How BETA Technologies is building the future of electric aviation

That's how Beta's flying several hundred miles when the equivalent airplane goes twice as far. Even though batteries are 30 times less energy dense, by the time you take a systems level approach, you say, 'Okay, that's a meaningful range.' And then the big kicker is you're doing it at a 40th of the cost of energy. A 40th of the cost of energy.

Well, you know, it still feels like the same company. It is, you know, small is all relative. Aerospace has some pretty big companies, and there's not a face that I don't recognize within the company. We are highly vertically integrated in a relatively small campus here in Vermont. It doesn't feel that different. However, the expectations are significantly larger and the energy is high, and people are recognizing that we have to do a lot with the technology that we've developed. So, there's a lot of pressure to answer your question. There's a lot of expectation, but it's married with a lot of fun and excitement.

I assume I'm the horse, and I will tell the founding story of Beta. So, Beta was actually by name my senior's thesis in college quite a while ago, and I really focused on this concept of simple aircraft design, aerodynamic efficiency, propulsive efficiency, and designed this around kind of a two-seat inline airplane that at the time was proposed to be hybrid. That actually won the thesis of the year at Harvard University way back in 2004, and I couldn't get anyone to invest in it. I pitched to everybody to the point that at the Thanksgiving table, my mother's like, 'Will you shut up about the airplane thing?' You know, but I just loved it and I was really obsessed with it. But I couldn't get anybody to invest in it after college. So, I started some other businesses mostly focused on technical products. So power electronics, high reliability motors, did the design behind the Patriot missile system electrification program, a lot of Tesla's commercial and industrial power supplies, large wind farms, and I learned how to design really reliable power electronics and electromagnetic machines. And finally, in 2017, I was talking in Philadelphia about Beta and electrification. And Martine Rothblad, who was the founder of SiriusXM Radio, she grabbed me and she goes, 'We need to talk.' And that talk, by the end of the week, I met her, spent, I don't know, 12, 14 hours with her straight, and she said, 'Write this down and tell me how you want to do this.' And I sent her a hand-drawn watercolor type thing and said, 'This is what I think we should do.' And her response was, 'You're on. That's it.' And we did it. And so we kicked off the business kind of together with her as our first customer at that point. At that point, she wasn't an investor in the business. She was just a customer. And we signed a contract that had a singular objective. It said, 'Elicit critical thinking in electric aviation.' That was the contract. And she funded the development of a 4,000-pound electric vertical takeoff and landing aircraft that we built in 10 months with eight people. And it was just a boatload of fun. And we proved that electric flight worked at a reasonable scale, and I flew about a hundred test flights in the airplane, and that catalyzed us to our next phase, which was developing commercial aircraft.

Yeah. No, that's a great question. I had started a number of companies, but one of the companies was a bank called Venture Co. And so I had got my investment banking license and wrote some software and was working on that. Now, because I was the fiduciary for that bank—because I hold the Series 7, 63, 24, and a 79 investment banking license—I had to stick around with the bank for a year and still review all of the deals as I transitioned out. And finally, we found somebody to cover that portion of it. But it's a great question. None of this stuff—nobody's just sitting around waiting for something to happen. I was working really hard at the time, but it wasn't in the field that I was passionate about. It was something that I was actually—the very first project on the bank was Beta Air, which is fun. I started a bank to try and raise money for a company that I wanted to pursue. But yeah, it's never as clean as the retrospective view. There was a lot of like, 'How are you going to juggle all these things?' You know, there's no money, and the house is on its third mortgage, and you're like, 'I think this is going to come through,' and then you pull out everything that you possibly can to start a business. And in retrospect, everybody's like, 'Oh, well, it must have been easy. It just worked out. People were throwing money at you.' It's not the case. You know, when United Therapeutics funded us, most of the people here, because we wanted to put all of that money into hardware and development, were just working without pay. That was the de facto position for most everybody that was on that team.

It's probably been surpassed because we have a lot of people flying a lot now and a small fleet of electric trainers. We have multiple of these things around the world. But look, we get that reaction all the time. I remember with Pete Buttigieg who was the secretary at the time. We flew the thing into Louisville and we parked it underneath the wing of a 747, and it was in the hangar, and he came, and I introduced myself and said it's an electric airplane. He goes, 'All electric?' I'm like, 'Yeah.' And he looks at me in this kind of weird look and he says, 'How did you get it here?' And I'm like, 'We flew it here from Vermont.' And this was like five years ago, you know, and his eyes lit up. But I get that reaction like we'll fly into these small airports and there'll be some corporate flight taking off, and the pilots will be like, 'What is that thing?' And it's a proud moment, but a funny moment always when you say this is an all-electric airplane that just flew from California to Wichita or whatever. You know, people just have a hard time believing that's the case because they don't want to believe that batteries have an energy density and propulsion has a propulsive efficiency to make this beautiful thing fly today. But when they get in it and fly it, they realize that holy cow, not only is it real, but it has real tangible advantages over traditional aviation.

Yeah. Well, it's a great question. So let me just describe what it is that we're building. The obvious thing that we're building is a 7,000-pound aircraft that carries six people that flies several hundred miles. Now, it comes in two forms. Either it flies airport to airport and it doesn't take off and land vertically, or you add the lift rotors and it takes off and lands vertically. It's like float plane floats, right? You get some flexibility, you increase the drag, increase the weight. That's effectively the same thing here with the lift, but you have the ability to take off and land vertically. Now you asked the question why do so many pieces of this, and I'll tell you that aerospace engineering is a technologically unforgiving pursuit. You have to be optimized on almost every front. You can't be really good at making engines and propellers and forget about the structural weight fraction. You can't be really good at aerodynamics and forget about the propulsive efficiency because they all play together to create performance in the aircraft. You have to have a slippery airplane, one that's lightweight, that carries a lot of energy and transfers that precious energy into propulsion efficiency efficiently. You have to do all those things at the same time. Now, every system on the plane has to be very utilitarian. You don't get to put extra things on the plane. You know, when you design automobiles, a car that looks fast isn't necessarily fast. You do it for aesthetic reasons, right? You do it for floor presence and showroom presence. In airplanes, there's no sense of humor for that. You have the shape of the wing, the shape of the nose, the placement of the windows, the shape of the landing gear, all of those things are very utilitarian. Now, they happen to look beautiful because airflow likes to go around shapes that have, you know, not a lot of discontinuities or second derivative curves there. You know, there's a lot of thoughtfulness in what our body perceives as physically optimized in aircraft. So when you do that, back to your question, why design all these things, it's because the motor has to be in harmony with the propeller has to be in harmony with the batteries. Well what is the motor? The motor includes the inverter. The inverter has to be accommodating a wide range of voltage because batteries start at one voltage and end at another voltage. So you design an inverter in a certain way. Now the inverter then of course the capacitance in the inverter has to be tuned with the inductance of the motor. So now you're going to have all these multidisciplinary things that come together. If I were to go out and let's examine the counterfactual for a second and say well don't do all the things yourself, that means at the beginning of the development project you have to define the requirements and in many cases the interface control documents between what you're creating and what you're asking a supplier to give you. That's pretending to know more than you know at the time that you're giving the information. If you do that, you're going to be sub-optimal. So, back to the whole thesis, this is a technologically unforgiving pursuit. It has to be system level optimized. In order to do that, you have to defer the creation of ICDs to the point that you've maximized the mechatronic design functions of the plane. And you've minimized the parts, brought the weight down to a minimization, the reliability up, the efficiency to its maximum state. And then you lock those things in. And you don't get to do that if you don't do it yourself. Or at least it would be really high friction to do that.

Yeah. Well, look, we might run out of money. We might fail. That's a very real possibility. It's more of a possibility than we don't. But the outcome of the risks that we take and the benefit to society and the benefit to the world is so great that the risks have to be commensurate with that outcome. So we are not playing the game of trying not to fail. If we do, we should not even start this, right? Because the probability is that we are. However, we are doing everything within our power to not fail. And yes, it increases our spend, our people, and it reduces our focus on any one part if we try to focus on multiple parts. Now, this is kind of the nature of the developmental philosophy here is we make everybody aware in the company of the end goal and then we focus on how they're going to support that goal. And three times a week, the whole company gets together and every team identifies what they're doing that day to support the end goal of that quarter or that year. You apply that philosophy to the technological construction of the airplane as well. And you don't lose focus. You say this is your contribution to focusing that laser beam down the way. And it does cost money, it takes somebody who thinks in systems, somebody who's able to be multidisciplinary. We have, I would say, one of the best CTOs in the world, his name's Dave Churchill, he's a polymath, he's able to think about this stuff in a diverse way, and we have a team that work with him that are similar in thinking, so our technical team here is able to grasp all that. But I want to hit the very key punchline here, and you hit it early, which is yes there's a lot of things, but the oversimplification of the entire aircraft is what makes this possible. We still have a very simple aircraft; now we do all the things in the aircraft, but it's a simple aircraft, and that allows us to get this optimization thesis right. Even though batteries are 30 times less energy dense, by the time you take a systems level approach, you say, 'Okay, that's a meaningful range.' And then the big kicker is you're doing it at a 40th of the cost of energy. A 40th of the cost of energy. So you might go half as far. So then the real question is what missions can you attain by going half as far? Well, or a third as far or even tenth as far. Well, it's a ton of missions that you can do and you do it at a fraction of the cost and bang, you've got a business. So there's naysayers everywhere and like people are constantly opining on LinkedIn about how stupid and how people were wasting their money and my only response to them is come and fly with me. Just come and get in the airplane. Shut up on LinkedIn and come and get in the airplane.

Yeah. So the design for the use cases—all of those use cases want a safe, reliable aircraft that gets from A to B with meaningful economy. That's the baseline. There are nuances in the design, but the baseline of the wing and the tail and the control system and the propulsion, it's going to be equivalent no matter what use case you do. Now the next question is what use cases can we do? Now what use cases are a low barrier to entry? Well, flying in and out of Manhattan or Chicago or Dallas from the suburbs requires municipal approvals. It requires airspace changes. It requires new helipads and vertiports to be put in. When we already have hospitals that have helipads that are looking for organs or medical equipment or personnel, we already have military bases that are ready to accept this technology. That becomes a much more logical early entry point. And then cargo and logistics takes away the variability of convincing thousands of people to get on the airplane because you convince one person, the load master or the CEO of the cargo company. You say, 'Look, it costs less. It's more reliable.' And they're like, 'Okay, I'll take that.' And then you start flying cargo. My point is that we are not not doing passenger, but we're doing it in sequence. We're doing military, medical early, we're doing cargo and logistics, and then we're doing passenger. We're doing it both horizontal takeoff and landing and vertical takeoff and landing. And we've taken a lot of spears for that as well, where people say, well, geez, your optimization point for vertical takeoff and landing must be different than airport to airport. But when you really break down the flight profile of vertical takeoff and landing, you're spending upwards of 95% of your time as an airplane, right? So you're really going to optimize for the airplane part of this anyway. Now, do you have to make a stiffer and a modal—you have to make a structure that recognizes the modes and the vibrations and the loads associated with vertical takeoff and landing? For sure you do. And there's another misnomer. People think the loads of vertical takeoff and landing in an ultimate sense are going to be greater or equal to those of aerodynamic loads imposed on the airplane while it's flying. That is not true. You can actually produce much greater loads in almost all enveloping cases by flying really fast and yanking on the controls versus pushing air down with a fan. It's just the physics of it because velocity squared makes the force aerodynamically. So once you understand these things you start to understand why in the first part of that—sorry for talking so much, I know that's a point of a part—so in the first part of it, it's like, why is your market entry strategy through medical cargo logistics then going into passenger? Well, because the friction is lower, the customers have a use case we do today and they're willing to pay for it, and they recognize the low cost of the aircraft and the value associated with it. Bang. Easy. Why are you doing conventional takeoff and landing and VTOL? Well, the certification path is easier. The physics all support it. Get type certifications in a step-wise way. Start bringing revenue in earlier than our competitors. And it doesn't require any changes to our airspace, and all of a sudden we've got a product in the air. It's actually, I think, a way more thoughtful approach, and it's working. Like I'm looking at a production line making these things that are going to go out there and fly in the eVTOL integration pilot program early as advanced air mobility aircraft and then migrate into VTOL aircraft. All the pieces have fallen into place probably because of dumb luck because I know I'm not that smart.

Yeah, it's a very good question. Well, so the actual design of the airplane is identical in all of these cases, right? There's 200 cubic feet of cargo space. There's two pilot seats. Only one is required for flight. The other one is optional for training. Every one of those customers wants that. They said, 'We want a lot of volume. We want the ability to train people. We want an airplane that goes from A to B.' Now, the key is selecting the launch cases where the range is relatively short for airplanes because that's where you exploit the biggest value. You don't want intermediate charging stops during a mission. So, in the case of New Zealand, it's an awesome application because everything within that island is basically within striking distance of our airplane. Certainly if you start at the middle and go out. Up in the Nordics, we have another airplane up in Norway doing the same thing. The geographic impediments to traveling up there are pretty large. Big bodies of water, fjords, other things. The airplane covers a lot more ground relative to the ground transportation up in Seattle in the San Juan Islands. We stopped there on the way out. We did a bunch of flying there to show how you can take a 10-hour truck ride and reduce it to a 40-minute flight. And that's with ferries and all the bridges and everything in between, right? So these applications, although they may be carrying medical stuff or UPS cargo or any of these things or New Zealand's cargo, they're really doing the same thing. It's selecting the characteristics that really matter and exploit the benefits while respecting the detriments. It's not the perfect tool for everything. Motorcycles suck on days like this in Vermont, right? I love motorcycles, but you don't ride a motorcycle when we get 10 inches of snow in the mountains, right? So my point is that you have a horse for a course or you have a different use case. We go and select those use cases based on the important parameters as opposed to whether or not it has a title on it.

Yeah. We're still — I still end up in a lot of places where people don't know who we are. I would say that a tenth of the United States even knows that electric aviation exists and a tenth of those people even know who Beta is, right? So it's a very small portion. We're just barely getting started. Now, what are the biggest focal points in this next phase of growth? It is the furtherance of our industrialization. We made a handful of aircraft last year on our production line. We made prototypes before and then we made aircraft on our production line. Doing the thing exposes the issues — the tolerancing, the production flow, the tooling strategies, the manufacturing engineering, the inspection points.

All of those things are getting litigated and refined. I'm looking out the shop floor right now at engineers that are supposed to sit right next to every one of their installations and they are deleting requirements, simplifying things, taking parts out so that the economics of the aircraft get better and better and better. We have to make an aircraft that's economical to buy and an aircraft that's economical to operate. I believe we've nailed the economic to operate. Now we have to nail the industrialization, the production flows.

This also reaches back into — even though we're vertically integrated, we still have a supply chain to manage. When we build these aircraft I'm looking at right now, the conforming aircraft, we have to be in really tight partnership with our suppliers to ensure that the pedigree and the documentation that proves to the FAA when we go out to get credit for testing that the thing we're flying is going to be consistently and repeatedly built over time. That's the effort right now.

We're doing it at scale. We're not just doing it onesie twosies. I'm looking at 1, 2, 3, 4, 5, 6, 7, 8 aircraft in front of me. Those are going to move to the next index point and we're building these things. The current administration has kicked the door open on the regulatory pathway to start deploying these.

Yeah. Look, we have partnered with a number of folks at different levels on manufacturing. I think the most notable one and the one we're getting the most value of right now is GE. We have a great partnership with them. The things that they do that Stellantis and Toyota and others don't do is they certify propulsion systems and they have production lines that have production certificates.

Where we get the most value is not necessarily in figuring out how to push the widget down the assembly line faster. It's how to do it in a way that is acceptable to the FAA — conforming test rigs and data digestion. These are all very key to make a super reliable product for aviation and GE has been an awesome partner on getting through some of those wickets. I believe we've been a good partner to them as well. We brought some pretty spectacular technology to the products we've been developing together.

Yeah, so GE put about $300 million into us as a private company. We have one major program, a turbo generator program with them, and we have other programs that are not public. Then they put additional money into the IPO. So they've been an investor and a technological partnership. I would tell you that the strategic partnership with them is worth way more than the investment to me.

Yeah, I mean we've had a large number of defense contracts. I think significantly more than anybody else in this space. We have talked less about it. I was told in our IPO that you guys do everything better than your competitors except for marketing. And here's another example — you're asking about defense. We have an amazing team that has worked to really create a product that is low cost, attritable, quiet, low thermal signature, and is right in the wheelhouse of what the Department of Defense needs, especially as we get into longer range South Pacific and European theaters.

There's a lot of value in having small, low-cost — when I say small, like 7,000-pound aircraft that cost one-twentieth of the existing large helicopters and can do very similar tasks. By the way, one of the things that isn't recognized, and I think you'll be the first one that I'll say this to, is that a helicopter is physically limited in its speed and its range by retreating blade and by its inefficiency or its lift-to-drag. Predominantly, eVTOLs don't have that issue. We can fly faster and we can fly further. That's a tactical advantage for our military.

And yes, in many cases the fly-further case requires hybridization — hence the GE partnership where we're creating a turbo generator, but it uses the physics of the eVTOL, the distributed propulsion, in order to achieve those technological advantages. If I'm supporting our warfighter in the South China Sea or the Pacific, I don't want them to have an inferior technology or inferior product. So I think we absolutely have to, as an aerospace company, provide this to the military, and the military has been accepting it with open arms. I just got briefed with the many millions of dollars that we recognized in revenue just this past quarter in military programs. And when I look at our competitors, they may have a lot of pretty pictures of this stuff — they aren't recognizing revenue, which means they aren't delivering valuable product. And that's what we're doing.

Yeah, this is right. You have to do two things there. We have a rule internally — no photo renderings, no CGIs. We never issue something about something that's going to happen. We only talk about things that have already been done and we fly what we build. So that's a product of that.

There was a subsequent piece that came out about vertical flight and they took ADS-B data for the vertical flights and they were off by several orders of magnitude on our vertical flight campaigns because when we do that we're doing it in class golf airspace. Usually the transponder is the chase airplane and we're flying over there. The funny part about that is that it had showed some infinitesimally small amount of vertical flight hours on our airplane and I had just walked away from a Saturday where I flew 12 flights, 2.3 hours, and I think the hours they were logging was like less than what I had flown that day.

I was like, 'Oh, okay. There's a lot of data that's missed. Am I going to go and correct that? Probably not.' You know why? Because it's not how you start, it's how you finish. I know what we're doing and I'm confident in the progress that we're making. There's going to be a lot of people that are going to try and call the race before it ends. But when we get to our first certifications and our second certifications and our third certifications and people are like, 'Okay, you guys started measuring who had the best shorts in the marathon — it doesn't matter who broke.'

Yeah, it's a good question and we have actually electrified helicopters. So we understand that and it's a great thought experiment. The lift-over-drag ratio of a helicopter, which is the ratio of how far it glides to how far it sinks, is about four. The lift-over-drag ratio of our airplanes in the vertical is between 13 and 17 depending on the configuration of the aircraft. So you've got a four-times difference in lift-over-drag ratio. That means for every unit of energy that is either in the airplane or put into the airplane, you go one-quarter as far.

Now you're like, 'Well, why is that? Why wouldn't you just change the lift-over-drag ratio?' The fundamental physics of a helicopter say it's never going to have a good lift ratio. And why is that? Because you've optimized the helicopter for a different propulsion plant. A turbine loves running at the same speed all the time. So you say, 'Okay, if I'm going to gear-reduce that and put it into a rotor head that turns the same speed all the time — why? Because it has a torque curve and a torque-speed curve and you get off that speed and all of a sudden you can't make the torque when you need it.' So what do you do to make up for that? You put in a cyclic. You put in collectives. You put in things that allow you to keep things at the same speed and modulate the relative thrust side to side or collectively.

We have a technical solution. Therefore, we no longer have a problem. However, if you take an electric motor and you put it in there, you get all the detriments of carrying batteries around. And now you have a motor that doesn't care what speed it runs at — it always puts out the same torque limit. You're saying, 'So now I'm double-solving the problem with collectives and cyclic for a motor that actually can vary its speed. At least I can get rid of the collective, but I'm not using that function. I'm just running it at a singular speed.' You're effectively leaving money on the table at that point.

So now you have a suboptimal integration of propulsion with mechanics and you end up with a helicopter that has pathetic range because its lift-over-drag ratio sucks. You're carrying all that complexity in the rotor head and you have to carry batteries around. My proposal is, and I said it before, if you're going to exploit the benefits, exploit the damn benefits, but respect the detriments. Electric enables distributed propulsion because you get rid of all that stuff in a helicopter.

Run, in our case, a fixed-pitch blade at a variable speed, because electric motors — you can commutate these things at whatever speed you want, and that's a flexibility that doesn't exist in helicopters. So that's the technical reason, and at the very superficial level, it's because it doesn't work very well.

Yeah. The battery packs are huge because they drive the economic outcome of our business. You sell an airplane for say four or five million bucks, maybe six if you got a lot of features and pretty paint on it. But then over the course of the airplane, you sell 13-plus million dollars of batteries. And even while you're doing that, you grossly reduce the cost of operation for the customer. Therefore, you have to get really good at building and certifying batteries. So it's an important part of the business model.

The secret sauce within that is that every time you release a new battery, the performance goes up. That means unlike any other aircraft in the world, the paradigm is flipped now — the worst performance you'll get on the airplane is on its first day. And by the time you retire that airplane, its performance will be significantly greater. So there's two reasons why that battery needs improvement and replacement. That's a focal point of the business.

The chargers just kind of landed in our lap. We wanted to do a lot of flying and nobody made a charger for high-voltage, high-rate Level 3 charging. So we went out and built it. My experience in the past — we built a lot of different types of chargers. And it turned out that once we built it, we realized we can't put it into every airport unless we certify it. So we went and certified it. Then people started coming to us saying, 'We want to buy that.' So we refined the product into a real good commercial product and started selling it to other people.

Now we have a charging network that goes all the way up and down the East Coast. It's going to go across the entire United States. We just put our foot down a couple places internationally. We won the Abu Dhabi chargers. It's an elegant, beautiful, really high-margin, great product for the business, and it serves a need to allow us — it's an enabler to put the aircraft out in the world. I think at the end of the day, the charging network may be as valuable as the aircraft because they're blowing out fast, especially this year.