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Why Sierra Nevada’s owners are betting big on Dream Chaser

Why Sierra Nevada’s owners are betting big on Dream Chaser

To Fatih and Eren Ozmen, Dream Chaser is more than a spaceplane. It’s a vehicle to transform the entire industry.
This article originally appeared in the April 9, 2018 issue of SpaceNews magazine.
Sierra Nevada Corp. plays a unique role in the aerospace industry. Like traditional contractors, it’s a major systems integrator with billions of dollars in annual revenue stemming from civil, commercial and military work. But it’s also a private company, like SpaceX and Blue Origin, making enormous investments in future space capabilities.
SNC’s largest investment to date is in Dream Chaser, the spaceplane NASA selected in the initial rounds of its campaign to encourage companies to build private space taxis to transport astronauts to and from the International Space Station. After awarding SNC more than $312 million for Dream Chaser development, NASA passed over SNC to award commercial crew contracts in 2014 to competitors Boeing and SpaceX. That loss was incredibly painful, Eren and Fatih Ozmen said in their first joint interview, but they quickly decided to continue investing in Dream Chaser.
Unlike SpaceX and Blue Origin, SNC is not very well known. It was a small, family-owned electronics business in Stead, Nevada, when Fatih, a former Turkish cycling champion with a master’s degree in electrical engineering, joined as an intern in 1981. In 1989, SNC hired Fatih’s wife Eren as a financial consultant. Eren, a Turkish immigrant with an MBA from the University of Nevada, Reno, recognized that SNC was struggling financially. Although the Ozmens were newlyweds with a small child, they used their house as collateral for a loan and purchased SNC in 1994.
Why Sierra Nevada’s owners are betting big on Dream Chaser

SNC’s relative obscurity is likely to end soon as the company brings its 9,000-kilogram Dream Chaser to the 34th Space Symposium in Colorado Spring, Colorado, a move guaranteed to make headlines. Fatih also is becoming more well-known as a member of the National Space Council’s panel of experts known as the Users Advisory Group.
In addition to Dream Chaser, which is scheduled to begin delivering cargo to the International Space Station in 2020, SNC has a broad portfolio of space programs including small satellites, rockets and propulsion, habitats, and environmental control and life support systems. SNC components have flown on 13 Mars missions and the firm is designing and building the Descent Braking Mechanism to help NASA’s Mars 2020 touch down softly on the red planet. SNC also is developing a deep space habitat that pairs Dream Chaser’s cargo module with electric propulsion to transfer it to lunar orbit as part of NASA’s Next Space Technologies for Exploration Partnership (NextSTEP)-2 program.
One of the reasons we wanted to speak with you is because it’s hard to imagine a publicly traded company sticking with Dream Chaser all these years. Why were you so persistent?
Fatih: Which is the same point I heard from my counterparts, the CEOs of Tier 1 companies. They are driven by quarterly earnings-per-share targets. They can’t afford long-term investments that are not going to pay off for 5-10 years or more.
Eren: This is a very risky adventure for us. I don’t think that we could have done that if we were a public company.
Fatih: I would be fired by now. Our persistence goes back to our core, the passion and excitement that led us to come to the United States in the first place, Eren and I, separately. We have big dreams. We go after those dreams and don’t give up when the challenges pop up.
Why so committed to Dream Chaser?
Fatih: We have been fortunate. A lot of wonderful things have happened to us. This investment helps U.S. leadership in space. It helps inspire the next generation. And it makes an impact that is sorely needed right now. When you look at government contractors, there is a tremendous need for innovation and challenge to the status quo. It’s very difficult for a small innovative company to show up on the radar screen and challenge the big guys. We can be a lot more effective now that we have broken the billion-dollar mark.
How do you challenge the status quo?
Eren: We always look for innovative solutions. Our model has been to provide an 80-percent solution for 20 percent of the cost and schedule. Our customers need that kind of affordable solution. By applying this model to space, we feel we can make big things happen. When you look at the amount of money being spent on deep space programs and the affordability issues, it doesn’t look like the U.S. will be able to maintain its leadership. Three innovative companies, Blue Origin, SpaceX and us, offer a different path. We are saying, “Hey you don’t have to spend that kind of money. Hey, you don’t have to spend so many years in development. Things can happen for a fraction of the cost and time.”
Fatih: We are at the crossroads right now. With the resources and capabilities we have, there is no limit to what we can do. We are trying to show the world and the government that the basic structure of Tier 1 — just a handful of prime contractors spending most of the money in the budget — is slowing down innovation. It needs to change.
Dream Chaser completed its free-flight test in November. What’s next?
Why Sierra Nevada’s owners are betting big on Dream Chaser

Fatih: We are going through a series of critical design reviews right now. We have a contract in place to do the first launch in 2020. That’s the next big milestone.
Eren: We also will be selecting the launch vehicle for future missions. We are working with many launch providers and they are coming up with very affordable new launch vehicles in the 2021 timeframe. After the first mission, we will have more opportunities to reduce the cost because a significant cost of our mission is the launch. We are looking at all those different partnerships with different companies, looking for synergies and strategic relationships. We are in very heavy discussions with all of them. That is helping us understand how the dynamics are changing and how to maintain our competitive place while launch costs come down and technology improves.
How much have you invested in Dream Chaser?
Eren: Normally we don’t give those numbers out but you can have a really good feel for it. We did the entire development of Dream Chaser. This is a billion-dollar type of development effort. We got some funding from NASA both on the prior crew program and the integration of the Dream Chaser on the Commercial Resupply Services-2 program, but we are investing the lion’s share of the money. We also are building Dream Chaser with our own money.
We hope the entire space vehicle will someday be in the $250 million to $300 million range. We are looking for ways to make it more affordable but the first couple of vehicles are the initial prototypes. The goal is once we achieve the mission to recoup all the costs because this is a leasing arrangement and we are going to depreciate the investment as we achieve those missions. We are going to recoup our initial investment through the amortization.
Fatih: It’s the most significant investment we’ve ever made. And from a personal perspective, it is a larger investment than Elon Musk made in SpaceX. We are way beyond that. We are very committed. We believe in this and like Eren said, it is not a shot in the dark. It is a very rational investment decision that will pay back but it’s going to take a while; we may have to wait five-plus years.
You seem very patient.
Fatih: This is our legacy. People can look back after we are long gone and say, “These people did things that had never been done before. They did it as private entrepreneurs and realized the American dream.” That is the best that we can hope for.
Eren: Leaving behind a huge capability is so much better than leaving behind a bunch of money in the bank. That’s what we are doing, converting everything to a capability that the next-generation can benefit from.
Are you interested in completing development of the crew version of Dream Chaser?
Eren: Yes. The NASA crew contract that we got awarded is still open. And actually, we got an extension on that contract. There is no current funding right now because two other companies [Boeing and SpaceX] got the award. But the reason we didn’t get the crew contract is because supposedly we couldn’t achieve the schedule. Now you see the other two companies are behind schedule.
Why Sierra Nevada’s owners are betting big on Dream Chaser

What would it cost to finish the crew version of Dream Chaser?
Fatih: We don’t talk about those numbers for competitive reasons, but it is a fraction of the cost of developing the uncrewed version. It would be a much smaller investment to make because we left a lot of infrastructure in place for that conversion possibility. Right now, our focus is on that first uncrewed version.
Eren: I would say that 80 percent of the capabilities that we are maturing right now apply to the crew version. All our investments right now will benefit the crew version. But for the crew version, the certification is the hardest part.
Fatih: In time and money.
Why would certification be the hardest part?
Eren: That’s something we don’t have a good feel for. We can definitely bring it to a crew capability. We are going to see how the two companies that got crew contracts are faring in the next couple of years. That is going to give us a better feel for how difficult it will be to certify these vehicles and how difficult or easy it will be to take people up there. It is definitely possible and we would love to do that someday.
Fatih: Dream Chaser doesn’t have to go up, it can come down. We can do an in-space crew version. It doesn’t have to be the same as what Boeing and SpaceX are doing today.
Eren: Actually, Dream Chaser was a rescue vehicle initially.
A rescue vehicle?
Fatih: That was one of the NASA contracts we won in the space shuttle days when they were debating cargo, crew, lifeboats — all these different things. There were variations on the crew capability.
Eren: That may be the stepping stone. Just park it up there and if some crisis happens, you can rescue the crew and bring them down to land at an airport. That capability is a lot easier than taking them up there, as far as the risks and certification are concerned. We are looking at all those capabilities to get to the finish line.
Fatih: We see bringing a crew to any runway where a commercial airplane can land as a huge advantage over the capsules. There could be other circumstances where people don’t want the high-G reentry of capsules. That is going to evolve once we show Dream Chaser’s performance and execute a cargo mission successfully. We are building credibility and confidence every time we meet milestones. We are not in a hurry. We want to do it the right way and we will take our time to get that right. We would love to see a crewed version of Dream Chaser sometime in the future.
You have mentioned partners. Do you mean investors or industrial partners?
Fatih: We are talking about industries and space agencies. We have direct agreements with ESA, DLR [the German space agency] and JAXA [the Japanese space agency]. They are making investments on their own part. We bring it together. We leverage what exists around the world. If you look at Dream Chaser, it’s more of an integration job. We are a best-of-the-breed integrator. That’s our reputation in DoD. We bring the best solution that makes sense — not what we build, but what is the best and the most capable system.
If you saw the number of partnerships, the teaming agreements we have, it’s mindboggling. It’s very different than the model SpaceX employs, which is vertically integrated, everything in-house. We try to do as much as possible outside of the house. We find the best experts and bring them to the table. That’s how we put together the best team.
Why Sierra Nevada’s owners are betting big on Dream Chaser

How is SNC faring financially?
Eren: We are financially very stable right now. We have a pretty significant line of credit, about $700 million that we can tap into if we have additional programs that require investment, or if we want to take Dream Chaser to the finish line. It’s a syndication loan that we don’t often tap into. Yes, it is nerve-wracking. We don’t like to borrow money. We have never done it. We took the company from really nothing to a multibillion dollar company without borrowing money.
Fatih: Financially, we are very healthy but we are basically putting all our earnings and life savings into Dream Chaser and programs like this. If you look at the so-called NewSpace companies, they’re investing more. They are really not profitable. And then on the conventional side, the Tier 1 companies are risk averse and they have to be. They have to be very careful how much money they invest to turn a profit. That’s where our private ownership and entrepreneurial spirit comes into play. We can get the best of both worlds and leverage this.
What’s ahead for SNC?
Fatih: There is a lot more we can do, but we are waiting for the dust to settle. NASA leadership is not established yet. The National Space Council just started. The National Space Strategy was just released. Once it’s clear how this is all going to play together, there are a lot of options we have from investments to financial partnerships. We are going cautiously right now while still making sure we are involved in these deep space programs.
What’s your view of the National Space Council?
Fatih: It’s very critical that it’s been established because the U.S. space programs are not as coordinated as they need to be given the national security challenges we face. There are a lot of good things happening with the current leadership of Air Force space, DoD and the intelligence community. Everybody is lined up saying, “Hey, we have a challenge. We have to cooperate. We have to do things differently. It’s not business as usual anymore.” The timing is very exciting.
At the first meeting of the National Space Council, Fatih talked about infrastructure investment. What space infrastructure investments should U.S. government make?
Fatih: There are several. I hope part of this critical infrastructure we are trying to build will go to space. Budgets went up but the plan is still not clear. The right infrastructure in space — space stations and transportation systems — would stimulate that new space economy. There is tremendous potential. The government has done that successfully in the past. It put in railroads to stimulate the economy and get everybody to the next level. With the right public-private partnership approach, which NASA has done successfully on the commercial crew programs, there is a lot of potential. I’m excited the Commerce Department is getting involved more.
The critical infrastructure in space will help not just the commercial side, but the national security side as well. And bringing international partners onboard will help the U.S. maintain its leadership. If we are not proactive, China is going to build a space station and everybody will go in that direction. And somebody else is going to go to the moon and somebody else will land on Mars. That infrastructure investment is very important.
Do your small satellites play a role in a contested space environment?
Fatih: Yes. Both the classified and unclassified capabilities that we have in the small satellite area. They are a part of an architecture that we are developing. These things are not all independent. For instance, Dream Chaser can launch small satellites and small satellites can be part of a network. You heard Air Force Secretary Heather Wilson talking about multi-domain command and control. We need an integrated approach. Not just low Earth orbit or airborne or deep space. We need full awareness and everything needs to play together. Smallsats are part of that equation.
Eren: Our interest in space started with small satellites. In 2008, we made three different acquisitions all in space. The first was MicroSat, a smallsat company with a great capability. We actually proposed building small satellites for $50 million. At the time, everybody said, “Small satellites don’t make sense.” We were a little ahead of our time. We could not convince anybody that that was the way to go. We were talking about the threats that people are talking about now, how vulnerable big satellites are and how small satellites could help.
Does Dream Chaser feed into SNC’s NextStep-2 work?
Fatih: Yes. The Dream Chaser investment is already paying off. We have two contracts in the NASA NextSTEP-2 program both the power propulsion module element as well as the habitat piece, Lunar Orbit Platform Gateway. Dream Chaser is built into a common interoperable architecture. That is part of the bigger picture. Most the hardware and software is going to be the same. It’s a capability we can build on.
What role could Dream Chaser play in low Earth orbit?
Eren: A replacement for space station is very much on the table right now, which gives us a very short period to look for options. How are you going to transition from the space station into other things? Whether commercial companies would take over, which is not likely because it is an aging asset and very expensive to maintain. We are looking for ways to partner with other companies to create an 80-percent solution for 20 percent of the cost and schedule.
Instead of paying billions of dollars to maintain an aging asset, you can put those dollars into research, satellite servicing, robotic arms, 3D manufacturing, and debris cleanup. There is so much that can be done. A Dream Chaser-type of capability could do all those things. It can stay in space for months at a time. It can become a small laboratory. There are so many possibilities.
What’s unique about Dream Chaser?
Fatih: A key discriminator between Dream Chaser and our competitors is that we are the only rocket-agnostic space vehicle. We are not married to any particular program.
With Dream Chaser, we have a lot of partnerships internationally. We have applications across the board, from the United Nations to working with pharmaceutical companies.
It is a unique approach that is different than what we’ve been doing for the last 40-50 years: sending capsules into space and bringing them back to splash down in the ocean. Dream Chaser lands like the space shuttle did and it leverages all the lessons learned over the years into a next-generation spaceplane.
Why Sierra Nevada’s owners are betting big on Dream Chaser

You’ve been very private. Why did you agree to this interview?
Fatih: Our public relations campaign has not been a priority for us. We keep our heads down and focus on getting things done. But right now, everybody says, “You are the poster child for the next-generation companies. You have the best of both worlds: old space and new space. You can make a difference and you need to get up on the radar screen.”
We wanted to let people know there are companies like SNC that are going to be the next-generation companies. They will operate differently than people are used to seeing. You do not have to rely on traditional space companies to build a very complex system to accomplish a critical mission.
Is that why you are bringing Dream Chaser to the Space Symposium?
Eren: Yes. We feel that based on the types of programs we are going after, and with Fatih on the National Space Council right now, we need to do a little more PR and get more awareness. I was talking to my friend from Seattle yesterday. She said, “How come nobody in Seattle knows about SNC and Dream Chaser? They know about Boeing, Blue Origin and SpaceX.”
That’s a little bit by design. We have been private, but I believe the time is right for us to get out there a little bit and create awareness of who we are and what we do. This is the future. How do we shape the policy and how do we be part of the future requirements? We feel we are in a good place. Vice President Pence recognized that and gave us a seat at the table. How do we make that into something good? How do we make our impact? We cannot make an impact if we are not publicly known. The timing is right for us to do a little more PR. We need to get our mission statement out there.
Fatih: For a couple with our background to come here with no English and no money, if we can survive and realize the American dream, anybody can do that. We have all these internship programs and efforts to inspire kids growing up, to show them that there is no limit. This is the country where you realize your dream. There is no better place to do it. That’s why we wanted to display Dream Chaser at the Space Symposium this year. It’s going to generate excitement and inspiration way beyond current programs. People will be exposed to it for the first time. They will be able to see it, touch it, feel it.
What is your mission statement?
Fatih: Our mission statement is: Dream, innovate, inspire and empower the next generation to transform humanity through technology and imagination. Dream Chaser is the vehicle that we use to do this. You can’t do this with a special defense system, a box that you build for DoD.
But Dream Chaser excites people at the international level. ESA signed an agreement directly with us. And the United Nations said it wants this. We have 84 countries signed up to do experiments. They want to have access to space.
That’s where we look at Blue Origin, Jeff Bezos’ kind of vision. That’s when we talked to him about making space accessible and millions of people going to space, doing experiments, finding the next-generation solutions and making Earth more green, moving heavy industry up there. All these ideas from mining an asteroid to finding new habitats for humanity and making Earth a better place are symbolized in this one vehicle.

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