avichal's comments

I'd completely forgotten about Digg and how much of a diaster that rollout was. Great example.

"Our voluntary attrition rate for women engineers since 2016 is still zero." -- impressive

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.

They are going to fly transoceanic routes to start so they don't have to worry about sonic booms over population centers.

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.

References

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Dropbox launch: https://news.ycombinator.com/item?id=8863 Coinbase launch: https://news.ycombinator.com/item?id=4703443 A 2012 thread discussing comment negativity where: https://news.ycombinator.com/item?id=4363717 A classic thread from 2012 where PG talks about negative comments: https://news.ycombinator.com/item?id=4396747

Mini-FAQ

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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."

Dropbox launch: https://news.ycombinator.com/item?id=8863

Coinbase launch: https://news.ycombinator.com/item?id=4703443

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

A classic thread from 2012 where PG talks about negative comments: https://news.ycombinator.com/item?id=4396747

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.

Are you live everywhere in the US or only in certain cities?

This should be the top comment.

It's hard to be helpful here without specifics. What sorts of jobs are you applying for at which companies? What industry are you in? What are the brands you've worked at before? What industry switch are you hoping to make? Do they get to a background check stage or no? 7 offsites to 0 offers is a pretty steep drop off but if, for example, you were only interviewing for VP of Product at series A startups in the Bay Area backed by Sequoia and Benchmark, then that's not unexpected.

I'm going to disagree with a lot of the sentiment here. I think it's rare to find a business that really truly works and you may have found the beginnings of one. Be ambitious. Figure out how to scale this 100x.

In terms of what you should do, it's hard to know without the specifics of what your business does, who you are, what you are good at, how your business will grow, etc.

I think there are some general thoughts that may help:

1. Early on, overpivot on people you can trust who happen to be good, not people you can't trust but who are great. Also don't hire your friends. Most people want to hire the best people they can but I've found that loyalty, work ethic, and trust are more important for the first or second people you hire. But hiring friends or family can often blow up so avoid that.

2. Figuring out how to hire people is hard. Managing employees is hard. Keep the stakes low initially and then figure out how to hand off ownership of more core things after you feel like you have a good sense for how to hire and who to hire. Start with something you know really well that is not going to lead your business to fail if you hire the wrong person. Hiring someone to do work you know well lets evaluate the quality of someone's work. Putting them in a role where they aren't working on something critical minimizes your risk. For example, if you are doing all of your customer support right now hire an Android developer if you know Android really well to add a new feature to your app. Don't hire an engineer to work on your payment system if you don't know that part of your stack or if you can't afford for your payment system to go down.

3. There is no comprehensive resource because every business is different so you will have to spend a lot of time reading. Read through everything related to business, entrepreneurship, hiring, scaling a business, etc. on Quora. Ask questions there and see who responds. Find the courses similar to what you want to learn at top business or engineering management schools (Stanford, Harvard, MIT) and look at their curricula. Read everything in their curricula. Read this post I wrote several years ago about the dynamics in the education space in the US to make sure you don't fall in to the trap that many education entrepreneurs do around thinking that your business can actually scale far beyond where you are today: https://avichal.wordpress.com/2011/10/07/why-education-start... Google searching will get you quite far too: https://www.google.com/#q=hire+first+employee+startup

4. Find successful people who have built a business in your space that is 10x bigger than yours, 100x bigger than yours, and if possible 1000x bigger than yours. Email these people and ask for advice. See which of them you click with. Ask them all of the questions you have and see where a relationship develops. Ask them for the best resources thy know about related to your business or how to scale a business. For example, I tell a lot of entrepreneurs to read High Output Management by Andy Grove to see how an experienced manager and executive thinks about running a large organization. You are not yet running a large organization but you will learn a lot and can work backwards to lessons that are relevant for your business today. In general, you will be surprised at how often successful people will actually help out. It's entirely possible (and likely) the woman that has a $200M business today was in your shoes a just few years ago and is willing to help.

5. Find successful people that you respect outside of your space and do the same as in #4. Consider raising investment from experienced people who can help you. Applying to YCombinator is a good option if you don't even know where to start.

6. See if you can find people that want to learn what you've done and could help you. For example, there are probably people who want to learn what you've done to bootstrap your business but who are running a small part of a very large company. These middle managers could teach you how to build an org and you could teach them how to start their own business.

Pick the one with better, higher quality people. In the long run what matters most is who you surround yourself with. You'll learn more from smarter people and become better as a result.

Check out Insight Data Fellows

Find out why the stopped. Did they find something intrinsic in the market that is off or did they just get bored?

The range of possibilities is broad and without that information you may just waste a bunch of time re-learning the same painful lessons they likely learned. Track down as much as you can about Sold (via founders, investors, advisors, friends) before investing a bunch of time in building anything.

Unfortunately I think most of it still holds. The underlying psychology of the typical consumer hasn't changed. I think it will take a lot of liquidity to stick around long enough in this market to see the underlying market dynamics shift. This means you either raise a ton of money (at which point the returns don't make sense to anyone except the later stage investors), you run it as a non-profit where you can have a very long runway from grants, or you scale slowly but surely for the next decade before the market catches up. It will happen eventually but I think it will take more like 10 years, not the 4-6 that most VCs need to generate returns.

Kno failed because it focused on trying to make education better when most Americans care about getting the same quality educational resources for cheaper (textbooks in this case).

If anyone is interested, I wrote this blog post 2+ years ago that expands upon this hypothesis, based on my experience founding and exiting from an online education company: http://avichal.com/2011/10/07/why-education-startups-do-not-...

The guy who owned the mansion was a former entrepreneur who didn't want to live in the Bay Area but owned this giant house, and several other very expensive properties. To pay the property taxes on all of these places, he bought/sold very expensive items, and this stuff would get shipped to his house. But he didn't want to leave it outside for long and needed someone trustworthy to bring it in doors. That person was me.

So I would once a week drag a giant box filled with something expensive into the garage, and some guy would come by later and load it into a truck and carry it off. The guy who owned the house could then live in Tahoe or Hawaii or Florida in his other mansions, with the peace of mind of knowing he could pay his tax bills with 0 effort on his part.

In return, I got to live in a 6 bedroom house with a pool, basketball court, 2 gardens...for the cost of the utilities. In case you're curious, I found this guy on Craigslist when he was trying to rent the mansion at the bottom of the real estate bust and he just liked me, so we set up this special arrangement.

I ended up with renting a mansion in Atherton right off of Fair Oaks for dirt cheap for about a year. If you look at the tickets, a lot of them are on the streets around Fair Oaks since that's also a short path to/from Redwood City and the highway.

I would bet a lot of money that the profiling is done based on the type of car you drive and intended to keep people from Redwood City out of Atherton.

I drive an older Civic and my girlfriend drives a really beat up old Civic. We would get followed home down El Camino and Fair Oaks basically every day. To the point that the police learned that our Civics actually belonged in that Atherton block and then stopped following us after a few months. I had friends come over in expensive cars and hang out and not a single one was followed. I asked them specifically to keep an eye on if they were followed because the profiling was so blatant with me. The expensive cars were never followed.

For what it's worth, I think that's what a lot people in Atherton pay their local government for. They don't want people there who don't live in Atherton. You go to Atherton to get away from people, e.g. lots are massive because you don't want to see your neighbors, and there aren't sidewalks or street lights in most of Atherton because they don't want people walking around at night. Because if you're rich and don't want to see your neighbors, why would you walk around at night? Funnily, the train station is right there too and the Caltrain only stops in Atherton on the weekends because they don't want the poor commuters being able to get in or out of Atherton during the week. So it's not surprising that the data shows the community police force is doing exactly what the community pays them to do - keep people who don't live in Atherton out of the city.

I don't think a lot of people know about the Insight Fellows program yet, but it's highly relevant here: http://insightdatascience.com/

They're taking people in STEM fields who are over-qualified and under paid, and helping them transition into new careers as data scientists at top technology companies (Google, Facebook, Square, LinkedIn, etc.). It's a really interesting model because they're filling a big hole that universities have right now in that there's no degree for data science. Close to 100% of their Fellows make the transition successfully and I think the idea is something that others are going to try to copy in the near future because it's clear there's a supply-demand mismatch right now.

Fwiw, the company is a YC alumnus (a hard pivot from their original idea).

Actually, Instagram turned out to be a fantastic deal. Many thought it was over-valued at the time but Instagram has passed 100 million active users early this year and users spend more time on Instagram than they do on Twitter (or practically any other app than Facebook or email). In retrospect, I think $1 Billion was a steal.