Thanks for the thoughtful response. Obviously I won't be able to do justice to an entire business plan in a few sentences.
They are definitely not representing their order book as the basis for a full debt financing. I appreciate your assuming best intent as I use broad brush strokes in the parent comment and below.
A few thoughts:
+ I think the history of startups is also one of teams succeeding with far less capital than the incumbents. They're on track to build the fastest civilian aircraft ever built for less than $100M raised which speaks to their accomplishments to date. Aero is notorious for cost overruns but their capital efficiency to date is impressive.
+ Of course, the biggest risk is that there are cost over runs due to unforseen issues, e.g. Bombadier's C-Series estimated to cost $2B and that ended up closer to $5B (though that was also for multiple planes and configurations). At the same time the A320-NEO was done for below $1.5B I believe. Time will tell how much it actually costs but I think it's probably much closer to $2B than say $20B.
+ You are correct that these are not pre-orders. I shouldn't have used that term and should have used LOIs (and now I can't figure out how to edit the comment). As I understand it, the LOIs are of varying levels of commitment. The earliest LOIs were non-binding and with no skin in the game. More recent LOIs have more teeth. The strategy has been very clever. Each batch of LOIs has terms more favorable to Boom, so there is an incentive to move before the LOIs become less favorable to you (the airline). And there is a competitive dynamic that is at work that engages companies, e.g. JAL vs ANA, via incentives such as exclusivity on certain routes or deal sweeteners like the opportunity to invest. I think it's unlikely that 100% of these LOIs convert as external circumstances will always be a factor (e.g. airline gets a new CEO who has a different strategy) but the newer LOIs also have significant executive, CEO, and board buyin from the airlines, so they're certainly not throwaway. As you noted, airlines are very conservative about basically everything. The reason these LOIs are managing to get board level approval is that the math makes a ton of sense if the planes fly. You're essentially replacing less profitable narrow body jets with a Boom jet on certain routes so you stand to make more money as an airline if you get one of these.
+ It's much harder to debt finance the entire thing as an R&D endeavor at once but there are multiple ways to traunch this and phase it in over time. And not all of the costs need to borne by Boom directly. It's pretty standard for suppliers (not the airlines, as you noted) to put up significant commitments as part of the development process and bear those costs and risks. Many of the existing partners for major components of the Boom plane are bearing these costs directly already, because the math behind unlocking supersonic makes sense and even if the plane doesn't launch they stand to benefit from the R&D on these new components. Sharing these costs such that the partners benefit from the upside in a success case (huge new market the supplier is a leaders in) and in a failure case (IP that makes their existing components much better), while also bearing the capital risk helps reduce the capital and debt burden on Boom itself.
Anyway, your read that this is a well-intentioned aerospace project full of great engineers trying to do something wildly ambitious is correct. Anything I've misstated that might imply otherwise is a failure on my part, not Boom's. I also think they are as savvy on their business as they are talented at the engineering, which is why they've even made it this far.
Obligatory quarterly post from me about optimism (or lack thereof on HN)! :)
It's unfortunate that so many people come out of the woodwork to tell people their ideas are terrible or won't work without actually understanding the idea, technology, or risk-adjusted return that investors may be considering. It's far far more interesting to consider how things may work or what you may be missing. I've listed a mini-FAQ at the bottom about Boom. I'm an investor in every Boom round, from before they were in YC so am clearly biased, but also know the company very well.
Props to everyone in the thread who is asking genuine questions and actually trying to understand what the team is building.
1. Isn't the most important part of reducing flight times the pre-flight experience (security, airport delays, etc.)?
Yes, you are correct. However, the long haul international market that is about 10% of the overall number of flights in the world is still a HUGE opportunity where the bulk of time is spent in the air. Boom is most effective in these longer 8-hour+ flight situations like SFO-Tokyo, LA-Syndney, etc. On these routes you would save a day round trip. For many people an extra day in the office or an extra day with family is a tremendous win.
Most people don't realize but travel to Hawaii 10x-ed in the decade after the jet engine became common because Hawaii became a five hour flight from the West Coast instead of an eight hour flight. Imagine if you could get from SFO to Japan or China as fast as SFO-NYC.
2 - How can do this for so cheap?
It will be capital intensive to get to the final plane, probably ~$2B. Most of this can be financed with debt, however, because there are many billions in pre-orders from airlines already. This round gets you to fly a one-third scale version of the plane and be ready to raise an even bigger round to build the full scale plane and get to FAA certification in the series C.
The Boom team has been very smart in their go to market by maximizing the amount of already FAA approved technology that goes on the first plane. For example, the carbon fiber composite is the same as that used on the 787. Fast tracking the components because they're already FAA approved dramatically reduces costs.
3 - What qualifications does this team have? How can they possibly pull this off?
The team includes 80 technical experts and leaders from Airbus, Boeing, SpaceX, Gulfstream, NASA, and Lockheed. Collectively, the team has made key contributions to 40+ successful air and space vehicles the SpaceX Falcon 9, Airbus A380, and the SR-71 Blackbird. The team has led the development of many planes that have gone from 0 to FAA approved and launched.
Hope the above is helpful to people reading through and wondering how this makes any sense. I think Boom is a once in a lifetime, category creating company (like SpaceX or Tesla). Happy to answer more questions if you have any.
It's unfortunate so many people come out of the woodwork to tell people their ideas are terrible or won't work.
I think it's far more interesting to ask how a thing might work, which uses cases might be dramatically underserved today and serve as a beachhead, or the tradeoffs being made rather than just say something is a "bad idea."
A 2012 thread discussing comment negativity where, coincidentally, the top comment is from @iamwil who posted this link and is on the DIRT team: https://news.ycombinator.com/item?id=4363717
To me, the most interesting ideas in the world are the ones that at first blush look like they can't possibly work. But upon thinking through how they might, you learn something.
Props to everyone in the thread who is asking genuine questions and actually trying to understand what the team is building.
Ah yes, the annual resurfacing of this blog post :) unfortunately I think most of it is still true. I should do a follow up...
Edit: I'll address the comments/thoughts here in a follow up blog post. Glad to see so many people thinking about this space. It's a great thing for the world to have entrepreneurs building here.
It's hard to be helpful here without specifics. What sorts of jobs are you applying for at which companies? What industry are you in? What are the brands you've worked at before? What industry switch are you hoping to make? Do they get to a background check stage or no? 7 offsites to 0 offers is a pretty steep drop off but if, for example, you were only interviewing for VP of Product at series A startups in the Bay Area backed by Sequoia and Benchmark, then that's not unexpected.