The Company That Wants To Bring Back Supersonic Jet Travel
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Easy Cater, your business tool for food. To learn more, visit easycater.com slash podcast. Bloomberg Audio Studios. Podcasts, radio, news. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Alloway. Tracy, I have to say, if I had any friend who I would have guessed would have ever been on a Concord, it would have been you.

Oh, is that a nice thing for you to say? 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 maybe you would have flown aboard the Concorde jet. I mean, I would have been in middle school or high school flying on the Concorde, which would have been quite an experience, I imagine. Let's see. So it stopped flying in the early 2000s. Yeah. Right? I guess that was a long time ago. Yeah. But of course, it has this massive legacy. And when people think of the Concorde, they think of luxury air travel and I guess advanced technology too. And it's kind of

It's crazy to think that this plane, a supersonic plane, started flying in, I think it was the 60s or the 70s. And now, 50 years later, we don't have any supersonic air travel, commercially at least. I know there's supersonic fighter jets and things like that. Like, is that weird? Well, it's weird. 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 like going backwards, right? Because, okay, like we're currently not building any supersonic jets or flying them. Our capacity, if you just think about the U.S. and you think about Boeing, it seems to have gotten worse over time. So it's not just that Boeing hasn't launched new planes in a long time. Its 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. Oh.

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. By the way, hot take. I think for a short flight, I would be OK with a stand up seat. No. Yeah, seriously. I stand up on the bus for a long time. I stand up on the train. I could do it. For like an hour? Yeah.

Yeah, I have actually. But anyway, without digressing too much. So, you know, we talk about manufacturing. We actually talk about aerospace a fair 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? 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. So in early June, the White House instructed the FAA to lift its ban on flying supersonic jets over the United States. I don't think the ban has been lifted yet, but it's been instructed to. And then the question is, anyone, are there actually going to be new supersonic jets? Will 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 Scholl, on the podcast. They're actually trying to build a supersonic jet. That's crazy. Welcome to the podcast, Blake. Hey, Joe. Hey, Tracy. Thank you for having me. You think you can actually build a supersonic jet company in America in the 2020s?

It seems like the answer is yes. We've built and flown 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 Airlines 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, we've got less excuses for failure. Yeah.

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 ask that is because Concorde, famously developed by Aerospatial and British Aerospace, and they never made money on it. They never recouped their development costs. But BA and

Air France, I 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? Yeah, well, I think we have to look back and say, like, why was Concorde such a disaster? And I think a lot of the stories that are out there kind of miss the basic truths.

In 1969, we landed on the moon and we flew Concorde for the first time. And at the time, these were heralded as the harbingers of great things to come of space exploration, of a new age of supersonic travel. But of course, now we're here in 2025, but 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 Concorde 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, we did it by adopting communism and central planning. And so we had these programs that were spec'd by governments.

that we're not thinking about market viability. And so Concorde, here's an airplane with 100 seats on it. Mind you, there are 100 uncomfortable seats. You might mistake it for Ryanair. Wait, I thought they were plush leather seats. They look like economy. Oh. The legroom was better than typical economy, but these were 17-inch wide seats. Oh, because the actual body of the aircraft was so narrow, right?

Yeah, and they didn't, I don't think they laid it out very well. So 100 seats, not super comfortable. You have to duck to get on the airplane. And yet adjust for inflation and the fares are about $20,000. And guess what? You can't fill 100 seats at $20,000 a pop, especially not with like 70s or 80s kind of travel volumes. So the whole thing never made any sense.

But that doesn't mean you can't make a supersonic airliner that makes sense. It just means that Concorde didn't because it was, in essence, because it was centrally planned. Well, sorry, explain that further. Is the issue that it was centrally planned or was the issue that at 70s or 80s tech and 70s or 80s air traffic volume, it wasn't there to support the cause? Because those strike me as

Two different things. And we'll get into the tech of your plane, but I know there's been progress in various fronts since 70s. Could it have been commercially viable in the 70s or 80s when the tech theoretically existed? Because that strikes me as different than saying, oh, it was central planning. 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 60s. France and Britain got together and did Concorde. In Soviet Russia, they did the TU-144. People called it Konkordski. In the U.S., Nixon and Kennedy stood up what was called the SST. FAA gave the contract to Boeing.

That was going to be a 300-seat Mach 3 airplane. It made even less sense than Concorde. And then the plug gets pulled on the SST. Now it looks like Europe and Russia are moving forward with supersonic. It's not yet really obvious how DOA those products are. And then in 1973, we did the worst thing I think we've ever done in the history of regulation, which is we banned supersonic flight in the U.S.,

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, cell phones, cars, 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, the 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 for companies. And that airplane would have needed to carry maybe five or 10 people at a time. And it would have only needed to fly, say, 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 an iteration cycle that would have led to bigger airplanes, to airliners. And I think had that history unfolded, we'd all be going Mach 5 by now. But when you ban supersonic flight over the U.S., 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. Yeah.

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. 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 fly first-year business class today, which is somewhere like 80% of international airline profits. So it's the economically significant place to start.

And so with all the technology that's been developed since Concorde, you can get the fares down by about three quarters. So I think more like a $5,000 business class fare, not a $20,000 kind of bucket list item. And then we put, well, how many seats should the airplane have? Well, it should have as many as airlines can fill. So about as many as you find in business class today. So this is a 60 to 80 seat airplane. I think the sweet spot's really going to be right around 64 seats.

64 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 trans-oceanic on the routes that are the 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. ♪

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As a former transportation 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 SilverJet springs to mind. Joe, I have to tell you a really funny story about SilverJet later on. Okay.

But, you know, I think back to 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?

So I have a slightly different point of view on why the all business class airlines have mostly failed. Okay. So first off, let's start with why they're attractive. All the money is in business class. So why not buy smaller, cheaper airplanes, put business class in them only, be able to lower the fares and still roll in money? It sounds like a great business plan. But the problem is it's really starting with the profit story, not starting with the customer story. And the passengers by and large don't care

Whether there's an economy cabin on the airplane. What do 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 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 why

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's ordered, American's ordered. It's going to fit in their route 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. Before we move on, you've been around for like a decade. So why don't 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?

Yes, we've been around for almost 11 years now. We have raised a bit over $600 million. And one of the things I'm really proud of is the capital efficiency story. We did the XB-1 airplane for less than $200 million, including the airplane, including the flight test program. And to put that in sort of industry context, the closest...

comparison as the NASA X-59. And 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 6X more capital efficient versus legacy approaches. And so some people look at this and they say, well, geez, Boeing takes $10 billion plus

to develop new airplanes, this seems financially infeasible. And I think that's, I think it's true if it's going to take you $10 billion, but it doesn't need to take anywhere close to that amount of money. I think new entrants and SpaceX, I think proved this by running circles around ELA and Lockheed and Boeing. And I think, you know, we're in the process of demonstrating the same thing. We can be at least 5X, maybe 10X

more capitally efficient. And so suddenly this is a very, a very reasonable financial proposition. Tell to us though, all right, where are you now? And then getting to, okay, we wake up in just near 2035. What did it take in terms of money and time to get to where you have planes rolling out of the gates? How much more money? How much more time? 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 engine come together around the end of this year.

And then the next thing is we're scaling up the airplane from our XB-1 prototype to the Overture airliner. You'll see the first one starting to be built next year. And so our goal is to be ready to carry passengers by the end of 29. And I think when that happens, in some ways, the most interesting story will be how small the team was that did it and what a tiny amount of money it took compared to what the big guys spent. Hmm.

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 always one of the problems with Concorde. 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? 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 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 forex reduction in cost.

relative to what the big guys quoted us. And then we end up with an engine that is optimized together with the airplane. And that makes a big difference, not just in fuel efficiency, but in capability. So we demonstrated boomless cruise on XB1, and that's a capability that would not have been possible on Overture if we weren't doing our own engines.

If you're doing boomless supersonic flights, do you have to change the name of the company? Boom to boomless? We're just going to delete the boom. We're just going to call the company supersonic. I like that. That's a nice name. Actually, can you give us a theory of the firm? So you mentioned that, you know, SpaceX is...

is done, accomplish 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 it was at NASA. There are a lot of sort of hard tech, industrial tech 2.0 type companies that 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, in your view, so much cheaper and faster and more efficient than the legacy industrial players?

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 the best engineers aren't like 10 or 20% better. They're like 10 times better than the average engineer. So we start with a small number of highly talented engineers. We leverage them up with software. So a lot of what we do at Boom is try to figure out how to make hardware development look more like software development. And that means reducing the cost of iteration,

both in time and money. And so 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, 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 and the pace of progress just skyrockets.

Can you actually say more about vertical integration? When we do episodes about some of the Chinese manufacturing juggernauts that have emerged 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 that

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 going to go into your plane, you're the only customer or the only customer there 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?

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 60% of the parts are 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 chain for.

And as we were working through this on our first prototype, the engine turbine blades are 3D printed. And we quoted them out of the traditional aerospace supply chain. It was going to cost a million dollars for one engine's 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, how long does it actually take to make a blade? And the answer was, well, only 24 hours.

But, you know, it takes 180 days to get one out of the supply. Why? Bunch of stupid things. I'm like, okay, well, what is the machine that makes these cost? And I assumed that it would be cost prohibitive and really hard to get. But it turned out the machine costs about $2 million. They're in an inventory. You can get one in a couple 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 3D 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, we'd still be waiting for the first blades to show up. What are the stupid things that slow down the supply chain? 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 it to Wisconsin for another process step, and it goes back to South Carolina. And then you have to put it, say, to California, actually like twice.

And it's insane. And like the thing spends like more time on a truck back and forth than 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, it's still driven by defense procurement. Right.

And they need their supply chain in every city, city, district. 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 costs so you can maximize your plus. So nobody cares that it's inefficient. And yet that's the industrial base in the U.S.,

And you can get enormous time and cost savings by just putting everything under one roof. Why has no one done that before? 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 DOD procurement processes, you end up being subject to all these forces that end up with the complex diffuse supply chain 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 the commercial resupply program with them. And that gave 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. We're not beholden to congressional funky dynamics. And so we're able to go do the efficient thing, not the politically expedient thing.

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. I think that's true. And yet they, that being, I think, really the only alternative to the big legacy players, history shows they were able to do it without compromising how they went about it. You know, if you go to their factory in Hawthorne in the Falcon 9 days,

It's basically raw materials in one side of the building and rockets and rocket engines out the other side. They brought in-house substantially all the production processes. And that results in, frankly, I don't think they would have succeeded without that. ♪

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Hey, it's Ryan Reynolds here for Mint Mobile. Now, I was looking for fun ways to tell you that Mint's offer of unlimited premium wireless for $15 a month is back. So I thought it would be fun to share with you.

If we made $15 bills, but it turns out that's very illegal. So there goes my big idea for the commercial. Give it a try at mintmobile.com slash switch. Upfront payment of $45 for three month plan equivalent to $15 per month required. New customer offer for first three months only. Speed slow after 35 gigabytes if network's busy. Taxes and fees extra. See mintmobile.com. 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 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 for payback. Talk about financing from here. Who's going to invest to get you through your next leg?

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 Lyft and Uber and Airbnb...

raised in VC and you compare it to like SpaceX and Tesla and Andrel, what you find is that many times the software companies 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 is largely spend a small amount of seed money, ship a product, find out whether it's working, then double down. Okay. 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 market's 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 a there there in the end. And then the risk is, can you actually execute it in a capital efficient way? It's not a risk of like, does anybody want this thing? The other thing that I think is 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 and American 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 is you want to find other ways to monetize early. And we've got something very exciting happening.

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. That's sort of the side hustle that pays for the main hustle. Huh. You're teasing us now. We'll have you back on. Yeah, this is a real tease.

I wish I could share it. It'd be fun. It's going to be so much fun. 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.

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 their own sort of internal FAA that are all Boeing employees that do everything.

as they develop an airplane. And then they show up at, pop at FAA at the end of the program and say, please rubber stamp me.

But 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, so they never had any input along the way. And that's just a really terrible way to work with a regulator. And if you look back in history, before Boeing really lost its way, like in the 1990s on the 777 program, it was Boeing plus FAA versus the problem, and they shipped a pretty amazing airplane on time

with an FAA certification process that took less than a year. And so we looked at that example. And when we did our XB1, 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 anytime 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 so they saw XB-1 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 90-day approvals process for an R&D airplane took literally 90 minutes. Like the day we said we're ready, they handed us the paperwork.

And that's not some kind of lobbying miracle. That's just building trust. And I don't think it'll be 90 minutes on our airliner, obviously. But 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 those trade-offs. What do you think? We don't have that sort of boom FAA proxy. We just work with them directly. And so by the time that we're done, we'll have gone through the process of

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'll have gone through it together.

I have a question. 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 luxury.

Are you sure that people will trade beds for shorter flights en masse? Because I don't know. It's like, oh, yeah, OK, 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 when, yeah, it's longer with the current thing, but it's really comfortable? A couple of 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. 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, 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 I, 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, I think, beat the socks off of domestic first class. And yet you'll be able to go to Europe or to Asia, right?

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, sleeping on the airplane and getting to 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 in a far better bed that you can find on any airplane than one at home. If

If you can be productive, I have to say, like, I actually don't care that much about seats anymore because I just scroll my phone the whole time. And this is true. I've been on flights watching Joe and this is what he does. Yeah, it's totally fine. As long as I have good, fast Wi-Fi, I actually don't really care that much anymore. All right. I have a question. Another question. You know, obviously, building planes is one part of a broader idea.

or push or whatever for more domestic U.S. manufacturing. One of the things that there's seemingly a bipartisan interest for, though maybe different people have different ways of getting there. I don't know. Maybe the probably people from the Trump administration who do ask you this question. So maybe this is not hypothetical. What are the barriers? It's like, OK, 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 U.S. back from being an advanced manufacturer in a range of things or things that you've discovered along the way that are counterproductive to these efforts?

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 U.S., I think, is probably the best example of a regulatory own goal.

where like literally every airplane from the Wright brothers through the Boeing 707 was faster than 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.

Boeing kept building new – but that was in the early 1970s, and Boeing kept building powerhouse planes for at least a few decades after that, right? Yeah, they had a decent runout. But if you look at the latest generation Boeing and you look at next – put it next to the very first jetliner, 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. Right.

And ultimately, it's like who wants to go work for Boeing if you're a great engineer so you can like re-engineer the same basic thing? 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. We seem to be falling behind in obviously other things. Are there other sort of like broad themes you've discovered in U.S. manufacturing that are holding us back?

Yeah, I think there's a lot of regulatory environment, both federal and state and local, that just adds cost and time. I'll give you an example. So we built a factory in Greensboro, North Carolina, almost 200,000 square foot factory. And it took longer to get the building permit than it took to build the factory. It took about 18 months.

to get the building permit. 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 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 U.S. So in China, you can look at this stuff and it's kind of anything goes, which I don't think is the right answer. And in the U.S., 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 the

an asymmetric incentive to say nay, because if they approve something they shouldn't approve, 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.

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 composites because you're building out of composites instead of aluminum like the Concorde. Where do you actually get that from?

Yeah. Well, maybe I'll talk about engine parts because they're some of the most fun. So engines are these sort of jet engines 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 metal that the turbine blades are made out of. And so these turbine blades, they're 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 in a thermal environment that's above its own melting point. And all this is happening while 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 metallic structure. 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 forms,

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 most amazing thing about what I just shared is that's 1970s technology. And it's still state of the art. That's what we're using. We're using a more advanced version of what I just described to build the production turbine blades for our symphony engine with some 3D printing and the investment casting process. 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?

Step one is hire 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 distillery.

So what's that? It's about the mix of senior and junior talent. I believe in teams that are basically 80% young and up and coming, smart, driven, bright. They don't know what's impossible. And about 20% of the, what we call the oak, they've been got a bit of scar tissue, 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 it is this guy, Nick Sharika, who's at this point a nine-year boom veteran. He ran flight tests on XB1. 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 have 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. We'll 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 partner and go forward from there. Have you been peeling any old oak engineers from Boeing? No.

unsuccessfully. We've had a handful of people that we get out of Boeing earlier in their career before they've been corrupted. But every single big aerospace hire 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. That's interesting. And I think the reason 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 $10 or $20 billion program, and it's just impossible. You have to be willing to think differently. And so you've got to have people that are willing to say, I want to learn all the first principles. I want to learn all 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. I'm reading the bio page for Nick, Nick Sharico, who you mentioned. And it says, in his free time, Nick fabricated and test flew his own experimental home-built aircraft. Sounds like a cool guy who you'd want to have –

Who you'd want to have on your team. You mentioned how some of this tech is 1970s tech. What actually has substantively improved tech-wise since the age of the Boeing such that the economics just from a sort of like cost per mile or cost per seat are going to be better?

So it turned out that Boeing shipped all the technology you need for an economic supersonic airliner on the 787 about 15 years ago. Okay. So it's 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 20% better aerodynamic efficiency. And you can't 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, Concorde flew with converted military engines with afterburners.

And that is a very expensive way and a very loud way to make thrust. But today, every commercial airplane flies with a turbofan. They're cleaner, quieter, way more fuel efficient. 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. 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 team to do the work that would historically require a large design team. So we've got new materials, we've got better aerodynamics, we've got better engines, we've got software everywhere, and all of that adds up to about a 20% aerodynamic efficiency improvement. Similarly, about a 20% engine efficiency improvement, and you put all those together into an airplane, and then again, relative to Concorde, you can make the seats bigger and more comfortable while the costs come down. Hmm.

I do remember seeing the 787 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 oohing and aahing over the composites and just moving from like room to room to room within the aircraft itself.

But just on this note, and this sort of dovetails with Joe's 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 that airlines themselves are going to prefer higher speeds over lower operating costs?

I think the United and American and Japan Airlines deals sort of 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 to the economic profile flying a flatbed in business class...

The airlines are going to make more money supersonic than they would make subsonic. So there's just a very capitalist motivation there on one hand. On the other hand, there's also an arms race. So our passenger research says that 87% of people who fly first-year 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. Wait, just real quickly. Why are they – just walk through like the cost basis or the economics of a flight on a supersonic and why it's compelling for the airlines that have already made the preorders. Let's take New York-London as just an example case. It's pretty representative from a cost perspective. With 80 percent of the seats full, which is a little bit less than what airlines typically get,

The break-even fare round trip is about $3,500. And that compares to people routinely paying five grand or more in business today. So it's super profitable. And why 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 and it's got the right number of seats and the right amount of range, you're going to be able to fly at 12, 13, 14 hours on a day just like a wide body. But you're going to 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. Blake Scholl, this is super fascinating. 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 another episode. Thank you.

Let's do it. Anytime you want to come to Denver and see the... Fly one? See the factory and see the test airplane. When's your next test flight? Next test flight is probably about three years out. We did 13 on the XB-1, accomplished everything we wanted to accomplish. And so that airplane is retired now. And the next test flight is going to be the airliner. Thanks so much, Blake. Really enjoyed you coming on the Outlaw. Appreciate you having me. Good to chat. Tracy, good to chat. Joe, thank you. Thank you so much. Thank you.

Tracy, 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 Shenzhen 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 that every congressman and senator feels the need to protect jobs in their own home state to consider various weapons programs.

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. It's built in like Colorado, but then stuff gets sent to Arkansas, North Carolina, whatever. And it does seem like...

it's very time consuming. We just need one state or one really big chunk of a state to sort of have. Which state do you nominate, Joe? That's the problem. 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 panels. Of course you would pick Texas. And then you have it like libertarian, no rules and,

know and just build up whatever you want. No, I thought that was really interesting. I don't know. I guess I'll believe it when I see it. Yeah. I mean, it would be really cool. I'm very pro it. But what does that mean to be pro it? We are pro it. But like, it'd be really cool. I'd love to see it actually happen. So there's two things that really stand out to me. So number one is, I

I think the operating costs are going to be key, right? Like that really is one of the things that kind of doomed the Concorde. 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. 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 flight if it comes with a higher ticket price or a lower profit. So that seems to me to be the key. And again, like I've seen the business class airlines start up before, like SilverJet and MaxJet. Well, what's your theory about why they failed?

It was operating costs. So they started, I think it was post-2008, 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, one of the business class only airlines. So when it was entering its last days, it was obviously having trouble getting extra money from its various creditors. And so the CEO started putting...

jet fuel on his personal credit card. Oh, that's cool. And the funniest thing was his personal credit card had reward points with British Airways. So he was earning tons and tons and tons of BA points while purchasing jet fuel for his own airline. That's a good nugget. You know the story about FedEx, right? How like the company, I think FedEx...

like was really close to going bankrupt really early on in his days. And the founder, there's like some story of the founder, like went to Vegas and played blackjack to look at a FedEx founder blackjack and,

There's some story how Fred Smith rescued FedEx from bankruptcy. He won $27,000 playing blackjack one time. Amazing. And he rescued the companies from bankruptcy. So yeah, sometimes entrepreneurs, they just got to like put it all on the line themselves. They got to gamble. To save their company. Yeah. All right. Shall we leave it there? Yeah, let's leave it there. This has been another episode of the Odd Lots podcast. I'm Traci Alloway. You can follow me at Traci Alloway.

And I'm Jill Wiesenthal. You can follow me at The Stalwart. Follow our guest, Blake Scholl. He's at BScholl. Follow our producers, Kermen Rodriguez at Kermen Erman, Dashiell Bennett at Dashbot, and Kale Brooks at Kale Brooks. For more OddLots content, go to bloomberg.com slash oddlots. We have a daily newsletter and all of our episodes. And you can chat about all of these topics 24-7 in our Discord, discord.gg slash oddlots.

And if you enjoy OddLots, 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.

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