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Boom (YC W16) signs $2B letter of intent with Virgin, $5B total (techcrunch.com)
428 points by lacker on Mar 23, 2016 | hide | past | web | favorite | 165 comments

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.

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.

There's also the example of Steve Jobs. He used the word 'boom' quite a bit in keynotes (silly compilation at https://www.youtube.com/watch?v=Y38Sb3FOYmY), always with the positive connotation of 'get results fast'. I don't remember anyone ever making a remark that it had negative connotations.

On the other hand, if this becomes a successful company, it is inevitable one of their planes will go boom in a negative way one day, and that day will see quite a few bad jokes. Will that permanently damage the brand? That, I think, is anybody's guess, and may not be caused by the name. 'MH' didn't have any connotation positive or negative a few years ago, but I expect it will be a few years before anybody considers using that airline abbreviation again.

Concorde had a fatal crash... but then they went out of business (er their division was dropped?) -- but everyone wants faster than sound transport between continents. I doubt BOOM will ever be a detracting brand issue.

> I doubt BOOM will ever be a detracting brand issue.

I dunno, it could turn against them if they have reliability issues. "BOOM is the sound their planes make when exploding on takeoff", etc.

Aren't Malaysian still using the "MH" designation?

You are right. I thought Malaysian had stopped operations, but Google tells me it was nationalized and Wikipedia that their subsidiary MASwings uses the code.

Malaysia are still in almost full operation. They never stopped using MH. There are currently 37 MH flights in the air at the moment according to FlightRadar.

It's an example of Antonin Scalia's advice to "yield indefensible terrain---ostentatiously":

    Rarely will all the points, both of fact and law, be in your favor. Openly
    acknowledge the ones that are against you. In fact, if you're the appellant,
    run forth to meet the obvious ones. [1]
[1] Dan Slater. "Scalia and Garner: 'Yield Indefensible Terrain---Ostentatiously'" in The Wall Street Journal Law Blog, April 29, 2008.

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

The first thing that came to my mind was sonic boom, which made me think of Guile from Street Fighter II, who was one of my favourite characters. It also reminded me of my dad describing the sound of sonic booms as jets passed overhead (he lived fairly close to an air force base).

Then I read more comments here and now I think of crashing and death :-(.

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

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.


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

Was it not grounded due to Airbus ending their support agreements?

Makes me think of the challenger disaster [1]

[1] https://en.wikipedia.org/wiki/Space_Shuttle_Challenger_disas...

One of the difficulties Concorde had was the sonic boom, drawing attention to it doesn't seem wise.

Talk about 0-100 real fast in terms of media. I wonder how long they were in development for before this.

Yeah! I guess the bad name that was criticized here a few days ago didn't stop them! I think it's very nice to see that kind of involvement so early from virgin and co!

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.

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.

"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."

...unless the deal is an LOI on something so far in the future than it's (effectively) meaningless, coupled with an agreement to pay the LOI-signer for real-world engineering services, today. Then the money is flowing the other way, as the OP said.

The finances aren't actually clear from this announcement, but the TechCrunch headline (and some of the reaction here) is certainly credulous. A LOI for an unbuilt airplane is essentially just validation that airline companies would like to have an cost-effective supersonic airplane, if it's possible to create one. I think most reasonable observers know that's true -- they just disagree on whether it's possible.

That's exactly what it is. And now they're going to take these LOIs to Kleiner Perkins, Sequoia, a16z, Fidelity, and any other money manager, say "We have $5B in signed LOIs for a Mach 2.2 airplane. Would you like to help us build it?", raise a few hundred million in capital, and then hire a lot of bored aerospace engineers out of Boeing, Lockheed, and Airbus to actually make it a reality. Or try, at least. If they can't build it, the financiers are out their money, but that's a risk they willingly bet on, and by getting the LOIs Boom has de-risked the other serious problem.

Before the late 1970s, this is how most businesses were created: big-talking entrepreneur promises something awesome to customers, signs them up, uses that promise to get money from financiers, uses that money to recruit the specialized talent that will actually build the product. Software threw a monkey-wrench into that, because having more people is actually a disadvantage when building v1 of a software product. But in many industries, the only way you can make progress is by lining up a number of commitments from people, all of whom bring something different to the table, and then hoping you can work out all the details later.

Yeah, I agree that it's smart marketing. It might even work. It's still quite a long-shot that raising VC-scale money will get you to a working supersonic jet. But hey...better (for society; not necessarily the fund LPs) than investing in the newest SMS-based, on-demand food delivery service for dogs!

That said, I don't agree with your second paragraph. Investors didn't suddenly lose (or gain) the ability to evaluate technical risk in the late 1970s. There have probably always been big-dream pitches as long as there have been investors, but most businesses started small, and grew. If anything, the throw-money-indiscriminately-at-a-dreamer style of investment probably became more popular since the rise of Silicon Valley, not less.

In this particular domain, all of the big players started tiny, grew off of government largesse, or both. The risk is entirely on the execution and feasibility side of the equation. And a statement from an airline that they'd like an affordable, practical supersonic jet is of nearly zero information. I, too, would like a goose that lays golden eggs.

As an industry outsider, it wasn't obvious to me that their business plan was viable, even if the technology panned out.

They want to charge $5,000 for a round trip between NYC and London. That's at least 5x the cost of getting a normal economy trip, if you buy early. Certainly, there are people who would pay that much to save time (~$600 per hour saved), but is the market big enough for many planes, running 24 hours a day? Most people aren't willing to pay a couple hundred extra dollars for first class, let alone a few thousand.

The LoI means investors don't have to trust their market judgements. An airline is going to buy the planes and bear the risks regarding how much customers will pay. The remaining questions are technical. I'm sure the technical side is the vast majority of the risk, but it seems like a nice simplification for them.

"The LoI means investors don't have to trust their market judgements. An airline is going to buy the planes and bear the risks regarding how much customers will pay."

You're dramatically overstating the power of a letter of intent.

It's fairly routine for purchase options to fall through in the world of big jet purchases. The Concorde program itself had over a hundred options after announcement, from a bunch of big airlines, but ultimately sold only 14 jets. These are just options, after all.

This announcement is probably most useful in that it gets them some press on demo day, indicates that there's still customer demand (however tentative) and that these guys aren't total chumps, and last but not least, makes a bunch of credulous investors think about the big-B number and see dollar signs blinking in front of their eyes.

I don't think it generally is just a couple hundred extra dollars for first class for NYC <-> London...

I checked some BA flights in April, and the same flights went from down to <$400 for economy, $2500-$3600 for business, and up to $7700 for first.

Some of those flights don't even have economy seats so your choice of fights is actually greater for business (BA flies some 32 seat business-only flights out of London City Airport using the old Concorde BA001 flight code with extra short checkin time, and immigrations pre-screening at Shannon)

$5k doesn't seem given the amount of business and first class seats currently available on NYC <-> London. Consider that they're by no means the only airline doing that stretch either.

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.

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.)

For anybody else needing more context for the last paragraph: https://en.wikipedia.org/wiki/Odyssey_Airlines

It's the issue to us, who are random bystanders on an Internet forum without any skin in the game. It may not be the issue for other key resources that Boom will need to accomplish this.

Imagine you were an aeronautical engineer inside, say, Boeing who had discovered a way to control or reduce the sonic boom generated by a supersonic aircraft. You can't get permission from your boss to investigate this further and run actual field trials - the higher-ups have already decided that Boeing is not going to be in the SST business, so why waste money on it? You have a family to feed and only one life to live, so if you jump ship to another job, it better be one where your invention will actually make it to market. By getting LOIs from customers, Boom has something to show to both investors and prospective hires so that the portion of the risk that is outside of their control is mitigated. That matters a lot - as an engineer, one critical thing I look for when joining a company is whether the founders and salespeople are doing their job and ensuring that my work will actually be valuable to customers.

Remember that different people all have different pieces of the puzzle. I'm a random HN reader, I neither know nor care much about aviation. Someone who does know a lot about aeronautical engineering is a rather critical part of Boom's story, however, and may have a much better picture of the technical risks involved, and if such a person exists and believes they have a technical solution, demonstrating that you've solved the market & financing risks is a huge selling point for bringing them on board.

There is no risk in terms of demand for the product at the target price, just like there isn't a risk for demand for cold-fusion or, as someone else here suggested, a cure for cancer.

It is true that the LOI serves a marketing purpose, which is why it was created.

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."


>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.

>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.


If SpaceX really starts to commercialize space (i.e. in 20 years with many hundreds of flights per year), ozone will be an issue with them, as well.

It's something to watch, but I also wouldn't be particularly concerned until these things actually start to scale.

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.

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.

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.

The amount of business traffic from boston to some place that isn't heathrow is miniscule compared to NY-heathrow.

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...

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?

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.

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

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

> SpaceX has brought reusability to space travel

Err... is trying to bring?

They brought the first stage back, and already have launch customers interested in flying on the used stage to get a cheaper price. I agree that the last step, of course, is a successful flight on a previously used booster.

That's not even the last step, really - it would prove that they could do it but that's it. What they really need to change the game is to get down full and rapid reusability. SpaceX estimates are that they could do launches at $7M if they could land a rocket, refuel it and launch it again. I'd say the "last step" is rapid, automatic and full rocket reuse, like an airplane. This is probably still 4-5 years away (at minimum) I'd guess.

I feel like that's a bit of an exaggeration. The cost savings isn't in Southwest-style 20 minute turn around. It's that you're not throwing a booster worth tens of millions of dollars away at each launch.

Note that according to spacex fuel is only 0.3% of the cost, but materials are also only 2% of the cost. (http://www.space.com/21386-spacex-reusable-rockets-cost.html)

A rocket is not worth 10s of millions in raw materials, so it is the process of creating it that makes it worth tens of millions. So the 10s of millions of dollar question is: how much cheaper is the process of re-using a rocket vs the process of building a new one? It seems impossible to ever fully recoup the other 97.7%, but how much can they?

Well, it's both. If SpaceX wants the demand side of the market to expand sufficiently for its business model, it will have to launch that frequently. Also, the faster you can launch, the fewer rockets you have to build for your fleet.

Yes and one went boom in 2000 killing everyone on board. 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.

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.

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.

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.

I can't imagine a serious investor that doesn't consider oil price volatility when deciding whether or not to invest in an airplane company. You seem to be assuming that all of the investors are abjectly incompetent.

I think you're right that it would be considered, but from inside the VC world, I can also say it would be very very strange (to the point of almost unthinkable) for a fund to make a meaningful hedge against a particular portfolio company's commodities exposure. It's just not done, at least if you're running other people's money.

You can think of lots of reasons why, but it mainly boils down to this: VCs are hired to make bets within an asset class (startups) and not outside that asset class. Institutional investors (upstream of VCs) have other managers to do commodities etc.

Also, at least in theory, the market price of oil takes all info into account. If the VCs could really predict the price of oil in 3-5 years, they should probably be trading that alpha instead of investing in VC.

I'm not talking about hedging (like buying call options). I'm saying that oil price would be expected to be a potentially large part of the risk profile of the business, so it doesn't cut muster to just assume that the price of oil won't go up and cut a check. A competent investor will analyze the impact of common risks for the type of business in question, and make a determination as to whether the investment makes sense in light of the risks.

That doesn't mean that the investment isn't expected to be hurt (or wiped out completely) should the price of oil rise, it just means that a competent investor would have looked at that possibility and decided that the investment was still worthwhile.

The comment I was responding to IMO assumed flippancy on the part of investors and implied that they would be surprised by an increase in oil. That's absurd.

Some investors don't believe that an oil price rebound is inevitable in the medium term. Boom is a great opportunity for such an investor, because it has different characteristics than does selling options.

You can very easily buy options and futures oil and hedge away the risk for quite a while. Serious investors do this.

The shuttle was reusable, it had plenty of other issues. IMO, mostly centered around how bad government procurement is. ex: polar orbit

There's a really big difference between how 'reusable' the Shuttle was compared to what SpaceX is trying to achieve. SpaceX's goal is not just reusability, but "full and rapid" reusability, where the entire system is reusable with minimal refurbishment/inspection. The Space Shuttle took months of inspection, tens of thousands of people to work on it and countless millions of dollars to get ready for the next launch - and only a fraction of it was actually reusable.

SpaceX is still very far from their goal, but it's worth describing that "full and rapid" reusability was not how the Shuttle worked. A reusable SpaceX rocket would be able to launch, deliver payload to orbit, land, refuel itself and load the next payload all in less than 1 hour and with a cost of ~$300k. They are very far from that of course, but it's a fantastical goal.

Nope, SpaceX is not trying to reuse the second stage. The shuttle reused the second stage (the shuttle) and the booster rockets, just not the 'cheap' external fuel tank.

Remember the second / final stage get's to orbit so return needs a heat shield or an obscene amount of fuel. The shuttle demonstrated the issues with reusing heat shields very well.

PS: IMO, Space X is all about execution not technology. Landing a first stage rocket vs using taking a dip in the ocean is probably a good trade-off. But, most of there gains are about being lean and making incremental improvements.

They are not trying to reuse the second stage of the Falcon 9 rocket. They are planning for full reusability of their future rockets, however. That's what I'm talking about when I'm talking about their plans for full and rapid reusability. This is not something the Falcon 9 will achieve but is in their plans for reusability.

IMO, your overstating things. They mentioned back in 2012 plans for a reusable upper stage and even had a basic video. But, that second stage is a very hard problem and there not actively working on / testing it. So, if you want to include something that's little more than a power point deck then your a far more generous man than I.

ED: It's the classic doing X, trying to do X, or hope to someday do X.

The plan for the shuttle was 50 flights a year, with greatly reduced launch costs. It didn't work out that way. We'll see about SpaceX: they have one successful 1st stage recovery, and no re-launches yet. I hope they are successful, but they're a long way from proving that they can bring launch costs down all that much.

Some people would argue it was cost effective. It was just prohibited from competing by Boeing lobbying to get it banned from the most profitable routes

Concorde cost £1.134 billion to develop around 1965. That's like $10bn+ inflation adjusted.

The key innovation is that they are building an economic, supersonic airplane. That was what SpaceX brought to space travel, and what has never been built in supersonic air travel.

Boom are expanding on previous development, only more efficiently.

For flight testing a scale model, they could use a F-5E Tiger [0] ($1-5m each, de-milled) to test the wing and nose aerodynamics, keeping as much systems as possible from the original jet. NASA have done similar modifications before [1]

I expect this will be more of a project management challenge than a technical challenge.

[0] https://en.wikipedia.org/wiki/Northrop_F-5

[1] https://en.wikipedia.org/wiki/Shaped_Sonic_Boom_Demonstratio...

I'm just glad that companies like SpaceX, Tesla, Boom, Faraday Future, and others are taking on hard, interesting problems. To be fair, SpaceX and Tesla are much (much) farther up their growth curve, but as for the inherent technical challenges, why draw the comparison? They're all awesome.

Why would you think it's harder out of curiosity?

I'm not an aerospace engineer, so don't read too much into this, but: In James Fallows' China Airborne, there's a paragraph or so where he talks about how building a modern airliner is harder than building a rocket ship. Roughly it's because 1) rocket ships are allowed to fail on occasion and 2) planes are subject to constant use and are not subject to the kind of preflight inspections rockets are.

In the case of SpaceX, consider their last launch failure. The general consensus seemed to be "well, rockets are really hard. And it was the strut manufacturer's fault to some extent. They'll do better next time, and they're still changing the world. Anyway, SpaceX rockets are 4x cheaper than any competitor so even with the occasional launch failure it's still the best option!"

Can you imagine the reaction today if e.g. a Boeing plane blew up on launch? In fact, recall all the criticism Boeing received after issues with the 787's batteries...

But again, I certifiably don't really know. Someone could write about energy requirements and wet/dry mass and how thin rocket skins are and aerodynamic forces and easily convince me rockets are harder.

Even in the case of rockets, once you work out all the kinks, you can get very high reliability. When was the last time you heard a Soyuz rocket fail or one of ULA's launch vehicles.

How many launches has the Soyuz had?

Think how many more cycles a plane goes through a day / month / year / decade. Times that by the number of models of that plane out there.

A plane doesn't undergo stress anywhere near what a rocket goes through and we understand all the science behind it very well.

It's a different class of stress - think marathon vs. sprint.

I doubt any spacegoing rocket will ever be expected to match the durability and maintenance schedule of e.g. the average 767.

Just my guess: You can blow up a rocket from time to time and it's OK. Even if it's manned it's more acceptable for astronauts to die than civilian passengers.

Building a totally new passenger airplane just seems a hugely complex thing. Getting it to fly is one thing but you need safety, long-term maintenance, fuel efficiency, international regulation and many other factors.

At least from the outside a rocket looks simpler to me.

We have a lot more experience building planes of various types that can fly. This is well understood science. The difficulty with rockets are the razor thin margins and the extreme conditions it needs to handle.

The science is probably well understood. But getting a plane approved in different markets must be a massive undertaking. I work for a medical device company and even getting a simple device to market takes a huge amount of money, effort and experience. Now scale that up a few hundred times and you have something that only somebody like Boeing, Airbus or a state sponsored company can do. Add to that changing oil prices and other factors you need a lot of money to finish that effort. Virgin is not even flying their Spaceship Two yet and that certainly is a much simpler development.

Don't get me wrong. I would love to see them succeed but it seems really, really, really hard. Much harder than anything any of the current unicorns has achieved.

It seems to me that most of your doubts stem from the financing side of things and not really from the technical ones. That's a valid point.

From a technical POV, I don't think this is anywhere near unicorn territory. In fact, I think they are aiming too low. I'd ideally want a supersonic plane that is quiet enough to fly over land and cheap enough that your average traveler can afford if they want to trade price for speed. Full autonomous capability so that the plane itself can have thousands of flight hours under its belt before a human test pilot gets on-board.

Depends on what the rocket is carrying. If the rocket with the James web telescope blows up, there goes 10 years and 8 billion dollars worth of work.

Well, for one, the "when it explodes, there are people in it" problem is likely arise much earlier in the process than with the SpaceX rockets

Maybe this is a dumb question, but why? If you were building an aircraft like this from scratch, why design it to require a present human pilot? Satellite latency too long?

> Satellite latency too long?

Yes. Also, regardless of the human pilot, this is intended as a passenger aircraft. That necessitates people on board for it to operate as intended.

Sure but "earlier in the process"? SpaceX is trying to become passenger-safe as well, they just have the luxury of being able to sell something human-less in the meantime.

Meaning that they can then use the money they're making launching satellites and restocking the ISS to pay for the development of passenger rockets.

Boom can't do this. Unlike SpaceX, they need enough investment money to take them all the way to passenger-safe.

Also passenger safe for a few highly trained and risk aware astronauts is a lower bar than passenger safe for the general public.

It would not be certified for passenger travel without a human pilot.

Sure, take out the pilot. You still have passengers that need to survive.

Actually, supersonic unmanned cargo might be interesting, but probably isn't as interesting as manned passenger aircraft.

As far as I know the cost for going supersonic is extremely high compared to subsonic. There probably isn't much cargo that really needs to be there a few hours earlier. Even the military doesn't have supersonic cargo planes. All (most?) bombers are subsonic too.

As a percentage of cargo, small.

The military has used supersonic aircraft on cargo missions in exceptional cases, actually. Their supersonic aircraft tend to be vastly less efficient than even Concorde, though.

All (most?) bombers are subsonic too.

To answer that




The only long range strategic bomber developed after the 50s that wasn't supersonic was the B-2 stealth bomber (not that there have been very many strategic bombers developed after the 50s).

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

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!

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.

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.

If the founding fathers were born in the 80's, they might have gone for restricting the establishment of brands not religions. (Which are also brands of a kind, really.)

The Concorde was developed in £1.134 billion[1], in today's dollars that's about £7.37B[2].

[1] http://www.concordesst.com/faq.html [2] http://inflation.stephenmorley.org/

That is only development costs. That is about 10billion dollars. If the margin on the plane is 50% which is just to breakeven they would need to sell 20billion dollars worth. If they can sell each plane for 300 mil they would need to sell 67 to break even. There were 20 concordes that were ever made.

Margins on aircraft are never 50%. For 787 its like 10-15%.

10% Margin? They wish. Boeing is losing $25 million for every 787 it delivers [1]. Boeing investors would be ecstatic to get a 1% margin right now.

[1] http://www.seattletimes.com/business/boeing-aerospace/will-7...

How much of that is fixed-cost accounting loss?

Aircraft have high design costs (figure for the '87 is above), but the actual manufacturing costs should be ... somewhat reasonable. I have a hard time imagining Boeing would be selling the aircraft if they weren't recovering their marginal costs.

Coincidentally, Boeing's being investigated by the SEC for their bizarre program accounting to answer this exact question.


The "never make a profit" line is probably a tax-deferral strategy which is reflected by their stock price increasing ~100% in the past 5 years. Not exactly the performance you'd expect of a floundering company.

To put that number in perspective, recall the huge engineering effort necessary, not to mention the flight test program needed to get a commercial airline EIS certification.

The 787 was designed for 44,000 takeoff/landings [1], with mere minutes turn around time, while carrying 400+ people in comfort. Add to that target 99% dispatch availability (i.e. does not break down). To do that, you've got to think hard about every single nut and bolt and how that bolt will break in 30 years, and how hard it will be to detect the broken bolt, and how cheaply the bolt can be replaced (easy wrench access, need to pull out seats?). Extrapolate that to the millions of parts in the airframe.

Add to that Billions for production tooling for mass production. Remember, 495 Boeing 737 were build last year[2]. That's one finished plane every 16 hours.

[1] http://aviationweek.com/commercial-aviation/boeing-begins-an...

[2] https://en.wikipedia.org/wiki/Boeing_737#Total_production

Boom is going to be smaller, I wonder how much simpler (and cheaper) than a 787 one of their planes is going to be? It's still going to need all the same type of components. It won't be as hard to make the wings strong, given they will be smaller and delta-shaped.

I also wonder if a business jet would be a better market for this type of thing. Netjets would buy a few, I bet.

The 787 had $15 billion in cost overruns though. If Boom plays their cards right they can absolutely get it done for less.

It sounds like they've made some truly incredible progress and I can see demand. But how are they going to get to a fully developed and built aircraft for a fraction of that cost?

Bombardier, a multi-billion dollar transportation technology company that also builds private jets, almost went bankrupt trying to develop a small 2+2 passenger jet.

Bombardier also couldn't deliver streetcars on time.

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.

>If ... something ... was viable, it seems like somebody would already be doing it

This kind of thinking is useful as a first pass check, but one should not carry it too far. I would hope that by now the company has considered why no one has done it, and concluded that the obstacles are not insurmountable, and the prize in the end is worth it. Like so many other innovative companies, e.g. Tesla.

Also... "Somebody who would be already doing it" would have had to pass exactly the same hurdle.

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?

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.

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

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

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

Engine is generally optimised for max efficiency at a cruising speed. A airliner engine is optimised for transonic cruising, you can't just half the plane and double the speed.

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).

$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.

Did you understand my question?

I was referring to CO2 impact, not price.

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.

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.

Well, you did say, "they'll finally get to afford a ride on one of these contraptions." So initially I was addressing the cost part of your comment.

And you also said, "I'm not sure this is something to cheer, just because it's new and shiny." So I was addressing that part of your comment in stating that people are excited about it for more than vanity reasons.

And you talked about CO2 impact as well, to which I replied, "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." Carbon is one of the components of CO2 and phrases like "carbon impact" typically encompass things like CO2 generation.

So, to answer your question directly: Yes, I did understand your question. I addressed your question in my original comment, and addressed your side comments where you did implicitly mention price.

With a moniker like "kafkaesq" you must be really smart, so maybe you skipped over that part of my original comment. Or maybe it's just easier to be condescending than address the substance of a comment in your reply.

Yeah, I tend to skip the last 20% of post when the first 80% doesn't seem to address the main point of what it's responding to. Like a lot of bleary-eyed people here. Which is why I try to make a habit of getting to the most important part of what I'm responding to first, and deal with secondary or tertiary parts after that. But that's just me.

That said I didn't mean to be condescending, and apologize for it ending up that way.

As to what you were originally saying: I'm not sure your argument will "fly", as it were -- for the simple reason what most strongly predicts the carbon impact of a means of transport is not transit time but, generally, the amount of energy expended to get from A to B (not the transit time). And even though the flight may be shorter, something tells me the energy expenditure has to be much higher for supersonic than for subsonic flight -- in part precisely it needs to get to a much higher speed (i.e. get there with "decreased flight time") and attain a higher altitude before coming down again.

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?

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.

I don't have details but the Boom CEO is positive:

>YC has been awesome and supportive in so many ways, far beyond money. 5 stars, would do again!! :-)

YC have a lot of knowledge, connections and name recognition

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

The article explicitly states: "Now, this doesn’t mean that Virgin has bought the planes — it’s a bit too early for that. They’ve signed a letter of intent, meaning that, having seen the nitty-gritty specs of the plane and the company’s plans for moving forward, they intend to buy 10 planes if everything comes together as planned."

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.

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.

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.

They got $5bn in LOIs, a new YC record: https://twitter.com/sama/status/712705887853383680

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.

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.

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

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.

Unfortunately we aren't done finding out just how bad the F-35 will be. Or have I missed recent news?

Nope, we aren't done yet. I was just trying to compare it to a project people (here in particular) are probably more familiar with.

Keep in mind a 787 can carry 242 to 335 passengers. The first Booms are going to carry about 50. Significantly smaller plane.

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.

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

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.

> I'd love to have more startups like this to watch,

There have been plenty of supersonic commercial jet startups-and-shutdowns through the years, to the extent that aviation people shrug when a new one appears ( but are quite happy to take the promotional merchandise that is handed-out at airshows! )

One of the most recent prior to Boom is Aerion:


Prior to that we had HyperMach who were proposing Mach 3.5


Or fancy a catchier name? Here's Spike


Even the big-boys have dabbled in the arena; Dassault, Gulfstream, Lockheed-Martin, Sukhoi and Tupolev all had projects but none made it to hardware.

Don't get me wrong, I think it's great that someone is trying this but:

>people solving REAL problems

This real problem (as opposed to the cool tech)--unless the price of fuel goes to near-zero--is likely to turn out to be mostly about how to get international lawyers, investment bankers, CEOs, and so forth back and forth between New York and London fast enough to do a short turnaround trip.

"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?

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.

> I'd love to have more startups like this to watch

Keep watching. Maybe they'll have something in 10-15 years.

LOI is nothing, they're non binding.

So? Show me another startup with billions in non-binding commitments from customers saying they'd love to buy their product if it existed. It's a founder's dream.

Cure for cancer will easily generate billions and billions dollars worth of LOIs. Not a founder's dream, unless you actually have cure for cancer.

I think the criticism is that it's not much of an achievement to get a non-binding commitment to sell what some people think is $20b worth of work for $2b. Yes it's a flashy number to throw around (whoa, $2b!) but at the end of the day, the real challenge hasn't even begun yet.

Edited: Revised the numbers to better reflect the article.

I'd call those criticisms spurious. First off, the Concorde had a unit cost of £23 million in 1977 - about $130 million in 2016 dollars – for a plane 2.5x the size. An early-bird unit price of $200m doesn't seem all that unreasonable. Secondly, why should they have to amortize all their development costs on the very first sale?

Yes, there's still a ton of technical work to be done. But it's a hell of a lot easier to hire smart people and raise the funding you need to build stuff when you've decisively proven the business case for your product.

The Concorde cost ~£1 billion to develop in the 1960s. That's something like £17 billion, inflation adjusted.

Also, not for nothing:

"An advertisement covering two full pages, promoting Concorde, ran in the 29 May 1967 issue of Aviation Week & Space Technology. The advertisement predicted a market for 350 aircraft by 1980 and boasted of Concorde's head start over the United States' SST project.

The consortium secured orders (i.e., non-binding options) for over 100 of the long-range version from the major airlines of the day: Pan Am, BOAC, and Air France were the launch customers, with six Concordes each. Other airlines in the order book included Panair do Brasil, Continental Airlines, Japan Airlines, Lufthansa, American Airlines, United Airlines, Air India, Air Canada, Braniff, Singapore Airlines, Iran Air, Olympic Airways, Qantas, CAAC, Middle East Airlines, and TWA. At the time of the first flight the options list contained 74 options from 16 airlines." [1]

Guess how many they sold? 14. LOIs for unbuilt, undesigned airplanes are meaningless.

[1] https://en.wikipedia.org/wiki/Concorde

To put things into perspective, I once did some back of the envelope maths which suggested that the governments that underwrote the development costs of Concorde spent something in the region of £2000 per flight ticket sold in today's money.

It's something of an understatement to say the business case for SSTs remains unproven.

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

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

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.

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

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.

Interesting. Thanks for the clarification/inputs.

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

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.

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.

I'm sure there are many engineers who are extremely proud of their work on Concorde, but overall it could hardly be called a successful programme.

It was just about profitable at the margins, but only after the enormous development costs had been written off entirely. As the fleet aged and safety fears mounted, it became uneconomic to run, and was retired.

Concorde was a brilliant corporate welfare boondoggle that might have become profitable if the US aerospace corporates hadn't tried quite so hard to kill it by lobbying - successfully - for limited access to US airports.

It helped give Airbus a technological start, which was probably the only thing that allowed Airbus to become globally competitive.

So politically it wasn't necessarily a failure at all.

It's not easy to assess the true economic return on a megaproject, especially one that lasts for decades. Something that looks like a disaster on the profit and loss account can still provide big benefits.

The US space program is a more obvious example. The direct economic return on bringing a few rocks back and developing giant booster rockets wasn't great. But there were significant spin-off multipliers that provided a significant lift to whole sectors of the economy.

If you try to imagine the state of US computing and aerospace without Apollo, and British and French aerospace without Concorde, it should be clear the money wasn't just thrown away for nothing.

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!

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

Today: Oh shit

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