Revisiting Apollo 1 in a Post-ZIRP World
What Startups can learn from the successes and failures of the Apollo Program.
“Eleven, ten, nine. Ignition sequence starts…”
In the summer of 1969, humanity reached its most significant milestone to date by landing a man on the moon with the Apollo 11 mission. This historic event represented the zenith of human ingenuity, setting a new benchmark for technological advancement. Behind the astronauts was a massive engineering undertaking and tone-shift following the failure of Apollo 1. We revisit Apollo 1, the lessons learned back in 1967 and apply it to our new Post-ZIRP (Zero Interest Rate Policy) world, where tech companies are under more scrutiny to build and grow faster with less. The free money party hosted by venture capital is over, and the board-demanding-profitability induced hangover is beginning to set in. The only way to achieve success now for some venture-funded Startups is tremendous change and hard work.
Overcoming Failure
The Apollo program was not always a resounding success. At the onset, Apollo 1 failed due to a catastrophic fire that took the lives of 3 astronauts. Gus Grissom, Henry H. White II, and Roger B. Chaffee. Tragically, they lost their lives when a fire overtook the cockpit during pre launch testing. The original engineers, in an attempt to optimize for weight, had made a critical mistake by pressurizing the craft with 100% oxygen, in turn making the capsule atmosphere extremely flammable. However, this critical mistake wouldn’t be the only one. Dozens of other issues painted a picture of organizational dysfunction, and lack of attention to detail by engineers and managers.
Astronaut Michael Collins, one of the three astronauts aboard Apollo 11, had critiqued North American Rockwell, the engineering company responsible for building the module. Specifically, he pointed out the poor culture surrounding the firm.
“There was a we-know-better kind of an arrogant attitude on the part of some of the managers, and it was a laid-back well, we’ll get done one way or the other sometime, somehow, attitude on the part of some of the workers. I think there was not the dedication to the extremely strong work ethic. Things like, building a good spacecraft instead of worrying about whether you were going to get your camper up into the High Sierras for the weekend.”
- Astronaut Michael Collins on the Engineers of North American Rockwell
That culture parallels many attitudes today born of the relaxed financial posture of the zero interest rate policy of the last ~15 years. While we prefer not to generalize, we look no further than the forums of Blind, a message board popular with tech workers, in search of such attitudes.
When hardship is overcome by throwing more money at problems, calluses never grow and the Carhartt’s get replaced with soft Patagonias. For more on how ZIRP has affected tech and venture from a financial standpoint, we recommend reading Gergely Orosz piece.
In our view ZIRP may have knock-on effects for some organizations used to the easy rounds, but aren’t quite there yet in terms of profitability.
“The pairing of decreasing deal count with sharply falling valuations tells one story: Late-stage investors are finding fewer attractive companies to back, and few (if any) companies are immune from the realities of a valuation reset.”
- Carta State of Private Markets Q3-2023
For more on the state of fundraising, we suggest reading the Carta State of Private Markets report of Q3 2023. It gives a great data-driven analysis on the state of fundraising.
We share Carta’s view that bigger, established venture-backed startups are having difficulty adjusting aperture to refocus on profitability and unit-economics. We ask the question, if I put 1 dollar into this business, would I get more than 1 dollar back in its current state? We believe a subset of venture backed startups are the equivalent of Apollo 1 capsules filled with 100% oxygen, dangerously close to critical failure.
Tough and Competent
Following the incident of Apollo 1, NASA overhauled everything. Gene Kranz, NASA’s Chief Flight Director at the time, called a meeting and gave a speech to NASA Launch Control staff, setting a new tone for the organization.
“From this day forward, Flight Control will be known by two words: Tough and Competent. Tough means we are forever accountable for what we do or what we fail to do. We will never again compromise our responsibilities. Competent means we will never take anything for granted. Mission Control will be perfect. When you leave this meeting today you will go to your office and the first thing you will do there is to write Tough and Competent on your blackboards. It will never be erased.”
- Gene Kranz
The “Tough and Competent” mantra became known simply as the “Kranz Dictum.” With it NASA effectively set a new bar for performance. Within a very short period of time, NASA positioned itself culturally to not only achieve greatness, but to prevent any failure of that magnitude from ever happening in the Apollo program again.
“The subsequent actions instituted some very, very sweeping changes – management changes, technical changes were made, that gave us a vehicle that was far superior to the one that they died in.”
- Michael Collins
We believe that the ability for some companies to adapt to the Post-ZIRP macro climate and return to the“tough and competent” days of early-stage scrappiness may be the defining question for shareholders and boards over the next few years. This means something different for every company, but in general, we see a few general areas for improvement:
Zoom Fatigue: We believe tech companies, in general, currently have an inflated managerial class due to excessive capital consumption during ZIRP. We believe the individual contributor (IC)-to-managerial staff ratio follows a law of diminishing returns. Too much managerial class often results in 5 to 6 meetings per day for individual contributors. A good manager is a force-multiplier for the team by advocating for engineers, and elevating high-performers. We suggest measuring the work-to-meeting ratio in hours. Select a sample of your ICs. Count how many un-interrupted 4 hour long blocks of time exist on their calendar to complete work. Can they work for four hours straight for at least four days out of the week? Deep focus is a substrate of excellence, and bureaucracy is the enemy of speed. “Let them cook” as they say.
Rest-and-vest: Sadly the days of Pool-side Project Managers posting “Day in the life working in Tech” TikToks are over. Although we found them entertaining, we had our doubts on how long that could last. As companies begin taking a magnifying glass to performance, attitudes may shift. After all, the Spicy Rigatoni at Carbone isn’t cheap!
Overengineering: During ZIRP, the checkbook was wide open for engineering teams. As much as software folks don’t like to admit, we love trendy new tech. A heavy salary incentive exists for technical IC to select trendy tech (ex. Kubernetes) when solving problems to gain experience in it. It comes at the expense of speed and complexity (and future tech-debt). Being at the bleeding edge can translate into new, higher paying jobs for those who learn the fancy new tools, but a limited talent pool, and expensive maintenance for the organization. We advise technical leadership post-ZIRP, to focus on speed-to-delivery using tried-and-true technology with deep talent pools, and knowledge redundancy across the stack. Save your “complexity points” for where it counts.
Founder-lead organizations often have staff from the “old days” of getting the company off the ground. We believe that companies will begin to tap into the energy of their scrappier earlier stages. With higher levels of equity at stake, founding teams are most incentivized to push change within the organization and accept the challenge. Engineers at Northrop Grumman accepted the challenge for NASA, and built the most complex part of the later Apollo spaceship, the Lunar Module (LM). The LM was responsible for undocking from the spacecraft, orbiting, landing on the moon, taking off from the moon and landing on earth. All while providing life support, comms, and a host of other critical mission requirements.
For Grumman, it was a pirate-like, engineer-lead culture that brought success to the LM project. Grumman engineers recall a mixture of dedication, stress, and collaboration during their time. Grumman Director and LM Chief Designer Thomas J. Kelly even developed a nervous tic as a result of the pressure to deliver a safe vehicle to NASA. But engineers mostly described a culture they fondly look back upon. A culture that was mission driven.
“I cried and I cried,” said Anthony Cacioppo, remembering the Apollo 11 milestones he watched with his colleagues at the former Grumman Aircraft headquarters in Bethpage, N.Y. Cacioppo, “And … today … I still cry about that experience,” he said, unable to hold back the tears. “It was a wonderful experience.”
- asme.org
To ensure their heroic efforts lived on, Grumman engineers added a plaque to the descent stage of the Lunar Module used in Apollo 11. NASA reluctantly allowed them to keep it on the final version of the LM. To this day, there are six descent stages somewhere on the moon that say “Made In Bethpage, N.Y.”
What will your plaque read?
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