams of a couple of people. When expanding and hiring, how do you decide what to approach first?
First, you have to stay true to your values. Regardless of the company’s size — whether it’s 3 people or 30 people — you need to take the time to understand what the core values of your business are. When I arrived at Reaction Engines in 2015, the whole team was in it together and it felt a bit like a family business, but in order to truly scale, you also need structure. I decided to bring in the experience needed at the highest leadership levels to provide that direction, and implement the right amount of process and structure to make it work. For example, I brought in a strong Operations Director and Programmes Director, and we created an HR function because there wasn’t one there previously and talented people are at the heart of what we do.
For many, there was a degree of needing to look up and be inspired by people who had been on that journey before that could tell the stories and provide reassurance. No more so than when you’re constantly faced with a challenge around cash preservation versus innovation. You need to be pulling the levers all the time, providing the reassurance and the reality of the situation to get the best efforts from the business.
How do you go about getting in front of the right customers, especially if you are still fine-tuning the product?
It’s all about being hyper-connected and building relationships as early as possible, even if you are speaking to an investor or an industry stakeholder and you know that it’s too early. If you can invest in that relationship now, it can pay back in the future. The right type of advisor will also help. They will have a long list of investors and provide access to the most appropriate ones. Then it’s on you to do the outreach and send the company teasers out to try to generate some interest and facilitate the dialogue.
On the other hand, a bad advisor will send you all over the place to talk to all of the wrong people at the wrong time. This will consume your effort and take you away from the business, create a distraction and charge you an unhealthy fee for all of that as well. My advice is to be really careful here.
I would also say don’t be too captivated by the big-name companies because they will have a lot of other things that they are dealing with as well. This can suck up their time and might happen precisely at the point when you need them most. Then that becomes very difficult.
How do you find a balance between the need for a structure to the madness with the need to be agile, fast, and innovative?
You have to test it all of the time! You need structure so that people understand: how do I fit into this organisation? How do I get my job done? How does that deliver value? They need to see the value stream. What you’re trying to avoid is too many silos or compartments or separate functions. Wherever possible, integrate people into teams. There is absolutely a need for a process and especially if you’re going to be in an investment-type situation because people want to see that structure and discipline in the way you work. You need this in your design process, your development process, your HR policies, and everything that you expect to find in good business practice.
On the other hand, you need to preserve that agility and innovation. At Reaction Engines, we do this in several different ways. One thing to remember is that individuals in organisations approach innovation differently. For some people, they work better together in a diverse team, sleeves rolled up and that’s where the innovation happens for them. Then there are the quiet inventors that simply want to be able to deeply research a topic, think about it, do their own modeling simulation and come back with something tangible. As a business, you need to have the kind of environment that is conducive to all of these different types of innovation.
I know this is overused but I need to say it: create a culture that allows failure. Rather than fail fast, we talk about learning fast. We learn through getting things wrong as well as getting things right.
In some cases, people like to be competitive, and then in other areas, people like to be quite protective of their ideas. Your role is to try and bring out those for the business benefit through some kind of innovation strategy approach. In the commercial part of our business, we’ve done other things like creating a technology lab, which is set up to enable us to build/ test prototypes. We won a large part of our business from that process. We talk to a customer, understand their problem, and go back two weeks later with a prototype. They can then run the prototype on their rigs to prove that it delivers the required performance. It can blow them away!
I know this is overused but I need to say it: create a culture that allows failure. Rather than fail fast, we talk about learning fast. We learn through getting things wrong as well as getting things right. You need to be able to flex the business quite rapidly. So if you realise you’ve done something wrong, you put something in place that’s not too heavy in terms of governance or a project where there are too many people involved in managing that project then you have to be prepared to change it straight away and admit that it was wrong. If we get it wrong, I will say we’ve got it wrong, that was a mistake, but we’ve learned from it. And we’re going to try something different next time around.
Thanks to Mark for sharing his learnings and experience with us. We’re excited to see what’s next for Reaction Engines!
For more information about the programme, please contact the ATI Boeing Accelerator team:
Gabi Matic — gm@atiboeingaccelerator.com | linkedin.com/in/gabrielamatic
Wil Benton — wb@atiboeingaccelerator.com | linkedin.com/in/fatkidonfire
Ksenia Kurileva — kk@atiboeingaccelerator.com | linkedin.com/in/kseniakurileva
