Executive Suite: He's over the moon about space tourism

BOSTON -- Either selling outer-space vacations to wealthy business moguls is easy or Eric Anderson's a superb salesman.

Just 33, Anderson is CEO of the decade-old company Space Adventures, a Northern Virginia-based firm that sells space trips aboard Russian spacecraft to extremely rich private citizens. The price: $30 million to $40 million, depending on details of the trip. He's been the middleman in all five deals in which the Russians have delivered a tourist to the International Space Station and returned them safely.

When he first started the venture, he said while traveling here recently on business, "Everyone said, 'You're crazy.' " But Anderson's dad, a real estate entrepreneur, taught him to never take no for an answer, and he hasn't.

"I'm the only one who can get you a trip into space," he says while hurtling through Boston streets in a limousine on his way to speak at the Massachusetts Institute of Technology.

Driven by the love of outer space and of business deals, Anderson has demonstrated to skeptics that a market for private space travel exists. And while the initial fares to outer space are well beyond the means of the masses, it may not always be that way. Considering Anderson's fast start in the exotic business of selling space vacations, he may still be the one selling tickets when prices come into the reach of more ordinary folks.

George Whiteside, executive director of the National Space Society and an adviser to Briton Richard Branson's space-tourism-related venture, Virgin Galactic, credits Anderson with injecting excitement back into a languishing space movement by proving there's demand for private space travel.

"Orbital flight has really proven that space tourism is real," Whiteside says.

Space Adventures isn't your ordinary adventure-travel company.

The company operates with about 20 employees out of a modern office on the 10th floor of a 17-story tower in the Washington, D.C., suburb of Vienna, Va., not far from Anderson's home. It's filled with space memorabilia, including a suit used for spacewalks bought as surplus in Russia and toy light sabers. Anderson founded the company in 1997 with mentor and private-space-travel guru Peter Diamandis and adventure-travel pioneer Mike McDowell. It's privately held, with Anderson as the largest shareholder.

The firm initially offered flights aboard Russian MiG fighter jets, zero-gravity airplane flights and space-related experiences on the ground, such as VIP tours of Russian launches in Kazakhstan. It has dropped the MiG flights, but since 1999, Space Adventures has been selling trips to the Space Station aboard a Russian Soyuz rocket.

Space Adventures doesn't have a formal arrangement with the Russians for exclusivity. It's just the only company doing it. Recently, Space Adventures has been seeking to buy one seat on a Soyuz spacecraft for two flights a year when the Russians make that many available. The company has bought all the commercially available seats into 2009. It's in negotiations for all the seats available through 2011. The company hopes to be able to sell as many as 10 seats a year in 2012.

So far, five clients have taken the Soyuz trip, which lasts about 10 days. They launched into space after about four months of training, including continuous training in Russia for the final two months. Anderson says the time commitment — as opposed to the price — is the biggest obstacle for many potential customers.

The various ventures made Space Adventures profitable in about three years, Anderson says. He won't disclose specifics but says the firm has generated $200 million in revenue since inception with the bulk of it from the orbital trips. With all its products, the company serves about 1,000 clients a year, including corporate clients who sign up for team-building exercises based on astronaut training.

Before the first countdown

In a one-of-a-kind deal that broadened the company's scope and revenue potential about seven years ago, Space Adventures reached agreement with the Russian Federal Space Agency to buy seats on Soyuz for resale to private citizens. The move made Space Adventures the world's only outer-space-tourism company.

At the time, the Russian space agency was desperate to generate cash because Russia's economy had collapsed and the agency couldn't even afford to pay its workers, says Anatoly Zak, an expert on the Russian space program and publisher of RussianSpaceWeb.com, who now lives in New Jersey.

"They needed a travel agent who could do the marketing for them," he says.

What helped clinched the deal, Diamandis says, was a 50-page market study that Anderson helped the Russians finance so they could understand how much money was at stake. "The study gave Eric the ability to go and market the first seat, which was fantastic," he says. "That opened up a new way of thinking."

At MIT, Anderson doesn't appear nervous as he prepares to speak to about 300 technology executives, academics and students at a conference. It helps that he'll be talking about space, his favorite topic.

Dressed in light-gray jeans, a gray suit jacket and a white long-sleeve shirt, Anderson looks more like an engineer than the standard CEO. He's an intense, bespectacled guy who appears more mature than his 33 years. He explains the science-fiction-like world of today's space travel matter-of-factly. But at the same time, you get the feeling that when no one's looking, he pinches himself to make sure this is real.

For years, he says, he had to endure what he calls "the giggle factor" when he told people what he did. And, he says, the Russians he deals with still think it's funny how he finds people willing to pay millions for a space trip.

His wife, Inessa Anderson, understands those giggles. Some of her husband's ideas "seem crazy or insane" — so much so that sometimes they make even her laugh.

But, she says, he's shown the ability to take a crazy idea and make it real. "He'll be the one laughing in the end," she says.

Growing up in Littleton, Colo., Anderson fixated on becoming an astronaut. Star Trek fascinated him. He yearned to become the first person on Mars. But poor eyesight ruined his chances of passing physical exams to get into the Air Force to pursue his dream.

He studied aerospace engineering at the University of Virginia and admits to being a "geeky engineer" who earned straight A's. On campus, he started a chapter of Students for the Exploration and Development of Space.

In 1994, while still at UVA, he interned for Diamandis when his future business partner was organizing the $10 million X Prize for the first private-sector manned space flight. Microsoft co-founder Paul Allen and aviation designer Burt Rutan won the prize in 2004. Diamandis says he immediately saw Anderson's talent and potential.

"You meet people in life that you instantly know that you're going to be friends with and (who) are brilliant," Diamandis says of Anderson.

Drawn to entrepreneurship

After graduation in 1996, Anderson joined a software firm in Bryn Mawr, Pa., developing new software for space missions. He quit a year and a half later, drawn to entrepreneurship.

"I wanted to create a business and not simply write software for somebody else's business," he says.

Through Diamandis, Anderson met McDowell, the adventure-travel pioneer who'd worked with Russians setting up trips such as exploring the ocean floor in a submarine. In 1997, Diamandis, McDowell and some other investors put up about $1 million to start Space Adventures.

Anderson, then company vice president, operated it out of his townhouse in Arlington, Va. That lasted until his homeowners association hassled him about running a business from a residence.

At the beginning, Anderson buried himself in the annual Forbes magazine list of 400 billionaires to identify more investors.

"It's difficult to find these people and even more difficult to get in front of them," he says.

The deal that further changed Space Adventures' prospects came in 2000, when Anderson and Diamandis went to Santa Monica, Calif., to meet financial titan Dennis Tito, CEO of Wilshire Associates. Tito had been a NASA engineer, and Anderson figured he'd be a good lead as a potential investor in Space Adventures.

But Tito didn't want to invest. He wanted to go into space. Tito signed on as a client and went into orbit in 2001.

Anderson regularly worked 16-hour days on developing the company, he says. He often bugged his employees at night on the phone because "I just assumed they were working, too."

In the limo, Anderson juggles a conversation with a fellow passenger with e-mail checks and cellphone chats with his investment banker, Diamandis and his newest client, computer game creator Richard Garriott, who plans to make the Soyuz trip next fall.

Anderson insists he's mellowed since the early days of Space Adventures, and there's some evidence he has.

In 2005, Anderson married Inessa, a former concert pianist born in Russia, and their first child was born a year ago. He talks to his wife by phone throughout the day from Boston, calling her "sweetie." At one point, he instructs her on how to fix her computer. "Plug and unplug the router. It's the blinking thing on the wall," he says.

He shelved the 16-hour days and weekend work so he can spend more time with his family. He usually puts Luke to bed. He's even planned three overseas family vacations later this year: St. Barts, Italy and Argentina. They've already gone to Spain.

Besides the birth of Luke, Anderson found another reason to rethink priorities this year. In April, his stepdaughter, Kristina Anderson, 20, a student at Virginia Tech, was shot in the back during the shooting rampage there. She has since recovered.

Anderson has a personal connection to America's other big shooting rampage at a school: He's a graduate of Columbine High School in suburban Denver. He graduated in 1992, six years before the 1998 shooting.

Of the Virginia Tech experience, Anderson says: "It makes you think that family is the most important thing in your life. Every entrepreneur should keep that in mind."

As soon as Anderson finishes speaking at the MIT conference, his most recent outer-space client, Charles Simonyi, greets him. He shakes hands with Simonyi, lead developer of Microsoft Word and Excel, and the two agree to get together soon.

Simonyi attests to Anderson's sales skills when asked what prompted him to sign up for a $35 million space trip taken in April. "He knew I wanted to go before I knew I wanted to go," says Simonyi, 59.

An amateur jet pilot, Simonyi for years had loved visiting NASA's Johnson Space Center in Houston and the Cape Canaveral launch site. So when he heard that Space Adventures was selling tours to view a launch of a Soyuz spacecraft in Kazakhstan, he signed up.

After a second such tour of Star City, Simonyi says he still had doubts about going to space. Anderson persuaded him to undergo medical checkups and take training that included simulation of weightlessness and exposure to the high pressures he'd encounter in space travel. When Simonyi passed everything in August 2006, "Eric said, 'We have a seat in spring 2007.' " In five minutes, Simonyi said yes.

Simonyi says he loved the trip.

Only the beginning

For now, Anderson continues to work on more Soyuz deals, as well as other business plans that he refuses to divulge. When he interviews an MIT doctoral student about interning for him in January, he tells him that he'll have to sign a legal form promising secrecy.

Upcoming client Garriott may take a spacewalk, which would generate more revenue and publicity for the firm. Anderson is also negotiating with several people who want to be the first private citizens to orbit the moon at close range.

For Anderson, tourism is only the beginning of space development. He believes space can eventually be commercialized, opened to more private citizens, and used to help Earth deal with dwindling resources.

Greater demand for space travel puts earthlings such as Anderson closer to realizing their Star Trek-style dreams, such as mining asteroids and colonizing the moon and eventually Mars. Anderson keeps a model of Mars in his office to remind him of the future.

"The market, entrepreneurship and investment in this industry have all accelerated," Anderson says. "A lot of interesting things will happen over the next 10 years."

At some point, perhaps when baby Luke gets older, Anderson plans on going to outer space himself. Maybe even to Mars, if he's lucky.