Entrepreneur of the Year

In the entrepreneurial achievement of 2004, Burt Rutan became the first private businessman to launch human beings into space. His ultimate goal: to make space flight routine -- and turn a big profit.

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Above 100,000 feet, the air is so thin that wings become useless and aerodynamics stop mattering. Climbing higher takes sheer propulsion -- propulsion that air-breathing jet engines can't deliver in the deepening vacuum. Here is where the sky ends, the horizon curving away to reveal the star-freckled shadow of space. Call it nature's Maginot Line, separating the world of planes from the world of rockets.

Until a few months ago, that line seemed an impregnable barrier, with $200 coast-to-coast tickets for the masses underneath it and billion-dollar megalaunches for a few dozen professional astronauts above. But barriers are meant to be breached. In this case, history may pinpoint the breach to that moment on October 4 when an orca-shaped, stubby-winged aircraft planted its almost comically spindly legs on a runway in California's Mojave Desert. In so doing, the privately funded SpaceShipOne had carried humans to space and back again twice within a week, earning its owners the Ansari X-Prize, meant to spur the opening of the age of commercial space travel.

The man leading the team that took home that prize is, of course, Elbert Leander "Burt" Rutan, who drove the design and testing of SpaceShipOne at Scaled Composites, his 125-employee Mojave, Calif., company. Rutan has since garnered a variety of accolades for his feat, ranging from a presidential phone call to two appearances on Jay Leno. We'd humbly like to add one more: Inc.'s Entrepreneur of the Year (turn to page 68 for six honorable mentions).

Rutan has hit a big milestone, one that could ignite a revolution and even change the way we view the universe. But his achievement isn't really a matter of altitude or new types of space vehicles. It's about the business model. Rutan managed to send human beings out of the atmosphere without the benefit of an army of engineers and hundreds of millions of dollars in government funds. Instead, he did it the same way a fast-growth software or biotech company develops products -- with a small team, angel funding, freewheeling management, a willingness to take big risks, and a belief that serious profit lay on the far side. Not surprisingly, Rutan sounds a lot more like a venture capitalist than a salaried aerospace engineer. "The government is poison for the process," he says. "The flying that America has done in the last 20 years is by far the most expensive way to get to space and the most dangerous. This can't be done with NASA funding. It absolutely has to be privately funded."

Like most company builders, Rutan sees his achievement as mere prelude. He is already busy working to parlay the SpaceShipOne venture into a far bolder effort to create a space airliner, for which tickets have already gone on sale. He's even looking beyond, sketching designs for orbiting space hotels. Indeed, Rutan just may have opened the door for an entire space tourism industry, as other entrepreneurs and even NASA seem eager to capitalize on the X-Prize excitement to advance their own ambitious space-travel plans. That Rutan -- or anyone else -- will succeed in getting passengers into space is still far from a sure thing. But there's no denying that thanks to him, the earth's pull has never seemed weaker.

For a shrinker of planets, Rutan, 61, cuts a figure that is not only dashing but just a little bit goofy -- part Evel Knievel with even bigger sideburns and part Bill Gates with a slight drawl. Yet the extent to which he has already reframed our notion of space adventure was made clear on a warm October morning in St. Louis, when he picked up his $10 million X-Prize. Standing on a stage set up on a high school football field, Rutan and Paul Allen, the multibillionaire Microsoft co-founder who has sunk some $25 million into SpaceShipOne, struggled with the kitchen-table-size ceremonial check as some 600 local space fanatics cheered lustily. Just off to the side, and only briefly acknowledged, was Brian Binnie, the shy-looking fellow who actually piloted SpaceShipOne in its prize-winning flight. For the first time, manned space flight wasn't about the hero astronaut -- it was about an upstart company aimed at making space flight a consumer product.

Scaled Composites, of course, is no ordinary company. In the perennially profit-challenged aviation industry, it has managed to post 88 straight profitable quarters, according to Rutan. Working out of a dozen corrugated-metal buildings in a dismal windblown patch of desert in Mojave, 100 miles northeast of Los Angeles, it has rolled out 26 new types of manned aircraft in 30 years, many of them rule-breaking and innovative; most big aerospace contractors, by contrast, struggle to get a single new aircraft out in an entire decade. Even while pushing the envelope, the company has never suffered a fatal crash. It is the place where NASA and its top contractors often turn when they're stuck on a design issue.

"There's a good chance of getting my original investment paid back," says Allen. "That's pretty amazing."

SpaceShipOne promises to propel the company to even greater heights. Rutan ticks off new and potential revenue streams as if he were running through the world's coolest flight checklist. There's the $10 million X-Prize itself. Corporate sponsors, including M&M's candies and 7-Up, paid an estimated $2 million to get their logos on SpaceShipOne. Richard Branson, the mediagenic British founder and CEO of the formidable Virgin Group, which includes Virgin Airlines and Virgin Records, has agreed to pay up to $21.5 million over the next 15 years to provide spaceships and technology for a proposed space airline called Virgin Galactic. And Rutan says discussions are under way for similar deals with four other potential spaceline operators. "There's a good chance of getting my original investment paid back," says Allen, closing his eyes for a moment as if picturing a spaceshipful of weightless tourists. "That's pretty amazing."

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David H. Freedman

A Boston-based contributing editor, Freedman is the co-author of A Perfect Mess, which examines the useful role of disorder in daily life, business, and science. His other books include Corps Business: The 30 Management Principles of the U.S. Marines; At Large: The Strange Case of the World's Biggest Internet Invasion (co-authored with Charles C. Mann); and Brainmakers: How Scientists are Moving Beyond Computers to Create a Rival to the Human Brain.

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