Vern Raburn, CEO and President, Eclipse Aviation Corp.

Vern gave a lunch-time talk about how he started Eclipse Aviation, his thoughts on jet aircraft manufacturers and the impact on air travel industry.

Since 1998, Vern Raburn has led Eclipse Aviation in its quest to change the way people travel. Eclipse wants to revolutionize the way people fly by using Eclipse jets as "air taxis". Eclipse is well on its way to do just this and today has more than 2,000 orders for its 5 passenger $1.3 million aircraft to be delivered starting next year.

About Vern Raburn

Vern Raburn is a successful serial entrepreneur and information technology veteran with 25 years in the industry. He was Microsoft's employee #18 in 70s where he served as President of Consumer Products Division. Following his tenure at Microsoft, he served as Executive VP and General Manager of Lotus Development Corporation, where he played an integral role in the successful launch of Lotus 1-2-3. He has also served as Chairman and CEO of Symantec Corporation and Slate Corporation. Prior to founding Eclipse, Raburn worked as President of the Paul Allen Group, overseeing high technology investments for Microsoft co-founder Paul Allen.

Notes

Sees his business as disruptive so he doesn't know exactly how people will use his product.

Vern started with a historical perspective of the aviation industry (which is 102 years old)

There are 4 tracks: military, space, airlines, general aviation

Pratt was always involved with major breakthroughs with engines

Airline deregulation in 1978 made airlines available to the mass markets; prices reduced 300%; because a huge growth market; general aviation (GA) market contracted because it was very expensive and only for the elite

He thinks now is the time to bring GA back on parity with airlines

Eclipse plane performance is equal or better than current jets; price ¼ cost of current entry-level jets and ½ operating cost

Designed for airline: high hours, high cycle operations, with equal reliability and dispatchability

He said people have told him that he is "building a 6 seat 737"

Classic disruptive innovation – leads to market expansion and growth

Eclipse 500 Markets:
* Owner pilots – Jet ownership now within reach; "Experts" agree that this market exists; He thinks 600-700 unit/year market for next 10 years; 90 million in sales in first 3 months of this year
* Corporate aircraft – Benefits of a private jet at all time high; Need a billion before you can by a G550; Wants more than just the VPs of companies to use corporate jets (e.g., a tech that needs to be rushed out to a customer site)
* Training – Flight training in a jet now possible for civilian students; More efficient way to fill the need for new commercial pilots; Vietnam pilots will help for next 10 years but must change the way we train new pilots
* Same-day Logistics – Deliver packages same-day for smaller items (e.g., medical items – blood, urine samples, etc.)
* Air taxies – On demand air travel service; In aviation industry (unlike the IT industry), the non-existence of a technology is proof it won't or shouldn't work; NASA thinks there is a big latent demand; Avg portal to portal speed is declining for first time in our history; 300-500 nautical miles with Eclipse 500 (not coast to coast)

Technical Innovation:
* Using Friction Stir Welding
* They thought they were going to build a composite body, but compared with aluminum, it isn't that much better
* He thinks composite material is still not mature (He's not saying it is unsafe)
* Boeing may change the perception of composite with the 787
* So they used aluminum for the Eclipse but used welding not rivets

Business Innovation:
* Focus on core competencies and outsource everything else
* GA industry is phenomenally vertically integrated
* He isn't going to fabricate a single part
* Investing in lean manufacturing
* It will take 4.5 days (two shifts) to build a plane
* Leveraging IT
* $225,000 for a full-blown SAP implementation
* 14 TB of data storage
* Price all offerings from a cost basis, not market basis
* This goes against the rules but they don't know the right price for new markets; this creates a competitive advantage for them
* Real value change produces new demand
* Market estimates for disruptive products are NEVER correct (e.g., telephone, computers, etc.)

Eclipse 500 Jet
* Worked with IDEO and BMW on the design
* Will hold 6 occupants; twin-engine; can operate from over 10,000 airports; This was important because it puts them within 25 miles of 94% of all airports
* Cost: $1.175M but could go up because of aluminum process
* Cruise speed: 375 kt; range: 1280 nm; Useful load: 2250 lbs; Ceiling: 41,000 ft
* Designed to be fixed in 4 hrs or less
* All electronic – no hydraulics
* No incandescent bulbs – used LEDs instead
* Used HALT lab and beta aircraft – continuously running to see where it breaks
* Used Pratt and Whitney for the engine: PW Canada PW610F
* 2200 orders on the books
* 400 employees in the company