AI transcript
0:00:02 There’s a lot nobody tells you about running a small business,
0:00:08 like the pricing, the marketing, the budgeting, the accidents,
0:00:13 the panicking, and the things, and the things, and the non-stop things.
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0:00:31 Megan Rapinoe here.
0:00:35 This episode, we are riding the vibes of W All-Star.
0:00:38 We talk about our favorite moments on and off the court,
0:00:40 and we catch up with the breakout stars of The Weeknd,
0:00:45 Courtney Williams and Natisha Heidemann, a.k.a. the Stud Buds.
0:00:47 Plus, we get into all the drama at the Euros.
0:00:49 Check out our latest episode of A Touch More
0:00:51 wherever you get your podcasts and on YouTube.
0:00:55 Today’s number, 200 Swiss francs.
0:00:59 That’s how much Tour de France writers get fined for peeing in front of spectators.
0:01:00 True story, Ed.
0:01:02 I was at the local community pool, and they said,
0:01:03 no peeing in the pool.
0:01:04 And I said, come on, everybody pees in the pool.
0:01:07 And they said, yeah, but not from the diving board.
0:01:10 Listen to me.
0:01:12 Markets are bigger than us.
0:01:14 What you have here is a structural change in the wealth distribution.
0:01:16 Cash is trash.
0:01:17 Stocks look pretty attractive.
0:01:18 Something’s going to break.
0:01:19 Forget about it.
0:01:22 That beat out, you know, it’s okay to pee in the shower,
0:01:25 but everyone freaks out when I shower and pee.
0:01:30 Lil, free gift with purchase there.
0:01:31 Two for one, Ed.
0:01:33 Maybe you should have saved one of them for a future episode.
0:01:34 There you go.
0:01:37 Regardless, welcome to Property Markets.
0:01:39 Today we’re speaking with Stuart Simpson, the CEO of Vertical Aerospace.
0:01:42 But first, it’s time for banter, Ed.
0:01:44 It’s time for our favorite part of the show.
0:01:45 First off, let me just point out,
0:01:48 you’re now showing up late to every podcast.
0:01:52 You have decided that you are very important.
0:01:54 No, no, wrong.
0:01:55 Oh, and what do I see this morning?
0:01:58 Literally, talk about a boner killer.
0:02:01 I wake up, and I, of course, turn over, you know,
0:02:03 like a 13-year-old and turn on my phone.
0:02:06 What is the first thing that pops up in my Instagram feed?
0:02:07 Yes, it’s me.
0:02:09 Yeah, well, first it was Katie Tourer,
0:02:12 which I would not describe as a boner killer,
0:02:14 but that’s neither here nor there.
0:02:17 And then I see her interviewing you, and she’s like,
0:02:21 Ed, tell us why Gen Z went for Trump.
0:02:24 And I’m like, oh, my God, make it stop.
0:02:28 And you’re there in, like, a cool brown suede coat,
0:02:31 and you’re like, well, Katie, the first thing is,
0:02:36 the Republicans meet us where we are on TikTok and YouTube.
0:02:38 And I’m like, well, that’s some fucking blinding insight.
0:02:39 No shit, Sherlock.
0:02:42 I’m like, that’s how you get on MSNBC?
0:02:44 Republicans are on TikTok.
0:02:46 Anyway, I literally couldn’t watch a thing.
0:02:48 I skipped to watching Great Dane’s frolic with each other.
0:02:50 But you’re on again.
0:02:54 I’m going to assume you said something actually interesting.
0:02:55 What else did you say?
0:02:59 What else has the Trump administration done to meet Gen Z,
0:03:02 who pivoted very hard towards Redness last election?
0:03:05 This is not the time for me to do my whole spiel, I don’t think.
0:03:05 But…
0:03:06 Okay.
0:03:07 What, are you going to do it on Colbert next week?
0:03:08 Oh, wait, never mind.
0:03:10 Never mind.
0:03:11 Never mind.
0:03:12 All right, never mind, Ed.
0:03:13 Forget it.
0:03:14 Forget it.
0:03:16 I’m trying to banter here, and you’re not cooperating,
0:03:19 because you clearly want to impress the people at MSNBC.
0:03:21 Yeah, exactly.
0:03:27 Well, your opening line for banter is that my appearance on TV was a, quote,
0:03:28 boner killer.
0:03:30 That’s how you describe it.
0:03:31 Ed, I got to avoid those, Ed.
0:03:33 I got to avoid those.
0:03:37 Yeah, no, when that shit happens, can’t let anything get in the way of that.
0:03:39 Oh, my God.
0:03:40 Oh, my God.
0:03:41 Oh, I love it.
0:03:42 I love it.
0:03:43 What have you been up to?
0:03:43 I’m in Aspen.
0:03:45 I’m headed to Chicago.
0:03:45 Super excited.
0:03:46 I got a speaking gig.
0:03:50 My son, I’m taking my youngest, my 14-year-old.
0:03:52 There’s two cities in the world he wants to go to right now.
0:03:53 One is a city in China.
0:03:56 He’s seen TikToks on some amazing city in China.
0:03:59 And the other city he really wants to go to is Chicago.
0:04:01 And I’m like, we can do that.
0:04:03 So I get to pick the hotel.
0:04:04 We’re staying at the storehouse.
0:04:06 But he gets to pick what we’re doing.
0:04:10 So we’re going to the McDonald’s headquarters or the factory, the McDonald’s museum.
0:04:11 Oh, God.
0:04:13 Seventh circle of hell.
0:04:15 And I’m like, do you get free colon cancer when you go?
0:04:16 I didn’t say that.
0:04:16 But anyways.
0:04:22 Two, we’re going, in any city we’re in, we have to go to the tallest building and go
0:04:23 to the observation deck.
0:04:25 I mean, that’s just amazing whatever city we’re in, he’s decided.
0:04:27 And then what’s the third thing?
0:04:32 Oh, we’re going to, he goes, the best steakhouse in the world is this place called Gibson’s.
0:04:37 He said, but for lunch, we’re going to the place that holds the world, Guinness Book of
0:04:40 World Records for the deepest deep dish pizza in the world.
0:04:44 So this is going to be, it’s going to be a great couple of days in Chicago, Ed.
0:04:46 Where is he learning all of this stuff?
0:04:46 Maybe YouTube?
0:04:48 I think he gets it mostly from TikTok.
0:04:49 Yeah.
0:04:50 That sounds like a decent trip.
0:04:51 I don’t know.
0:04:52 Could be worse.
0:04:58 Oh, you’ll see this, this stuff is like, um, you start getting panicked because I used
0:05:00 to take these trips and they were great.
0:05:07 And then when your kids hit 13 or 14 and they, they refuse to stop growing, you realize pretty
0:05:07 soon.
0:05:12 And then your, your solace on your son’s taking the ACT, you realize, oh my God.
0:05:16 And then you see those TikToks, which are heartbreaking saying that by the time your kid is 17, you
0:05:19 have spent 90% of the total time you’re going to spend with that kid.
0:05:21 And so, and that really grips you.
0:05:26 And so now I’m just like trying to plan as many trips as possible with these, with these
0:05:26 guys.
0:05:28 But anyways, we’re off to Chicago, Ed.
0:05:29 Good stuff.
0:05:30 Okay.
0:05:34 Here’s our conversation with Stuart Simpson, CEO of Vertical Aerospace.
0:05:38 And a disclosure, Scott is an investor in Vertical Aerospace.
0:05:40 So I will be leading this conversation.
0:05:44 Stuart, thank you very much for joining us on Prof G Markets.
0:05:46 Ed, great to be with you and Scott.
0:05:48 Thank you very much for the investment.
0:05:49 Really appreciate it.
0:05:58 So Stuart, you are the CEO of an electric vertical takeoff and landing company.
0:06:00 This is a new sector that has come up.
0:06:08 It’s people call it the EV toll industry, spelled out E-V-T-O-L, electrical vertical takeoff and
0:06:08 landing.
0:06:15 So for our listeners that are unfamiliar, explain to us what this actually is.
0:06:17 What are these EV toll aircrafts?
0:06:18 Why are they important?
0:06:24 And what makes them different from, say, a helicopter, which to me sounds quite similar?
0:06:31 An EV toll is an electric, as you said, Ed, vertical takeoff and landing vehicle.
0:06:39 It is different to a helicopter in that it is safer than a single engine helicopter.
0:06:45 It’s silent in an urban environment with zero emissions.
0:06:47 And it takes off vertically.
0:06:51 And then once it’s taken off vertically, we have tilt rotors on the front of our wings.
0:06:58 And as the rotors tilt, you accelerate and then you fly on a wing, making it extremely efficient.
0:07:05 And having a wing as part of our design, as they say, VTOL means you can work with current battery technology.
0:07:07 So this isn’t something that’s coming in the future.
0:07:10 This is here right now and is working.
0:07:16 And we’re just driving to certification when we can then put the product in the hands of our customers.
0:07:21 And in what situation would you use one of these aircrafts?
0:07:23 Am I using this to go to work?
0:07:26 Is this sort of an equivalent to a taxi?
0:07:27 Is this more long range?
0:07:29 What are the use cases?
0:07:30 How are people using this?
0:07:33 The use cases are endless for this product.
0:07:43 We as a business, we have over $6 billion worth of orders from an incredible customer group, including American Airlines.
0:07:46 So I’m sure your listeners have heard of, they’ve got an order in for $350.
0:07:52 Bristow, world’s largest helicopter operator, have got an order in for over $100 of these.
0:07:57 AirAsia, Japan Airlines, Gol, Gosen, all across the world.
0:08:04 Now, that kind of gives a bit of a hint as to how these are going to be used, if you think of aircraft companies.
0:08:09 The first use cases are probably going to bookend international flights.
0:08:23 So, for example, if you fly with American from, say, Heathrow to JFK, you can then jump on one of these and then fly directly into Manhattan, completely transforming that experience.
0:08:27 Rather than having to spend two hours driving in, you can be there in seven minutes.
0:08:29 So that’s one early use case.
0:08:37 If you look at Bristow, the helicopter operator, they do a huge amount of emergency services within cities, moving people and things around.
0:08:40 Again, that’ll be an early use case for the product.
0:08:49 You know, Scott has made investments in many companies, and we could just have the CEOs of many of different Scott’s investments on the podcast.
0:08:59 But I think the reason that this is important is because you’re kind of at the forefront of a step change in the way transportation works.
0:09:03 And, you know, we think about what the future of transportation looks like.
0:09:15 We’ve been talking a lot about robotaxis and the ways that robotaxis are, in many cases, going to succeed the car, maybe replace the regular car.
0:09:17 That certainly seems the way things are headed.
0:09:30 But I think if we were to go a step further, there is potentially an argument to be made, or it seems as though that the EV tolls are going to replace many other forms of transportation.
0:09:47 I mean, I would rather get out from, you know, let’s call it Manhattan to Long Island in seven minutes through the sky than driving for three hours or taking a train for two hours.
0:09:49 It just is a better way to travel.
0:09:56 So, with that in mind, give us your view on the future of transportation.
0:10:06 And, you know, to the best of your ability, without talking your own book, where does the EV toll sit in that conversation?
0:10:07 Is this the future of transportation?
0:10:13 Is this going to do what the robotaxis are doing to the car?
0:10:18 I genuinely believe this is the first step to highways in the sky.
0:10:21 So, the goal here is mass transport.
0:10:23 This is not something for the luxury.
0:10:26 This is the goal is mass transport.
0:10:33 And just to bring that to life a bit, we’ve modelled out over 1,200 routes with our customers.
0:10:37 So, we get our customers together twice a year for three days.
0:10:39 They tell us how they’re going to deploy the aircraft.
0:10:46 We look at mobile phone data for the density of population movement on the routes they’re talking about.
0:10:51 And then we map out, okay, how many people do you think we can attract onto this type of product?
0:10:58 Without stressing the deployment of the asset, so you don’t have to run it 24 hours a day or anything.
0:11:00 You can run it a pretty normal way.
0:11:09 You get to a cost per seat per kilometre of $2, which is the same as an Uber Black or, for your listeners, in London, a Black Cab.
0:11:13 Now, that is a truly mass market cost point.
0:11:18 Now, of course, that won’t be the price point because we are an OEM.
0:11:20 We design, engineer, sell, service the aircraft.
0:11:21 We’ll sell it.
0:11:28 But we’re putting in the hands of our customers something that creates an incredible economic opportunity for them.
0:11:33 So, this is that first step to highways and sky.
0:11:44 And just building out on what I mean by that, if you look at a map of LA, you can see the age of the building by the ones that were built in the 60s and 70s.
0:11:45 Have a helicopter pad on top of them.
0:11:48 And then they were just pushed out because the noise.
0:11:50 Like, residents hate helicopters.
0:11:55 So, they were licensed out pretty much every city around the world, apart from maybe Sao Paulo.
0:11:57 Every city will have one or two routes.
0:11:58 But they’re not everywhere.
0:12:03 And I’m sure you know in Manhattan, there’s a huge, you know, pushback against helicopters.
0:12:07 And then you have the terrible tragedy with the crash recently.
0:12:11 What this does is it creates a product.
0:12:16 It is putting something out there that truly revolutionizes the skies.
0:12:17 It isn’t just me that’s saying that.
0:12:21 A great reference report Morgan Stanley wrote four years ago.
0:12:24 They talked about a trillion-dollar market in 2040.
0:12:27 They just updated it, actually, about a month ago.
0:12:35 And they doubled down and said, this is a trillion-dollar market in 2040 and a $9 trillion market in 2050.
0:12:37 Now, those are staggering numbers.
0:12:42 And it kind of doesn’t matter if they’re plus-minus, you know, 20% right or not.
0:12:44 This is genuinely what we see out there.
0:12:50 And from a business perspective, what I see is demand way exceeding supply through 2040.
0:12:52 Stuart, good to see you.
0:12:54 So, I’m fascinated by aviation.
0:12:57 This is my second investment in aviation.
0:13:03 I invested in Boom Technologies, the company trying to build the first commercial supersonic plane since the Concorde.
0:13:07 And quite frankly, it’s been a graveyard for investors.
0:13:09 It’s just been a terrible place to invest.
0:13:11 And we’ve seen is exciting.
0:13:16 All the numbers make just so much sense around replacing this kind of dirty, dangerous technology.
0:13:20 And the last mile is the problem to be solved in transportation.
0:13:22 Everyone knows the market is there.
0:13:25 But a bunch of these companies have already started and gone out of business.
0:13:28 There’s sort of three holding on, right?
0:13:30 Archer, Joby, and Vertical.
0:13:32 What’s different this time?
0:13:42 Why will this category return the investment or have a return for shareholders versus almost every other aviation company?
0:13:45 Why has aviation traditionally just been such a terrible place to invest?
0:13:47 And what’s different about this category?
0:13:53 When I was looking around, I was first approached to join Vertical, gosh, two years before I joined the business.
0:14:04 And I spent 18 months to two years looking around the sector, talking to investors, analysts, customers, suppliers, competitors to get a sense of, was this industry real?
0:14:18 And what kept coming back to me was that the whole thing has changed from the 50 years ago, the fantasy, to maybe five years ago, very frothy, to four years ago, to two years ago, it was starting to coalesce.
0:14:23 And in the last 12, and it was, you know, coalesce become real.
0:14:28 Like the technology, if you had the right design, the technology was capable of working.
0:14:33 And what’s happened in the last 12 months, as you say, there’s been a huge shakeout.
0:14:39 There are really only three, four at best kind of hanging on in there of which Vertical’s one.
0:14:41 The first defining thing is physics.
0:14:45 You have to have an aircraft that works with the current technology.
0:14:53 We’ve seen lots of people have designs where the physics needs next generation or two generations away battery technology.
0:15:00 I’m sure your listeners can look at our social media and see our aircraft flying.
0:15:07 We did a flight in and out of the world’s largest military aircraft show last week and then flew home yesterday.
0:15:08 This works.
0:15:12 And it works because our physics is right because we’ve got a wing.
0:15:15 And a wing means you are incredibly efficient.
0:15:22 So all of the companies that are left have broadly similar designs because that’s the physics that works.
0:15:24 The second thing is funding.
0:15:32 A lot of companies raised a lot of money, burnt it very quickly because they didn’t have the right business model or they didn’t have the right physics.
0:15:37 There’s been two and a half billion dollars flown into the sector in the last nine months.
0:15:39 And that’s picking out winners.
0:15:41 That’s the market really picking winners.
0:15:46 And within that, why is vertical, you know, a success?
0:15:49 We have been able to get out and access capital.
0:15:53 And we’ve raised 160 million in cash in the last seven months, which is fantastic.
0:15:59 And that sets us apart with our other pairs as being in the game.
0:16:03 The right physics and access to capital to drive to certification.
0:16:08 So against that, why can we get a return?
0:16:11 Why vertical is best placed for the highest return?
0:16:16 If you look at some of our pairs that you mentioned, as you know, Scott, pick one.
0:16:18 Joby is valued over $12 billion.
0:16:21 It’s sat there with about a billion dollars on its balance sheet.
0:16:25 Vertical, we’re sat here valued about $600 million.
0:16:29 We’ve got $150 million on the balance sheet, good for about a year.
0:16:33 They’re valued 20 times more than us.
0:16:35 Yet our progress is very similar.
0:16:37 We’ve got aircraft designs that are similar.
0:16:39 We’re flying full-scale piloted prototypes.
0:16:44 They are valued higher because they’ve got a track record of raising money and cash on
0:16:45 the balance sheet.
0:16:47 I’m just starting that journey with vertical.
0:16:52 You know, we didn’t raise any cash for three and a half, four years until December, January.
0:16:57 And I’m gradually building up the balance sheet, hitting all the performance milestones we’ve
0:16:58 said and building the credibility.
0:17:04 And I think that puts us in a brilliant position to generate very significant returns for investors.
0:17:05 I see a big part of that.
0:17:11 Delta, quite frankly, is two of the companies, Joby and Archer, are headquartered in the U.S.
0:17:12 and have that sort of technology halo.
0:17:15 You guys are headquartered in Bristol.
0:17:24 So talk about building an aviation and aerospace slash technology company in the U.K. versus building
0:17:24 it in the U.S.
0:17:28 I think the first thing I’d say is Silicon Valley hasn’t certified any aircraft.
0:17:34 And I love Silicon Valley in terms of the move fast, break things, et cetera.
0:17:39 Unfortunately, you can’t launch a beta product on a global stage.
0:17:41 You might be able to do it at somewhere in the Middle East, maybe.
0:17:48 But to get this market really working, to make your business work, you have to get certified
0:17:53 under Civil Aviation Authority in EASA or the FAA.
0:17:57 They unlock the global insurance markets, which means you can sell the product globally.
0:17:59 And that’s how you get scale.
0:18:05 So we are based in Bristol, which is the European hub of aviation.
0:18:07 It’s where the Concorde was designed and developed.
0:18:12 We’ve got tier one aerospace suppliers all around us here.
0:18:14 We’ve got great education and universities.
0:18:16 Oxford, just down the road.
0:18:17 Bristol, Bath.
0:18:21 We have incredible technology and capability right here.
0:18:26 And we know how to certify an aircraft, which is the secret sauce from my perspective.
0:18:33 And I think importantly on this moving fast, I’ve been an incumbent in prior jobs in automotive.
0:18:38 I don’t have any of that incumbent baggage where I can’t put my best people on it.
0:18:42 I can recruit the best talent from around the world to come here to Bristol.
0:18:44 They know this aircraft works.
0:18:47 They want to be signing the fuselage with the first certification one.
0:18:52 And we are so focused on bringing it to market.
0:18:54 We’re not distracted by anything else.
0:18:55 And that gives us an edge.
0:18:58 It lets us move at a pace unrivaled in aviation.
0:19:02 And remember, this is an aircraft we’re building, but you’ve got to get certified.
0:19:08 So we bring speed comparable to Silicon Valley, but we bring the knowledge of how to certify.
0:19:12 We’ll be right back.
0:19:18 If you’re enjoying the show so far and you haven’t subscribed, be sure to give Prof G Markets a follow wherever you get your podcasts.
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0:20:05 Hey, this is Peter Kafka, the host of Channels, a show about media and tech and what happens when they collide.
0:20:11 And this may be hard to remember, but not very long ago, magazines were a really big deal.
0:20:20 And the most important magazines were owned by Condé Nast, the glitzy publishing empire that’s the focus of a new book by New York Times reporter Michael Grinbaum.
0:20:34 The way Condé Nast elevated its editors, the way they paid for their mortgages so they could live in beautiful homes, there was a logic to it, which was that Condé Nast itself became seen as this kind of enchanted land.
0:20:39 You can hear the rest of our chat on channels, wherever you listen to your favorite media podcast.
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0:21:11 New episodes drop every Friday, available on YouTube and wherever you get your podcasts.
0:21:19 We’re back with Prof G Markets.
0:21:22 What would prevent this from working?
0:21:30 And, you know, I could throw out an example of something that pops into my head, and then I’d like for you to add some more.
0:21:37 One thing that pops into my head is we have millions of flying taxis in the sky.
0:21:42 How do we figure out how to make them not crash into each other?
0:21:44 And you talk about highways in the sky.
0:21:56 How do we figure out a way to, yeah, to make sure that people can operate these vehicles and not crash?
0:21:58 That’s the first thing that comes into mind.
0:22:00 One, is that legitimate?
0:22:04 And two, what are some other things that would stop this from actually happening?
0:22:11 In terms of what would make this not work and the highways in the sky, I guess I’ll give you two examples.
0:22:15 First, 20 plus years ago, I was working in automotive.
0:22:27 Just trying to get a car to self-park was incredibly difficult because you’ve got children and dogs and old people and bicycles behind you.
0:22:31 It was incredibly difficult because there’s always things around the vehicle.
0:22:33 If you look up in the sky, there is nothing there.
0:22:38 All you need is a little transponder on the aircraft.
0:22:40 They all talk to each other and they just stay apart.
0:22:45 It’s actually really easy to solve that staying apart once you’re in the sky.
0:22:46 That is quite easy.
0:22:49 And it kind of links to the next generation, which will be autonomy.
0:22:53 When, again, these things can fly on their own and stay apart.
0:22:55 Very, very easy to achieve.
0:23:01 So, I think you can get there and there is a route through that crashing, etc.
0:23:03 It’s not a massive technical challenge.
0:23:04 It’s all there already.
0:23:17 In terms of regulation, in another former role, I was chief operating officer of a company called International Delivery Systems, the equivalent of the U.S. Postal Service.
0:23:21 It was a FTSE 100 company.
0:23:27 Now, as part of that, I did the first commercial drone delivery in the U.K.
0:23:32 It took about 18 months’ worth of negotiation with the U.K. government to let us do it.
0:23:36 But it was front-page news for kind of three or four days when we did it.
0:23:41 So, I’ve worked through the regulatory challenges of putting something in the sky.
0:23:48 Analogous to that now is something called, in the U.K., it’s called the Future of Flight Industry Group.
0:23:49 It’s chaired by the government in the U.K.
0:23:52 They put $30 million behind it.
0:23:55 They’ve committed to the skies being open in 2028.
0:24:04 And in the U.S., you have the Trump presidency recently issued an instruction and executive order to the FAA to effectively do the same,
0:24:13 to keep up with what regulation is evolving in U.K., Europe, Korea, Japan, where there is a huge pull for this to happen.
0:24:21 So, you know, you asked what are the things that could stop it, regulation, but the whole industry is front-footed on that now.
0:24:25 Complete change from two years ago when everyone was wondering how it was going to evolve.
0:24:30 There is a massive push to get this up and running now, which is fantastic for the industry.
0:24:35 So, let’s assume it does work, and let’s assume it works fantastically.
0:24:38 Let’s assume full adoption of e-VTOLs.
0:24:45 What would that do to the current transportation industry?
0:24:49 What would that do to cars, trains, planes?
0:24:53 And also, what would it look like in everyday life?
0:24:57 Are we taking these vehicles to work?
0:24:59 Are we taking them to go on vacation?
0:25:03 What does a full adoptive world of e-VTOLs actually look like?
0:25:06 I very much see this back to this, highways in the sky.
0:25:10 So, yes, we will be using them on a daily basis.
0:25:22 If you look at cities like Seoul, Mumbai, New Delhi, LA, where the infrastructure is creaking already, where people just can’t get around in the cities.
0:25:24 You can’t build your way out of it.
0:25:25 There’s no space for roads.
0:25:28 You can’t tunnel your way out of it because it takes forever and it’s so costly.
0:25:30 So, everyone is looking to the skies.
0:25:34 So, this is the future of transportation.
0:25:42 And as I said earlier, we already know and have got this current generation of the product to a cost point of $2 per seat per kilometre.
0:25:51 So, as supply chains grow, as you manage to put more of these out there, this has the ability to be mass transport.
0:25:57 You can easily imagine taking it from one side of London into the city every day as a commute.
0:26:04 You could be, you know, my commute, I’m sure, Scott, you recognise this, in London, I commute about an hour a day.
0:26:05 That’s seen as not a bad commute.
0:26:08 You could, I’m only 11 miles out from the centre.
0:26:10 You could do that in five minutes in one of these.
0:26:14 Yeah, you can have a local vertiport somewhere, fly straight into the centre.
0:26:17 It is truly revolutionary.
0:26:20 And that is what we are all doing it as an industry.
0:26:22 And I do think this is what we want to create.
0:26:25 We want to create the industry here.
0:26:27 We want the whole industry to thrive.
0:26:29 And logistics and delivery.
0:26:35 I mean, we’re already starting to see Amazon delivering stuff to our doorsteps with drones.
0:26:40 Will eVTOLs have a role to play in that story?
0:26:44 Are we going to be seeing, are we going to be door dashing our burritos with these vehicles?
0:26:46 I don’t think we’d be door dashing them.
0:26:48 I think a drone is far better for that.
0:26:52 But in terms of bigger things, yeah, absolutely.
0:27:01 One of the things I just launched recently, I signed off 18 months ago a hybrid powertrain for the product because we have a large airframe.
0:27:09 What I mean by that is wingtip to wingtip fits on a helipad, but the tube under it is bigger than our peer groups and we can move things, more things.
0:27:15 So I signed off a hybrid powertrain that takes the range from 100 miles to 1,000 miles.
0:27:19 It takes the payload from 600 kilos to 1,200 kilos.
0:27:21 Well, all of a sudden you open up logistics.
0:27:26 Now, importantly, military logistics is something that drops in very nicely to that.
0:27:33 Hugely interesting from a military perspective because you’ve got silent takeoff and landing.
0:27:36 You’ve got a very low noise signature, a very low heat signature.
0:27:43 So this opens up a huge other market that, you know, it isn’t the core product.
0:27:46 It is distinctly different and a huge opportunity.
0:27:59 I think the numbers I was looking at just last week when I put this out in public about months ago, the geopolitical environment has changed, as you know, from when I think this has been one of the successes of Trump’s presidency.
0:28:02 He has got NATO putting their hand in their pocket.
0:28:10 And that means for Europe, it’s going to go defense spending from around $300 million up to nearly a trillion dollars.
0:28:12 Now, that is going to go somewhere.
0:28:16 We are the only European player in this space.
0:28:22 The other competitors are North American-based and in a North American-first, Europe-first.
0:28:25 We are brilliantly positioned for that.
0:28:29 And since I announced the hybrid, we’ve had a load of incoming from European military.
0:28:35 We’re at the world’s largest military air show last week at many meetings with military across Europe.
0:28:43 So that plays directly into that kind of the other verticals for the aircraft, whether it’s logistics and then additional to that military.
0:28:47 The military angle and the military use case.
0:28:52 Was that always part of the plan for vertical aerospace?
0:28:54 Was that always built in?
0:29:08 Or was that a reaction to, as you say, a heightening of geopolitical tension, which is causing this massive increase in defense and military spending, not just in Europe, but basically across the globe?
0:29:14 In other words, were you as the CEO already positioned to offer that as a product?
0:29:23 Or did you see what’s happening and say, okay, we need to start offering something that captures these defense budget, these massive increases in defense budgets?
0:29:27 Yeah. Well, I signed off the investment in this 18 months ago.
0:29:31 And the reason for that is we just have a bigger airframe, a more capable airframe.
0:29:35 You can take up to four, eight full-size Marines in it with all their kit.
0:29:39 So we knew that defense was an opportunity from some time ago.
0:29:45 To get the range, you had to have a different kind of powertrain, which is why I signed off the hybrid 18 months ago.
0:29:48 We actually had it working on a bench last summer.
0:29:49 It’s fantastic.
0:29:56 We’ve done the difficult bit of the control algorithm between the battery, the auxiliary powertrain, and the electronic power unit.
0:29:57 That all works.
0:30:01 We put it out in public because of the geopolitical environment.
0:30:06 We probably would have announced it maybe later this year, but it felt the right thing to do.
0:30:07 We already have the technology.
0:30:08 It’s working.
0:30:14 We will be putting the hybrid powertrain in the aircraft next summer and flying it.
0:30:21 The goal being to take it to the, again, to REAC, the largest military air show, and to be flying it there next year.
0:30:23 And it’s a great opportunity.
0:30:25 Really, really exciting.
0:30:28 So, Stuart, just to wrap up here, and you touched on this.
0:30:36 One, how much additional capital do you think Vertical needs to get to the first one rolling off the assembly lines for commercial use or military use?
0:30:43 And what is that target date in terms of we’re open for business and actually delivering against those orders?
0:30:51 We are the only one in the space with clear financial and operating metrics from 25 through 28 through 30.
0:30:55 And that’s because I can be certain about certification in 2028.
0:31:06 Under the EASA protocol, the regulation, you can go on the website, double click, download the engineering work stack, and say, right, we’re going to certify in 2028.
0:31:08 And that opens up the global market.
0:31:11 So that’s when we will be putting aircraft in the hands of customers.
0:31:18 In terms of cash, we haven’t been out to the market and said, this is exactly how much we’re going to spend.
0:31:25 But the way I kind of frame this up is I’m going to spend about $120 million this year, round numbers.
0:31:37 Even if I double that spend for the next three years, which is probably the outer limit of that, that is what our peer groups spend in a year and a half.
0:31:42 And they have no clear certification date for the global market.
0:31:47 So the potential return from investing in us is just way higher.
0:31:56 Because even if I did double the spend, we’ll be certified in 2028, cash break even almost immediately thereafter, 2030 at the latest.
0:32:03 And we’ve got access to the global market because we’re certifying to the highest safety standard in the world.
0:32:07 Stay with us.
0:32:21 Barry Diller was behind many of America’s favorite movies and shows.
0:32:24 Now, he’s giving an intimate look into his personal life.
0:32:27 To me, business risks were meaningless.
0:32:29 I couldn’t care less about business risks.
0:32:30 I’m Preet Bharara.
0:32:40 And this week, Diller joins me on my podcast, Stay Tuned with Preet, to discuss his sexuality, the end of Hollywood, and how the media industry broke.
0:32:42 The episode is out now.
0:32:45 Search and follow Stay Tuned with Preet wherever you get your podcasts.
0:32:53 We’re back with Prof G Markets.
0:32:57 How do legacy transportation companies view this space?
0:33:12 And the reason I ask that is because, you know, I look at the, let’s look at the auto industry, for example, and their adoption of electric vehicles, which I think some would argue was too late.
0:33:20 There was a reluctance to embrace them, probably because it was a pain in the ass to have to shift your supply chains and start offering a new product.
0:33:24 So, now, obviously, they’re all getting into it.
0:33:30 Basically, every legacy vehicle company is figuring out some electric vehicle offering.
0:33:34 And I think that’s generally what happens with innovation.
0:33:39 The legacy industries and the legacy companies are a little hesitant, reluctant to let go.
0:33:44 And then, eventually, it becomes so obvious that they concede.
0:33:57 How do legacy transportation companies, and this can include auto, it could also include the airline industries, it could also include Boeing, it could also include defense companies, Lockheed Martin, whatever it is.
0:33:59 How do they view you?
0:34:05 And what is your role in terms of disrupting the industries that they have had a hold on for so long?
0:34:09 Yeah, you’ve hit the nail on the head, Ed, with the incumbents’ challenge.
0:34:11 So, I’ve been there in automotive.
0:34:16 General Motors, back in the mid-90s, had the GM EV1.
0:34:20 It was an electric car who was driving around LA, and then they stopped it.
0:34:22 They completely lost it.
0:34:27 Because as an incumbent, you’re sat there, and you always end up putting your best people on,
0:34:36 what is the biggest problem, what do I need to fix now, where is all the profit, where’s all the margin, how do we make sure that keeps coming in to protect the company?
0:34:42 You can never get the focus to put the best people and the right amount of capital on the new and the innovative.
0:34:46 And you see that all the time with incumbents.
0:34:49 I don’t face that problem, right?
0:34:51 I am laser-focused on this one product.
0:34:59 And if you draw that parallel into the aerospace industry and the defense industry, they’ve all had a go at this.
0:35:04 And they’ve all come up with things that don’t work because they can’t put their best people on it.
0:35:05 They can’t put their focus on it.
0:35:11 They can’t, you know, when push comes to shove and you’re trying to hit a quarterly earnings, what’s the thing you cut?
0:35:15 You typically cut that thing because you’ve got to keep hitting your numbers.
0:35:17 And we don’t have that.
0:35:19 So we are brilliantly positioned, laser-like focused.
0:35:25 And despite the fact they’ve got a huge scale, they just can’t bring the focus to bear.
0:35:28 And it’s pretty common, you see it across a lot of industries.
0:35:30 And I’d say that’s the same for the automotive.
0:35:35 I’d say it’s for the aero, OEMs, and also the defense OEMs.
0:35:39 You have a long history and a long career working in business.
0:35:45 You had leadership roles at Bentley and General Motors, as we discussed, and Rolls-Royce.
0:35:47 You were the CEO of Royal Mail.
0:35:51 You’re also the CFO of a cybersecurity firm.
0:35:53 You know a lot about business.
0:36:02 With this new role at Vertical Aerospace, what have you learned about business that you didn’t know before?
0:36:07 And what could you share with any young people who are starting up their careers?
0:36:10 What have you learned over the last few years?
0:36:13 I’ve been incredibly lucky with my career.
0:36:15 I worked at the most amazing businesses.
0:36:16 I’ve had a fantastic time.
0:36:22 The thing I’d say to young people, I’d say to my kids, you do what you’re passionate about.
0:36:25 Because that’s how you put the discretionary effort in.
0:36:26 That’s where the interest lies.
0:36:31 And because you put the discretionary effort in, because you’re interested, you just get a better result.
0:36:39 As soon as you go chasing money, and I’ve seen friends of mine, they want to just get the next big job with a big paycheck, they’re not happy.
0:36:41 So you’ve got to just do what you’re passionate about.
0:36:43 And I was really lucky.
0:36:53 I was approached about this two years before I joined, and I spent time looking around, like, what do I want to do at this moment in my career?
0:37:04 And I came to the conclusion of joining here because I was incredibly passionate about the opportunity to create a multi-billion dollar company right here in the UK.
0:37:07 A world-leading company here in the UK.
0:37:16 And I think that’s a phenomenal thing to do, to be able to change the world with a new product, a new industry, is a once-in-a-lifetime opportunity.
0:37:21 And in terms of what I learn, I’m working with the most amazing engineers in the aerospace world.
0:37:30 So I’ve been in engineering-led businesses for 30 years, but the passion and energy that the team here bring is like nothing I’ve ever seen.
0:37:35 Because everyone wants to be part of changing aviation and changing the future of transport.
0:37:42 Stuart Simpson is the CEO of Vertical Aerospace, a UK-based company developing electric vertical takeoff and landing aircraft.
0:37:52 Prior to Vertical, Stuart served as CEO of Royal Mail, CFO of Avast, and held senior leadership roles at Rolls-Royce, Bentley, and General Motors at Vertical.
0:38:01 He’s leading the company through certification, commercialization, and expansion into global markets with a focus on building the future of zero-emission air mobility.
0:38:03 Stuart, this was great.
0:38:07 Thank you for joining us and sharing everything eVTOL.
0:38:15 Yes, Stuart, and by the way, not to put any additional pressure on you, but whether my kids go to college or not is basically pivoting on whether you execute or not.
0:38:20 I’m not sure I believe that, Scott, but we are executing.
0:38:23 My kids are really hoping that you bring it.
0:38:25 So get on it, my man.
0:38:28 I’m absolutely on it, Scott.
0:38:30 We’ve had an amazing few weeks.
0:38:33 I don’t know if you saw the Flying In and Out of React video.
0:38:34 There’s another couple of little…
0:38:37 I’ve been watching it over and over and showing it to everybody I know.
0:38:38 Thanks, man.
0:38:39 Well done.
0:38:39 Fantastic.
0:38:40 Fantastic.
0:38:58 Scott, let’s get your reactions to that interview, and also let’s hear a little bit about why you invested in this company and what drew you to this.
0:39:00 So I’ll start with the vehicle.
0:39:10 We did a pipe into the company of, I think it was $80 million, and we bought – I put $2.5 million into the round at $5 a share.
0:39:16 In addition, we were given warrants, an equivalent amount of warrants that I think expire in 2030 at that price, $5 a share.
0:39:22 And then we did another raise just a few weeks ago, and I put in another $2 million.
0:39:24 So I’m about $4.5 million into this thing, which is a lot of money for me.
0:39:30 I’m really excited about this one, probably more excited about this than almost any investment I’ve made in a while.
0:39:35 And by the way, I’ve had total wipeouts and things I’ve been really excited about.
0:39:37 So I’m – who knows?
0:39:40 But I’m excited about this one for the following reasons.
0:39:42 One, the use case and the TAM, the total addressable market.
0:39:43 I love aviation.
0:39:53 The ability to take off vertically and go point-to-point above the traffic, it reduces the point-to-point travel by 80% to 90% in terms of time.
0:39:57 Helicopter value proposition of vertical takeoff and landing is enormous.
0:40:00 I was in Sao Paulo.
0:40:03 The concierge calls me and says, there’s traffic.
0:40:04 You need to leave now.
0:40:06 It’s a four-hour trip to the airport.
0:40:09 And I take a helicopter from the roof.
0:40:11 They don’t have the same noise regulations in Sao Paulo.
0:40:14 And I’m at the airport in 22 minutes.
0:40:20 The problem is when you’re in a helicopter, you just look around, and it’s super loud.
0:40:21 It smells.
0:40:22 It’s dirty.
0:40:23 It’s dangerous.
0:40:29 I mean, helicopters, I just think, are really old technology waiting to be disrupted.
0:40:37 And anyone who’s been in a helicopter, you just get the sense that there’s just so many points of failure in these things, and the data kind of bears that out.
0:40:41 So the total addressable market here, the value proposition is clear.
0:40:47 The hard part is that aviation just gorges on capital.
0:41:02 It always takes longer than people think because the safety standards or the benchmarks that the FAA and the European agencies have implemented on aviation, it is so high because they want to create this sense of security.
0:41:03 Otherwise, people would never fly.
0:41:07 Typically, any plane takes much longer.
0:41:12 Any aviation takes much longer and is much more expensive than people originally anticipate.
0:41:13 So there’s real capital risk here.
0:41:22 And one point of evidence around that is every time we do a pipe into this company, you think, oh, the stock should go down because the existing shareholders are being diluted.
0:41:32 When it’s announced, the stock drops, but within a week, the stock recovers and goes up because the market likes the fact we’re putting more capital on the balance sheet.
0:41:35 So the latest round was only done two or three weeks ago.
0:41:38 Another dilution, another $60 million in the company.
0:41:42 The company has to issue another 12 million shares.
0:41:44 Stock goes down.
0:41:53 And now the stock is up, I think, 25% since then because the market just wants to see that these companies have the runway to get there.
0:41:56 We did a bunch of diligence around the technology itself.
0:42:01 I’m obviously talking my own book here, but the people who looked at this company said they have the best technology.
0:42:04 So I see it as sort of a capital war.
0:42:08 And the guy I partnered with on this is a guy named Jason Mudrick.
0:42:13 And Jason has an ability like no one I’ve met to raise capital.
0:42:26 So the real delta, the risk here, and the reason why, as he referenced, as Stuart referenced, that vertical trades at 5% or 10% of the market cap of the other guys is they don’t have the same amount of capital.
0:42:39 But I believe that delta, I believe that insecurity is going to be or that hole is going to be filled because, quite frankly, Jason Mudrick is now on the balance sheet and has an ability to just raise a shit ton of capital.
0:42:44 In addition, the kind of free gift with purchase here is I got very excited.
0:42:45 We’ve talked about this on the show.
0:42:54 NATO or European EU countries have announced they’re going to take their – increase their military spending from about 2% to 3% of GDP.
0:42:56 That’s an incremental $200 billion.
0:43:02 And there just aren’t that many aerospace or defense companies in Europe.
0:43:08 And I don’t think they’re going to take any of that $200 billion and send it to the U.S., given what an asshole Trump is being to Europe right now.
0:43:13 So I look at this as – I generally think this could go up 3, 5, 10x.
0:43:16 I also, to be clear, think this could be a zero.
0:43:21 If the technology proves to be much harder than we all think it’s going to be, it’s going to hurt everybody.
0:43:25 If we’re not able to raise the capital, this thing could easily go to zero.
0:43:28 There’s been like 12 of these companies and nine, eight or nine of them have gone out of business.
0:43:32 So I look at this just trying to be very honest with myself.
0:43:36 I think there’s a real possibility this could go 3, 5, 10x.
0:43:38 I also think there’s a real possibility it could be a zero.
0:43:42 But when I do that math, I think it’s asymmetric to the upside.
0:43:45 And I’ve made – I voted with my wallet here.
0:43:47 Any thoughts or reactions, Ed?
0:43:48 Where do I have this wrong?
0:43:51 No, I think you got it right.
0:43:56 The only thing that I would flag – and I’d be interested to hear how you think about this.
0:44:01 As you say, $4.5 million for you – I mean, $4.5 million is a lot for many people.
0:44:08 But I think it’s an important point that you make that this was not like a throw a quick angel check in there.
0:44:10 This was a significant investment for you.
0:44:12 You have real money on the line here.
0:44:14 There’s something at stake.
0:44:21 At the same time, you have a real passion for this industry and for aviation.
0:44:30 It’s something that you are drawn to in the same way that I might be drawn to Chelsea and to football teams.
0:44:31 And to glass dildos.
0:44:31 I’m sorry.
0:44:32 Go ahead.
0:44:33 I’m sorry.
0:44:34 I’m sorry.
0:44:39 I didn’t mean to reveal some of our hobbies, some of your hobbies.
0:44:41 Those are our private conversations, yeah.
0:44:42 Details!
0:45:02 So, the question I would ask you, how do you think about the facts and how do you manage the reality, which is that you might also just be quite excited about something because you’re passionate about it and because it interests you.
0:45:06 And by the way, I agree with the investment thesis.
0:45:09 I just also recognize that you’re very excited about this.
0:45:12 It’s something that is fun for you.
0:45:20 And so, how do you make sure in your head, okay, am I just finding this really fun or have I really found something that is significant here?
0:45:21 So, it’s a fair point.
0:45:33 And I’ve always said that you’ve got to be careful when you get emotionally invested in something because what that means is, you know, the categories you’re really interested in, it gives you some psychic return, right?
0:45:39 It’s fun to, I just, I’m part of an investor group that just bought a football team in Bogota, Colombia.
0:45:42 Well, the difference there is you didn’t invest four and a half million dollars into it.
0:45:47 I think with that investment, you recognize this is more of a passion investment.
0:45:48 Consumption, yeah.
0:45:50 Yeah, I put a million bucks in it.
0:45:51 That’s real money for me.
0:45:52 That’s not money I want to lose.
0:45:58 But, yeah, that’s, that, to your point, that probably says my thinking is a little bit clouded here.
0:46:00 I’m fascinated by aviation.
0:46:03 It’s something I’ve spent a lot of money on.
0:46:05 I spent a disproportionate amount of my money on aviation.
0:46:07 I’m drawn to these investments.
0:46:12 And the reality is this sector has been a terrible place to invest.
0:46:18 Not, not, not VTOL specifically, but just all aviation has been a difficult place to make money in.
0:46:20 So, you’re right.
0:46:22 It’s probably, it’s probably a little bit clouded.
0:46:30 I didn’t, I didn’t say this in order to get you to say that, that you have clouded judgment, by the way.
0:46:32 I was just wondering if you were factoring that in.
0:46:35 I get to go to air shows.
0:46:36 I love that.
0:46:37 I think it’s fascinating.
0:46:39 And I love to look at the different equipment.
0:46:41 I find these things really interesting.
0:46:42 So, there is some psychic.
0:46:47 I do think I know a little bit about the space and knew some engineers to evaluate the technology.
0:46:50 And they said there’s still a lot of hurdles for the whole space.
0:46:59 But, generally speaking, this company had, I mean, one of the things he didn’t talk about, they can get aerospace engineers for about half the price you can get them for in America.
0:47:04 It’s just, Bristol has this, Bristol made the Hawker hurricane.
0:47:06 It made a bunch of the planes and world.
0:47:12 It has a legacy of aviation extending all the way back to World War II and then through the Concorde and Hawker.
0:47:16 And there’s just a ton of aviation talent that, quite frankly, is just a lot less expensive.
0:47:27 So, one of the things we like about Stuart is that he is hitting new benchmarks across certification at a fraction of the cost of the capital that what the American guys are spending.
0:47:33 Because the American guys are competing against engineers designing, you know, the Oculus or whatever.
0:47:36 There is, I see some advantage.
0:47:38 But I absolutely love this investment.
0:47:40 I think it’s better to be lucky than good.
0:47:49 I think there’s going to be a tidal wave of additional spending into anything resembling a defense or aviation company in Europe over the next three to five years.
0:47:52 But this is a really risky one.
0:47:57 And also, some of this is just, I have so much faith in Jason, Jason Mudrick.
0:48:05 He just has an ability to find these small companies that are capital constrained and recapitalize them and go raise a bunch of money.
0:48:13 And also, I don’t, as excited as I get about anything, I never put more than, call it, 3% or 4% of my capital into any one thing.
0:48:17 Because I’m at a point in my life where I’m not looking to get, I’m looking to get richer, but I’m not looking to get rich.
0:48:20 I’m just really focused on not getting poor again.
0:48:25 And where I have really screwed up before is getting emotionally invested in things that made sense.
0:48:28 I mean, e-commerce just made a lot of sense.
0:48:30 Red Envelope was doing amazing.
0:48:31 It’s just everything made sense.
0:48:33 But I didn’t see 08 coming.
0:48:49 And when our credit line got pulled and we could no longer buy inventory, and there was a software glitch in the address guns at our Kentucky, Ohio fulfillment center, and we sent 11,000 gifts to the wrong address just as Wells Fargo was cutting our credit line, you just never know.
0:48:55 And the stock went from $7 or $8 to $0 in, I don’t know, 22 trading days.
0:48:58 So nobody knows, right?
0:49:04 And the investments I’ve been most excited about in the last few years, some have done really well, some have gone to zero.
0:49:17 If you were to ask me what investment I was most excited about, the investment I was most excited about in the last five years before this one was a company called 98.6 that was doing text-based preventive healthcare for corporations.
0:49:28 Sam signs up 10,000 people at $3 a month, and they can text with health issues, and an AI overlay refers them to the right person.
0:49:32 Amazing investors, solid CEO, great VC.
0:49:35 I lost all of it in 24 months.
0:49:39 I’ve never gone 5 million to zero in 24 months.
0:49:40 It’s usually longer and more painful.
0:49:43 So with companies like this, nobody knows.
0:49:47 So, you know, I don’t want to make an investment recommendation here.
0:49:50 I just want to say the math I’ve done and why I’m investing.
0:49:53 But also, this is – there’s no getting around it.
0:49:54 This is a risky one.
0:49:56 But I’m – yeah, I’m super excited about this one.
0:50:04 This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer.
0:50:06 Mia Saverio is our research lead.
0:50:09 Our research associates are Isabella Kinsel and Dan Shallan.
0:50:11 Drew Burrows is our technical director.
0:50:13 And Catherine Dillon is our executive producer.
0:50:16 Thank you for listening to Prof. G. Markets from the Vox Media Podcast Network.
0:50:21 If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.
0:50:51 We’ll see you next time.
0:50:56 Prof. G. Markets from the Vox Media Podcast Network.
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0:00:17 But having the right insurance can help protect you from many things.
0:00:20 Customize your coverage to get the protection you need
0:00:22 with BCAA Small Business Insurance.
0:00:28 Use promo code PROTECT to receive $50 off at bcaa.com slash smallbusiness.
0:00:31 Megan Rapinoe here.
0:00:35 This episode, we are riding the vibes of W All-Star.
0:00:38 We talk about our favorite moments on and off the court,
0:00:40 and we catch up with the breakout stars of The Weeknd,
0:00:45 Courtney Williams and Natisha Heidemann, a.k.a. the Stud Buds.
0:00:47 Plus, we get into all the drama at the Euros.
0:00:49 Check out our latest episode of A Touch More
0:00:51 wherever you get your podcasts and on YouTube.
0:00:55 Today’s number, 200 Swiss francs.
0:00:59 That’s how much Tour de France writers get fined for peeing in front of spectators.
0:01:00 True story, Ed.
0:01:02 I was at the local community pool, and they said,
0:01:03 no peeing in the pool.
0:01:04 And I said, come on, everybody pees in the pool.
0:01:07 And they said, yeah, but not from the diving board.
0:01:10 Listen to me.
0:01:12 Markets are bigger than us.
0:01:14 What you have here is a structural change in the wealth distribution.
0:01:16 Cash is trash.
0:01:17 Stocks look pretty attractive.
0:01:18 Something’s going to break.
0:01:19 Forget about it.
0:01:22 That beat out, you know, it’s okay to pee in the shower,
0:01:25 but everyone freaks out when I shower and pee.
0:01:30 Lil, free gift with purchase there.
0:01:31 Two for one, Ed.
0:01:33 Maybe you should have saved one of them for a future episode.
0:01:34 There you go.
0:01:37 Regardless, welcome to Property Markets.
0:01:39 Today we’re speaking with Stuart Simpson, the CEO of Vertical Aerospace.
0:01:42 But first, it’s time for banter, Ed.
0:01:44 It’s time for our favorite part of the show.
0:01:45 First off, let me just point out,
0:01:48 you’re now showing up late to every podcast.
0:01:52 You have decided that you are very important.
0:01:54 No, no, wrong.
0:01:55 Oh, and what do I see this morning?
0:01:58 Literally, talk about a boner killer.
0:02:01 I wake up, and I, of course, turn over, you know,
0:02:03 like a 13-year-old and turn on my phone.
0:02:06 What is the first thing that pops up in my Instagram feed?
0:02:07 Yes, it’s me.
0:02:09 Yeah, well, first it was Katie Tourer,
0:02:12 which I would not describe as a boner killer,
0:02:14 but that’s neither here nor there.
0:02:17 And then I see her interviewing you, and she’s like,
0:02:21 Ed, tell us why Gen Z went for Trump.
0:02:24 And I’m like, oh, my God, make it stop.
0:02:28 And you’re there in, like, a cool brown suede coat,
0:02:31 and you’re like, well, Katie, the first thing is,
0:02:36 the Republicans meet us where we are on TikTok and YouTube.
0:02:38 And I’m like, well, that’s some fucking blinding insight.
0:02:39 No shit, Sherlock.
0:02:42 I’m like, that’s how you get on MSNBC?
0:02:44 Republicans are on TikTok.
0:02:46 Anyway, I literally couldn’t watch a thing.
0:02:48 I skipped to watching Great Dane’s frolic with each other.
0:02:50 But you’re on again.
0:02:54 I’m going to assume you said something actually interesting.
0:02:55 What else did you say?
0:02:59 What else has the Trump administration done to meet Gen Z,
0:03:02 who pivoted very hard towards Redness last election?
0:03:05 This is not the time for me to do my whole spiel, I don’t think.
0:03:05 But…
0:03:06 Okay.
0:03:07 What, are you going to do it on Colbert next week?
0:03:08 Oh, wait, never mind.
0:03:10 Never mind.
0:03:11 Never mind.
0:03:12 All right, never mind, Ed.
0:03:13 Forget it.
0:03:14 Forget it.
0:03:16 I’m trying to banter here, and you’re not cooperating,
0:03:19 because you clearly want to impress the people at MSNBC.
0:03:21 Yeah, exactly.
0:03:27 Well, your opening line for banter is that my appearance on TV was a, quote,
0:03:28 boner killer.
0:03:30 That’s how you describe it.
0:03:31 Ed, I got to avoid those, Ed.
0:03:33 I got to avoid those.
0:03:37 Yeah, no, when that shit happens, can’t let anything get in the way of that.
0:03:39 Oh, my God.
0:03:40 Oh, my God.
0:03:41 Oh, I love it.
0:03:42 I love it.
0:03:43 What have you been up to?
0:03:43 I’m in Aspen.
0:03:45 I’m headed to Chicago.
0:03:45 Super excited.
0:03:46 I got a speaking gig.
0:03:50 My son, I’m taking my youngest, my 14-year-old.
0:03:52 There’s two cities in the world he wants to go to right now.
0:03:53 One is a city in China.
0:03:56 He’s seen TikToks on some amazing city in China.
0:03:59 And the other city he really wants to go to is Chicago.
0:04:01 And I’m like, we can do that.
0:04:03 So I get to pick the hotel.
0:04:04 We’re staying at the storehouse.
0:04:06 But he gets to pick what we’re doing.
0:04:10 So we’re going to the McDonald’s headquarters or the factory, the McDonald’s museum.
0:04:11 Oh, God.
0:04:13 Seventh circle of hell.
0:04:15 And I’m like, do you get free colon cancer when you go?
0:04:16 I didn’t say that.
0:04:16 But anyways.
0:04:22 Two, we’re going, in any city we’re in, we have to go to the tallest building and go
0:04:23 to the observation deck.
0:04:25 I mean, that’s just amazing whatever city we’re in, he’s decided.
0:04:27 And then what’s the third thing?
0:04:32 Oh, we’re going to, he goes, the best steakhouse in the world is this place called Gibson’s.
0:04:37 He said, but for lunch, we’re going to the place that holds the world, Guinness Book of
0:04:40 World Records for the deepest deep dish pizza in the world.
0:04:44 So this is going to be, it’s going to be a great couple of days in Chicago, Ed.
0:04:46 Where is he learning all of this stuff?
0:04:46 Maybe YouTube?
0:04:48 I think he gets it mostly from TikTok.
0:04:49 Yeah.
0:04:50 That sounds like a decent trip.
0:04:51 I don’t know.
0:04:52 Could be worse.
0:04:58 Oh, you’ll see this, this stuff is like, um, you start getting panicked because I used
0:05:00 to take these trips and they were great.
0:05:07 And then when your kids hit 13 or 14 and they, they refuse to stop growing, you realize pretty
0:05:07 soon.
0:05:12 And then your, your solace on your son’s taking the ACT, you realize, oh my God.
0:05:16 And then you see those TikToks, which are heartbreaking saying that by the time your kid is 17, you
0:05:19 have spent 90% of the total time you’re going to spend with that kid.
0:05:21 And so, and that really grips you.
0:05:26 And so now I’m just like trying to plan as many trips as possible with these, with these
0:05:26 guys.
0:05:28 But anyways, we’re off to Chicago, Ed.
0:05:29 Good stuff.
0:05:30 Okay.
0:05:34 Here’s our conversation with Stuart Simpson, CEO of Vertical Aerospace.
0:05:38 And a disclosure, Scott is an investor in Vertical Aerospace.
0:05:40 So I will be leading this conversation.
0:05:44 Stuart, thank you very much for joining us on Prof G Markets.
0:05:46 Ed, great to be with you and Scott.
0:05:48 Thank you very much for the investment.
0:05:49 Really appreciate it.
0:05:58 So Stuart, you are the CEO of an electric vertical takeoff and landing company.
0:06:00 This is a new sector that has come up.
0:06:08 It’s people call it the EV toll industry, spelled out E-V-T-O-L, electrical vertical takeoff and
0:06:08 landing.
0:06:15 So for our listeners that are unfamiliar, explain to us what this actually is.
0:06:17 What are these EV toll aircrafts?
0:06:18 Why are they important?
0:06:24 And what makes them different from, say, a helicopter, which to me sounds quite similar?
0:06:31 An EV toll is an electric, as you said, Ed, vertical takeoff and landing vehicle.
0:06:39 It is different to a helicopter in that it is safer than a single engine helicopter.
0:06:45 It’s silent in an urban environment with zero emissions.
0:06:47 And it takes off vertically.
0:06:51 And then once it’s taken off vertically, we have tilt rotors on the front of our wings.
0:06:58 And as the rotors tilt, you accelerate and then you fly on a wing, making it extremely efficient.
0:07:05 And having a wing as part of our design, as they say, VTOL means you can work with current battery technology.
0:07:07 So this isn’t something that’s coming in the future.
0:07:10 This is here right now and is working.
0:07:16 And we’re just driving to certification when we can then put the product in the hands of our customers.
0:07:21 And in what situation would you use one of these aircrafts?
0:07:23 Am I using this to go to work?
0:07:26 Is this sort of an equivalent to a taxi?
0:07:27 Is this more long range?
0:07:29 What are the use cases?
0:07:30 How are people using this?
0:07:33 The use cases are endless for this product.
0:07:43 We as a business, we have over $6 billion worth of orders from an incredible customer group, including American Airlines.
0:07:46 So I’m sure your listeners have heard of, they’ve got an order in for $350.
0:07:52 Bristow, world’s largest helicopter operator, have got an order in for over $100 of these.
0:07:57 AirAsia, Japan Airlines, Gol, Gosen, all across the world.
0:08:04 Now, that kind of gives a bit of a hint as to how these are going to be used, if you think of aircraft companies.
0:08:09 The first use cases are probably going to bookend international flights.
0:08:23 So, for example, if you fly with American from, say, Heathrow to JFK, you can then jump on one of these and then fly directly into Manhattan, completely transforming that experience.
0:08:27 Rather than having to spend two hours driving in, you can be there in seven minutes.
0:08:29 So that’s one early use case.
0:08:37 If you look at Bristow, the helicopter operator, they do a huge amount of emergency services within cities, moving people and things around.
0:08:40 Again, that’ll be an early use case for the product.
0:08:49 You know, Scott has made investments in many companies, and we could just have the CEOs of many of different Scott’s investments on the podcast.
0:08:59 But I think the reason that this is important is because you’re kind of at the forefront of a step change in the way transportation works.
0:09:03 And, you know, we think about what the future of transportation looks like.
0:09:15 We’ve been talking a lot about robotaxis and the ways that robotaxis are, in many cases, going to succeed the car, maybe replace the regular car.
0:09:17 That certainly seems the way things are headed.
0:09:30 But I think if we were to go a step further, there is potentially an argument to be made, or it seems as though that the EV tolls are going to replace many other forms of transportation.
0:09:47 I mean, I would rather get out from, you know, let’s call it Manhattan to Long Island in seven minutes through the sky than driving for three hours or taking a train for two hours.
0:09:49 It just is a better way to travel.
0:09:56 So, with that in mind, give us your view on the future of transportation.
0:10:06 And, you know, to the best of your ability, without talking your own book, where does the EV toll sit in that conversation?
0:10:07 Is this the future of transportation?
0:10:13 Is this going to do what the robotaxis are doing to the car?
0:10:18 I genuinely believe this is the first step to highways in the sky.
0:10:21 So, the goal here is mass transport.
0:10:23 This is not something for the luxury.
0:10:26 This is the goal is mass transport.
0:10:33 And just to bring that to life a bit, we’ve modelled out over 1,200 routes with our customers.
0:10:37 So, we get our customers together twice a year for three days.
0:10:39 They tell us how they’re going to deploy the aircraft.
0:10:46 We look at mobile phone data for the density of population movement on the routes they’re talking about.
0:10:51 And then we map out, okay, how many people do you think we can attract onto this type of product?
0:10:58 Without stressing the deployment of the asset, so you don’t have to run it 24 hours a day or anything.
0:11:00 You can run it a pretty normal way.
0:11:09 You get to a cost per seat per kilometre of $2, which is the same as an Uber Black or, for your listeners, in London, a Black Cab.
0:11:13 Now, that is a truly mass market cost point.
0:11:18 Now, of course, that won’t be the price point because we are an OEM.
0:11:20 We design, engineer, sell, service the aircraft.
0:11:21 We’ll sell it.
0:11:28 But we’re putting in the hands of our customers something that creates an incredible economic opportunity for them.
0:11:33 So, this is that first step to highways and sky.
0:11:44 And just building out on what I mean by that, if you look at a map of LA, you can see the age of the building by the ones that were built in the 60s and 70s.
0:11:45 Have a helicopter pad on top of them.
0:11:48 And then they were just pushed out because the noise.
0:11:50 Like, residents hate helicopters.
0:11:55 So, they were licensed out pretty much every city around the world, apart from maybe Sao Paulo.
0:11:57 Every city will have one or two routes.
0:11:58 But they’re not everywhere.
0:12:03 And I’m sure you know in Manhattan, there’s a huge, you know, pushback against helicopters.
0:12:07 And then you have the terrible tragedy with the crash recently.
0:12:11 What this does is it creates a product.
0:12:16 It is putting something out there that truly revolutionizes the skies.
0:12:17 It isn’t just me that’s saying that.
0:12:21 A great reference report Morgan Stanley wrote four years ago.
0:12:24 They talked about a trillion-dollar market in 2040.
0:12:27 They just updated it, actually, about a month ago.
0:12:35 And they doubled down and said, this is a trillion-dollar market in 2040 and a $9 trillion market in 2050.
0:12:37 Now, those are staggering numbers.
0:12:42 And it kind of doesn’t matter if they’re plus-minus, you know, 20% right or not.
0:12:44 This is genuinely what we see out there.
0:12:50 And from a business perspective, what I see is demand way exceeding supply through 2040.
0:12:52 Stuart, good to see you.
0:12:54 So, I’m fascinated by aviation.
0:12:57 This is my second investment in aviation.
0:13:03 I invested in Boom Technologies, the company trying to build the first commercial supersonic plane since the Concorde.
0:13:07 And quite frankly, it’s been a graveyard for investors.
0:13:09 It’s just been a terrible place to invest.
0:13:11 And we’ve seen is exciting.
0:13:16 All the numbers make just so much sense around replacing this kind of dirty, dangerous technology.
0:13:20 And the last mile is the problem to be solved in transportation.
0:13:22 Everyone knows the market is there.
0:13:25 But a bunch of these companies have already started and gone out of business.
0:13:28 There’s sort of three holding on, right?
0:13:30 Archer, Joby, and Vertical.
0:13:32 What’s different this time?
0:13:42 Why will this category return the investment or have a return for shareholders versus almost every other aviation company?
0:13:45 Why has aviation traditionally just been such a terrible place to invest?
0:13:47 And what’s different about this category?
0:13:53 When I was looking around, I was first approached to join Vertical, gosh, two years before I joined the business.
0:14:04 And I spent 18 months to two years looking around the sector, talking to investors, analysts, customers, suppliers, competitors to get a sense of, was this industry real?
0:14:18 And what kept coming back to me was that the whole thing has changed from the 50 years ago, the fantasy, to maybe five years ago, very frothy, to four years ago, to two years ago, it was starting to coalesce.
0:14:23 And in the last 12, and it was, you know, coalesce become real.
0:14:28 Like the technology, if you had the right design, the technology was capable of working.
0:14:33 And what’s happened in the last 12 months, as you say, there’s been a huge shakeout.
0:14:39 There are really only three, four at best kind of hanging on in there of which Vertical’s one.
0:14:41 The first defining thing is physics.
0:14:45 You have to have an aircraft that works with the current technology.
0:14:53 We’ve seen lots of people have designs where the physics needs next generation or two generations away battery technology.
0:15:00 I’m sure your listeners can look at our social media and see our aircraft flying.
0:15:07 We did a flight in and out of the world’s largest military aircraft show last week and then flew home yesterday.
0:15:08 This works.
0:15:12 And it works because our physics is right because we’ve got a wing.
0:15:15 And a wing means you are incredibly efficient.
0:15:22 So all of the companies that are left have broadly similar designs because that’s the physics that works.
0:15:24 The second thing is funding.
0:15:32 A lot of companies raised a lot of money, burnt it very quickly because they didn’t have the right business model or they didn’t have the right physics.
0:15:37 There’s been two and a half billion dollars flown into the sector in the last nine months.
0:15:39 And that’s picking out winners.
0:15:41 That’s the market really picking winners.
0:15:46 And within that, why is vertical, you know, a success?
0:15:49 We have been able to get out and access capital.
0:15:53 And we’ve raised 160 million in cash in the last seven months, which is fantastic.
0:15:59 And that sets us apart with our other pairs as being in the game.
0:16:03 The right physics and access to capital to drive to certification.
0:16:08 So against that, why can we get a return?
0:16:11 Why vertical is best placed for the highest return?
0:16:16 If you look at some of our pairs that you mentioned, as you know, Scott, pick one.
0:16:18 Joby is valued over $12 billion.
0:16:21 It’s sat there with about a billion dollars on its balance sheet.
0:16:25 Vertical, we’re sat here valued about $600 million.
0:16:29 We’ve got $150 million on the balance sheet, good for about a year.
0:16:33 They’re valued 20 times more than us.
0:16:35 Yet our progress is very similar.
0:16:37 We’ve got aircraft designs that are similar.
0:16:39 We’re flying full-scale piloted prototypes.
0:16:44 They are valued higher because they’ve got a track record of raising money and cash on
0:16:45 the balance sheet.
0:16:47 I’m just starting that journey with vertical.
0:16:52 You know, we didn’t raise any cash for three and a half, four years until December, January.
0:16:57 And I’m gradually building up the balance sheet, hitting all the performance milestones we’ve
0:16:58 said and building the credibility.
0:17:04 And I think that puts us in a brilliant position to generate very significant returns for investors.
0:17:05 I see a big part of that.
0:17:11 Delta, quite frankly, is two of the companies, Joby and Archer, are headquartered in the U.S.
0:17:12 and have that sort of technology halo.
0:17:15 You guys are headquartered in Bristol.
0:17:24 So talk about building an aviation and aerospace slash technology company in the U.K. versus building
0:17:24 it in the U.S.
0:17:28 I think the first thing I’d say is Silicon Valley hasn’t certified any aircraft.
0:17:34 And I love Silicon Valley in terms of the move fast, break things, et cetera.
0:17:39 Unfortunately, you can’t launch a beta product on a global stage.
0:17:41 You might be able to do it at somewhere in the Middle East, maybe.
0:17:48 But to get this market really working, to make your business work, you have to get certified
0:17:53 under Civil Aviation Authority in EASA or the FAA.
0:17:57 They unlock the global insurance markets, which means you can sell the product globally.
0:17:59 And that’s how you get scale.
0:18:05 So we are based in Bristol, which is the European hub of aviation.
0:18:07 It’s where the Concorde was designed and developed.
0:18:12 We’ve got tier one aerospace suppliers all around us here.
0:18:14 We’ve got great education and universities.
0:18:16 Oxford, just down the road.
0:18:17 Bristol, Bath.
0:18:21 We have incredible technology and capability right here.
0:18:26 And we know how to certify an aircraft, which is the secret sauce from my perspective.
0:18:33 And I think importantly on this moving fast, I’ve been an incumbent in prior jobs in automotive.
0:18:38 I don’t have any of that incumbent baggage where I can’t put my best people on it.
0:18:42 I can recruit the best talent from around the world to come here to Bristol.
0:18:44 They know this aircraft works.
0:18:47 They want to be signing the fuselage with the first certification one.
0:18:52 And we are so focused on bringing it to market.
0:18:54 We’re not distracted by anything else.
0:18:55 And that gives us an edge.
0:18:58 It lets us move at a pace unrivaled in aviation.
0:19:02 And remember, this is an aircraft we’re building, but you’ve got to get certified.
0:19:08 So we bring speed comparable to Silicon Valley, but we bring the knowledge of how to certify.
0:19:12 We’ll be right back.
0:19:18 If you’re enjoying the show so far and you haven’t subscribed, be sure to give Prof G Markets a follow wherever you get your podcasts.
0:19:28 I’m Chris Hadfield.
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0:19:52 Just solutions-focused conversations on the challenges we must overcome and the possibilities that lie ahead.
0:19:54 This is On Energy.
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0:20:05 Hey, this is Peter Kafka, the host of Channels, a show about media and tech and what happens when they collide.
0:20:11 And this may be hard to remember, but not very long ago, magazines were a really big deal.
0:20:20 And the most important magazines were owned by Condé Nast, the glitzy publishing empire that’s the focus of a new book by New York Times reporter Michael Grinbaum.
0:20:34 The way Condé Nast elevated its editors, the way they paid for their mortgages so they could live in beautiful homes, there was a logic to it, which was that Condé Nast itself became seen as this kind of enchanted land.
0:20:39 You can hear the rest of our chat on channels, wherever you listen to your favorite media podcast.
0:20:42 What’s up, y’all?
0:20:43 It’s Kenny Beecham.
0:20:51 The 2024-2025 NBA season is over, but all that means for us is that the 2025-2026 season is already beginning.
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0:20:59 Which teams are tearing it down?
0:21:02 Who is retooling to make a championship push?
0:21:06 And what teams are leaving me dumbfounded by their lack of direction?
0:21:07 Don’t miss Small Ball with Kenny Beecham.
0:21:11 New episodes drop every Friday, available on YouTube and wherever you get your podcasts.
0:21:19 We’re back with Prof G Markets.
0:21:22 What would prevent this from working?
0:21:30 And, you know, I could throw out an example of something that pops into my head, and then I’d like for you to add some more.
0:21:37 One thing that pops into my head is we have millions of flying taxis in the sky.
0:21:42 How do we figure out how to make them not crash into each other?
0:21:44 And you talk about highways in the sky.
0:21:56 How do we figure out a way to, yeah, to make sure that people can operate these vehicles and not crash?
0:21:58 That’s the first thing that comes into mind.
0:22:00 One, is that legitimate?
0:22:04 And two, what are some other things that would stop this from actually happening?
0:22:11 In terms of what would make this not work and the highways in the sky, I guess I’ll give you two examples.
0:22:15 First, 20 plus years ago, I was working in automotive.
0:22:27 Just trying to get a car to self-park was incredibly difficult because you’ve got children and dogs and old people and bicycles behind you.
0:22:31 It was incredibly difficult because there’s always things around the vehicle.
0:22:33 If you look up in the sky, there is nothing there.
0:22:38 All you need is a little transponder on the aircraft.
0:22:40 They all talk to each other and they just stay apart.
0:22:45 It’s actually really easy to solve that staying apart once you’re in the sky.
0:22:46 That is quite easy.
0:22:49 And it kind of links to the next generation, which will be autonomy.
0:22:53 When, again, these things can fly on their own and stay apart.
0:22:55 Very, very easy to achieve.
0:23:01 So, I think you can get there and there is a route through that crashing, etc.
0:23:03 It’s not a massive technical challenge.
0:23:04 It’s all there already.
0:23:17 In terms of regulation, in another former role, I was chief operating officer of a company called International Delivery Systems, the equivalent of the U.S. Postal Service.
0:23:21 It was a FTSE 100 company.
0:23:27 Now, as part of that, I did the first commercial drone delivery in the U.K.
0:23:32 It took about 18 months’ worth of negotiation with the U.K. government to let us do it.
0:23:36 But it was front-page news for kind of three or four days when we did it.
0:23:41 So, I’ve worked through the regulatory challenges of putting something in the sky.
0:23:48 Analogous to that now is something called, in the U.K., it’s called the Future of Flight Industry Group.
0:23:49 It’s chaired by the government in the U.K.
0:23:52 They put $30 million behind it.
0:23:55 They’ve committed to the skies being open in 2028.
0:24:04 And in the U.S., you have the Trump presidency recently issued an instruction and executive order to the FAA to effectively do the same,
0:24:13 to keep up with what regulation is evolving in U.K., Europe, Korea, Japan, where there is a huge pull for this to happen.
0:24:21 So, you know, you asked what are the things that could stop it, regulation, but the whole industry is front-footed on that now.
0:24:25 Complete change from two years ago when everyone was wondering how it was going to evolve.
0:24:30 There is a massive push to get this up and running now, which is fantastic for the industry.
0:24:35 So, let’s assume it does work, and let’s assume it works fantastically.
0:24:38 Let’s assume full adoption of e-VTOLs.
0:24:45 What would that do to the current transportation industry?
0:24:49 What would that do to cars, trains, planes?
0:24:53 And also, what would it look like in everyday life?
0:24:57 Are we taking these vehicles to work?
0:24:59 Are we taking them to go on vacation?
0:25:03 What does a full adoptive world of e-VTOLs actually look like?
0:25:06 I very much see this back to this, highways in the sky.
0:25:10 So, yes, we will be using them on a daily basis.
0:25:22 If you look at cities like Seoul, Mumbai, New Delhi, LA, where the infrastructure is creaking already, where people just can’t get around in the cities.
0:25:24 You can’t build your way out of it.
0:25:25 There’s no space for roads.
0:25:28 You can’t tunnel your way out of it because it takes forever and it’s so costly.
0:25:30 So, everyone is looking to the skies.
0:25:34 So, this is the future of transportation.
0:25:42 And as I said earlier, we already know and have got this current generation of the product to a cost point of $2 per seat per kilometre.
0:25:51 So, as supply chains grow, as you manage to put more of these out there, this has the ability to be mass transport.
0:25:57 You can easily imagine taking it from one side of London into the city every day as a commute.
0:26:04 You could be, you know, my commute, I’m sure, Scott, you recognise this, in London, I commute about an hour a day.
0:26:05 That’s seen as not a bad commute.
0:26:08 You could, I’m only 11 miles out from the centre.
0:26:10 You could do that in five minutes in one of these.
0:26:14 Yeah, you can have a local vertiport somewhere, fly straight into the centre.
0:26:17 It is truly revolutionary.
0:26:20 And that is what we are all doing it as an industry.
0:26:22 And I do think this is what we want to create.
0:26:25 We want to create the industry here.
0:26:27 We want the whole industry to thrive.
0:26:29 And logistics and delivery.
0:26:35 I mean, we’re already starting to see Amazon delivering stuff to our doorsteps with drones.
0:26:40 Will eVTOLs have a role to play in that story?
0:26:44 Are we going to be seeing, are we going to be door dashing our burritos with these vehicles?
0:26:46 I don’t think we’d be door dashing them.
0:26:48 I think a drone is far better for that.
0:26:52 But in terms of bigger things, yeah, absolutely.
0:27:01 One of the things I just launched recently, I signed off 18 months ago a hybrid powertrain for the product because we have a large airframe.
0:27:09 What I mean by that is wingtip to wingtip fits on a helipad, but the tube under it is bigger than our peer groups and we can move things, more things.
0:27:15 So I signed off a hybrid powertrain that takes the range from 100 miles to 1,000 miles.
0:27:19 It takes the payload from 600 kilos to 1,200 kilos.
0:27:21 Well, all of a sudden you open up logistics.
0:27:26 Now, importantly, military logistics is something that drops in very nicely to that.
0:27:33 Hugely interesting from a military perspective because you’ve got silent takeoff and landing.
0:27:36 You’ve got a very low noise signature, a very low heat signature.
0:27:43 So this opens up a huge other market that, you know, it isn’t the core product.
0:27:46 It is distinctly different and a huge opportunity.
0:27:59 I think the numbers I was looking at just last week when I put this out in public about months ago, the geopolitical environment has changed, as you know, from when I think this has been one of the successes of Trump’s presidency.
0:28:02 He has got NATO putting their hand in their pocket.
0:28:10 And that means for Europe, it’s going to go defense spending from around $300 million up to nearly a trillion dollars.
0:28:12 Now, that is going to go somewhere.
0:28:16 We are the only European player in this space.
0:28:22 The other competitors are North American-based and in a North American-first, Europe-first.
0:28:25 We are brilliantly positioned for that.
0:28:29 And since I announced the hybrid, we’ve had a load of incoming from European military.
0:28:35 We’re at the world’s largest military air show last week at many meetings with military across Europe.
0:28:43 So that plays directly into that kind of the other verticals for the aircraft, whether it’s logistics and then additional to that military.
0:28:47 The military angle and the military use case.
0:28:52 Was that always part of the plan for vertical aerospace?
0:28:54 Was that always built in?
0:29:08 Or was that a reaction to, as you say, a heightening of geopolitical tension, which is causing this massive increase in defense and military spending, not just in Europe, but basically across the globe?
0:29:14 In other words, were you as the CEO already positioned to offer that as a product?
0:29:23 Or did you see what’s happening and say, okay, we need to start offering something that captures these defense budget, these massive increases in defense budgets?
0:29:27 Yeah. Well, I signed off the investment in this 18 months ago.
0:29:31 And the reason for that is we just have a bigger airframe, a more capable airframe.
0:29:35 You can take up to four, eight full-size Marines in it with all their kit.
0:29:39 So we knew that defense was an opportunity from some time ago.
0:29:45 To get the range, you had to have a different kind of powertrain, which is why I signed off the hybrid 18 months ago.
0:29:48 We actually had it working on a bench last summer.
0:29:49 It’s fantastic.
0:29:56 We’ve done the difficult bit of the control algorithm between the battery, the auxiliary powertrain, and the electronic power unit.
0:29:57 That all works.
0:30:01 We put it out in public because of the geopolitical environment.
0:30:06 We probably would have announced it maybe later this year, but it felt the right thing to do.
0:30:07 We already have the technology.
0:30:08 It’s working.
0:30:14 We will be putting the hybrid powertrain in the aircraft next summer and flying it.
0:30:21 The goal being to take it to the, again, to REAC, the largest military air show, and to be flying it there next year.
0:30:23 And it’s a great opportunity.
0:30:25 Really, really exciting.
0:30:28 So, Stuart, just to wrap up here, and you touched on this.
0:30:36 One, how much additional capital do you think Vertical needs to get to the first one rolling off the assembly lines for commercial use or military use?
0:30:43 And what is that target date in terms of we’re open for business and actually delivering against those orders?
0:30:51 We are the only one in the space with clear financial and operating metrics from 25 through 28 through 30.
0:30:55 And that’s because I can be certain about certification in 2028.
0:31:06 Under the EASA protocol, the regulation, you can go on the website, double click, download the engineering work stack, and say, right, we’re going to certify in 2028.
0:31:08 And that opens up the global market.
0:31:11 So that’s when we will be putting aircraft in the hands of customers.
0:31:18 In terms of cash, we haven’t been out to the market and said, this is exactly how much we’re going to spend.
0:31:25 But the way I kind of frame this up is I’m going to spend about $120 million this year, round numbers.
0:31:37 Even if I double that spend for the next three years, which is probably the outer limit of that, that is what our peer groups spend in a year and a half.
0:31:42 And they have no clear certification date for the global market.
0:31:47 So the potential return from investing in us is just way higher.
0:31:56 Because even if I did double the spend, we’ll be certified in 2028, cash break even almost immediately thereafter, 2030 at the latest.
0:32:03 And we’ve got access to the global market because we’re certifying to the highest safety standard in the world.
0:32:07 Stay with us.
0:32:21 Barry Diller was behind many of America’s favorite movies and shows.
0:32:24 Now, he’s giving an intimate look into his personal life.
0:32:27 To me, business risks were meaningless.
0:32:29 I couldn’t care less about business risks.
0:32:30 I’m Preet Bharara.
0:32:40 And this week, Diller joins me on my podcast, Stay Tuned with Preet, to discuss his sexuality, the end of Hollywood, and how the media industry broke.
0:32:42 The episode is out now.
0:32:45 Search and follow Stay Tuned with Preet wherever you get your podcasts.
0:32:53 We’re back with Prof G Markets.
0:32:57 How do legacy transportation companies view this space?
0:33:12 And the reason I ask that is because, you know, I look at the, let’s look at the auto industry, for example, and their adoption of electric vehicles, which I think some would argue was too late.
0:33:20 There was a reluctance to embrace them, probably because it was a pain in the ass to have to shift your supply chains and start offering a new product.
0:33:24 So, now, obviously, they’re all getting into it.
0:33:30 Basically, every legacy vehicle company is figuring out some electric vehicle offering.
0:33:34 And I think that’s generally what happens with innovation.
0:33:39 The legacy industries and the legacy companies are a little hesitant, reluctant to let go.
0:33:44 And then, eventually, it becomes so obvious that they concede.
0:33:57 How do legacy transportation companies, and this can include auto, it could also include the airline industries, it could also include Boeing, it could also include defense companies, Lockheed Martin, whatever it is.
0:33:59 How do they view you?
0:34:05 And what is your role in terms of disrupting the industries that they have had a hold on for so long?
0:34:09 Yeah, you’ve hit the nail on the head, Ed, with the incumbents’ challenge.
0:34:11 So, I’ve been there in automotive.
0:34:16 General Motors, back in the mid-90s, had the GM EV1.
0:34:20 It was an electric car who was driving around LA, and then they stopped it.
0:34:22 They completely lost it.
0:34:27 Because as an incumbent, you’re sat there, and you always end up putting your best people on,
0:34:36 what is the biggest problem, what do I need to fix now, where is all the profit, where’s all the margin, how do we make sure that keeps coming in to protect the company?
0:34:42 You can never get the focus to put the best people and the right amount of capital on the new and the innovative.
0:34:46 And you see that all the time with incumbents.
0:34:49 I don’t face that problem, right?
0:34:51 I am laser-focused on this one product.
0:34:59 And if you draw that parallel into the aerospace industry and the defense industry, they’ve all had a go at this.
0:35:04 And they’ve all come up with things that don’t work because they can’t put their best people on it.
0:35:05 They can’t put their focus on it.
0:35:11 They can’t, you know, when push comes to shove and you’re trying to hit a quarterly earnings, what’s the thing you cut?
0:35:15 You typically cut that thing because you’ve got to keep hitting your numbers.
0:35:17 And we don’t have that.
0:35:19 So we are brilliantly positioned, laser-like focused.
0:35:25 And despite the fact they’ve got a huge scale, they just can’t bring the focus to bear.
0:35:28 And it’s pretty common, you see it across a lot of industries.
0:35:30 And I’d say that’s the same for the automotive.
0:35:35 I’d say it’s for the aero, OEMs, and also the defense OEMs.
0:35:39 You have a long history and a long career working in business.
0:35:45 You had leadership roles at Bentley and General Motors, as we discussed, and Rolls-Royce.
0:35:47 You were the CEO of Royal Mail.
0:35:51 You’re also the CFO of a cybersecurity firm.
0:35:53 You know a lot about business.
0:36:02 With this new role at Vertical Aerospace, what have you learned about business that you didn’t know before?
0:36:07 And what could you share with any young people who are starting up their careers?
0:36:10 What have you learned over the last few years?
0:36:13 I’ve been incredibly lucky with my career.
0:36:15 I worked at the most amazing businesses.
0:36:16 I’ve had a fantastic time.
0:36:22 The thing I’d say to young people, I’d say to my kids, you do what you’re passionate about.
0:36:25 Because that’s how you put the discretionary effort in.
0:36:26 That’s where the interest lies.
0:36:31 And because you put the discretionary effort in, because you’re interested, you just get a better result.
0:36:39 As soon as you go chasing money, and I’ve seen friends of mine, they want to just get the next big job with a big paycheck, they’re not happy.
0:36:41 So you’ve got to just do what you’re passionate about.
0:36:43 And I was really lucky.
0:36:53 I was approached about this two years before I joined, and I spent time looking around, like, what do I want to do at this moment in my career?
0:37:04 And I came to the conclusion of joining here because I was incredibly passionate about the opportunity to create a multi-billion dollar company right here in the UK.
0:37:07 A world-leading company here in the UK.
0:37:16 And I think that’s a phenomenal thing to do, to be able to change the world with a new product, a new industry, is a once-in-a-lifetime opportunity.
0:37:21 And in terms of what I learn, I’m working with the most amazing engineers in the aerospace world.
0:37:30 So I’ve been in engineering-led businesses for 30 years, but the passion and energy that the team here bring is like nothing I’ve ever seen.
0:37:35 Because everyone wants to be part of changing aviation and changing the future of transport.
0:37:42 Stuart Simpson is the CEO of Vertical Aerospace, a UK-based company developing electric vertical takeoff and landing aircraft.
0:37:52 Prior to Vertical, Stuart served as CEO of Royal Mail, CFO of Avast, and held senior leadership roles at Rolls-Royce, Bentley, and General Motors at Vertical.
0:38:01 He’s leading the company through certification, commercialization, and expansion into global markets with a focus on building the future of zero-emission air mobility.
0:38:03 Stuart, this was great.
0:38:07 Thank you for joining us and sharing everything eVTOL.
0:38:15 Yes, Stuart, and by the way, not to put any additional pressure on you, but whether my kids go to college or not is basically pivoting on whether you execute or not.
0:38:20 I’m not sure I believe that, Scott, but we are executing.
0:38:23 My kids are really hoping that you bring it.
0:38:25 So get on it, my man.
0:38:28 I’m absolutely on it, Scott.
0:38:30 We’ve had an amazing few weeks.
0:38:33 I don’t know if you saw the Flying In and Out of React video.
0:38:34 There’s another couple of little…
0:38:37 I’ve been watching it over and over and showing it to everybody I know.
0:38:38 Thanks, man.
0:38:39 Well done.
0:38:39 Fantastic.
0:38:40 Fantastic.
0:38:58 Scott, let’s get your reactions to that interview, and also let’s hear a little bit about why you invested in this company and what drew you to this.
0:39:00 So I’ll start with the vehicle.
0:39:10 We did a pipe into the company of, I think it was $80 million, and we bought – I put $2.5 million into the round at $5 a share.
0:39:16 In addition, we were given warrants, an equivalent amount of warrants that I think expire in 2030 at that price, $5 a share.
0:39:22 And then we did another raise just a few weeks ago, and I put in another $2 million.
0:39:24 So I’m about $4.5 million into this thing, which is a lot of money for me.
0:39:30 I’m really excited about this one, probably more excited about this than almost any investment I’ve made in a while.
0:39:35 And by the way, I’ve had total wipeouts and things I’ve been really excited about.
0:39:37 So I’m – who knows?
0:39:40 But I’m excited about this one for the following reasons.
0:39:42 One, the use case and the TAM, the total addressable market.
0:39:43 I love aviation.
0:39:53 The ability to take off vertically and go point-to-point above the traffic, it reduces the point-to-point travel by 80% to 90% in terms of time.
0:39:57 Helicopter value proposition of vertical takeoff and landing is enormous.
0:40:00 I was in Sao Paulo.
0:40:03 The concierge calls me and says, there’s traffic.
0:40:04 You need to leave now.
0:40:06 It’s a four-hour trip to the airport.
0:40:09 And I take a helicopter from the roof.
0:40:11 They don’t have the same noise regulations in Sao Paulo.
0:40:14 And I’m at the airport in 22 minutes.
0:40:20 The problem is when you’re in a helicopter, you just look around, and it’s super loud.
0:40:21 It smells.
0:40:22 It’s dirty.
0:40:23 It’s dangerous.
0:40:29 I mean, helicopters, I just think, are really old technology waiting to be disrupted.
0:40:37 And anyone who’s been in a helicopter, you just get the sense that there’s just so many points of failure in these things, and the data kind of bears that out.
0:40:41 So the total addressable market here, the value proposition is clear.
0:40:47 The hard part is that aviation just gorges on capital.
0:41:02 It always takes longer than people think because the safety standards or the benchmarks that the FAA and the European agencies have implemented on aviation, it is so high because they want to create this sense of security.
0:41:03 Otherwise, people would never fly.
0:41:07 Typically, any plane takes much longer.
0:41:12 Any aviation takes much longer and is much more expensive than people originally anticipate.
0:41:13 So there’s real capital risk here.
0:41:22 And one point of evidence around that is every time we do a pipe into this company, you think, oh, the stock should go down because the existing shareholders are being diluted.
0:41:32 When it’s announced, the stock drops, but within a week, the stock recovers and goes up because the market likes the fact we’re putting more capital on the balance sheet.
0:41:35 So the latest round was only done two or three weeks ago.
0:41:38 Another dilution, another $60 million in the company.
0:41:42 The company has to issue another 12 million shares.
0:41:44 Stock goes down.
0:41:53 And now the stock is up, I think, 25% since then because the market just wants to see that these companies have the runway to get there.
0:41:56 We did a bunch of diligence around the technology itself.
0:42:01 I’m obviously talking my own book here, but the people who looked at this company said they have the best technology.
0:42:04 So I see it as sort of a capital war.
0:42:08 And the guy I partnered with on this is a guy named Jason Mudrick.
0:42:13 And Jason has an ability like no one I’ve met to raise capital.
0:42:26 So the real delta, the risk here, and the reason why, as he referenced, as Stuart referenced, that vertical trades at 5% or 10% of the market cap of the other guys is they don’t have the same amount of capital.
0:42:39 But I believe that delta, I believe that insecurity is going to be or that hole is going to be filled because, quite frankly, Jason Mudrick is now on the balance sheet and has an ability to just raise a shit ton of capital.
0:42:44 In addition, the kind of free gift with purchase here is I got very excited.
0:42:45 We’ve talked about this on the show.
0:42:54 NATO or European EU countries have announced they’re going to take their – increase their military spending from about 2% to 3% of GDP.
0:42:56 That’s an incremental $200 billion.
0:43:02 And there just aren’t that many aerospace or defense companies in Europe.
0:43:08 And I don’t think they’re going to take any of that $200 billion and send it to the U.S., given what an asshole Trump is being to Europe right now.
0:43:13 So I look at this as – I generally think this could go up 3, 5, 10x.
0:43:16 I also, to be clear, think this could be a zero.
0:43:21 If the technology proves to be much harder than we all think it’s going to be, it’s going to hurt everybody.
0:43:25 If we’re not able to raise the capital, this thing could easily go to zero.
0:43:28 There’s been like 12 of these companies and nine, eight or nine of them have gone out of business.
0:43:32 So I look at this just trying to be very honest with myself.
0:43:36 I think there’s a real possibility this could go 3, 5, 10x.
0:43:38 I also think there’s a real possibility it could be a zero.
0:43:42 But when I do that math, I think it’s asymmetric to the upside.
0:43:45 And I’ve made – I voted with my wallet here.
0:43:47 Any thoughts or reactions, Ed?
0:43:48 Where do I have this wrong?
0:43:51 No, I think you got it right.
0:43:56 The only thing that I would flag – and I’d be interested to hear how you think about this.
0:44:01 As you say, $4.5 million for you – I mean, $4.5 million is a lot for many people.
0:44:08 But I think it’s an important point that you make that this was not like a throw a quick angel check in there.
0:44:10 This was a significant investment for you.
0:44:12 You have real money on the line here.
0:44:14 There’s something at stake.
0:44:21 At the same time, you have a real passion for this industry and for aviation.
0:44:30 It’s something that you are drawn to in the same way that I might be drawn to Chelsea and to football teams.
0:44:31 And to glass dildos.
0:44:31 I’m sorry.
0:44:32 Go ahead.
0:44:33 I’m sorry.
0:44:34 I’m sorry.
0:44:39 I didn’t mean to reveal some of our hobbies, some of your hobbies.
0:44:41 Those are our private conversations, yeah.
0:44:42 Details!
0:45:02 So, the question I would ask you, how do you think about the facts and how do you manage the reality, which is that you might also just be quite excited about something because you’re passionate about it and because it interests you.
0:45:06 And by the way, I agree with the investment thesis.
0:45:09 I just also recognize that you’re very excited about this.
0:45:12 It’s something that is fun for you.
0:45:20 And so, how do you make sure in your head, okay, am I just finding this really fun or have I really found something that is significant here?
0:45:21 So, it’s a fair point.
0:45:33 And I’ve always said that you’ve got to be careful when you get emotionally invested in something because what that means is, you know, the categories you’re really interested in, it gives you some psychic return, right?
0:45:39 It’s fun to, I just, I’m part of an investor group that just bought a football team in Bogota, Colombia.
0:45:42 Well, the difference there is you didn’t invest four and a half million dollars into it.
0:45:47 I think with that investment, you recognize this is more of a passion investment.
0:45:48 Consumption, yeah.
0:45:50 Yeah, I put a million bucks in it.
0:45:51 That’s real money for me.
0:45:52 That’s not money I want to lose.
0:45:58 But, yeah, that’s, that, to your point, that probably says my thinking is a little bit clouded here.
0:46:00 I’m fascinated by aviation.
0:46:03 It’s something I’ve spent a lot of money on.
0:46:05 I spent a disproportionate amount of my money on aviation.
0:46:07 I’m drawn to these investments.
0:46:12 And the reality is this sector has been a terrible place to invest.
0:46:18 Not, not, not VTOL specifically, but just all aviation has been a difficult place to make money in.
0:46:20 So, you’re right.
0:46:22 It’s probably, it’s probably a little bit clouded.
0:46:30 I didn’t, I didn’t say this in order to get you to say that, that you have clouded judgment, by the way.
0:46:32 I was just wondering if you were factoring that in.
0:46:35 I get to go to air shows.
0:46:36 I love that.
0:46:37 I think it’s fascinating.
0:46:39 And I love to look at the different equipment.
0:46:41 I find these things really interesting.
0:46:42 So, there is some psychic.
0:46:47 I do think I know a little bit about the space and knew some engineers to evaluate the technology.
0:46:50 And they said there’s still a lot of hurdles for the whole space.
0:46:59 But, generally speaking, this company had, I mean, one of the things he didn’t talk about, they can get aerospace engineers for about half the price you can get them for in America.
0:47:04 It’s just, Bristol has this, Bristol made the Hawker hurricane.
0:47:06 It made a bunch of the planes and world.
0:47:12 It has a legacy of aviation extending all the way back to World War II and then through the Concorde and Hawker.
0:47:16 And there’s just a ton of aviation talent that, quite frankly, is just a lot less expensive.
0:47:27 So, one of the things we like about Stuart is that he is hitting new benchmarks across certification at a fraction of the cost of the capital that what the American guys are spending.
0:47:33 Because the American guys are competing against engineers designing, you know, the Oculus or whatever.
0:47:36 There is, I see some advantage.
0:47:38 But I absolutely love this investment.
0:47:40 I think it’s better to be lucky than good.
0:47:49 I think there’s going to be a tidal wave of additional spending into anything resembling a defense or aviation company in Europe over the next three to five years.
0:47:52 But this is a really risky one.
0:47:57 And also, some of this is just, I have so much faith in Jason, Jason Mudrick.
0:48:05 He just has an ability to find these small companies that are capital constrained and recapitalize them and go raise a bunch of money.
0:48:13 And also, I don’t, as excited as I get about anything, I never put more than, call it, 3% or 4% of my capital into any one thing.
0:48:17 Because I’m at a point in my life where I’m not looking to get, I’m looking to get richer, but I’m not looking to get rich.
0:48:20 I’m just really focused on not getting poor again.
0:48:25 And where I have really screwed up before is getting emotionally invested in things that made sense.
0:48:28 I mean, e-commerce just made a lot of sense.
0:48:30 Red Envelope was doing amazing.
0:48:31 It’s just everything made sense.
0:48:33 But I didn’t see 08 coming.
0:48:49 And when our credit line got pulled and we could no longer buy inventory, and there was a software glitch in the address guns at our Kentucky, Ohio fulfillment center, and we sent 11,000 gifts to the wrong address just as Wells Fargo was cutting our credit line, you just never know.
0:48:55 And the stock went from $7 or $8 to $0 in, I don’t know, 22 trading days.
0:48:58 So nobody knows, right?
0:49:04 And the investments I’ve been most excited about in the last few years, some have done really well, some have gone to zero.
0:49:17 If you were to ask me what investment I was most excited about, the investment I was most excited about in the last five years before this one was a company called 98.6 that was doing text-based preventive healthcare for corporations.
0:49:28 Sam signs up 10,000 people at $3 a month, and they can text with health issues, and an AI overlay refers them to the right person.
0:49:32 Amazing investors, solid CEO, great VC.
0:49:35 I lost all of it in 24 months.
0:49:39 I’ve never gone 5 million to zero in 24 months.
0:49:40 It’s usually longer and more painful.
0:49:43 So with companies like this, nobody knows.
0:49:47 So, you know, I don’t want to make an investment recommendation here.
0:49:50 I just want to say the math I’ve done and why I’m investing.
0:49:53 But also, this is – there’s no getting around it.
0:49:54 This is a risky one.
0:49:56 But I’m – yeah, I’m super excited about this one.
0:50:04 This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer.
0:50:06 Mia Saverio is our research lead.
0:50:09 Our research associates are Isabella Kinsel and Dan Shallan.
0:50:11 Drew Burrows is our technical director.
0:50:13 And Catherine Dillon is our executive producer.
0:50:16 Thank you for listening to Prof. G. Markets from the Vox Media Podcast Network.
0:50:21 If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.
0:50:51 We’ll see you next time.
0:50:56 Prof. G. Markets from the Vox Media Podcast Network.
Stuart Simpson, CEO of Vertical Aerospace, joins the show to break down the competitive landscape of the eVTOL market and where Vertical Aerospace sits in that landscape. He explains what a fully adoptive world of eVTOLs looks like, explains why aviation has historically been a tough sector for investors, and shares his vision for the future of transportation. Finally, Scott and Ed discuss why Scott decided to invest in the company.
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