
Boom (YC W16) signs $2B letter of intent with Virgin, $5B total - lacker
http://techcrunch.com/2016/03/23/boom-the-startup-that-wants-to-build-supersonic-planes-just-signed-a-massive-deal-with-virgin/
======
brenschluss
Wow, who's doing the marketing? Pretty savvy. If they had launched with this
notice, we'd be thinking, "Oh cool, Virgin's making a supersonic airplane with
some company!"

Instead, with this tiered announcement: Three days ago, nobody knew about
Boom. Within the last two days, they have lots of new press, and and thus lots
of skepticism. Today, they 'announce' an effective endorsement with Virgin.
Brilliant.

~~~
xanadohnt
Yeah, I didn't agree with the name criticism either. For the small sample of
us techies, sure, it has some negative associations (but even still not
significantly so). For most, however, it's positive: _Boom_ , drops the mic;
Sonic boom, something good in the technical advancements of achieving great
speed; and great for a simple, easy to remember, evocative brand name.

~~~
peachepe
Why does it have negative associations for us techies? It sure doesn't for me.

~~~
mikeryan
In the previous thread some associated "Boom" with "Something blowing up"
which wasn't perceived as a great name for a plane.

~~~
zdean
Yeah, I thought it was a horrible name in light of the fact that the last
supersonic jet program was permanently grounded because of a crash.

[https://en.wikipedia.org/wiki/Air_France_Flight_4590](https://en.wikipedia.org/wiki/Air_France_Flight_4590)

~~~
aptwebapps
That just moved things up a bit - they were already winding it down.

------
paulsutter
Title misleading. The relationship is opposite what's implied. Boom will be
hiring Branson's "The Spaceship Company" to do engineering, and Virgin gets an
option to buy the first ten planes.

Granting an option means Boom has given something to Virgin, not the other way
around.

> a Virgin Group spokeswoman confirmed their plans to The Guardian: “We can
> confirm that The Spaceship Company will provide engineering, design and
> manufacturing services, flight tests and operations and that we have an
> option on the first 10 airframes. It is still early days and just the start
> of what you’ll hear about our shared ambitions and efforts.”

EDIT: Let's hope that we hear Virgin is making a big investment in Boom soon,
that will be a stronger indicator. If Virgin really had substantive interest
in the planes, and Boom was actually experiencing demand, Virgin would have
had to PAY MONEY for an option.

~~~
nostrademons
My interpretation is that this is pretty standard LOI-speak. The reason it's
an _option_ is because Virgin is under no obligation to buy the first 10
airframes: LOIs are usually non-binding and contingent upon the company
actually delivering what they've promised, which means Virgin can back out if
Boom can't actually deliver on the promised specs. But the money is still
flowing from Virgin to Boom.

The bit about the Spaceship Company seems to be systems-integration, not
hiring out the full engineering department. If you've ever sold enterprise
software, usually a deal with a big company includes a commitment on the part
of the customer to provide engineering & testing resources to integrate the
new product. For something huge like an SST, they need to ensure it meets
Virgin's safety specifications, they need to make sure it can interface with
Virgin's maintenance department, they may need to alter the design to meet
noise requirements from airports Virgin operates from, and all other sorts of
little engineering tasks. These all require engineering resources from the
customer, not just the seller.

~~~
foobarqux
No, because the issue here isn't whether there is a desire for the product,
which is what the LOI demonstrates, it is whether the product can be built.

Put another way, Boom won't have trouble selling their plane if they manage to
build it, and the only point of the LOI is to put Virgin and Boom on the front
page of every news outlet tomorrow.

~~~
notahacker
I argued yesterday that Boom would probably have more trouble selling a
supersonic aircraft in sufficient quantities to break even than building it,
and I haven't changed my mind.

I think you're quite right about the LOI mostly being for the publicity, but
from the opposite perspective: I don't think the market for a new player
offering a product highly specialised towards transatlantic all premium
flights is actually that big, and enthusiastic noises made by an airline run
by the British equivalent of Elon Musk who made similar noises about
resurrecting Concorde doesn't really change that.

(Related prediction: the undisclosed LOI turns out to be from Odyssey Airlines
whose _proposed_ business model is perfectly suited to supersonic business
class jets, but at present have nothing but a massive binding commitment with
Bombardier and some small change from crowdfunders.)

~~~
jpatokal
For anybody else needing more context for the last paragraph:
[https://en.wikipedia.org/wiki/Odyssey_Airlines](https://en.wikipedia.org/wiki/Odyssey_Airlines)

------
Certified
Maybe I am misinformed but I was under the impression part of the reason
concorde was retired is because at those speeds you tear up the ozone.

"From their particle measurements, the authors of the Science study calculate
that a future possible fleet of 500 supersonic passenger aircraft will
increase the surface area of particles in the atmosphere by an amount similar
to that following small volcanic eruptions. In mid-latitude regions, such
emissions have the possibility of increasing ozone loss above that expected
for nitrogen oxide emissions alone. The increase in the number of particles
may also affect the ozone-related processes occurring on wintertime polar
stratospheric clouds (PSCs) in the polar regions."

-[http://www.publicaffairs.noaa.gov/pr95/oct95/noaa95-65.html](http://www.publicaffairs.noaa.gov/pr95/oct95/noaa95-65.html)

~~~
ghaff
>Maybe I am misinformed but I was under the impression part of the reason
concorde was retired is because at those speeds you tear up the ozone.

That really wasn't a reason for the Concorde's retirement. It was an old
plane. It was marginal economically. It had a fatal accident. And then, just
as it was returning to service, the travel slump after 9/11 happened.

Environmental opposition was one factor in the cancellation of the Boeing SST
program. Although the bigger one was almost certainly that it didn't make
economic sense.

~~~
Certified
>It was an old plane. It was marginal economically. It had a fatal accident.
And then, just as it was returning to service, the travel slump after 9/11
happened.

I agree that all those are the primary retirement factors but I did not want
to bring them up as they where being discussed elsewhere in the comments.

I'm interested to see that people where complaining about the potential of
Concorde stratospheric pollution all the way back in 1972[1]. Maybe it was not
so much a reason for retirement but one of the many reasons the concorde
received such a poor public reception in the 70s. I think Boom has some
serious hurdles ahead of them in this regard. Environmental regulations have
done nothing but grow since the 1970s and many countries where outright
banning the concorde from their airspace then.

[1][https://upload.wikimedia.org/wikipedia/commons/6/61/ACPTimes...](https://upload.wikimedia.org/wikipedia/commons/6/61/ACPTimes.jpg)

------
onion2k
Awesome as this is, there's something largely outside of Boom's control that
could derail their plans. When Concorde was ready to fly the British and
French governments (who paid for the plane's development) had to negotiate
with New York for permission to land there. There were concerns about the
noise - not sonic booms, just general plane noise, because Concorde was
"loud". The problems were actually political ones because Concorde wasn't
American. Boom will have to do the same, but London has some _really_ bad
NIMBY issues with airports and the expansion of Heathrow at the moment.
Problems that will probably continue for decades. If the anti-expansion
environmental lobby groups can block this, and they see it as politically
useful to do so, there will be _a lot_ of negotiating to wade through.

~~~
meddlepal
This could be a gain for other cities though. If NY puts up a fuss then what
about Boston instead? Same problem for London. Just don't go to Heathrow.

~~~
alextgordon
This has the same problem as hyperloop, then. Sure the main part of the
journey is quicker, but if you have to take a connecting flight from New York
to Boston, _and_ a train from Luton to London, it's overall slower than a
subsonic plane.

------
abalone
I'm disheartened there's no mention of carbon footprint or sustainability.
With all the great focus in our community on sustainable land transport
(Tesla), data centers, solar and neo-nuclear power, etc., here we have a
startup that markets this:

 _" imagine leaving New York in the morning, making afternoon meetings in
London, and being home to tuck your kids into bed."_

That is a terrible thing to enable from an environmental impact standpoint.
While air travel can be somewhat more efficient per mile than driving alone in
a gas car[1], the distances it enables you to travel are vastly greater.
Further upping the convenience factor would no doubt encourage more "binge
flying".

Perhaps Boom is more efficient than typical airplanes. Perhaps it's less
efficient. Perhaps it could make planes that travel at the same speed but at
half the carbon footprint. We wouldn't know from this. It's not part of the
story.

Let's change that. Let's make sustainability as important a consideration with
airplanes as it is with cars.

[1] [http://www.yaleclimateconnections.org/2015/09/evolving-
clima...](http://www.yaleclimateconnections.org/2015/09/evolving-climate-math-
of-flying-vs-driving/)

~~~
T2_t2
Hmmm... Aren;t the two separate? Carbon neutral is going to be almost
impossible with flight. Why don't we split the two (carbon output and input)
into two fields?

------
maxxxxx
I would be extremely impressed if they could pull this off. Developing a
supersonic passenger plane must possibly be one of the most expensive and
complex things to do. Probably harder than what SpaceX does.

~~~
meritt
You know we've had supersonic passenger jets since 1969, right? It just wasn't
cost-effective.
[https://en.wikipedia.org/wiki/Concorde](https://en.wikipedia.org/wiki/Concorde)

SpaceX has brought reusability to space travel. That's slightly more
impressive than a fast airplane.

~~~
jcoffland
Yes and one went boom in 2000 killing everyone on board.
[https://en.m.wikipedia.org/wiki/Air_France_Flight_4590](https://en.m.wikipedia.org/wiki/Air_France_Flight_4590)

The only reason this idea is even being entertained right now is because oil
prices are so low. As soon as the oil producers are finished crushing this
round of alternative energy companies oil prices will go back up and Boom
won't sound so good.

~~~
sandstrom
Other airplanes have crashed too. I think it was deemed a fairly safe
aircraft, they had some trouble with tyres, but that shouldn't be impossible
to resolve.

~~~
notahacker
It was retired from service largely because the accident was attributed to a
critical design flaw.

Sure, that was the only ever Concorde crash, but then they really didn't fly
very much compared with conventional aircraft. There are _individual_
commercial aircraft that logged around as many flight cycles as the entire
Concorde programme without incident.

~~~
sandstrom
I know they have recurring problems with tyres (and I'm sure they had other
design flaws too).

But afaik the main culprit in the crash was a piece of titanium that fell off
from another airplane and was left on the runway. This metal-piece cut into
the tyre and caused an explosion.

------
samfisher83
Just for some context 787 cost $32billion dollars to develop.

~~~
jcfrei
Most important figure here. How could a "startup" design and build a
_commercial_ airplane and still be considered a startup? Either they get
acquired before launching the final version of their plane or the company goes
bust. The margins for building airplanes are very slim, both Airbus and Boeing
get massive subsidies from the EU and US respectively. Which investor would be
crazy enough to pour billions into the development of such a plane? And don't
even think about mentioning SpaceX - building a rocket is orders of magnitude
less complex than building a commercial airliner that meets customer's
standards, is commercially viable and safe. In contrast spending tax payer
money on rockets (which are allowed to fail every now and then) is easy!

~~~
jessaustin
There isn't a chance in hell that _after_ producing a supersonic prototype,
these people _wouldn 't_ also get massive subsidies and investments. Still,
right now they're a startup.

------
vannevar
If building a supersonic passenger plane with an existing engine was viable,
it seems like somebody would already be doing it. Which means it's probably
not viable, in which case Boom is an aircraft engine company first and
foremost; once they have the engine, wrapping a plane around it should be the
easy part, relatively speaking. Developing a new engine costs on the order of
$1B, so the development cost for the whole plane would probably be between
$1.5-2B. So they'd pay for that with their first 10 planes to Virgin, with
maybe some money left over to change their name.

~~~
andy_ppp
Can you not just make the plane smaller and lighter and more aerodynamic and
use a larger engine? You may also be able to show that current engines can
operate at higher energy levels for longer?

~~~
ethank
Doesn't work like that. They want to use a J28D engine modified for super
sonic flight. That engine was designed to power MD80's.

~~~
neurotech1
Its the intake design that makes the difference for supersonic performance.

JT8D [0] is based on the J52 engine that powered the A-4 Skyhawk, and a
related design is the RM8 [1] that powered the M2.0+ SAAB Viggen.[2]

[0]
[https://en.wikipedia.org/wiki/Pratt_%26_Whitney_JT8D](https://en.wikipedia.org/wiki/Pratt_%26_Whitney_JT8D)

[1]
[https://en.wikipedia.org/wiki/Volvo_RM8](https://en.wikipedia.org/wiki/Volvo_RM8)

[2]
[https://en.wikipedia.org/wiki/Saab_37_Viggen](https://en.wikipedia.org/wiki/Saab_37_Viggen)

------
kafkaesq
So what's the carbon impact (per passenger-mile) of the service Boom is
proposing (compared to regular air travel) again?

I'm not sure this is something to cheer, just because it's new and shiny (and
because it appeals to tech types who fancy they'll finally get to afford a
ride on one of these contraptions, some day).

~~~
elbigbad
$5,000 for the trip isn't a huge leap for typical business class to London.
Economy alone is usually like $1,200-1,500rt. This isn't some huge exorbitant
leap like costing $30k for a first-class trip. It certainly doesn't come close
to elite "tech types" being able to afford it "some day" like trips on the
Virgin SpaceShipOne will.

I think many companies depending on situation will consider this worth it for
the quick flight. It certainly doesn't strike me as something that people are
excited about just because it's "new and shiny." It adds actual utility to get
key players to certain locations on short notice.

In any case, despite it holding fewer passengers than a Boeing 787 or
something, I would bet that drastically decreasing flight time goes a long way
toward bringing the carbon impact more in line with a typical flight of the
same length.

~~~
kafkaesq
Did you understand my question?

I was referring to CO2 impact, not price.

~~~
bencoder
My uninformed understanding/guess: Flight is low margin and fuel is the
primary cost. So you can make an estimate of the CO2 impact; if the average
seat price on a normal airliner for that journey is $1000 and the average seat
price on this aircraft is $5000 then I think you can say it's approximately 5x
the impact.

Happy to be shown wrong, this is complete conjecture.

~~~
kafkaesq
That would seem to make sense, to a first order approximation.

But there may be other factors to consider: type of fuel that gets burned (and
how it is burned); how long it stays in the upper atmosphere (possibly at
higher altitudes), etc.

------
haberman
I don't know the first thing about how a business in the space operates. Can
someone fill me in on why a startup like this would go through YC? How are
$120k and Silicon Valley connections going to help a startup in this space in
the slightest?

~~~
jzwinck
We are all here reading and thinking about it. And SV taken as a whole eats
its own dog food: I was amazed the first time I worked with a YC company how
many other nearby startups they used as vendors.

If you think about Boom as part of an ecosystem, they will eventually need a
large number of companies to buy seats on their planes. As with Concorde, only
a minority of seats will be saleable to individual consumers. Now Boom,
they're here, getting name recognition at hundreds of SV companies, some of
which will have offices in London, Singapore (where Concorde also briefly
flew), etc.

------
oniony
Letter of intent. Not a contract. The article is speaking like it's a done
deal.

~~~
dandermotj
The article first states that they've optioned a purchase - so I assume
they've purchased some sort of call option and Boom are the issuers which
would mean that some money has changed hands.

~~~
D_Alex
I doubt any money has changed hands (if it has, Boom would trumpet the
figure). This is a pure publicity move for both Boom and Virgin. I doubt, tbh,
that Virgin rates highly the chances for this to succeed, but they lose
nothing by saying that _if_ the plane is as magnificent as promised, they will
buy a bunch.

~~~
dandermotj
If they purchased an option then Virgin paid for it. Optioning purchases is a
common instrument traded in aviation finance. The option to buy this aircraft
at some point in the future at a price specified today is worth a lot. The
fact that it's a moonshot only means the price of the option would be reduced.
_If_ the plane is as magnificent as promised, Boom's order books will be
filled for decades and other airlines will be second in line to Virgin.

------
nerdy
They got $5bn in LOIs, a new YC record:
[https://twitter.com/sama/status/712705887853383680](https://twitter.com/sama/status/712705887853383680)

~~~
ryana
That's awesome.

$200M per delivery seems a little tight to design and build 25 planes from
scratch (the latest version 787 is ~$300M for comparison) but I'm sure they
have smart people working on it.

~~~
Jtsummers
The 787 was almost as bad as the F-35. Somewhat different problem, though.
Theirs was the issue of too many subcontractors with subcontractors with
subcontractors and poor control over manufacturing. They literally bought
companies that made the parts because they:

1) didn't have the manufacturing means themselves;

2) couldn't control the quality enough via contract measures.

That significantly drove up the cost of the 787 project. Someone really needs
to do a good write-up on these two projects as today's version of the
_Mythical Man Month_ and similar texts.

~~~
bazqux2
A subcontractor can make way more money by internally making parts of
substandard quality to ensure they get bought.

~~~
Jtsummers
This was not deliberate in the cases I'm thinking of. This was a lack of
quality control due to the extreme distributed design and development approach
Boeing chose with the 787.

------
frenchman_in_ny
I love what these guys are doing, but I find it odd that they're using an
actively registered tail number (N22BT) in their mockup images.

------
rory096
This is _awesome_. Great counterpoint to all the naysayers and middlebrow
dismissals on Monday. I'm pumped to see this thing fly.

~~~
FussyZeus
I'd love to have more startups like this to watch, people solving REAL
problems and making REAL things, not just a new social thingy or toy for bored
suburban residents.

Plus I always wanted to fly on the Concorde but the fleet retired before I got
the chance.

~~~
imjustsaying
"toy for bored suburban residents" \+ "Plus I always wanted to fly on the
Concorde" = flying on the Concorde as a toy for bored suburban residents?

~~~
FussyZeus
As I recall the majority of passengers on the Concorde flights were
businesspeople, the pricing made it prohibitive to regular consumers. But yes,
to me it would be a cool experience to save the pennies and get a ticket.

------
rdl
Boom is probably my favorite new company in a long time. I wish there were
infosec concerns :)

~~~
jessaustin
I can picture the Mandiant APT press release already...

------
altotrees
Read about Boom a few days ago, thought this could be a cool idea years into
the future, with the right backing.

Today, realize that most things happen a hell of a lot faster than I expect.

------
rgovind
What is the importance of an LOI? Its non binding. So why does it matter,
except as a PR exercise?

~~~
inopinatus
They're not completely useless, because they can move a negotiation along a
step e.g. by ensuring exclusivity, or agreeing on language in subsequent
negotiations. PR side effects aren't empty either: investor confidence can
keep a struggling firm alive; or for manufacturers, having a LOI in hand may
be beneficial to your supply chain relationships.

A word of warning though.

Anyone who thinks a LOI violation isn't actionable hasn't met bigco lawyers. I
was taught long ago to basically treat LOIs as purchase orders. They are hard
to make completely nonbinding. Whether an LOI, a MOU, or a HOA; all such
preliminary agreements fall into basically the same category of potential
legal time bombs. An imperfectly drafted LOI may be treated as billable by
some parties, with all the actionable response this implies if you withdraw
from the arrangement.

So someone asking you to sign a LOI or similar preliminary agreement who
suggests "Oh it's just a letter of intent" is probably taking you for a chump.
Do not sign without very good legal advice, and (unless you are an excellent
lawyer) never attempt to write one yourself.

~~~
rgovind
Interesting. Thanks for the clarification/inputs.

------
nbevans
The article describes Concorde as "ill-fated". Is that accurate?

~~~
mikeyouse
I mean, they only built 20 planes in total, so 5% suffered catastrophic
failures with complete loss of life. Over the life of the program there were
numerous 'near-misses' with rudders and control surfaces breaking off the
plane at >Mach 1. The tire problem that brought down AF4590 wasn't an isolated
incident whatsoever, there were dozens of blown tires including at least one
other one that punctured a fuel tank and nearly brought down that plane. So
yeah, 'ill-fated' seems fair.

~~~
Retric
Only 14 entered airline service, but they made it from 1976 to 2003 which is
not that bad.

For comparison 3% of 747's (53) have been a total hull loss. But, the Boeing
707's had 17% hull-loss occurrences and 246 major aviation occurrences out of
1,010 built (172) which is arguably a better comparison.

------
mathattack
In a prior thread I asked about how they would get the funding they need
straight out of YC. I guess this is the answer!

------
forrestthewoods
Yesterday: Hahaha what a stupid company name! What a bunch of idiots!

Today: Oh shit

