Illustration by Nelson Aedo.

Illustrations by Nelson Aedo.

This article originally appeared in The Innovation Issue of APEX Experience.

APEX Insight: Airbus confirmed earlier this month that their new venture capital arm is officially up and running in Silicon Valley. Armed with $150 million to invest in startups, new digs in the geek playground and its own band of forward-thinking techies, the aircraft manufacturer is inventing the future of aviation. “Our investment and engagement through these new initiatives are key elements in the global transformation of our company,” says Tom Enders, CEO of Airbus Group.

No company innovates like a company that’s fighting for survival.

That truism is the basis of Silicon Valley’s transformation from the sleepy suburbs south of San Francisco to the center of the high-tech world. Back in the day, the US military was in an arms race with the then Soviet Union. Rather than go toe to toe and tank for tank, the Pentagon wanted to fight smarter. Top brass reached out to Fairchild Semiconductor, one of the only companies in the world at the time that could build silicon transistors.

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“What distinguishes the startup community is its focus on being bold regardless of risk and regardless of offending anyone,” Tom Enders, Airbus CEO at the AIAA Aviation conference last summer.

Thus began a symbiotic relationship between established industries and tech startups (and, while we’re at it, hipster coffee shops). That relationship has only strengthened over time as the airline industry leans heavily on the tech world to take in-flight entertainment and connectivity, check-in and even snack sales to the next level. Perhaps it was inevitable, but now we’re seeing airline companies dive directly into the tumultuous world of Silicon Valley innovation.

Thinking like a startup means working from a blank slate: What if you could just reinvent your entire industry, forget the legacy constraints? That outside-the-cabin thinking is just what airlines and original equipment manufacturers (OEMs) need in this highly competitive, low-margin marketplace, and Airbus is betting big on that very idea.

Airbus isn’t just competing with established aerospace companies; upstart startups like Elon Musk’s SpaceX have landed in the valley, as well as satellite launcher Planet Labs and drone-based mapping company Skycatch.

CALIFORNIA DREAMING

To future-proof itself, Airbus has booted up two new Silicon Valley ventures, both of which are firmly in the domain of the adventurous. To helm them, Airbus hired not only two Valley mainstays, but two disruptors.

Airbus Group Ventures is in the business of writing checks to the smartest young companies it can find. Its latest key hire is Tim Dombrowski, former partner at venture capital (VC) firm Andreessen Horowitz, and global director of Biz Dev at Hewlett-Packard. In leading Airbus Group Ventures, Dombrowski brings his deep experience to the complicated, high-stakes game of emerging-technology investment.

Thinking like a startup means working from a blank slate. What if you could just reinvent your entire industry?

Beyond just funding Valley startups, Airbus has taken an active role in shaping them by opening an innovation lab. The OEM’s startup incubator is sort of like a passenger experience version of the US Military’s Defense Advanced Research Projects Agency (DARPA).

Leading the Airbus innovation lab is self-described “complexity geek” Paul Eremenko, most recently director of Engineering for Google’s Advanced Technology and Projects (ATAP) division. His baby was Project Ara, a modular smartphone whose hardware components could be upgraded, rather than just tossed atop an ever-swelling landfill as the materials to build such phones become more difficult to source. A great fit, considering the length of time an aircraft must fly until it spends time in a desert boneyard. Its interior can be remodeled and retrofitted to make it more modern, but then it must fly again for many years in its current configuration. Before that? Eremenko worked for the actual DARPA.

“We are thrilled to welcome Tim and Paul to Airbus Group. Both bring tremendous experience in their relative fields and an entrepreneurial spirit that aligns with our vision for the Airbus Group Ventures fund and the business innovation center,” says Tom Enders, CEO of Airbus Group in a press release. “Our investment and engagement through these new initiatives are key elements in the global transformation of our company.”

VENTURE PLAYGROUND

Incubators are boot camps for startups, which take fresh-faced entrepreneurs and hone their ideas into something marketable – like a no-nonsense personal trainer for your fledgling business. Airbus will use the VC company and its innovation lab to bring new enterprises into its already established ecosystem.

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Airbus will use the VC company and its innovation lab to bring new enterprises into its already established ecosystem.

“Big corporations have visions; small startup companies have solutions,” says Sally Ann Reiss, founder and CEO of PlayyOn, employee number one of TiVo and founding director of BioSF. Having run a huge biotech incubator herself, Reiss is not new to the game. She’s intimately familiar with the dynamic that emerges when a bunch of kids, hyperactive and maybe too smart for their own good, get to run riot in the biggest playground they’ve ever seen. These makers and doers are free to do and make, but under a larger company’s auspices.

“Those incubators are showcases for the big companies to have a look at what’s going on in research and technology,” says Reiss. It’s like being on a reality show: You’re in unnaturally close proximity to your competitors and potential collaborators, and under the spotlights of mega-corporate scrutiny the whole time. Can you handle the pressure? That’s part of the test.

PEOPLE OF THE WORLD

A company is nothing without the minds that drive it, and Airbus knows this. One unique problem with staffing in Silicon Valley is that these tech workers are too good. You can’t hire them, because they can’t be hired. “There’s amazing talent here, but everyone wants to start their own company,” says Reiss. “Innovators and really clever business people want to invent their own things. The only way [big companies] can get access to that talent is to create an environment where they’ll come and play in their store.”

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Airbus is also courting the startup world in its hometown of Toulouse, France, with a biz dev gymnasium called BizLab.

Not content with California dreaming, Airbus is also courting the startup world in its hometown of Toulouse, France, with a biz dev gymnasium called BizLab, which will be the first of several across the globe. Airbus BizLab hit the ground running this past summer with an initial cohort of five startups. “The quality of the projects has made the selection process tougher than expected, which is good news,” says Bruno Gutierres, head of BizLab, in a press release.

Aside from wireless 3-D printing data transfer and ground system equipment provisioning technology, one product will stand out even to the layperson: Hong Kong-based Paperclip Design’s seat that can transform from a premium-economy seat to a lie-flat business-class bed. “The challenging phase of transforming ideas into reality begins, and we can’t really wait,” says Gutierres.

THE NEW NORMAL

Welcome to the new normal, says Reiss: “Everywhere I turn, everyone’s got an incubator! Disney has an incubator here in Palo Alto. I was like, ‘What?!’, but it’s one step past a VC. If you make progress, Disney might come in and fund you, or they might just buy you outright. Very fascinating, and very smart on the part of the big corporations. My guess is, Airbus is coming in and saying, ‘We’re gonna create a playground!’” Reiss reckons that the smart kids will come running. Just as today’s bachelor’s degree is yesterday’s high school diploma, participation in an incubator may well soon be a necessary phase in a serious startup’s life cycle.

“In some ways, these accelerators are like internships,” says Reiss. “They see if you can do what you say you’re going to do. If they like you, they’ll keep you.” Getting that sage nod of approval from a juggernaut like Airbus is high praise indeed, and perhaps the beginning of a blindingly bright future.

What, what did she say? Accelerators? “‘Accelerator’ just sounds sexier than ‘incubator,’” says Reiss with a laugh. Is it too late for a rewrite?

Jordan juggles deadlines across various time zones as he writes about travel, culture, entertainment, and technology.