Obligatory quarterly post from me about optimism (or lack thereof on HN)! :)
It's unfortunate that so many people come out of the woodwork to tell people their ideas are terrible or won't work without actually understanding the idea, technology, or risk-adjusted return that investors may be considering. It's far far more interesting to consider how things may work or what you may be missing. I've listed a mini-FAQ at the bottom about Boom. I'm an investor in every Boom round, from before they were in YC so am clearly biased, but also know the company very well.
Props to everyone in the thread who is asking genuine questions and actually trying to understand what the team is building.
1. Isn't the most important part of reducing flight times the pre-flight experience (security, airport delays, etc.)?
Yes, you are correct. However, the long haul international market that is about 10% of the overall number of flights in the world is still a HUGE opportunity where the bulk of time is spent in the air. Boom is most effective in these longer 8-hour+ flight situations like SFO-Tokyo, LA-Syndney, etc. On these routes you would save a day round trip. For many people an extra day in the office or an extra day with family is a tremendous win.
Most people don't realize but travel to Hawaii 10x-ed in the decade after the jet engine became common because Hawaii became a five hour flight from the West Coast instead of an eight hour flight. Imagine if you could get from SFO to Japan or China as fast as SFO-NYC.
2 - How can do this for so cheap?
It will be capital intensive to get to the final plane, probably ~$2B. Most of this can be financed with debt, however, because there are many billions in pre-orders from airlines already. This round gets you to fly a one-third scale version of the plane and be ready to raise an even bigger round to build the full scale plane and get to FAA certification in the series C.
The Boom team has been very smart in their go to market by maximizing the amount of already FAA approved technology that goes on the first plane. For example, the carbon fiber composite is the same as that used on the 787. Fast tracking the components because they're already FAA approved dramatically reduces costs.
3 - What qualifications does this team have? How can they possibly pull this off?
The team includes 80 technical experts and leaders from Airbus, Boeing, SpaceX, Gulfstream, NASA, and Lockheed. Collectively, the team has made key contributions to 40+ successful air and space vehicles the SpaceX Falcon 9, Airbus A380, and the SR-71 Blackbird. The team has led the development of many planes that have gone from 0 to FAA approved and launched.
Hope the above is helpful to people reading through and wondering how this makes any sense. I think Boom is a once in a lifetime, category creating company (like SpaceX or Tesla). Happy to answer more questions if you have any.
Appreciate conservative industries like aerospace need optimists like yourself to back ambitious projects that Airbus and Boeing have commercial reasons to avoid trying for themselves even if they thought they might be viable, but point 2 of your FAQ alarms me.
~$2bn is a ludicrously small sum of capital to get a "final plane", even compared with airframe programmes that took the 737 as a starting point and had the relatively straightforward objective of being a 737 but a few percentage points more fuel efficient and with a nice new cockpit. And no, you really can't debt-finance a new aircraft research programme with outstanding orders. Most of the money in an aircraft transaction changes hands at the delivery stage (deposits are a small fraction of the aircraft cost, pre-delivery payments are also a small fraction and are made in the months immediately prior to an aircraft delivery, not as r&d funding). The airlines usually need external financing to actually manage these payments which comes from the asset finance arms of conservative financial institutions looking to earn steady ROI from having assets with predictable residual values on their balance sheet, not a punt on a research project which may or may not actually deliver an aircraft. Boom's going to have to raise VC-type funding themselves; the airlines can't and won't do it for them at any scale. (I used to speak with senior executives at airlines involved in aircraft finance on a day to day basis so I'm not just being cynical here). And please correct me if there is undisclosed information and I am wrong on this point, but at the moment as I understand it Boom does not have "many billions" in orders, it has non-binding LOIs for an entirely notional 76 aircraft and $10m in equity investment from JAL is the only financial commitment from any airline.
So I'd be extremely worried if this was the basis from which investors in general were considering their risk-adjusted returns. I suspect this is more your attempt at an HN-friendly summary of the prospects based on casual conversations with employees, as someone who yourself backed the project for other reasons at a much earlier stage. But if they were making claims about funding much of their r&d from their order book in representations to investors (as I said, I suspect they aren't) I'd start viewing it a Theranos-level heist as opposed to yet another well-intentioned aerospace project full of good engineers trying something wildly ambitious (which is where I think they actually are).
Thanks for the thoughtful response. Obviously I won't be able to do justice to an entire business plan in a few sentences.
They are definitely not representing their order book as the basis for a full debt financing. I appreciate your assuming best intent as I use broad brush strokes in the parent comment and below.
A few thoughts:
+ I think the history of startups is also one of teams succeeding with far less capital than the incumbents. They're on track to build the fastest civilian aircraft ever built for less than $100M raised which speaks to their accomplishments to date. Aero is notorious for cost overruns but their capital efficiency to date is impressive.
+ Of course, the biggest risk is that there are cost over runs due to unforseen issues, e.g. Bombadier's C-Series estimated to cost $2B and that ended up closer to $5B (though that was also for multiple planes and configurations). At the same time the A320-NEO was done for below $1.5B I believe. Time will tell how much it actually costs but I think it's probably much closer to $2B than say $20B.
+ You are correct that these are not pre-orders. I shouldn't have used that term and should have used LOIs (and now I can't figure out how to edit the comment). As I understand it, the LOIs are of varying levels of commitment. The earliest LOIs were non-binding and with no skin in the game. More recent LOIs have more teeth. The strategy has been very clever. Each batch of LOIs has terms more favorable to Boom, so there is an incentive to move before the LOIs become less favorable to you (the airline). And there is a competitive dynamic that is at work that engages companies, e.g. JAL vs ANA, via incentives such as exclusivity on certain routes or deal sweeteners like the opportunity to invest. I think it's unlikely that 100% of these LOIs convert as external circumstances will always be a factor (e.g. airline gets a new CEO who has a different strategy) but the newer LOIs also have significant executive, CEO, and board buyin from the airlines, so they're certainly not throwaway. As you noted, airlines are very conservative about basically everything. The reason these LOIs are managing to get board level approval is that the math makes a ton of sense if the planes fly. You're essentially replacing less profitable narrow body jets with a Boom jet on certain routes so you stand to make more money as an airline if you get one of these.
+ It's much harder to debt finance the entire thing as an R&D endeavor at once but there are multiple ways to traunch this and phase it in over time. And not all of the costs need to borne by Boom directly. It's pretty standard for suppliers (not the airlines, as you noted) to put up significant commitments as part of the development process and bear those costs and risks. Many of the existing partners for major components of the Boom plane are bearing these costs directly already, because the math behind unlocking supersonic makes sense and even if the plane doesn't launch they stand to benefit from the R&D on these new components. Sharing these costs such that the partners benefit from the upside in a success case (huge new market the supplier is a leaders in) and in a failure case (IP that makes their existing components much better), while also bearing the capital risk helps reduce the capital and debt burden on Boom itself.
Anyway, your read that this is a well-intentioned aerospace project full of great engineers trying to do something wildly ambitious is correct. Anything I've misstated that might imply otherwise is a failure on my part, not Boom's. I also think they are as savvy on their business as they are talented at the engineering, which is why they've even made it this far.
The transPacific and Pac Rim routes do seem interesting if the range is there. For a lot of those routes even flying in comfort on an A380 or 787 is still just a long time to be mostly sitting down even if the food is great and you can sleep in relative comfort. And they're routes that a lot of executives and other highly-paid business people routinely drop >$5K on today. At least from my perspective, it's a lot more interesting than US East Coast to Europe where the flights are short enough that it's not that big a deal so long as you're comfortable.
I have no idea about the economics or practicality of this particular effort. But one place I agree with the criticism of the criticism is that I do think it's silly to operate from a premise that supersonic commercial flight will never make sense. In fact, it seems almost obvious that it will some day even if it takes a long time.
It's unfortunate so many people come out of the woodwork to tell people their ideas are terrible or won't work.
I think it's far more interesting to ask how a thing might work, which uses cases might be dramatically underserved today and serve as a beachhead, or the tradeoffs being made rather than just say something is a "bad idea."
A 2012 thread discussing comment negativity where, coincidentally, the top comment is from @iamwil who posted this link and is on the DIRT team: https://news.ycombinator.com/item?id=4363717
To me, the most interesting ideas in the world are the ones that at first blush look like they can't possibly work. But upon thinking through how they might, you learn something.
Props to everyone in the thread who is asking genuine questions and actually trying to understand what the team is building.
Ah yes, the annual resurfacing of this blog post :) unfortunately I think most of it is still true. I should do a follow up...
Edit: I'll address the comments/thoughts here in a follow up blog post. Glad to see so many people thinking about this space. It's a great thing for the world to have entrepreneurs building here.
I thought I had read the post before. Thank you for the insights, and I hope that you can do that follow-up!
One thing not mentioned which I think is important is the ease of paying (whether the edtech is app or web-based). It’s all very well to target those in poorer countries, but many of them (consumers) still don’t have online banking, and payment gateways are often local and clunky (I did notice in my last trip to Asia that this is improving.) I’d love to hear your thoughts on this :)
We are currently working with Optometrists in San Francisco, New York and Chicago. We are onboarding other healthcare professions and hope to expand to other major cities soon.
Will never forgetting getting marked down in that class for producing a square, when I was asked to produce a rectangle. "No, I meant a rectangle rectangle!"
It's hard to be helpful here without specifics. What sorts of jobs are you applying for at which companies? What industry are you in? What are the brands you've worked at before? What industry switch are you hoping to make? Do they get to a background check stage or no? 7 offsites to 0 offers is a pretty steep drop off but if, for example, you were only interviewing for VP of Product at series A startups in the Bay Area backed by Sequoia and Benchmark, then that's not unexpected.
I'm going to disagree with a lot of the sentiment here. I think it's rare to find a business that really truly works and you may have found the beginnings of one. Be ambitious. Figure out how to scale this 100x.
In terms of what you should do, it's hard to know without the specifics of what your business does, who you are, what you are good at, how your business will grow, etc.
I think there are some general thoughts that may help:
1. Early on, overpivot on people you can trust who happen to be good, not people you can't trust but who are great. Also don't hire your friends. Most people want to hire the best people they can but I've found that loyalty, work ethic, and trust are more important for the first or second people you hire. But hiring friends or family can often blow up so avoid that.
2. Figuring out how to hire people is hard. Managing employees is hard. Keep the stakes low initially and then figure out how to hand off ownership of more core things after you feel like you have a good sense for how to hire and who to hire. Start with something you know really well that is not going to lead your business to fail if you hire the wrong person. Hiring someone to do work you know well lets evaluate the quality of someone's work. Putting them in a role where they aren't working on something critical minimizes your risk. For example, if you are doing all of your customer support right now hire an Android developer if you know Android really well to add a new feature to your app. Don't hire an engineer to work on your payment system if you don't know that part of your stack or if you can't afford for your payment system to go down.
3. There is no comprehensive resource because every business is different so you will have to spend a lot of time reading. Read through everything related to business, entrepreneurship, hiring, scaling a business, etc. on Quora. Ask questions there and see who responds. Find the courses similar to what you want to learn at top business or engineering management schools (Stanford, Harvard, MIT) and look at their curricula. Read everything in their curricula. Read this post I wrote several years ago about the dynamics in the education space in the US to make sure you don't fall in to the trap that many education entrepreneurs do around thinking that your business can actually scale far beyond where you are today: https://avichal.wordpress.com/2011/10/07/why-education-start... Google searching will get you quite far too: https://www.google.com/#q=hire+first+employee+startup
4. Find successful people who have built a business in your space that is 10x bigger than yours, 100x bigger than yours, and if possible 1000x bigger than yours. Email these people and ask for advice. See which of them you click with. Ask them all of the questions you have and see where a relationship develops. Ask them for the best resources thy know about related to your business or how to scale a business. For example, I tell a lot of entrepreneurs to read High Output Management by Andy Grove to see how an experienced manager and executive thinks about running a large organization. You are not yet running a large organization but you will learn a lot and can work backwards to lessons that are relevant for your business today. In general, you will be surprised at how often successful people will actually help out. It's entirely possible (and likely) the woman that has a $200M business today was in your shoes a just few years ago and is willing to help.
5. Find successful people that you respect outside of your space and do the same as in #4. Consider raising investment from experienced people who can help you. Applying to YCombinator is a good option if you don't even know where to start.
6. See if you can find people that want to learn what you've done and could help you. For example, there are probably people who want to learn what you've done to bootstrap your business but who are running a small part of a very large company. These middle managers could teach you how to build an org and you could teach them how to start their own business.
