Jan 1, 2005

Entrepreneur of the Year

 

For Rutan, it's the culmination of a lifelong dream. Even as a child growing up in the 1940s in Dinuba, Calif., the son of a dentist, he was something of an action nerd. He soloed in an airplane before getting his driver's license, but his real obsession was designing and building model planes. After picking up a degree in aeronautical engineering from California Polytechnic in 1965, he took a job as a test engineer at Edwards Air Force Base in the Mojave. "Young engineers at aerospace companies went through relatively lengthy periods designing some arcane bulkhead or door," he says. "I felt by testing the final product I'd understand it better, which would help me in my dream of being a configuration designer" -- that is, a designer of aircraft, not just components. He narrowly survived a test ride in the back of an out-of-control Phantom F-4 fighter while studying ways to stop the aircraft's treacherous handling from killing pilots in Vietnam.

After seven years at Edwards, Rutan founded his first company -- RAF, or Rutan Aircraft Factory -- to sell plans for small, mostly two-seater aircraft to hobbyist pilots. Unable to afford a wind tunnel to test his designs, he would strap parts of his plane to the roof of his station wagon and hurtle down the road at 80 mph to see how they held up. "He was always one of those guys who if you said to him, 'No, you can't do it that way,' it was like waving a red flag in front of a bull," says Vern Raburn, founder of jet manufacturer Eclipse Aviation in Albuquerque, who has known Rutan for a decade. Rutan eventually discovered a cheap way to hand-build exterior components out of "composite" materials -- essentially strips of glue-soaked fiberglass over cut foam -- that proved stronger and lighter than wood or aluminum and easier to craft into complex shapes. In 1982, he founded Scaled Composites to design, build, and test experimental prototypes for big customers such as aerospace companies, the Air Force, and NASA.

As a manager, Rutan has proven intuitively adept at inspiring loyalty and extraordinary work. He doesn't worry so much about the formal background of the engineers he hires. He looks for people who share his passion for aircraft design and gives those who have it free rein. Instead of the specialists sought by aerospace companies, he encourages his staffers to remain generalists who can design anything from a fuselage to a door handle and then go into the shop and build it. Chief engineer Matthew Gionta recalls starting off at the company right out of graduate school in 1994 and being handed the project-leader slot on an ultra-high-tech unmanned aircraft. "What I had to learn on the job made my formal education pale in comparison, but I had to learn it because no one else was going to do it for me," Gionta says. "The stress took years off my life, but when you get that kind of responsibility, it's hard not to feel ownership."

Rutan is loath to codify his approach to managing. "I don't like rules," he says. "Things are so easy to change if you don't write them down." But one way or another, he has communicated a few simple principles to employees. One is that when it comes to safety issues -- and in aircraft design, almost everything is a safety issue -- everyone should be quick to raise questions. Rutan makes sure that when people at Scaled point out their own mistakes, they're applauded rather than reprimanded. And instead of extensively analyzing a design before building it, a notion that's axiomatic in the aerospace industry, Rutan pushes his people to get a first version built quickly, test it, and fix it. Says Gionta: "Testing leads to failure, and failure leads to understanding."

Rutan himself has remained on the company's frontlines. He long ago trained his board of directors not to waste time asking administrative or financial questions he can't answer. An eight-person management committee, of which he is a member, runs the company. But Rutan also keeps busy by picking out the one or two projects that interest him and joining those teams as a designer. Scaled test operations chief Doug Shane, like many others at the company, says that having Rutan work alongside him has served to reinforce his own excitement about the job. "Most aerospace businesses are run by people who are only interested in making money," he says. "Burt built an environment of passion for the product, and that's the only motivation."

Indeed, no one joins Scaled Composites for the pay or benefits. The company doesn't even offer a retirement plan. And then there's the location, in a remote corner of a wind-scoured desert. A new male employee who's married will inevitably be asked, only half jokingly, how long his wife cried without stopping when she arrived in Mojave -- the generally accepted company record is a month. "What keeps us in this crummy desert is doing things that are fun," says Rutan. "I built a house without windows because you don't need to look outdoors here." The only significant source of turnover at the company is employees becoming romantically involved with people who refuse to move there.

Scaled grew to 50 employees by the late 1980s and more than 100 by the mid-1990s -- a close-knit, highly competent company that was financially successful and sought after by high-profile customers. Rutan also had caught the fancy of the general public. In 1986, his brother Dick co-piloted an aircraft called Voyager on the first nonstop flight around the world. Thereafter, Burt Rutan belonged to a rare and oxymoronic breed: the celebrity engineer.

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