June 26, 2025 • 50 mins
We talk all the time about the US attempting to become a powerhouse in advanced manufacturing, but a lot of it just sounds like talk that's not going anywhere. But some companies are trying. Boom Supersonic is an 11-year old company that has raised hundreds of millions of dollars in its quest to build a new supersonic jet for commercial air passengers. And it believes that just because the business model of the Concorde didn't work out in the end, that there's no reason there can't be a market for ultra-fast travel in the sky. On this episode, we spoke with Boom founder and CEO Blake Scholl about the business, and how they actually plan to manufacture planes. We discuss the challenges of advanced manufacturing in the United States and why he believes that small startups can succeed, even while legacy aerospace firms like Boeing stumble.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:18):
Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3 (00:22):
I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 4 (00:24):
Tracy, I have to say.
Speaker 2 (00:25):
If I had any friend who I would have guessed
would have ever been on a Concord, it would have
been you.
Speaker 3 (00:30):
Oh is that a nice thing to say?
Speaker 2 (00:33):
You're international, You've been all around the world, sophisticated traveler
like I would have guessed that maybe at some point
when it still flew, that.
Speaker 4 (00:42):
Maybe you would have flown aboard the Concord jet.
Speaker 3 (00:44):
I mean, I would have been in middle school or
high school flying on the Concord, which would have been
quite an experience, I imagine. Let's see, so it stopped
flying in the early two thousands.
Speaker 4 (00:54):
Yeah, right, I guess that was a long time ago.
Speaker 3 (00:56):
Yeah, but of course it has this massive legacy. And
when people think of the Concord, they think of luxury
aeror travel, and I guess advanced technology too. And it's
kind of crazy to think that this plane, a supersonic plane,
started flying in I think it was the sixties or
the seventies, and now fifty years later, we don't have
(01:17):
any supersonic air travel commercially, at least I know there's
supersonic fire jets and things like that. Like is that weird? Well,
it's weird.
Speaker 2 (01:27):
It's depressing too, because I think when I think of
like civil aviation in general, not only do I think
we haven't really made much progress, like we're not at
the cutting edge. We're going back right because okay, like
we're currently not building any supersonic jets are flying them.
Our capacity if you just think about the US and
you think about Boeing seems to have gotten worse over time.
(01:48):
So it's not just that Boeing hasn't launched new planes
in long time. It's ability to produce the existing planes
seems to have been degraded. So this is one area
where like it's not even lack of progress, it's like
literally going in reverse.
Speaker 3 (02:03):
Also, every once in a while one of the budget
carriers in Europe especially will threaten to have like stand
up seating on one of their planes. It really does
feel like we're regressing.
Speaker 4 (02:15):
By the way hot take.
Speaker 2 (02:17):
I think for short flights I would be okay with
the stand ups.
Speaker 4 (02:20):
No, yeah, I stand up on the bus. For a
long time, I stand up on the train. I could
do it for like an hour.
Speaker 5 (02:26):
Yeah, I have.
Speaker 2 (02:27):
Actually, But anyway, without digressing too much, So, you know,
we talk about manufacturing, we actually talked about aerospace affair amount,
but we should talk more about the people actually building
actual things, or at least aspiring to actual build things
in the United States. And what are the barriers and
why does it seem so hard?
Speaker 3 (02:46):
Let's do it, especially for something like supersonic flight, which
was challenging at the best of times. I think that's
a fair way to describe it. So I'm excited to
dig into this totally.
Speaker 2 (02:56):
So in early June, the White House instructed the FAA
to lift its ban on flying supersonic jets over the
United States.
Speaker 4 (03:05):
I don't think the band.
Speaker 2 (03:06):
Has been lifted yet, but it's been destructed to And
then the question is anyone they're actually going to be
new supersonic jets. Well, this actually matter because right now
none are flying anyway. There are companies that are trying,
and one of the companies that is trying to build
a commercial supersonic jet is Boom Supersonic, and I'm thrilled
to say we have its founder and CEO, Blake schul
On the podcast. They're actually trying to build a supersonic jet.
(03:29):
That's crazy. Welcome to the podcast.
Speaker 5 (03:30):
Blake, Hey, Joe, Hey, Tracy, thank you for having me.
Speaker 2 (03:33):
You think you can actually build a supersonic jet company
in America in the twenty twenties.
Speaker 5 (03:39):
It seems like the answer is yes. We've built and
flown the actually the first ever civil supersonic jet made
in America. We became the first private company ever to
build and fly a supersonic jet. United Airlines, American Airlines,
Japan Airllians have signed up for the airplanes. We've got
a factory in North Carolina. There's still a lot of
work left to do, but every day that goes by,
(04:01):
we've got less excuses for failure.
Speaker 3 (04:04):
So I have a question, which is I don't mean
this to sound insulting, but shouldn't you be an airline
rather than an aerospace manufacturer? And the reason I asked
that is because Concord famously developed by Aerospetsial and British
Aerospace and they never made money on it. They never
recouped their development costs. But BA and Air France, I
(04:26):
think those were the major airlines flying it at the time.
They made some money, you know, in certain years, So
what exactly makes you confident that this is going to
be a profitable enterprise for you?
Speaker 5 (04:38):
Yeah. Well, I think we have to look back and say, like,
why was Concord such a disaster? And I think a
lot of the stories that are out there kind of
missed the basic truths. In nineteen sixty nine, we land
on the Moon and we flew Concord for the first time,
and at the time these were heralded as the harbingers
of great things to come of space exploration, of a
(04:59):
new age supercent travel. But of course now we're here
in twenty twenty five and we can't land on the
Moon and we can't fly supersonic. And I think in
many ways the deepest reason is that both of those
projects were deeply misguided. And I think Concord killed supersonic flight.
I think Apollo killed space exploration. And the proximal story
on Concord is what we were trying to do in
the West is compete with Soviet Russia, and very ironically
(05:23):
we did it by adopting communism and central planning, and
so we had these programs that were respect by governments
that were not thinking about market viability, and so Concord,
here's an airplane with one hundred seats on it. Mind you,
they are a hundred uncomfortable seats. You might mistake it
for Ryanair.
Speaker 3 (05:41):
I thought they were plush leather seats.
Speaker 5 (05:44):
They look like economy. Oh the lake room was better
than typical economy. But these were seventeen inch wide seats.
Speaker 3 (05:50):
Because the actual body of the aircraft was so narrow, right.
Speaker 5 (05:55):
Yeah, and they didn't I don't think they laid it
out very well. So one hundred seats not super comfortable.
You have to duck to get on the airplane. And
yet it just for inflation, and the fares are about
twenty thousand dollars. And guess what. You can't fill one
hundred seats at twenty thousand dollars a pop, especially not
with like seventies or eighties kind of travel volumes. So
the whole thing never made any sense. But that doesn't
(06:15):
mean you can't make a supersonic airliner. That makes sense.
It just means that Concord didn't because it was in essence,
because it was centrally planned.
Speaker 2 (06:22):
Well, sorry, explain that further. Is the issue that was
centrally planned or was the issue that at seventies or
eighties tech and seventies or eighties air traffic volume, it
wasn't there to support the cause because those strikeen me
is two different things. And we'll get into the tech
of your plane. But I know there's been progress in
various fronts and seventies. Could it have been commercially viable
(06:45):
in the seventies or eighties when the tech theoretically existed,
because that strikes me as different than saying, oh, central planning.
Speaker 5 (06:52):
I think those are two sides of the same coin.
The central planning leads to creation of things that don't
actually make any economic sense. Let me paint you a
very different history. So actually, let's start with the history
that really happened. So we had these sort of centrally
planned supersonic projects in the sixties. France and Britain got
together and did did Concord and Soviet Russia they did
(07:13):
the t U one forty four. People called it Concord
Ski and the US Nixon and Kennedy stood up what
was called the sst FAA Specta gave the contract to
Boeing that was going to be a three hundred seat
Mock three airplane. It made even less sense than concord,
and then the plug gets pulled on the SST. Now
it looks like Europe and Russia are moving forward with
(07:36):
supersonic it's not yet really obvious how doa those products are.
And then in nineteen seventy three, we did the worst
thing I think we've ever done in the history of regulation,
but as we banned supersonic flight in the US. And
what that did is basically outlaw the way this thing
should have come to market. So, if you think of
the way most technology comes to market, and cell phones,
(08:01):
electric cars, computers, these things typically start at relatively higher
price points for the more well to do, and then
as we scale and find efficiencies, that cost comes down.
And now our kids have cell phones. And so the
way supersonic passenger travel should have started was with a
small private jet really for the well to do and
(08:23):
for companies. And that airplane would have needed to carry
maybe five or ten people at a time, and it
would have only needed to fly safe from like Seattle
to Miami, kind of what's the longest sort of North
American route. You can imagine that small airplane would be
easy to make quiet. It wouldn't have mattered if it
was a bit more expensive to operate on day one,
and that would have kicked off in an iteration cycle that
would have led to bigger airplanes to airliners, and I
(08:45):
think had that history unfolded, we'd all be going mock
five by now. But when you ban supersonic flight over
the US, what you do is you make that product illegal,
and so we ended up freezing progress. It's an artifact
of I think, really, you know, Cold War era national
prestige politics.
Speaker 3 (09:05):
So talk to us about what you're doing differently, because
I think this will maybe help solidify the point that
you're making. So for you, it sounds like the business
model is going to be more about scale and volume
versus having those high ticket prices and supposedly luxury good.
Speaker 5 (09:24):
Right, everybody wants faster flights so long as they are
affordable and comfortable and safe, and airlines want them so
long as they can make money doing it, and so
the question really became, well how do you do those things?
And so we said, look, ultimately we want to do
this for everybody, but we're going to start focused on
people who'd fly first your business class today, which is
(09:47):
somewhere like eighty percent of international airline profits. So it's
the economically significant place to start. And so with all
the technology that's been developed since Concord, you can get
the fares down by about three quarters. So I think
more like a five thousand dollars business class fair, not
a twenty thousand dollars kind of bucket list item. And
then we put well, how many seats would the airplane have? Well,
(10:07):
should have as many as airlines can fill, so about
as many as you find in business class today. So
this is a sixty to eighty seat airplane. I think
the sweet spot's really going to be right around sixty
four sixty four really nice seats, the range and the
economics to make it work on hundreds of routes. And
so we started out thinking, let's assume that the regulation
is not going to change. Let's focus on an airplane
that can fly transoceanic on the routes that are the
(10:29):
most painful today. Let's find our foothold market there, and
then ultimately we'll find a way to conquer sonic boom
and expand the market to transcon as well. And it
turned out that actually happened much faster than we thought
it would.
Speaker 3 (10:58):
As a former transfer two reporter. When I hear someone
talk about business class only flights, I think about this
sort of perpetual crop of companies that have attempted to
do that over the years, and silver Jet springs to mind. Joe.
I have to tell you a really funny story about
Silverjet later on. But you know, I think back to
(11:19):
those Most of them, the vast majority of them are
unsuccessful because you know, it turns out they still have
high operating costs, and the airlines can't They can't raise
the tickets enough to offset those What are you doing
on the operating costs side to make this model actually work?
Speaker 5 (11:39):
So I have a slightly different point of view and
why the all business class airlines have mostly failed. Okay,
so first off, let's start why they're attractive. All the
money is in business class, So why not buy smaller
or cheaper airplanes, put business class in them, only be
able to lower the fairs and still roll in money.
It sounds like a great business plan, but the problem
is it's really start with the profit story, not starting
(12:02):
with the customer story, and the passengers by and large
don't care whether there's an economy cabin on the airplane.
What a passengers care about well they care about are
the flight times convenient? Can they use their frequent flyer miles?
Do they get the benefits of their status? Is it
easy to connect? The all business class airlines had no
advantage in the eyes of the passengers, and they had
(12:25):
lots of disadvantages. So the business plan didn't actually work
for that reason. Now if you bring it to supersonic,
now there's a reason for the passengers to prefer the airplane.
They can get there in half the time. And moreover,
you deploy these in the context of today's international airlines.
So United ordered, Americans ordered, it's going to fit in
(12:46):
their root network. You'll be able to connect, you'll be
able to benefit from your status. And so if you
put an all business class supersonic jet and you put
it into an existing airline network, it makes sense fundamentally
because it makes sense for passengers.
Speaker 2 (12:59):
Before we move, you've been around for like a decade,
So why do you bring us up to speed? How
much money have you raised, where are you at within development?
And how much more money and time are you going
to need before you have a plane that's regularly coming
out of your factories.
Speaker 5 (13:15):
Yes, we've been around for almost eleven years now, we
have raised bit over six hundred million dollars. And one
of the things I'm really proud of is the capital
efficiency story. We did the XB one airplane for less
than two hundred million dollars, including the airplane, including the
flight test program. And to put that in sort of
industry context, the closest comparison is the NASA X fifty nine,
(13:40):
And you know, we basically did everything that that thing
set out to do, did it faster, and that thing
hasn't even flown yet. I think we're going to come
out somewhere around six x more capital efficient versus legacy approaches.
And so some people look at this and they say, well,
she's Boeing takes ten billion dollars plus to develop new airplanes.
This seems financially infeasible, and I think that. I think
(14:00):
it's true if it's going to take you ten billion dollars,
but it doesn't need to take anywhere close to that
amount of money. I think new entrants and SpaceX I
think prove this by running circles around YLA and Locket
and Boeing, and I think we're in the process of
demostrating the same thing, we can be at least five x,
maybe ten x more capitally efficient, and so suddenly this
is a very very reasonable financial proposition.
Speaker 4 (14:22):
Tell George, though, all right, where are you now?
Speaker 2 (14:24):
And then getting to okay, we wake up in just
dear twenty thirty five. What did it take in terms
of money and time to get to where you have
planes rolling out of the gates?
Speaker 4 (14:34):
How much more money? How much more time?
Speaker 5 (14:35):
Yeah, I think it's going to be between one and
three billion to kind of get this all done. I'd
like to see it come out closer to one, could
be three to give you a sense of kind of
where we are today. So we've proven all the technology
is there, We've proven the airlines want it. I think
it's obvious that passengers want it. We've got a factory
in North Carolina. The next thing we're actually doing is
scaling up our engine technology. So you'll see the first
(14:56):
engine come together around the end of this year. And
then the next thing is we're scaling up the airplane
from our XB one prototype to the Overture Airline or
you'll see the first one starting the built next year.
And so our goal is to be ready to carry
passengers by the end of twenty nine, and I think
when that happens, in some ways, the most interesting story
will be how small the team was that did it,
(15:19):
and what a tiny amount of money it took compared
to what the big guys spend.
Speaker 3 (15:24):
You mentioned the engines just then, and I wanted to
ask you about those. So you're developing your own engines.
I think they're called Symphony, and that seems like a
pretty big challenge to build an aircraft engine from scratch.
But on the other hand, you could see why the
engines would be a very key part of making the
plane actually economic and efficient, because I think that was
(15:45):
always one of the problems with Concord, the engines weren't
that fuel efficient. Why did you decide to go down
that route? And what has the actual development and manufacturing
experience been like so far?
Speaker 5 (15:58):
Yeah, I mean, so we looked at using one of
the existing engine providers for it. There was no off
the shelf engine that would be a fit, and the
big engine players were at most willing to kind of
take a subsonic engine and shoehorn it, and that turned
out to be both extremely expensive and super inefficient, and
then we wouldn't end up with a custom engine that
actually fit what we needed. And so what we found
(16:20):
was that by building an engine ourselves, just the way
SpaceX does by the way, we could get a fully
custom engine much faster and much cheaper than any other approach.
So you were seeing about a four x reduction and
cost relative to what the big guys quoted us. And
then we end up in an engine that is optimized
together with the airplane, and that makes a big difference,
(16:41):
not just in fuel efficiency but in capability. So we
demonstrated boomless crews on XB one and that's a capability
that would not have been possible on overture if we
weren't doing our own engines.
Speaker 3 (16:53):
If you're doing boomless supersonic flights, do you have to
change the name of the company boom to boomless.
Speaker 5 (17:00):
We're gonna delete the boom, or we're just gonna call
the company supersonic.
Speaker 4 (17:03):
I like that.
Speaker 2 (17:03):
That's a nice thing. Actually, can you give us a
theory of the firm? So you mentioned that you know
SpaceX is done accomplished things at a fraction of the
cost of what it would be at some of the legacies,
and your ability to at least get one plane out
the door and in the air is cheaper than there
was in Nassa. There are a lot of sort of
hard tech industrial tech two point zero type companies that
(17:27):
are emerging these days with this idea seemingly that you know,
a lot of big industrial operations if you started over
from today, could be much simpler or at least much cheaper.
What is it that you all have in common such
that you think that these really advanced products starting over
without this big organization. What do you do that just
(17:49):
in your view so much cheaper and faster and more
efficient than the legacy industrial players.
Speaker 5 (17:55):
There's a lot of things that go together into it.
Part of it is the power of small elite teams.
This is, you know, I think the most exciting thing
happening in aviation. So we get our pick of the
best engineers. And that the best engineers aren't like ten
or twenty percent better, they're like ten times better than
the average engineer. So we start with a small number
of highly talented engineers, we leverage them up with software.
(18:19):
So a lot of what we do at BOOM is
trying to fare out to make hardware developments look more
like software development, and that means reducing the cost of iteration,
both in time and money. And so that's that's software
design tools, it's extensive use of AI, and it's also
vertical integration to reduce cost of making parts and importantly
(18:40):
the time required to iterate on hardware. So if you
focus a lot of your energy on reducing cost of iteration,
what you find is that cost collapse in the pace
of progress just skyrockets.
Speaker 2 (18:52):
Can you actually see more about vertical integration when we
do episodes about some of the Chinese manufacturing juggernauts state
of over the last several years. This is a recurring
theme and I'm interested in what the advantages are, but
also specifically like the challenges of when you're building a
new product for which you may be I have to
imagine that for a lot of the parts that are
(19:13):
going to go into your plane, you're the only customer
or the only customer that right now that there isn't
a large supply chain that currently exists for obvious reasons
for supersonic transport, how do you deal with the fact
that I assume for many parts the supply chain literally
currently does not exist.
Speaker 5 (19:31):
Yeah, the supply chain exists, but it's kind of a disaster. Frankly,
I'll tell you a story. As I mentioned, we're building
our first symphony engine right now, about sixty percent of
the parts or somewhere in the manufacturing process. We're moving
towards being able to build ultimately all of those ourselves.
Right now. It's sort of a hybrid of things we
build ourselves and things we go to the aerospace supply
(19:54):
chain for. And as we are working through this on
our first prototype that the engine turbine blades are three
pers and we quoted them out of the traditional aerospace
supply chain. It was going to cost a million dollars
for one enginees worth of blades and take six months,
and that didn't support our schedule. And the cost was
just mind blowing, and so I started asking questions like, well,
(20:14):
how long does it actually take to make a blade?
And the answer was, well, only twenty four hours, but
you know it takes one hundred and eighty days to
get one out of the supplianet. Why a bunch of
stupid things? And like, okay, well what is the machine
that makes these costs? And I assumed that it would
be cost prohibitive and really hard to get but it
turned out the machine costs about two million dollars. They're
in an inventory. You can get one in a couple
(20:35):
of weeks. So we said, great, well, let's just buy
the machine and make these things ourselves. So for the
price of two engines worth of blades, we got the
three D printer that makes the blades. We set it
up in a matter of weeks, and we're iterating super rapidly,
and had we gone out of house, would still be
waiting for the first blades to show up.
Speaker 3 (20:52):
And what are the stupid things that slow down the
supply chain?
Speaker 5 (20:58):
One pattern is spreading production processes out across a large
number of facilities that are geographically spread out. And so
it's like, oh, well, to make this part, you start
with raw material in South Carolina, and then it goes
to like North Carolina for one process step, and then
you ship at the Wisconsin for another process step. Then
(21:18):
it goes back to South Carolina, and then you have
to put it into California actually like twice. And it's
it's insane, and like the thing spends like more time
on a truck back and forth and it does actually
getting any work done to it. So why I think
the answer is actually Congress. So why Congress? Right, So
since sort of the end of the Cold War, a
huge piece of aerospace is still driven by defense. You know,
(21:40):
it's still driven by defense procurement, and.
Speaker 2 (21:43):
They need their supply chain in every city.
Speaker 5 (21:46):
Exist exactly exactly, So you end up with these like
politically optimized really congressionally optimized supply chains. And everyone's on
a cost plus contract. So if you're on a cost
plus contract, you know your incentive is to actually maximize,
so you can maximize your plus so nobody cares that
it's inefficient. And yet that's the industrial base in the US,
(22:07):
and you can get enormous time and cost savings by
just putting everything under one roof.
Speaker 3 (22:14):
Why has no one done that before?
Speaker 5 (22:16):
Well, SpaceX has. I think one of the things that
lets you go do this is getting out from under
defense and congressional appropriations as kind of being your primary
revenue stream. So long as you're going through traditional DOOD
procurement processes, you end up being subject to all these
forces that end up with the complex difuse supply chain
(22:39):
being at some level optimal or at some level necessary.
But if you look at what SpaceX did, they pivoted
away from that approach, NASA did the commercial crew program
with them and with the commercial resupply program with them,
and that give them a lot more ability to just
do what was efficient. And I think we're doing the
same thing at Boom here, where we're starting with commercial customers.
(23:00):
We're not beholden to congressional funky dynamics, and so we're
able to go do the efficient thing, not the politically
expedient thing.
Speaker 3 (23:09):
I mean, some people would argue that SpaceX did get
a lot of development money from the government, which is
one of the things that has allowed it to do this.
Speaker 5 (23:18):
I think that's true, and yet they being I think
really the only alternative to the big legacy players. The
history shows they were able to do it without compromising
how they went about it. You know, you go to
their factory in Hawthorn in the Falcon nine days, it's
basically raw materials in one side of the building and
rockets and rocket engines out the other side. They brought
(23:39):
in house substantially all the production processes and that results
in frankly, I don't think the would have succeeded without that.
Speaker 2 (24:02):
Talk to us more about financing from here, because this
is a thing that comes up, and maybe it's changing
a little bit, but large upfront investments aren't the sort
of natural domain of VC or tech. And there's a
reason that a lot of this kind of investment often
seems to come from the government or the public sector
(24:23):
in some way. And it's going to be a long
time before you have your factory, and then it's going
to be a long time before you have planes rolling out,
and there's going to be a long time before payback.
Speaker 4 (24:31):
Talk about financing from here, who's going to invest to
get you through your next leg.
Speaker 5 (24:36):
Starting with pulling the camera back? I think it is
largely a mythology that hardware companies are more capital intensive
than software companies. If you look at what lift and
Uber and Airbnb raised in VC, and you compare it
to like space Ax and Tesla and androll, what you
(24:57):
find is that many times the software companympany is actually
consumed way more venture capital than the hardware companies. And
I do think there is one important distinction, which is,
in a software company, you can prove you've built a
useful product by shipping a simple version of it and
noticing that it gets adoption. Yes, And the VC playbook
(25:19):
is largely spend a small amount of seed money, ship
a product, find out whether it's working, then double down.
Speaker 4 (25:26):
Okay.
Speaker 5 (25:26):
And you can't do a hardware company that way, Like
we can't go build a supersonic airliner in order to
find out whether anybody wants supersonic airliners. We have to
have another way of proving the markets really there, and
that's why pre orders really matter. I think in hardware
companies you got to prove that if you go invest
in the development, that there's actually there there in the end,
and then the risk is can you actually execute it
(25:47):
in a capital efficient way. It's not a risk of
like does anybody want this thing? The other thing that
I think as a piece of the strategy is you
need to get very clever about how to pull revenue
to the left. One thing we've done at Boom is
our agreements with United in America and include a prepayment schedule.
We've already gotten non refundable deposits. We'll get more from
both of them as we approach delivery. The other piece
(26:10):
is you want to find you want to find other
ways to monetize early and we've got something very exciting
that will probably reduce by an order of magnitude how
much capital we need to raise that we haven't announced yet,
but we'll be sharing later this year. Our equivalent of
what starlink is for SpaceX, the sort of the side
hustle that pays for the main hustle.
Speaker 3 (26:28):
Huh yeah, back on.
Speaker 4 (26:32):
Yeah, this is a real tease.
Speaker 5 (26:34):
I wish I could share. It'd be fun. It's going
to be so much fun.
Speaker 3 (26:36):
Okay, all right, Well we'll look out for it for sure. So,
speaking of pre orders, one of the complicating factors of
building a brand new aircraft has to be the regulatory
process and getting things like FAA approval. I'm really curious
what that has been like for you and what your
expectation is in terms of the timeline.
Speaker 5 (26:59):
Yeah. The surprising thing is we've actually never had a
regulatory delay. And you read all the headlines about what
Boeing struggles with with FAA, and I think that the
principal reason there is really two things. One is they
lost the trust of their regulator, and then number two
is they operate in this delegated model where they have
(27:21):
their own sort of internal FAA that are all Boeing
employees that do approvals as they develop an airplane. And
then they show up at Papa FAA at the end
of the program and say please rubber stamp me. But
then then the Papa FAA one doesn't trust them, and
two hasn't seen any of the work along the way,
And so now you're at the end of the program
and they're telling you to go back and change things
(27:41):
that they never had any input along the way. And
that's just a really terrible way to work with the regulator.
And if you look back in history before Boeing really
lost its way, like in the nineteen nineties on the
Triple seven program, it was Boeing plus FAA versus the
problem and they shipped a pretty amazing airplane on time
with an FA certification process that took less than a year.
(28:04):
And so what we looked at that example, and when
we did our XB one, we said, we're going to
work with the FAA kind of the old good way.
And so we showed up in DC and we said,
let me tell you what we're doing. We'd love to
get your input. Come any time you want look at
anything you want to look at, Please give us your feedback.
Please give it to us early enough that when we
have your feedback, we can actually act on it. And
(28:24):
so they saw XB one when it was a piece
of paper, they saw it when it was a bucket
of parts, they saw it when it rolled out, and
they saw it when it was ready to fly. And
as a result, what usually is a ninety day like
approvals process for an R and D airplane took literally
ninety minutes, like the day we said we're ready, they
handed us the paperwork. And that's not some kind of
(28:47):
lobbying miracle. That's just building trust. And I think I
don't think it'll be ninety minutes on our airliner, obviously,
But you know, we're already talking with them. We're saying
here's what we're doing, here's some of the big choices
we need to make, here's how we're thinking about it.
There's trade offs. What do you think? You know, we
don't have that sort of boom FAA proxy. We just
work with them directly. And so by the time that
(29:08):
we're done, we'll have gone through the process together. Everyone
will understand the decisions, they'll understand the testing we've done,
and I expect that when FAA is convinced it's ready,
that'll be about the same time that we're convinced it's
ready because we've gone through it together.
Speaker 4 (29:23):
I have a question.
Speaker 2 (29:24):
It's more related to the business of SuperSonics than the
manufacturing of them. I've gone to Europe for work a
few times with Bloomberg, and I've been fortunate enough to
be able to fly business class and it's really nice
and I really like lying down on the plane. It's
just such an insane luxury every time, I can't believe
it's real. Are you sure that people will trade beds
(29:45):
for shorter flights on mess because.
Speaker 4 (29:47):
I don't like it.
Speaker 2 (29:48):
I'm just like, oh, yeah, okay, I get there a
few hours earlier, but then I don't get this really
nice live flight experience. Like, I don't know, why are
you confident so much demand will materialize just for the
sake of speed? And then yeah, it's longer with the
current thing, but is really comfortable.
Speaker 5 (30:04):
A couple things. One is I think it helps to
look at what people pay for on flights that are
already shorter. So like a transatlantic flight supersonic is going
to be three to four hours. Yeah, and you say, well,
what about domestic flights that are three to four hours,
what it's like on board? Well, it's a nice first
class seat. And nobody puts flatbeds on flights that are
(30:25):
you know, three four five hours. They put them on
longer flights, particularly longer flights that are scheduled overnight, and
so the experience on overture there's another thing, unfortunately I
can only tease I can't show you yet it's going
to be nicer than domestic first class. Okay, from space, connectivity, comfort,
there's some really nice little innovations we're doing that will
(30:46):
I think beat the socks off a domestic first class.
And yet you'll be able to go to Europe or
to Asia in the time of a domestic flight, and
I think airlines will schedule them so the vast majority
of flights are daytime. So instead of leaving us in
the evening on the airplane and get into Europe in
the morning, you actually leave in the morning and you
get there in the afternoon or evening, and you're awake
and productive on the flight, and you get to sleep
(31:07):
in a far better bed that you can find on
any airplane the one at home.
Speaker 4 (31:11):
If you could be productive.
Speaker 2 (31:12):
I have to say, like I actually don't care that
much about seats anywhere, because I just scroll my phone
the whole time.
Speaker 3 (31:17):
And if this is true, I've been on flights watching
Joe and this is what he does.
Speaker 2 (31:21):
Yeah, it's totally fine as long as I have good
fast WiFi. I actually don't really care that much anymore.
All Right, I have another question. You know, obviously, building
planes is one part of a broader anxiety or push
or whatever for more domestic US manufacturing. One of the
things that they're seemingly a bypart is an interest for
(31:42):
though maybe different people have different ways of getting there.
Speaker 4 (31:45):
I don't know.
Speaker 2 (31:46):
Maybe the probably people from the Trump administration who do
ask you this question, so maybe it's not hypothetical.
Speaker 4 (31:52):
What are the barriers?
Speaker 2 (31:53):
It's like, Okay, we want to be, like, we want
to be at the cutting edge of more things in general.
What's getting in the way of that? And are there
policy things other than lifting the overland supersonic ban? Are
there other things that you could think of that generally
hold the US back from being in advanced manufacturer in
a range of things or things that you've discovered along
(32:15):
the way that are counterproductive to these efforts.
Speaker 5 (32:18):
Yeah, I think there is enormous fundamental American dynamism and
what gets in the way is really ourselves and our
own red tape. The ban on supersonic overland in the US,
I think is probably the best example of a regulatory
own goal, where like literally every airplane from the Right
Brothers through the Boeing seven oh seven was faster than
(32:39):
the one that came before it, and then we banned
the primary vector of innovation. And if you follow that
thread forward, it's not the only cause, but I think
it's a big piece of the undoing of Boeing, because
if you put a lid on innovation, the best and
brightest don't even want to work there.
Speaker 2 (32:54):
But Bowing kept building what you can find, but there
was not early nineteen seventies, and Bowling kept building power
high planes for at least a few decades after that.
Speaker 5 (33:02):
Right, Yeah, they had a decent runout. But if you
look at the latest generation Boeing and you look at
next to put it next to the very first jet liner,
it's it is literally a carbon copy of the same
basic airplane concept. They kept iterating and optimizing the technology,
but they didn't have any capability, And ultimately it's like
who wants to go work for both? As if you're
(33:22):
a great engineer, so you can like re engineer the
same basic thing.
Speaker 2 (33:25):
Okay, so that's plans and I get the speed thing.
There's obviously a lot of we seem to have stalled
out at the cars seemed to be falling behind in
obviously other things. Are there other sort of like broad
themes you've discovered in US manufacturing that are holding us back?
Speaker 5 (33:43):
Yeah. I think there's a lot of regulatory environment, both
federal and state and local that it just adds cost
in time. I give you an example. So we build
a factory in Greensboro, North Carolina, almost two one thousand
square foot factory, and it took longer to get the
building permit, and then it took to build the factory.
It took about eighteen months to get the building permit.
(34:04):
And if you double click on that, it's like, why, Well,
we had to do an environmental impact study on the
noise that our airplane would make once it was built.
And it was like, wait a minute, we have to
before we can roll a cement mixer, we have to
study the noise profile of an airplane that we haven't
finished designing, let alone, building where we've pledged is not
(34:26):
going to be any louder than other airplanes. And if
it were China, my guess is they wouldn't have to
do that, And I could tell you more stories like
we're building an engine test facility here in Colorado, and
the long pole in the tent is the fire Department.
I think we've made a big mistake in the US.
So in China you can look at this stuff and
it's kind of anything goes, which I don't think is
(34:48):
the right answer. And in the US, you know, obviously
we want clean air, clean water, we want airplanes that
don't crash, buildings that don't burn down, like all this
is common sense. But the risk underwriting decisions we've given
to monopolistic government entities that have the sole power to
say yay or nay, and have an asymmetric incentive to
(35:10):
say nay because if they approve something they shouldn't improve,
it's their career. If they hold something up, it doesn't
really matter. And so all the incentive of these sort
of centrally planned risk underwriting entities is that they slow
things down and they add cost. But I think we've
got fundamentally the wrong frameworks for those things, and we
need to get out of our own way.
Speaker 3 (35:30):
I'm so fascinated by the actual manufacturing process here and
the idea of starting to build an aircraft basically from scratch.
Could you maybe zero in on one specific part and
talk to us about how that particular thing comes into being.
So I'm thinking maybe something like composits, because you're building
out of composits instead of aluminum, like the concord. Where
(35:53):
do you actually get that from?
Speaker 5 (35:55):
Yeah, well, maybe I'll talk about engine parts, because there's
some of the most fun So engines are these that
sort of jet ins are these amazing machines, and they
need to operate at super high temperatures in order to
be efficient. And in fact, the high pressure, high temperature
air that comes out of the back of a jet
engine combustor is actually above the melting point of the
(36:17):
metal that the turbine blades are made out of. And
so these turbine blades, they are these metal parts that
are hollow on the inside and cooling air goes through them.
It comes out these little pores on the tip of
the turbine blade and that cool By the way, the
cooling air is only a thousand degrees and it sort
of envelops the turbine blade and allows it to operate
(36:39):
in a thermal environment that's above its own melting point.
And all this is happening, well, it's spinning at thousands
of RPMs. And so to make these parts so strong,
they're actually cast out of a advanced casting process that
allows the entire blade to be one single crystal talent structure.
(37:01):
So these are investment castings in what's called a directional
solidification oven, where they start cooling it from one side
so that as the crystal starts forming, as the molten
metal freezes, the lattice spreads out, and it's one very
specific grain structure, one crystal the entire blade, and that
allows you to get this incredibly high performance. Now, the
(37:23):
most amazing thing about what I just shared is that's
nineteen seventies technology and it's still state of the art.
That's what we're We're using a more advanced version of
what I just described to build the production turbine blades
for our symphony engine, with some three D printing in
the investment casting process.
Speaker 3 (37:40):
So how do you actually start doing that though, as
a brand new company that has never done this before.
What's step one and then step two and step three?
Speaker 5 (37:49):
Step one is higher great people, and many times the
alchemy of great people is the most important part of
the solution. We have this thing we call the talent distill.
So what's that. It's about the mix of senior and
junior talent. I believe in teams that are basically eighty
percent young and up and coming, smart, driven, bright, they
(38:11):
don't know what's impossible. And about twenty percent of the
what we call the oak that's got a bit of
scar tissue, you got some experience, and then you put
them all together, and the oak and the spirits interplay
with this great alchemy. And many times what we do
is we put the like on our engine program. For example,
the guy leading is this guy, Nick Shirika, who's a
at this point a nine year Boom veteran. He ran
(38:33):
flight test on XB one. He's never done an engine before,
but he loves engines and he's a really fast learner.
And then we've surrounded him with people that've done engines
before and they just learn super quickly, and we get
to hardware super quickly. So you know, we'll go on
this like lightning tour, will tour every factory in the
country that's relevant to this decide what we're going to
do ourselves, decide where it makes sense to pick a
(38:53):
partner and go forward from there.
Speaker 3 (38:55):
Have you been peeling any old oak engineers from Boeing unsuccessfully?
Speaker 5 (39:02):
We've had interesting a handful of people that we get
out of Boeing earlier in their career before they've been corrupted.
But every single big aerospace higher that we've made out
of any of the top companies and put into a
senior leadership role, it hasn't worked out a single time yet.
Speaker 4 (39:19):
That's interesting, and I think the reason.
Speaker 5 (39:21):
Is that to succeed at a startup doing something differently,
you can't walk in thinking you already know all the answers.
So if we do this the way Boeing would do it,
we're going to end up with a ten or twenty
billion dollar program, and it's just impossible. You have to
be willing to think differently, and so you got to
have people that are willing to say, I want to
learn all the first principles, I want to learn all
(39:41):
the fundamentals. I want to learn all the physics and
all the manufacturing engineering. But I'm going to forge my
own path for how we go about the development program.
I'm going to write a new playbook because the old
playbook doesn't work.
Speaker 2 (39:52):
I'm reading the bio page for Nick Shirka, who you mentioned,
and it says in his free time, Nick fabricated and
test flew his own experiment mental home built aircraft. Sounds
like a cool guy who you'd want to have, who
you'd want to have on your team. What don't you
mention how some of this tech is nineteen seventies tech.
What actually has substantively improved tech wise since the age
(40:14):
of the Boeing such that the economics just from a
sort of like cost per mile or cost per seed
are going to be better.
Speaker 5 (40:21):
So it turned out that Boeing shipped all the technology
you need for an economic supersonic airliner on the seven
eight seven about fifteen years ago.
Speaker 4 (40:30):
Okay, so it's.
Speaker 5 (40:31):
Carbon fiber composite airframe, and that matters not because it's lightweight,
although it is. It matters because you can shape it
in very complex ways. If you look at the fuselage
on overture, it's not a constant tube. It's bigger in
the front and it's skinnier in the back. That results
in about twenty percent better aerodynamic efficiency and you can't
(40:53):
build that in an efficient way out of aluminum. You
need to be able to build it out of composites
very precisely. So new materials make a difference. Engine technology
concord flu with converted military engines with afterburners, and that
is a very expensive way, in a very loud way
to make thrust. But today every commercial airplane that flies
with a turbofan they're cleaner, quiet, or way more fuel efficient,
(41:16):
and you just have to have enough thrust to overcome
the drag. You don't actually need an afterburner to go supersonic.
So materials in the airframe improved engines. That's about engine architecture.
It's also about the super alloys that go into those
engines that allow them to run at higher temperatures. Then
a lot is computation as well. It used to be
you have to develop in a wind tunnel and every
iteration would take six months and cost millions of dollars.
(41:39):
And today we have software virtual wind tunnels and we
can press a button and overnight we can run the
equivalent of hundreds of wind tunnel tests, looking at many
different designs and pick the best ones. And with cloud
computing you can just rent that capability computationally, and then
we've got our own software that allows a small design
(41:59):
to team to do the work that would historically require
a large design team. So we've got new materials, we've
got better or dynamos, we've got better engines, we've got
software everywhere, and all of that adds up to about
a twenty percent aerodynamic efficiency improvement. Similarly, about a twenty
percent engine efficiency improvement. And you put all those together
into an airplane and you can, relative to concord, you
(42:20):
can make the seats bigger and more comfortable while the
costs come down.
Speaker 3 (42:24):
I do remember seeing the seven eight seven for the
first time when it debuted at Farnborough and they took
all the reporters on. You could walk through it and
it was an amazing experience, and everyone was like ooing
and aweing over the composites and just moving from room
to room to room within the aircraft itself. But just
on this note, and this sort of dovetails with Joe's
(42:47):
question earlier about whether or not customers will be willing
to give up flatbeds for an extra I guess two
hours three hours of their time. How confident are you
the but airlines themselves are going to prefer higher speeds
over lower operating costs.
Speaker 5 (43:09):
I think that United An, American and japan airlines deals
what are going to speak for this? At the end
of the day, airlines are in business to make money.
And if you look at the economic profile on overture
relative the economic profile flying a flatbed and business class,
the airlines are going to make more money supersonic they
would make subsonic. So there's just you know, there's a
very capitalist motivation there on one hand. On the other hand,
(43:32):
there's also an arms race. So our passenger research says
that eighty seven percent of people who fly first your
business internationally today would switch airlines in order to access
supersonic flights and walk away from their status and their
loyalty points and whatnot. And what that means is as
soon as one airline gets supersonic, all their competitors have
to get it too because passengers want it.
Speaker 2 (43:53):
Wait, just real quickly, why are they just walked through
like the cost basis or the economics of a flight
onto supersonic and why it's competing or the.
Speaker 4 (44:02):
Orders.
Speaker 5 (44:02):
Yeah, let's let's take New York London as just an
example cast and it's pretty representative from a cost perspective.
With eighty percent of the seats full, which is a
little bit less than what airlines typically get. The break
even fair round trip is about thirty five hundred dollars,
and that compares to people routinely paying five grand or
more in business today. So it's super profitable. And why
(44:26):
is that, Well, you're starting with a pretty efficient airplane. Initially,
it only carries the premium passengers the first in business.
And because it's a faster airplane, it can do twice
as many flights with the same airplane and crew, so
you can sweat the asset. And I think that's the
thing that a lot of people don't realize about supersonic.
If you can build an airplane that's got enough demand
(44:49):
and it's got the right number of seats and the
right amount of range, you're gonna be able to fly
at you know, twelve thirteen, fourteen hours in a day,
just like a wide body, but you're gonna get twice
as many trips out of that. And so we call
that the speed dividend. By going faster, a bunch of
costs actually come down.
Speaker 4 (45:03):
Blake schol this is super fascinating.
Speaker 2 (45:05):
It's so great to I love hearing about manufacturing history
and all of this stuff. And when you have all
of these exciting new side projects and side revenue sources
and everything, Let's do Let's do another episode.
Speaker 5 (45:18):
Let's do it anytime you want to come to Denver
and see the fly one, see the factory, and see
the test airplane.
Speaker 4 (45:23):
Text test flight, the next test flight.
Speaker 5 (45:25):
It's probably about three years out. We did thirteen on
the XB one, accomplished everything we wanted to accomplish, and
so that that airplane is retired now and the next
test flight is going to be the airliner.
Speaker 2 (45:34):
Thanks so much, Blake. Really enjoyed you coming on odlock.
Speaker 5 (45:37):
Appreciate you having me. Good to chat, Tracy, good to chat.
Speaker 3 (45:39):
Jow, thank you, Thank you so much.
Speaker 4 (45:53):
Tracy.
Speaker 2 (45:54):
It was one minor point in there that I thought
was interesting. You know, when it comes to manufacturing, people
always talk about the importance of agglomeration and having everything
together in a Shenzen or whatever. It is funny to
think about that. For political reasons, we have specifically decided
to make the American defense manufacturing base extremely diffuse, so
(46:15):
that every Congressman and senator feels the need to protect
jobs in their own home state to consider various weapons programs.
Speaker 3 (46:22):
It is funny, but I mean it also weirdly exists
for commercial products as well. Right, And I'm thinking there
was a chart that I tweeted many many years ago
that showed manufacturing of a hot tub in America and
you could just see the round trip that all these
different parts actually took. And it's built in like Colorado,
but then stuff gets sent to Arkansas, North Carolina, whatever,
(46:45):
and it does seem like it's very time consuming.
Speaker 2 (46:48):
We just need one state, or one really big chunk
of a state to sort.
Speaker 3 (46:52):
Of have Which state do you nominate, Joe, that's the problem.
Speaker 2 (46:55):
Well, I would pick it somewhere like in West Texas
or something like that, where there's just a ton of
flat land and a bunch of solar parah.
Speaker 3 (47:02):
Of course you would pick Texas.
Speaker 2 (47:04):
And then you'd have it like libertarian, no rules and
no and just build up whatever you want.
Speaker 3 (47:09):
No.
Speaker 4 (47:09):
I thought that was really interesting. I don't know, I
guess I'll believe it when I see it.
Speaker 2 (47:13):
Yeah, I mean it would be really cool.
Speaker 4 (47:15):
Like I'm very pro it, but what does that mean
to be pro it?
Speaker 2 (47:18):
So there you are pro it, but like it would
be really cool. I'd love to see it actually happen.
Speaker 3 (47:22):
So there's two things that really stand out to me.
So number one is I think the operating costs are
going to be key, right, Like that really is one
of the things that kind of doomed the Concord. It
wasn't very fuel efficient, and then because it was such
a small fleet, the actual maintenance was really expensive because
you had to have all these specialists and things like that.
(47:44):
So operating costs are a big one. And then I'm
just not sure that airlines are going to airlines and
customers to the point that you made, are going to
be that interested in I guess like a two hour
gain on a fly if it comes with a higher
ticket price or a lower profit. So that seems to
(48:05):
me to be the key. And again, like I've seen
the business class airlines start up before, like Silverjet and
max Jet.
Speaker 4 (48:12):
Well, what's your theory about why they fail?
Speaker 3 (48:14):
It was operating costs. So they started I think it
was posts two thousand and eight and then things were
going okay, but then oil spiked, yeah, and that kind
of doomed them. And actually that reminds me I was
going to tell you a story Silverjet. Yeah, one of
the business class only airlines. So when it was entering
its last days, it was obviously having trouble getting extra
(48:37):
money from its various creditors, and so the CEO started
putting jet fuel on his personal credit card.
Speaker 4 (48:43):
Oh that's cool.
Speaker 3 (48:44):
And the funniest thing was his personal credit card had
reward points with British Airwins, so he was earning tons
and tons and tons of BA points while purchasing jet
fuel for his own airline.
Speaker 4 (48:57):
That's a good nugget.
Speaker 2 (48:58):
You know the story about a fat right how like
the company I think FedEx like was really close to
going bankrupt really early on as days. And the founder
there's like some story the founder like went to Vegas
and played blackjack. To let me look at a FedEx
founder blackjack. There's some story how Fred Smith rescued FedEx
from bankruptcy. He won twenty seven thousand dollars playing blackjack
(49:20):
one time, amazing, and he rescued the companies from bankruptcy.
So yeah, sometimes entrepreneurs they just got to like put it.
Speaker 4 (49:28):
All on the line themselves.
Speaker 3 (49:29):
They got a gown to save there literally, Yeah, all right,
shall we leave it there.
Speaker 4 (49:33):
Yeah, let's leave it there.
Speaker 3 (49:34):
This has been another episode of the Odd Lots podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway and.
Speaker 2 (49:39):
I'm Jill Wisenthal. You can follow me at the Stalwart.
Follow our guest Blake Schole, He's at b Shoal. Follow
our producers Kerman Rodriguez at Kerman ermann Dash'll Bennett at
Dashbot and kil Brooks at Kilbrooks. For more Odd Lots content,
go to Bloomberg dot com slash odd Lots with a
daily newsletter and all of our episodes, and you could
chat about all of these topics four seven in our
(50:01):
discord discord dot gg slash onlines.
Speaker 3 (50:04):
And if you enjoy odd Lots, if you like it
when we talk aerospace, then please leave us a positive
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is find the Bloomberg channel on Apple Podcasts and follow
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Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:18):
Hello and welcome to another episode of the Odd Lots podcast.
Speaker 3 (00:22):
I'm Joe Wisenthal and I'm Tracy Alloway.
Speaker 4 (00:24):
Tracy, I have to say.
Speaker 2 (00:25):
If I had any friend who I would have guessed
would have ever been on a Concord, it would have
been you.
Speaker 3 (00:30):
Oh is that a nice thing to say?
Speaker 2 (00:33):
You're international, You've been all around the world, sophisticated traveler
like I would have guessed that maybe at some point
when it still flew, that.
Speaker 4 (00:42):
Maybe you would have flown aboard the Concord jet.
Speaker 3 (00:44):
I mean, I would have been in middle school or
high school flying on the Concord, which would have been
quite an experience, I imagine. Let's see, so it stopped
flying in the early two thousands.
Speaker 4 (00:54):
Yeah, right, I guess that was a long time ago.
Speaker 3 (00:56):
Yeah, but of course it has this massive legacy. And
when people think of the Concord, they think of luxury
aeror travel, and I guess advanced technology too. And it's
kind of crazy to think that this plane, a supersonic plane,
started flying in I think it was the sixties or
the seventies, and now fifty years later, we don't have
(01:17):
any supersonic air travel commercially, at least I know there's
supersonic fire jets and things like that. Like is that weird? Well,
it's weird.
Speaker 2 (01:27):
It's depressing too, because I think when I think of
like civil aviation in general, not only do I think
we haven't really made much progress, like we're not at
the cutting edge. We're going back right because okay, like
we're currently not building any supersonic jets are flying them.
Our capacity if you just think about the US and
you think about Boeing seems to have gotten worse over time.
(01:48):
So it's not just that Boeing hasn't launched new planes
in long time. It's ability to produce the existing planes
seems to have been degraded. So this is one area
where like it's not even lack of progress, it's like
literally going in reverse.
Speaker 3 (02:03):
Also, every once in a while one of the budget
carriers in Europe especially will threaten to have like stand
up seating on one of their planes. It really does
feel like we're regressing.
Speaker 4 (02:15):
By the way hot take.
Speaker 2 (02:17):
I think for short flights I would be okay with
the stand ups.
Speaker 4 (02:20):
No, yeah, I stand up on the bus. For a
long time, I stand up on the train. I could
do it for like an hour.
Speaker 5 (02:26):
Yeah, I have.
Speaker 2 (02:27):
Actually, But anyway, without digressing too much, So, you know,
we talk about manufacturing, we actually talked about aerospace affair amount,
but we should talk more about the people actually building
actual things, or at least aspiring to actual build things
in the United States. And what are the barriers and
why does it seem so hard?
Speaker 3 (02:46):
Let's do it, especially for something like supersonic flight, which
was challenging at the best of times. I think that's
a fair way to describe it. So I'm excited to
dig into this totally.
Speaker 2 (02:56):
So in early June, the White House instructed the FAA
to lift its ban on flying supersonic jets over the
United States.
Speaker 4 (03:05):
I don't think the band.
Speaker 2 (03:06):
Has been lifted yet, but it's been destructed to And
then the question is anyone they're actually going to be
new supersonic jets. Well, this actually matter because right now
none are flying anyway. There are companies that are trying,
and one of the companies that is trying to build
a commercial supersonic jet is Boom Supersonic, and I'm thrilled
to say we have its founder and CEO, Blake schul
On the podcast. They're actually trying to build a supersonic jet.
(03:29):
That's crazy. Welcome to the podcast.
Speaker 5 (03:30):
Blake, Hey, Joe, Hey, Tracy, thank you for having me.
Speaker 2 (03:33):
You think you can actually build a supersonic jet company
in America in the twenty twenties.
Speaker 5 (03:39):
It seems like the answer is yes. We've built and
flown the actually the first ever civil supersonic jet made
in America. We became the first private company ever to
build and fly a supersonic jet. United Airlines, American Airlines,
Japan Airllians have signed up for the airplanes. We've got
a factory in North Carolina. There's still a lot of
work left to do, but every day that goes by,
(04:01):
we've got less excuses for failure.
Speaker 3 (04:04):
So I have a question, which is I don't mean
this to sound insulting, but shouldn't you be an airline
rather than an aerospace manufacturer? And the reason I asked
that is because Concord famously developed by Aerospetsial and British
Aerospace and they never made money on it. They never
recouped their development costs. But BA and Air France, I
(04:26):
think those were the major airlines flying it at the time.
They made some money, you know, in certain years, So
what exactly makes you confident that this is going to
be a profitable enterprise for you?
Speaker 5 (04:38):
Yeah. Well, I think we have to look back and say, like,
why was Concord such a disaster? And I think a
lot of the stories that are out there kind of
missed the basic truths. In nineteen sixty nine, we land
on the Moon and we flew Concord for the first time,
and at the time these were heralded as the harbingers
of great things to come of space exploration, of a
(04:59):
new age supercent travel. But of course now we're here
in twenty twenty five and we can't land on the
Moon and we can't fly supersonic. And I think in
many ways the deepest reason is that both of those
projects were deeply misguided. And I think Concord killed supersonic flight.
I think Apollo killed space exploration. And the proximal story
on Concord is what we were trying to do in
the West is compete with Soviet Russia, and very ironically
(05:23):
we did it by adopting communism and central planning, and
so we had these programs that were respect by governments
that were not thinking about market viability, and so Concord,
here's an airplane with one hundred seats on it. Mind you,
they are a hundred uncomfortable seats. You might mistake it
for Ryanair.
Speaker 3 (05:41):
I thought they were plush leather seats.
Speaker 5 (05:44):
They look like economy. Oh the lake room was better
than typical economy. But these were seventeen inch wide seats.
Speaker 3 (05:50):
Because the actual body of the aircraft was so narrow, right.
Speaker 5 (05:55):
Yeah, and they didn't I don't think they laid it
out very well. So one hundred seats not super comfortable.
You have to duck to get on the airplane. And
yet it just for inflation, and the fares are about
twenty thousand dollars. And guess what. You can't fill one
hundred seats at twenty thousand dollars a pop, especially not
with like seventies or eighties kind of travel volumes. So
the whole thing never made any sense. But that doesn't
(06:15):
mean you can't make a supersonic airliner. That makes sense.
It just means that Concord didn't because it was in essence,
because it was centrally planned.
Speaker 2 (06:22):
Well, sorry, explain that further. Is the issue that was
centrally planned or was the issue that at seventies or
eighties tech and seventies or eighties air traffic volume, it
wasn't there to support the cause because those strikeen me
is two different things. And we'll get into the tech
of your plane. But I know there's been progress in
various fronts and seventies. Could it have been commercially viable
(06:45):
in the seventies or eighties when the tech theoretically existed,
because that strikes me as different than saying, oh, central planning.
Speaker 5 (06:52):
I think those are two sides of the same coin.
The central planning leads to creation of things that don't
actually make any economic sense. Let me paint you a
very different history. So actually, let's start with the history
that really happened. So we had these sort of centrally
planned supersonic projects in the sixties. France and Britain got
together and did did Concord and Soviet Russia they did
(07:13):
the t U one forty four. People called it Concord
Ski and the US Nixon and Kennedy stood up what
was called the sst FAA Specta gave the contract to
Boeing that was going to be a three hundred seat
Mock three airplane. It made even less sense than concord,
and then the plug gets pulled on the SST. Now
it looks like Europe and Russia are moving forward with
(07:36):
supersonic it's not yet really obvious how doa those products are.
And then in nineteen seventy three, we did the worst
thing I think we've ever done in the history of regulation,
but as we banned supersonic flight in the US. And
what that did is basically outlaw the way this thing
should have come to market. So, if you think of
the way most technology comes to market, and cell phones,
(08:01):
electric cars, computers, these things typically start at relatively higher
price points for the more well to do, and then
as we scale and find efficiencies, that cost comes down.
And now our kids have cell phones. And so the
way supersonic passenger travel should have started was with a
small private jet really for the well to do and
(08:23):
for companies. And that airplane would have needed to carry
maybe five or ten people at a time, and it
would have only needed to fly safe from like Seattle
to Miami, kind of what's the longest sort of North
American route. You can imagine that small airplane would be
easy to make quiet. It wouldn't have mattered if it
was a bit more expensive to operate on day one,
and that would have kicked off in an iteration cycle that
would have led to bigger airplanes to airliners, and I
(08:45):
think had that history unfolded, we'd all be going mock
five by now. But when you ban supersonic flight over
the US, what you do is you make that product illegal,
and so we ended up freezing progress. It's an artifact
of I think, really, you know, Cold War era national
prestige politics.
Speaker 3 (09:05):
So talk to us about what you're doing differently, because
I think this will maybe help solidify the point that
you're making. So for you, it sounds like the business
model is going to be more about scale and volume
versus having those high ticket prices and supposedly luxury good.
Speaker 5 (09:24):
Right, everybody wants faster flights so long as they are
affordable and comfortable and safe, and airlines want them so
long as they can make money doing it, and so
the question really became, well how do you do those things?
And so we said, look, ultimately we want to do
this for everybody, but we're going to start focused on
people who'd fly first your business class today, which is
(09:47):
somewhere like eighty percent of international airline profits. So it's
the economically significant place to start. And so with all
the technology that's been developed since Concord, you can get
the fares down by about three quarters. So I think
more like a five thousand dollars business class fair, not
a twenty thousand dollars kind of bucket list item. And
then we put well, how many seats would the airplane have? Well,
(10:07):
should have as many as airlines can fill, so about
as many as you find in business class today. So
this is a sixty to eighty seat airplane. I think
the sweet spot's really going to be right around sixty
four sixty four really nice seats, the range and the
economics to make it work on hundreds of routes. And
so we started out thinking, let's assume that the regulation
is not going to change. Let's focus on an airplane
that can fly transoceanic on the routes that are the
(10:29):
most painful today. Let's find our foothold market there, and
then ultimately we'll find a way to conquer sonic boom
and expand the market to transcon as well. And it
turned out that actually happened much faster than we thought
it would.
Speaker 3 (10:58):
As a former transfer two reporter. When I hear someone
talk about business class only flights, I think about this
sort of perpetual crop of companies that have attempted to
do that over the years, and silver Jet springs to mind. Joe.
I have to tell you a really funny story about
Silverjet later on. But you know, I think back to
(11:19):
those Most of them, the vast majority of them are
unsuccessful because you know, it turns out they still have
high operating costs, and the airlines can't They can't raise
the tickets enough to offset those What are you doing
on the operating costs side to make this model actually work?
Speaker 5 (11:39):
So I have a slightly different point of view and
why the all business class airlines have mostly failed. Okay,
so first off, let's start why they're attractive. All the
money is in business class, So why not buy smaller
or cheaper airplanes, put business class in them, only be
able to lower the fairs and still roll in money.
It sounds like a great business plan, but the problem
is it's really start with the profit story, not starting
(12:02):
with the customer story, and the passengers by and large
don't care whether there's an economy cabin on the airplane.
What a passengers care about well they care about are
the flight times convenient? Can they use their frequent flyer miles?
Do they get the benefits of their status? Is it
easy to connect? The all business class airlines had no
advantage in the eyes of the passengers, and they had
(12:25):
lots of disadvantages. So the business plan didn't actually work
for that reason. Now if you bring it to supersonic,
now there's a reason for the passengers to prefer the airplane.
They can get there in half the time. And moreover,
you deploy these in the context of today's international airlines.
So United ordered, Americans ordered, it's going to fit in
(12:46):
their root network. You'll be able to connect, you'll be
able to benefit from your status. And so if you
put an all business class supersonic jet and you put
it into an existing airline network, it makes sense fundamentally
because it makes sense for passengers.
Speaker 2 (12:59):
Before we move, you've been around for like a decade,
So why do you bring us up to speed? How
much money have you raised, where are you at within development?
And how much more money and time are you going
to need before you have a plane that's regularly coming
out of your factories.
Speaker 5 (13:15):
Yes, we've been around for almost eleven years now, we
have raised bit over six hundred million dollars. And one
of the things I'm really proud of is the capital
efficiency story. We did the XB one airplane for less
than two hundred million dollars, including the airplane, including the
flight test program. And to put that in sort of
industry context, the closest comparison is the NASA X fifty nine,
(13:40):
And you know, we basically did everything that that thing
set out to do, did it faster, and that thing
hasn't even flown yet. I think we're going to come
out somewhere around six x more capital efficient versus legacy approaches.
And so some people look at this and they say, well,
she's Boeing takes ten billion dollars plus to develop new airplanes.
This seems financially infeasible, and I think that. I think
(14:00):
it's true if it's going to take you ten billion dollars,
but it doesn't need to take anywhere close to that
amount of money. I think new entrants and SpaceX I
think prove this by running circles around YLA and Locket
and Boeing, and I think we're in the process of
demostrating the same thing, we can be at least five x,
maybe ten x more capitally efficient, and so suddenly this
is a very very reasonable financial proposition.
Speaker 4 (14:22):
Tell George, though, all right, where are you now?
Speaker 2 (14:24):
And then getting to okay, we wake up in just
dear twenty thirty five. What did it take in terms
of money and time to get to where you have
planes rolling out of the gates?
Speaker 4 (14:34):
How much more money? How much more time?
Speaker 5 (14:35):
Yeah, I think it's going to be between one and
three billion to kind of get this all done. I'd
like to see it come out closer to one, could
be three to give you a sense of kind of
where we are today. So we've proven all the technology
is there, We've proven the airlines want it. I think
it's obvious that passengers want it. We've got a factory
in North Carolina. The next thing we're actually doing is
scaling up our engine technology. So you'll see the first
(14:56):
engine come together around the end of this year. And
then the next thing is we're scaling up the airplane
from our XB one prototype to the Overture Airline or
you'll see the first one starting the built next year.
And so our goal is to be ready to carry
passengers by the end of twenty nine, and I think
when that happens, in some ways, the most interesting story
will be how small the team was that did it,
(15:19):
and what a tiny amount of money it took compared
to what the big guys spend.
Speaker 3 (15:24):
You mentioned the engines just then, and I wanted to
ask you about those. So you're developing your own engines.
I think they're called Symphony, and that seems like a
pretty big challenge to build an aircraft engine from scratch.
But on the other hand, you could see why the
engines would be a very key part of making the
plane actually economic and efficient, because I think that was
(15:45):
always one of the problems with Concord, the engines weren't
that fuel efficient. Why did you decide to go down
that route? And what has the actual development and manufacturing
experience been like so far?
Speaker 5 (15:58):
Yeah, I mean, so we looked at using one of
the existing engine providers for it. There was no off
the shelf engine that would be a fit, and the
big engine players were at most willing to kind of
take a subsonic engine and shoehorn it, and that turned
out to be both extremely expensive and super inefficient, and
then we wouldn't end up with a custom engine that
actually fit what we needed. And so what we found
(16:20):
was that by building an engine ourselves, just the way
SpaceX does by the way, we could get a fully
custom engine much faster and much cheaper than any other approach.
So you were seeing about a four x reduction and
cost relative to what the big guys quoted us. And
then we end up in an engine that is optimized
together with the airplane, and that makes a big difference,
(16:41):
not just in fuel efficiency but in capability. So we
demonstrated boomless crews on XB one and that's a capability
that would not have been possible on overture if we
weren't doing our own engines.
Speaker 3 (16:53):
If you're doing boomless supersonic flights, do you have to
change the name of the company boom to boomless.
Speaker 5 (17:00):
We're gonna delete the boom, or we're just gonna call
the company supersonic.
Speaker 4 (17:03):
I like that.
Speaker 2 (17:03):
That's a nice thing. Actually, can you give us a
theory of the firm? So you mentioned that you know
SpaceX is done accomplished things at a fraction of the
cost of what it would be at some of the legacies,
and your ability to at least get one plane out
the door and in the air is cheaper than there
was in Nassa. There are a lot of sort of
hard tech industrial tech two point zero type companies that
(17:27):
are emerging these days with this idea seemingly that you know,
a lot of big industrial operations if you started over
from today, could be much simpler or at least much cheaper.
What is it that you all have in common such
that you think that these really advanced products starting over
without this big organization. What do you do that just
(17:49):
in your view so much cheaper and faster and more
efficient than the legacy industrial players.
Speaker 5 (17:55):
There's a lot of things that go together into it.
Part of it is the power of small elite teams.
This is, you know, I think the most exciting thing
happening in aviation. So we get our pick of the
best engineers. And that the best engineers aren't like ten
or twenty percent better, they're like ten times better than
the average engineer. So we start with a small number
of highly talented engineers, we leverage them up with software.
(18:19):
So a lot of what we do at BOOM is
trying to fare out to make hardware developments look more
like software development, and that means reducing the cost of iteration,
both in time and money. And so that's that's software
design tools, it's extensive use of AI, and it's also
vertical integration to reduce cost of making parts and importantly
(18:40):
the time required to iterate on hardware. So if you
focus a lot of your energy on reducing cost of iteration,
what you find is that cost collapse in the pace
of progress just skyrockets.
Speaker 2 (18:52):
Can you actually see more about vertical integration when we
do episodes about some of the Chinese manufacturing juggernauts state
of over the last several years. This is a recurring
theme and I'm interested in what the advantages are, but
also specifically like the challenges of when you're building a
new product for which you may be I have to
imagine that for a lot of the parts that are
(19:13):
going to go into your plane, you're the only customer
or the only customer that right now that there isn't
a large supply chain that currently exists for obvious reasons
for supersonic transport, how do you deal with the fact
that I assume for many parts the supply chain literally
currently does not exist.
Speaker 5 (19:31):
Yeah, the supply chain exists, but it's kind of a disaster. Frankly,
I'll tell you a story. As I mentioned, we're building
our first symphony engine right now, about sixty percent of
the parts or somewhere in the manufacturing process. We're moving
towards being able to build ultimately all of those ourselves.
Right now. It's sort of a hybrid of things we
build ourselves and things we go to the aerospace supply
(19:54):
chain for. And as we are working through this on
our first prototype that the engine turbine blades are three
pers and we quoted them out of the traditional aerospace
supply chain. It was going to cost a million dollars
for one enginees worth of blades and take six months,
and that didn't support our schedule. And the cost was
just mind blowing, and so I started asking questions like, well,
(20:14):
how long does it actually take to make a blade?
And the answer was, well, only twenty four hours, but
you know it takes one hundred and eighty days to
get one out of the supplianet. Why a bunch of
stupid things? And like, okay, well what is the machine
that makes these costs? And I assumed that it would
be cost prohibitive and really hard to get but it
turned out the machine costs about two million dollars. They're
in an inventory. You can get one in a couple
(20:35):
of weeks. So we said, great, well, let's just buy
the machine and make these things ourselves. So for the
price of two engines worth of blades, we got the
three D printer that makes the blades. We set it
up in a matter of weeks, and we're iterating super rapidly,
and had we gone out of house, would still be
waiting for the first blades to show up.
Speaker 3 (20:52):
And what are the stupid things that slow down the
supply chain?
Speaker 5 (20:58):
One pattern is spreading production processes out across a large
number of facilities that are geographically spread out. And so
it's like, oh, well, to make this part, you start
with raw material in South Carolina, and then it goes
to like North Carolina for one process step, and then
you ship at the Wisconsin for another process step. Then
(21:18):
it goes back to South Carolina, and then you have
to put it into California actually like twice. And it's
it's insane, and like the thing spends like more time
on a truck back and forth and it does actually
getting any work done to it. So why I think
the answer is actually Congress. So why Congress? Right, So
since sort of the end of the Cold War, a
huge piece of aerospace is still driven by defense. You know,
(21:40):
it's still driven by defense procurement, and.
Speaker 2 (21:43):
They need their supply chain in every city.
Speaker 5 (21:46):
Exist exactly exactly, So you end up with these like
politically optimized really congressionally optimized supply chains. And everyone's on
a cost plus contract. So if you're on a cost
plus contract, you know your incentive is to actually maximize,
so you can maximize your plus so nobody cares that
it's inefficient. And yet that's the industrial base in the US,
(22:07):
and you can get enormous time and cost savings by
just putting everything under one roof.
Speaker 3 (22:14):
Why has no one done that before?
Speaker 5 (22:16):
Well, SpaceX has. I think one of the things that
lets you go do this is getting out from under
defense and congressional appropriations as kind of being your primary
revenue stream. So long as you're going through traditional DOOD
procurement processes, you end up being subject to all these
forces that end up with the complex difuse supply chain
(22:39):
being at some level optimal or at some level necessary.
But if you look at what SpaceX did, they pivoted
away from that approach, NASA did the commercial crew program
with them and with the commercial resupply program with them,
and that give them a lot more ability to just
do what was efficient. And I think we're doing the
same thing at Boom here, where we're starting with commercial customers.
(23:00):
We're not beholden to congressional funky dynamics, and so we're
able to go do the efficient thing, not the politically
expedient thing.
Speaker 3 (23:09):
I mean, some people would argue that SpaceX did get
a lot of development money from the government, which is
one of the things that has allowed it to do this.
Speaker 5 (23:18):
I think that's true, and yet they being I think
really the only alternative to the big legacy players. The
history shows they were able to do it without compromising
how they went about it. You know, you go to
their factory in Hawthorn in the Falcon nine days, it's
basically raw materials in one side of the building and
rockets and rocket engines out the other side. They brought
(23:39):
in house substantially all the production processes and that results
in frankly, I don't think the would have succeeded without that.
Speaker 2 (24:02):
Talk to us more about financing from here, because this
is a thing that comes up, and maybe it's changing
a little bit, but large upfront investments aren't the sort
of natural domain of VC or tech. And there's a
reason that a lot of this kind of investment often
seems to come from the government or the public sector
(24:23):
in some way. And it's going to be a long
time before you have your factory, and then it's going
to be a long time before you have planes rolling out,
and there's going to be a long time before payback.
Speaker 4 (24:31):
Talk about financing from here, who's going to invest to
get you through your next leg.
Speaker 5 (24:36):
Starting with pulling the camera back? I think it is
largely a mythology that hardware companies are more capital intensive
than software companies. If you look at what lift and
Uber and Airbnb raised in VC, and you compare it
to like space Ax and Tesla and androll, what you
(24:57):
find is that many times the software companympany is actually
consumed way more venture capital than the hardware companies. And
I do think there is one important distinction, which is,
in a software company, you can prove you've built a
useful product by shipping a simple version of it and
noticing that it gets adoption. Yes, And the VC playbook
(25:19):
is largely spend a small amount of seed money, ship
a product, find out whether it's working, then double down.
Speaker 4 (25:26):
Okay.
Speaker 5 (25:26):
And you can't do a hardware company that way, Like
we can't go build a supersonic airliner in order to
find out whether anybody wants supersonic airliners. We have to
have another way of proving the markets really there, and
that's why pre orders really matter. I think in hardware
companies you got to prove that if you go invest
in the development, that there's actually there there in the end,
and then the risk is can you actually execute it
(25:47):
in a capital efficient way. It's not a risk of
like does anybody want this thing? The other thing that
I think as a piece of the strategy is you
need to get very clever about how to pull revenue
to the left. One thing we've done at Boom is
our agreements with United in America and include a prepayment schedule.
We've already gotten non refundable deposits. We'll get more from
both of them as we approach delivery. The other piece
(26:10):
is you want to find you want to find other
ways to monetize early and we've got something very exciting
that will probably reduce by an order of magnitude how
much capital we need to raise that we haven't announced yet,
but we'll be sharing later this year. Our equivalent of
what starlink is for SpaceX, the sort of the side
hustle that pays for the main hustle.
Speaker 3 (26:28):
Huh yeah, back on.
Speaker 4 (26:32):
Yeah, this is a real tease.
Speaker 5 (26:34):
I wish I could share. It'd be fun. It's going
to be so much fun.
Speaker 3 (26:36):
Okay, all right, Well we'll look out for it for sure. So,
speaking of pre orders, one of the complicating factors of
building a brand new aircraft has to be the regulatory
process and getting things like FAA approval. I'm really curious
what that has been like for you and what your
expectation is in terms of the timeline.
Speaker 5 (26:59):
Yeah. The surprising thing is we've actually never had a
regulatory delay. And you read all the headlines about what
Boeing struggles with with FAA, and I think that the
principal reason there is really two things. One is they
lost the trust of their regulator, and then number two
is they operate in this delegated model where they have
(27:21):
their own sort of internal FAA that are all Boeing
employees that do approvals as they develop an airplane. And
then they show up at Papa FAA at the end
of the program and say please rubber stamp me. But
then then the Papa FAA one doesn't trust them, and
two hasn't seen any of the work along the way,
And so now you're at the end of the program
and they're telling you to go back and change things
(27:41):
that they never had any input along the way. And
that's just a really terrible way to work with the regulator.
And if you look back in history before Boeing really
lost its way, like in the nineteen nineties on the
Triple seven program, it was Boeing plus FAA versus the
problem and they shipped a pretty amazing airplane on time
with an FA certification process that took less than a year.
(28:04):
And so what we looked at that example, and when
we did our XB one, we said, we're going to
work with the FAA kind of the old good way.
And so we showed up in DC and we said,
let me tell you what we're doing. We'd love to
get your input. Come any time you want look at
anything you want to look at, Please give us your feedback.
Please give it to us early enough that when we
have your feedback, we can actually act on it. And
(28:24):
so they saw XB one when it was a piece
of paper, they saw it when it was a bucket
of parts, they saw it when it rolled out, and
they saw it when it was ready to fly. And
as a result, what usually is a ninety day like
approvals process for an R and D airplane took literally
ninety minutes, like the day we said we're ready, they
handed us the paperwork. And that's not some kind of
(28:47):
lobbying miracle. That's just building trust. And I think I
don't think it'll be ninety minutes on our airliner, obviously,
But you know, we're already talking with them. We're saying
here's what we're doing, here's some of the big choices
we need to make, here's how we're thinking about it.
There's trade offs. What do you think? You know, we
don't have that sort of boom FAA proxy. We just
work with them directly. And so by the time that
(29:08):
we're done, we'll have gone through the process together. Everyone
will understand the decisions, they'll understand the testing we've done,
and I expect that when FAA is convinced it's ready,
that'll be about the same time that we're convinced it's
ready because we've gone through it together.
Speaker 4 (29:23):
I have a question.
Speaker 2 (29:24):
It's more related to the business of SuperSonics than the
manufacturing of them. I've gone to Europe for work a
few times with Bloomberg, and I've been fortunate enough to
be able to fly business class and it's really nice
and I really like lying down on the plane. It's
just such an insane luxury every time, I can't believe
it's real. Are you sure that people will trade beds
(29:45):
for shorter flights on mess because.
Speaker 4 (29:47):
I don't like it.
Speaker 2 (29:48):
I'm just like, oh, yeah, okay, I get there a
few hours earlier, but then I don't get this really
nice live flight experience. Like, I don't know, why are
you confident so much demand will materialize just for the
sake of speed? And then yeah, it's longer with the
current thing, but is really comfortable.
Speaker 5 (30:04):
A couple things. One is I think it helps to
look at what people pay for on flights that are
already shorter. So like a transatlantic flight supersonic is going
to be three to four hours. Yeah, and you say, well,
what about domestic flights that are three to four hours,
what it's like on board? Well, it's a nice first
class seat. And nobody puts flatbeds on flights that are
(30:25):
you know, three four five hours. They put them on
longer flights, particularly longer flights that are scheduled overnight, and
so the experience on overture there's another thing, unfortunately I
can only tease I can't show you yet it's going
to be nicer than domestic first class. Okay, from space, connectivity, comfort,
there's some really nice little innovations we're doing that will
(30:46):
I think beat the socks off a domestic first class.
And yet you'll be able to go to Europe or
to Asia in the time of a domestic flight, and
I think airlines will schedule them so the vast majority
of flights are daytime. So instead of leaving us in
the evening on the airplane and get into Europe in
the morning, you actually leave in the morning and you
get there in the afternoon or evening, and you're awake
and productive on the flight, and you get to sleep
(31:07):
in a far better bed that you can find on
any airplane the one at home.
Speaker 4 (31:11):
If you could be productive.
Speaker 2 (31:12):
I have to say, like I actually don't care that
much about seats anywhere, because I just scroll my phone
the whole time.
Speaker 3 (31:17):
And if this is true, I've been on flights watching
Joe and this is what he does.
Speaker 2 (31:21):
Yeah, it's totally fine as long as I have good
fast WiFi. I actually don't really care that much anymore.
All Right, I have another question. You know, obviously, building
planes is one part of a broader anxiety or push
or whatever for more domestic US manufacturing. One of the
things that they're seemingly a bypart is an interest for
(31:42):
though maybe different people have different ways of getting there.
Speaker 4 (31:45):
I don't know.
Speaker 2 (31:46):
Maybe the probably people from the Trump administration who do
ask you this question, so maybe it's not hypothetical.
Speaker 4 (31:52):
What are the barriers?
Speaker 2 (31:53):
It's like, Okay, we want to be, like, we want
to be at the cutting edge of more things in general.
What's getting in the way of that? And are there
policy things other than lifting the overland supersonic ban? Are
there other things that you could think of that generally
hold the US back from being in advanced manufacturer in
a range of things or things that you've discovered along
(32:15):
the way that are counterproductive to these efforts.
Speaker 5 (32:18):
Yeah, I think there is enormous fundamental American dynamism and
what gets in the way is really ourselves and our
own red tape. The ban on supersonic overland in the US,
I think is probably the best example of a regulatory
own goal, where like literally every airplane from the Right
Brothers through the Boeing seven oh seven was faster than
(32:39):
the one that came before it, and then we banned
the primary vector of innovation. And if you follow that
thread forward, it's not the only cause, but I think
it's a big piece of the undoing of Boeing, because
if you put a lid on innovation, the best and
brightest don't even want to work there.
Speaker 2 (32:54):
But Bowing kept building what you can find, but there
was not early nineteen seventies, and Bowling kept building power
high planes for at least a few decades after that.
Speaker 5 (33:02):
Right, Yeah, they had a decent runout. But if you
look at the latest generation Boeing and you look at
next to put it next to the very first jet liner,
it's it is literally a carbon copy of the same
basic airplane concept. They kept iterating and optimizing the technology,
but they didn't have any capability, And ultimately it's like
who wants to go work for both? As if you're
(33:22):
a great engineer, so you can like re engineer the
same basic thing.
Speaker 2 (33:25):
Okay, so that's plans and I get the speed thing.
There's obviously a lot of we seem to have stalled
out at the cars seemed to be falling behind in
obviously other things. Are there other sort of like broad
themes you've discovered in US manufacturing that are holding us back?
Speaker 5 (33:43):
Yeah. I think there's a lot of regulatory environment, both
federal and state and local that it just adds cost
in time. I give you an example. So we build
a factory in Greensboro, North Carolina, almost two one thousand
square foot factory, and it took longer to get the
building permit, and then it took to build the factory.
It took about eighteen months to get the building permit.
(34:04):
And if you double click on that, it's like, why, Well,
we had to do an environmental impact study on the
noise that our airplane would make once it was built.
And it was like, wait a minute, we have to
before we can roll a cement mixer, we have to
study the noise profile of an airplane that we haven't
finished designing, let alone, building where we've pledged is not
(34:26):
going to be any louder than other airplanes. And if
it were China, my guess is they wouldn't have to
do that, And I could tell you more stories like
we're building an engine test facility here in Colorado, and
the long pole in the tent is the fire Department.
I think we've made a big mistake in the US.
So in China you can look at this stuff and
it's kind of anything goes, which I don't think is
(34:48):
the right answer. And in the US, you know, obviously
we want clean air, clean water, we want airplanes that
don't crash, buildings that don't burn down, like all this
is common sense. But the risk underwriting decisions we've given
to monopolistic government entities that have the sole power to
say yay or nay, and have an asymmetric incentive to
(35:10):
say nay because if they approve something they shouldn't improve,
it's their career. If they hold something up, it doesn't
really matter. And so all the incentive of these sort
of centrally planned risk underwriting entities is that they slow
things down and they add cost. But I think we've
got fundamentally the wrong frameworks for those things, and we
need to get out of our own way.
Speaker 3 (35:30):
I'm so fascinated by the actual manufacturing process here and
the idea of starting to build an aircraft basically from scratch.
Could you maybe zero in on one specific part and
talk to us about how that particular thing comes into being.
So I'm thinking maybe something like composits, because you're building
out of composits instead of aluminum, like the concord. Where
(35:53):
do you actually get that from?
Speaker 5 (35:55):
Yeah, well, maybe I'll talk about engine parts, because there's
some of the most fun So engines are these that
sort of jet ins are these amazing machines, and they
need to operate at super high temperatures in order to
be efficient. And in fact, the high pressure, high temperature
air that comes out of the back of a jet
engine combustor is actually above the melting point of the
(36:17):
metal that the turbine blades are made out of. And
so these turbine blades, they are these metal parts that
are hollow on the inside and cooling air goes through them.
It comes out these little pores on the tip of
the turbine blade and that cool By the way, the
cooling air is only a thousand degrees and it sort
of envelops the turbine blade and allows it to operate
(36:39):
in a thermal environment that's above its own melting point.
And all this is happening, well, it's spinning at thousands
of RPMs. And so to make these parts so strong,
they're actually cast out of a advanced casting process that
allows the entire blade to be one single crystal talent structure.
(37:01):
So these are investment castings in what's called a directional
solidification oven, where they start cooling it from one side
so that as the crystal starts forming, as the molten
metal freezes, the lattice spreads out, and it's one very
specific grain structure, one crystal the entire blade, and that
allows you to get this incredibly high performance. Now, the
(37:23):
most amazing thing about what I just shared is that's
nineteen seventies technology and it's still state of the art.
That's what we're We're using a more advanced version of
what I just described to build the production turbine blades
for our symphony engine, with some three D printing in
the investment casting process.
Speaker 3 (37:40):
So how do you actually start doing that though, as
a brand new company that has never done this before.
What's step one and then step two and step three?
Speaker 5 (37:49):
Step one is higher great people, and many times the
alchemy of great people is the most important part of
the solution. We have this thing we call the talent distill.
So what's that. It's about the mix of senior and
junior talent. I believe in teams that are basically eighty
percent young and up and coming, smart, driven, bright, they
(38:11):
don't know what's impossible. And about twenty percent of the
what we call the oak that's got a bit of
scar tissue, you got some experience, and then you put
them all together, and the oak and the spirits interplay
with this great alchemy. And many times what we do
is we put the like on our engine program. For example,
the guy leading is this guy, Nick Shirika, who's a
at this point a nine year Boom veteran. He ran
(38:33):
flight test on XB one. He's never done an engine before,
but he loves engines and he's a really fast learner.
And then we've surrounded him with people that've done engines
before and they just learn super quickly, and we get
to hardware super quickly. So you know, we'll go on
this like lightning tour, will tour every factory in the
country that's relevant to this decide what we're going to
do ourselves, decide where it makes sense to pick a
(38:53):
partner and go forward from there.
Speaker 3 (38:55):
Have you been peeling any old oak engineers from Boeing unsuccessfully?
Speaker 5 (39:02):
We've had interesting a handful of people that we get
out of Boeing earlier in their career before they've been corrupted.
But every single big aerospace higher that we've made out
of any of the top companies and put into a
senior leadership role, it hasn't worked out a single time yet.
Speaker 4 (39:19):
That's interesting, and I think the reason.
Speaker 5 (39:21):
Is that to succeed at a startup doing something differently,
you can't walk in thinking you already know all the answers.
So if we do this the way Boeing would do it,
we're going to end up with a ten or twenty
billion dollar program, and it's just impossible. You have to
be willing to think differently, and so you got to
have people that are willing to say, I want to
learn all the first principles, I want to learn all
(39:41):
the fundamentals. I want to learn all the physics and
all the manufacturing engineering. But I'm going to forge my
own path for how we go about the development program.
I'm going to write a new playbook because the old
playbook doesn't work.
Speaker 2 (39:52):
I'm reading the bio page for Nick Shirka, who you mentioned,
and it says in his free time, Nick fabricated and
test flew his own experiment mental home built aircraft. Sounds
like a cool guy who you'd want to have, who
you'd want to have on your team. What don't you
mention how some of this tech is nineteen seventies tech.
What actually has substantively improved tech wise since the age
(40:14):
of the Boeing such that the economics just from a
sort of like cost per mile or cost per seed
are going to be better.
Speaker 5 (40:21):
So it turned out that Boeing shipped all the technology
you need for an economic supersonic airliner on the seven
eight seven about fifteen years ago.
Speaker 4 (40:30):
Okay, so it's.
Speaker 5 (40:31):
Carbon fiber composite airframe, and that matters not because it's lightweight,
although it is. It matters because you can shape it
in very complex ways. If you look at the fuselage
on overture, it's not a constant tube. It's bigger in
the front and it's skinnier in the back. That results
in about twenty percent better aerodynamic efficiency and you can't
(40:53):
build that in an efficient way out of aluminum. You
need to be able to build it out of composites
very precisely. So new materials make a difference. Engine technology
concord flu with converted military engines with afterburners, and that
is a very expensive way, in a very loud way
to make thrust. But today every commercial airplane that flies
with a turbofan they're cleaner, quiet, or way more fuel efficient,
(41:16):
and you just have to have enough thrust to overcome
the drag. You don't actually need an afterburner to go supersonic.
So materials in the airframe improved engines. That's about engine architecture.
It's also about the super alloys that go into those
engines that allow them to run at higher temperatures. Then
a lot is computation as well. It used to be
you have to develop in a wind tunnel and every
iteration would take six months and cost millions of dollars.
(41:39):
And today we have software virtual wind tunnels and we
can press a button and overnight we can run the
equivalent of hundreds of wind tunnel tests, looking at many
different designs and pick the best ones. And with cloud
computing you can just rent that capability computationally, and then
we've got our own software that allows a small design
(41:59):
to team to do the work that would historically require
a large design team. So we've got new materials, we've
got better or dynamos, we've got better engines, we've got
software everywhere, and all of that adds up to about
a twenty percent aerodynamic efficiency improvement. Similarly, about a twenty
percent engine efficiency improvement. And you put all those together
into an airplane and you can, relative to concord, you
(42:20):
can make the seats bigger and more comfortable while the
costs come down.
Speaker 3 (42:24):
I do remember seeing the seven eight seven for the
first time when it debuted at Farnborough and they took
all the reporters on. You could walk through it and
it was an amazing experience, and everyone was like ooing
and aweing over the composites and just moving from room
to room to room within the aircraft itself. But just
on this note, and this sort of dovetails with Joe's
(42:47):
question earlier about whether or not customers will be willing
to give up flatbeds for an extra I guess two
hours three hours of their time. How confident are you
the but airlines themselves are going to prefer higher speeds
over lower operating costs.
Speaker 5 (43:09):
I think that United An, American and japan airlines deals
what are going to speak for this? At the end
of the day, airlines are in business to make money.
And if you look at the economic profile on overture
relative the economic profile flying a flatbed and business class,
the airlines are going to make more money supersonic they
would make subsonic. So there's just you know, there's a
very capitalist motivation there on one hand. On the other hand,
(43:32):
there's also an arms race. So our passenger research says
that eighty seven percent of people who fly first your
business internationally today would switch airlines in order to access
supersonic flights and walk away from their status and their
loyalty points and whatnot. And what that means is as
soon as one airline gets supersonic, all their competitors have
to get it too because passengers want it.
Speaker 2 (43:53):
Wait, just real quickly, why are they just walked through
like the cost basis or the economics of a flight
onto supersonic and why it's competing or the.
Speaker 4 (44:02):
Orders.
Speaker 5 (44:02):
Yeah, let's let's take New York London as just an
example cast and it's pretty representative from a cost perspective.
With eighty percent of the seats full, which is a
little bit less than what airlines typically get. The break
even fair round trip is about thirty five hundred dollars,
and that compares to people routinely paying five grand or
more in business today. So it's super profitable. And why
(44:26):
is that, Well, you're starting with a pretty efficient airplane. Initially,
it only carries the premium passengers the first in business.
And because it's a faster airplane, it can do twice
as many flights with the same airplane and crew, so
you can sweat the asset. And I think that's the
thing that a lot of people don't realize about supersonic.
If you can build an airplane that's got enough demand
(44:49):
and it's got the right number of seats and the
right amount of range, you're gonna be able to fly
at you know, twelve thirteen, fourteen hours in a day,
just like a wide body, but you're gonna get twice
as many trips out of that. And so we call
that the speed dividend. By going faster, a bunch of
costs actually come down.
Speaker 4 (45:03):
Blake schol this is super fascinating.
Speaker 2 (45:05):
It's so great to I love hearing about manufacturing history
and all of this stuff. And when you have all
of these exciting new side projects and side revenue sources
and everything, Let's do Let's do another episode.
Speaker 5 (45:18):
Let's do it anytime you want to come to Denver
and see the fly one, see the factory, and see
the test airplane.
Speaker 4 (45:23):
Text test flight, the next test flight.
Speaker 5 (45:25):
It's probably about three years out. We did thirteen on
the XB one, accomplished everything we wanted to accomplish, and
so that that airplane is retired now and the next
test flight is going to be the airliner.
Speaker 2 (45:34):
Thanks so much, Blake. Really enjoyed you coming on odlock.
Speaker 5 (45:37):
Appreciate you having me. Good to chat, Tracy, good to chat.
Speaker 3 (45:39):
Jow, thank you, Thank you so much.
Speaker 4 (45:53):
Tracy.
Speaker 2 (45:54):
It was one minor point in there that I thought
was interesting. You know, when it comes to manufacturing, people
always talk about the importance of agglomeration and having everything
together in a Shenzen or whatever. It is funny to
think about that. For political reasons, we have specifically decided
to make the American defense manufacturing base extremely diffuse, so
(46:15):
that every Congressman and senator feels the need to protect
jobs in their own home state to consider various weapons programs.
Speaker 3 (46:22):
It is funny, but I mean it also weirdly exists
for commercial products as well. Right, And I'm thinking there
was a chart that I tweeted many many years ago
that showed manufacturing of a hot tub in America and
you could just see the round trip that all these
different parts actually took. And it's built in like Colorado,
but then stuff gets sent to Arkansas, North Carolina, whatever,
(46:45):
and it does seem like it's very time consuming.
Speaker 2 (46:48):
We just need one state, or one really big chunk
of a state to sort.
Speaker 3 (46:52):
Of have Which state do you nominate, Joe, that's the problem.
Speaker 2 (46:55):
Well, I would pick it somewhere like in West Texas
or something like that, where there's just a ton of
flat land and a bunch of solar parah.
Speaker 3 (47:02):
Of course you would pick Texas.
Speaker 2 (47:04):
And then you'd have it like libertarian, no rules and
no and just build up whatever you want.
Speaker 3 (47:09):
No.
Speaker 4 (47:09):
I thought that was really interesting. I don't know, I
guess I'll believe it when I see it.
Speaker 2 (47:13):
Yeah, I mean it would be really cool.
Speaker 4 (47:15):
Like I'm very pro it, but what does that mean
to be pro it?
Speaker 2 (47:18):
So there you are pro it, but like it would
be really cool. I'd love to see it actually happen.
Speaker 3 (47:22):
So there's two things that really stand out to me.
So number one is I think the operating costs are
going to be key, right, Like that really is one
of the things that kind of doomed the Concord. It
wasn't very fuel efficient, and then because it was such
a small fleet, the actual maintenance was really expensive because
you had to have all these specialists and things like that.
(47:44):
So operating costs are a big one. And then I'm
just not sure that airlines are going to airlines and
customers to the point that you made, are going to
be that interested in I guess like a two hour
gain on a fly if it comes with a higher
ticket price or a lower profit. So that seems to
(48:05):
me to be the key. And again, like I've seen
the business class airlines start up before, like Silverjet and
max Jet.
Speaker 4 (48:12):
Well, what's your theory about why they fail?
Speaker 3 (48:14):
It was operating costs. So they started I think it
was posts two thousand and eight and then things were
going okay, but then oil spiked, yeah, and that kind
of doomed them. And actually that reminds me I was
going to tell you a story Silverjet. Yeah, one of
the business class only airlines. So when it was entering
its last days, it was obviously having trouble getting extra
(48:37):
money from its various creditors, and so the CEO started
putting jet fuel on his personal credit card.
Speaker 4 (48:43):
Oh that's cool.
Speaker 3 (48:44):
And the funniest thing was his personal credit card had
reward points with British Airwins, so he was earning tons
and tons and tons of BA points while purchasing jet
fuel for his own airline.
Speaker 4 (48:57):
That's a good nugget.
Speaker 2 (48:58):
You know the story about a fat right how like
the company I think FedEx like was really close to
going bankrupt really early on as days. And the founder
there's like some story the founder like went to Vegas
and played blackjack. To let me look at a FedEx
founder blackjack. There's some story how Fred Smith rescued FedEx
from bankruptcy. He won twenty seven thousand dollars playing blackjack
(49:20):
one time, amazing, and he rescued the companies from bankruptcy.
So yeah, sometimes entrepreneurs they just got to like put it.
Speaker 4 (49:28):
All on the line themselves.
Speaker 3 (49:29):
They got a gown to save there literally, Yeah, all right,
shall we leave it there.
Speaker 4 (49:33):
Yeah, let's leave it there.
Speaker 3 (49:34):
This has been another episode of the Odd Lots podcast.
I'm Tracy Alloway. You can follow me at Tracy Alloway and.
Speaker 2 (49:39):
I'm Jill Wisenthal. You can follow me at the Stalwart.
Follow our guest Blake Schole, He's at b Shoal. Follow
our producers Kerman Rodriguez at Kerman ermann Dash'll Bennett at
Dashbot and kil Brooks at Kilbrooks. For more Odd Lots content,
go to Bloomberg dot com slash odd Lots with a
daily newsletter and all of our episodes, and you could
chat about all of these topics four seven in our
(50:01):
discord discord dot gg slash onlines.
Speaker 3 (50:04):
And if you enjoy odd Lots, if you like it
when we talk aerospace, then please leave us a positive
review on your favorite podcast platform. And remember, if you
are a Bloomberg subscriber, you can listen to all of
our episodes absolutely ad free. All you need to do
is find the Bloomberg channel on Apple Podcasts and follow
the instructions there. Thanks for listening,
Hosts And Creators
Joe Weisenthal
Tracy Alloway
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