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How do venture backed economics for a supersonic jet company work? My understanding of watching VC over the past decade is that it's great for hyper-scaling so

How do venture backed economics for a supersonic jet company work? My understanding of watching VC over the past decade is that it's great for hyper-scaling software companies, tenuous at best for hybrid tech/real world companies, and ruinous for companies that don't enjoy the zero marginal cost benefits of a software company at scale.

eganist 6y ago
My assumption is that Boom's pitch relied on a relatively quick tech exit, e.g. Boeing or Airbus picking them up once boom reaches a point where either company can scale a proof of concept. If the demonstrator proves itself next year, that's when to expect an exit. I don't see Boom independently competing with either of the mainstream manufacturers here; they're likely only a vehicle for proving that the concept works, and then the whole package — patents, tooling, team, and all — is sold to a firm that can scale it. Would be interesting to see if any non-commercial firms e.g. Lockheed use Boom as a way to make inroads into the commercial sector, though. My money is on a buy-out in 2021-2022, and for bonus points, I'll include unexpected buyers who want to make inroads in the commercial space, e.g. if Lockheed wants to add commercial airliners to its portfolio and also see whether any of Boom's supersonic tech makes sense in their non-commercial projects or if Rolls Royce wants to transition away from being just an enginemaker (for Boom and others). If Boeing buys Boom, it's a lost cause and the tech will likely just end up being mothballed by bean counters for being too slow to scale.
- lacker 6y ago
  Boom's pitch did not rely on a quick exit, it was much more along the lines of "This will take a very long time to come to fruition. We're up-front about that. But, it has the potential to be billions of dollars, if you can be patient." VCs are often more interested in that than the quick flip....
  - usrusr 6y ago
    VC can also be interested in a company as a quick flip opportunity when the pitch never mentions that possibility. Particularly early stage investors who buy in low enough to still win if the eventual exit is considerably below a meanwhile heavily inflated nominal valuation.
adventured 6y ago
> tenuous at best for hybrid tech/real world companies Worked just fine with Amazon, Tesla, SpaceX, Sun, Intel, Apple, Cisco, Nvidia, Network Appliance, Juniper Networks, Ciena and numerous other prominent tech / real world companies. There is a long list of successful hardware companies that took venture capital spanning many decades. A certain amount of margin is ideal if you're going to deal with VC, however it's not strictly necessary. You can also compensate with high top line growth and lower margins - Amazon was a low margin retail business for the first 12 years and produced an epic return for its early investors from 1994-2006.

eganist 6y ago

My assumption is that Boom's pitch relied on a relatively quick tech exit, e.g. Boeing or Airbus picking them up once boom reaches a point where either company can scale a proof of concept. If the demonstrator proves itself next year, that's when to expect an exit. I don't see Boom independently competing with either of the mainstream manufacturers here; they're likely only a vehicle for proving that the concept works, and then the whole package — patents, tooling, team, and all — is sold to a firm that can scale it. Would be interesting to see if any non-commercial firms e.g. Lockheed use Boom as a way to make inroads into the commercial sector, though. My money is on a buy-out in 2021-2022, and for bonus points, I'll include unexpected buyers who want to make inroads in the commercial space, e.g. if Lockheed wants to add commercial airliners to its portfolio and also see whether any of Boom's supersonic tech makes sense in their non-commercial projects or if Rolls Royce wants to transition away from being just an enginemaker (for Boom and others). If Boeing buys Boom, it's a lost cause and the tech will likely just end up being mothballed by bean counters for being too slow to scale.

lacker 6y ago
Boom's pitch did not rely on a quick exit, it was much more along the lines of "This will take a very long time to come to fruition. We're up-front about that. But, it has the potential to be billions of dollars, if you can be patient." VCs are often more interested in that than the quick flip....
- usrusr 6y ago
  VC can also be interested in a company as a quick flip opportunity when the pitch never mentions that possibility. Particularly early stage investors who buy in low enough to still win if the eventual exit is considerably below a meanwhile heavily inflated nominal valuation.

adventured 6y ago

> tenuous at best for hybrid tech/real world companies Worked just fine with Amazon, Tesla, SpaceX, Sun, Intel, Apple, Cisco, Nvidia, Network Appliance, Juniper Networks, Ciena and numerous other prominent tech / real world companies. There is a long list of successful hardware companies that took venture capital spanning many decades. A certain amount of margin is ideal if you're going to deal with VC, however it's not strictly necessary. You can also compensate with high top line growth and lower margins - Amazon was a low margin retail business for the first 12 years and produced an epic return for its early investors from 1994-2006.