Surrey Satellite Technology Limited (SSTL) was a spin-out from Surrey University in 1985 and was set up to commercialise the results of its innovative research in small satellite engineering. Two decades on, SSTL employs 200 staff and its turnover in 2003 was £15m. To date SSTL has been involved with 23 small satellite missions, making it the most successful and experienced manufacturer of small satellites in the world.

Dr Jeff Ward, SSTL’s Managing Director discusses some of the issues facing a fast growing company in a demanding sector.

1. SSTL growth has so far been self-funded. Do you think the absence of venture capital investors has allowed you greater freedom of action in SSTL’s development ? Conversely could the self-funding approach have limited your rate of growth ?

While it’s true to say that SSTL’s growth has been organically funded, UniS has made key working-capital investments. The absence of venture capital during SSTL’s early years was a deliberate strategy by UniS and the co-founder (Professor Sir Martin Sweeting) to permit the Company to stay close to the academic sources of its ideas and to be free from pressures for immediate and rapid growth. SSTL’s core mission in those early days was to prove that small satellites were practical and useful, and thereby create a market for its products. The satellite market is incredibly conservative, and this market-creation mission is still under way—after twenty years. Venture capital investors simply don’t have the stomach for such long-term processes, yet it seems unlikely that additional spending by SSTL could have significantly sped up the market creation.
Obviously, an organically growing business has restrictions on growth rate, and now that we see the small satellite market approaching a period of explosive growth, we may well need further investments if we are going to keep up. As always, it is a balance of risk; few investors want to put their money in before the market is demonstrated, but by then it’s too late to for a company’s facilities and processes to truly be ahead of the market growth curve.

2. How is Surrey as a location for high-tech startups? Are clusters important in your business?
SSTL, founded in 1985, can’t really be classified as a startup any more, but we are going through explosive growth with a requirement for skilled recruits, new facilities and an expanding supply chain. Surrey is excellent as a source of skilled recruits (especially in aerospace) both fresh from UniS and experienced staff from other Southeastern companies. There is a bit of a ‘cluster’ of aerospace companies on Southeastern England, and that is important to us as we expand our subcontracting activities to manage high growth. The Southeast is also perfect for international trade, with the airports on our doorstep.
On the other hand, the cost of living for staff and the cost of facilities for the Company are both very high. Since SSTL encompasses both design and manufacturing, it is a challenge to have a competitive cost base in Surrey. And it is difficult to pay employees from Europe or America enough that they can get on the property ladder here.

3. How important are ongoing intellectual links with the university ?
In a fast-moving industry such as space, every new idea can be crucial and there are a great number of emerging, disruptive trends to track. Our relationship with UniS allows us to keep pace with technology development and gives us a source of ideas for the future. The key point is that this is a true symbiosis: by working with UniS, SSTL has a access to a much larger and more diverse R&D department than it could afford independently; and by working with SSTL, UniS researchers can regularly test their ideas in space—a unique capability for a university research group. This symbiosis was the seed of SSTL, and I hope that it will remain mutually beneficial indefinitely.

4. As an American, can you think of any changes in the UK regulatory or cultural environment that would make life easier for high-tech startups?
I have spent virtually all of my working life in the UK, at SSTL, so it is difficult for me to comment in detail. Perhaps it is a stereotype, but I don’t think that the UK has the same respect for entrepreneurs that America does. When I arrived at Surrey, we spent a lot of time keeping our heads down and staying out of the public eye, rather than pushing ourselves into the limelight. In some sense that was just a conservative approach to marketing: make sure that the product works before you advertise it; but entrepreneurs have to thrive on risk and I think that the risk-taking atmosphere is better in America.
The UK regulatory regime has been very kind to SSTL in some ways. Successive governments have had a very pragmatic approach to export licensing, which has made it possible for us to work in a truly global market place. In America, space companies have been stifled by greater constraints on trade.
On the other hand UK and European legislation for employers seems to be more bureaucratic than the American equivalents. Perhaps Americans are litigious and Brits are bureaucratic? I am actually a great supporter of legislation to protect human beings and their environment, but we need to be conscious of the efficiency and effectiveness of measures taken. I think that the Data Protection Act is a good case in point: excellent aims, poor implementation.

5. SSTL has a very clearly defined customer base. With the technology you’re developing, do you come up with ideas that have non-satellite applications and if so, what do you do with them?
I’m sure that we come up with ideas that have non-satellite applications, but at the moment we’re too busy to really identify and exploit them. To an extent it’s a strength to concentrate only on our core business, but we could also extract some additional value from our ideas if we got them into diverse markets. At the moment, we are actively exploring some key areas that have synergy with space. Undersea exploration, for example, has the same demands for reliability, power efficiency and autonomy. We are working through the DTI to make the connections we need further to explore such diversification.

6. Finally, can you give an example of a tough period in SSTL’s development and how you got through it?
We’re growing so quickly that every period is a tough period. The last one that we can clearly say we have ‘got through’ was the transition from a Company focusing on one major project at a time to a Company with up to five major satellite projects underway simultaneously. To make this transition, we had to recruit with an eye for project management skills as well as technical skills, and we had to shift the culture of the Company from a what we might call a ‘technical focus’ to one where technology, time and money were all equally important. We also worked hard to maintain a flexible approach to allocating effort, rather than just putting each project into its own isolated silo.
Apart from the details of change management (vision, optimism, communication, patience, more communication, more patience, more optimism), I think that effective risk-management has been a key to getting us through tough periods. We worked hard to ensure that our whole management team understood the risks we were facing, and that we communicated risks effectively through the Board to the shareholder. When risks are out in the open, they can be managed and sometimes reduced, rather than just being a source of fear and stress in an organisation. If risk taking is a key source of entrepreneurial success, risk management is a key skill for entrepreneurial companies.