Pod Insights Prof G Markets Why Scott Invested In Vertical Aerospace — ft. Stuart Simpson About this episode 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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Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 Flowing ad budget on metrics that look great till the CFO sees them? That's bull spend, and marketers are calling it out in Dashboard Confessions.
0:09 Speaker 01 I remember telling my boss, "It'll be good for the brand," when leads were slow. Yeah, it wasn't.
0:17 Speaker 00 Cut the bull spend. LinkedIn lets you target by company, job title, and more. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.
0:30 Speaker 02 Energía baja, falta de concentración, nebla mental? You might be dehydrated. Gatorade Zero Powders han sido diseñados científicamente para ayudarte a mejorar el balance de hidratación en el cuerpo. Hechos con la mezcla número uno de electrolitos, sin colores ni sabores artificiales. Shop now online or at retailers nationwide. Gatorade: Hydrates Better Than Water. Is It In You? Signos de dehidratación leve y moderada. Consulta a tu médico si los síntomas persisten.
1:03 Speaker 03 Hey, Bose here. When your next track starts, listen for the decisions that the artist makes. The vocal pushed right up front, the bass that waits half a beat, that sample from a '70s underground gem. Every choice, deliberate. With Bose, you'll hear it all. Your music deserves Bose.
1:29 Scott Galloway? Today's number, 200 Swiss Francs. That's how much Tour de France riders get fined for peeing in front of spectators. True story, I was at the local community pool and they said, "No peeing in the pool." And I said, "Come on, everybody pees in the pool." And they said, "Yeah, but not from the diving board."
1:46 Speaker 05 Listen to me. Markets are bigger than us. What you have here is a structural change in the wealth distribution. Cash is trash. Stocks look pretty attractive. Something's gonna break. Forget about it.
1:56 Scott Galloway? That beat out, you know, it's okay to pee in the shower, but everyone freaks out when I shower and pee.
2:04 Scott Galloway? Little free gift with purchase there, two for one, Ed.
2:07 Ed Elson? Maybe you should have saved one of them for, for a future episode.
2:10 Scott Galloway? There you go. Regardless, welcome to property markets. Today, we're speaking with Stuart Simpson, the CEO of Vertical Aerospace. But first, it's time for banter, Ed. It's time for our favorite part of the show. First off, let me just point out, you're now showing up late to every podcast. You have decided that you are very important.
2:28 Ed Elson? No, no, wrong.
2:30 Scott Galloway? Oh, and what do I see this morning? Literally, talk about a boner killer. I wake up and I've, of course, turn over, you know, like a 13 year old and turn on my phone. What is the first thing that pops up in my Instagram feed?
2:42 Ed Elson? Yes, it's me.
2:43 Scott Galloway? Yeah, well, first it was Katie Tour, uh, which I would not describe as a boner killer, but that's neither here nor there. And then I see her interviewing you and she's like, Ed, tell us why Gen Z went for Trump. And I'm like, oh my God, make it stop. And you're there in like a cool, cool brown suede coat. And you're like, well, Katie, the first is, the first thing is the Republicans meet us where we are on TikTok and YouTube. And I'm like, well, that's some fucking blinding insight. No shit, Sherlock. I'm like, that's how you get on MSNBC? That Republicans are on TikTok? Anyway, I literally couldn't watch a thing. I skipped to watching Great Dane's rollick with each other. But you're on again.
3:27 Scott Galloway? What, so what, I'm gonna assume you said something actually interesting? What else did you say? What else did, has, has the Trump administration done to meet Gen Z who, who pivoted very hard towards redness last election?
3:38 Ed Elson? This is not the time for me to do my whole spiel, I don't think, but.
3:42 Scott Galloway? Okay. What, you're gonna do it on Colbert next week? Oh, wait, never mind. Never mind. Never mind. All right, never mind, Ed. Forget it. Forget it. I'm trying to banter here and you're not cooperating because you clearly want to impress the people at MSNBC.
3:56 Ed Elson? Yeah, exactly. Well, your, your opening line of banter is that my appearance on TV was a quote, "boner killer."
4:06 Scott Galloway? Ed, I gotta avoid those, Ed. I gotta avoid those. Yeah, no, when that shit happens, can't let anything get in the way of that. Oh, my God. Oh, my God.
4:16 Ed Elson? Oh, I love it. I love it. What have you been up to?
4:19 Scott Galloway? I'm in Aspen. I'm headed to Chicago. Super excited. I got a speaking gig. My son, I'm taking my youngest, my 14 year old. He, there's two cities in the world he wants to go to right now. One is a city in China. He read, he's seen TikToks on some amazing city in China. And the other city he really wants to go to is Chicago. And I'm like, we can do that. So I get to pick the hotel. We're staying at the SOAS. But he gets to pick what we're doing. So we're going to the McDonald's headquarters of the factory, the McDonald's museum. Oh, God. Seventh circle of hell. I'm like, do you get free colon cancer when you go? I didn't say that, but anyways. Two, we're going, in any city we're in, we have to go to the tallest building and go to the observation deck. I mean, that's just amazing, whatever city we're in, he's decided.
5:02 Scott Galloway? And then what's the third thing? Oh, we're going to, he goes, the best steakhouse in the world is this place called Gibson's. He said, but for lunch, we're going to the place that holds the world Guinness Book of World Records for the deepest deep dish pizza in the world. So this is gonna be, it's gonna be a great couple of days in Chicago, Ed.
5:20 Ed Elson? Where is he learning all of this stuff? Maybe YouTube?
5:23 Scott Galloway? I think he gets it mostly from TikTok. Yeah.
5:25 Ed Elson? That sounds like a decent trip. I don't know. Could be worse.
5:28 Scott Galloway? Oh, you'll see. This, this stuff is like, um, you start getting panicked because I used to take these trips and they were great. And then when your kids hit 13 or 14 and they, they refuse to stop growing, you realize pretty soon, and then your, your son, your son's taking the ACT, you realize, oh, my God. And then you see those TikToks, which are heartbreaking, saying that by the time your kid is 17, you have spent 90% of the total time you're gonna spend with that kid. And so, and that really grips you. And so now I'm just like, trying to plan as many trips as possible with these, with these guys. But anyways, we're off to Chicago, Ed.
6:05 Ed Elson? Good stuff. Okay, here's our conversation with Stuart Simpson, CEO of Vertical Aerospace. And a disclosure, Scott is an investor in Vertical Aerospace, so I will be leading this conversation. Stuart, thank you very much for joining us on Prof G Markets. Ed, great to be with you and Scott. Thank you very much for the investment. Really appreciate it.
6:28 Ed Elson? So Stuart, you are the CEO of an electric vertical takeoff and landing company. This is a new sector that has come up. People call it the EV toll industry, spelled out E V T O L, electrical vertical takeoff and landing. So for our listeners that are unfamiliar, explain to us what this actually is. What are these EV toll aircrafts? Why are they important? And what makes them different from, say, a helicopter, which to me sounds quite similar?
7:00 Speaker 07 An EVTOL is an electric, as you said, vertical takeoff and landing vehicle.
7:10 Speaker 07 It is different to a helicopter in that it is safer than a single engine helicopter. It's silent in an urban environment with zero emissions. And it takes off vertically. And then, once it's taken off vertically, we have tilt rotors on the front of our wings. And as the rotors tilt, you accelerate and then you fly on a wing, making it extremely efficient. And having a wing as part of our design, as this EVTOL, means you can work with current battery technology. So this isn't something that's coming in the future. This is here right now and is working. And we're just driving to certification when we can then put the product in the hands of our customers.
7:53 Ed Elson? And in what situation would you use one of these aircrafts? Like, am I using this to go to work? Is this sort of an equivalent to a taxi? Is this more long range? In what, what are the use cases? How are people using this?
8:06 Speaker 07 The use cases are endless for this product. We, as a business, we have over $6 billion worth of orders from an incredible customer group, including American Airlines, who I'm sure your listeners have heard of. They've got an order in for 350. Bristow, world's largest helicopter operator, have got an order in for over 100 of these. Air Asia, Japan Airlines, GOL, all across the world.
8:34 Speaker 07 That kind of gives a bit of a hint as to how these are going to be used if you think of aircraft companies. The first use cases are probably going to bookend international flights. 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 rather than having to spend two hours driving in, you can be there in seven minutes. So that's one early use case. If you look at Bristow, the helicopter operator, they do a huge amount of emergency services within cities, moving people and things around. Again, that'll be an early use case for the product.
9:16 Ed Elson? 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. 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. And, you know, we think about what the future of transportation looks like. We've been talking a lot about robot taxis and the ways that robot taxis are in many cases going to succeed the car, maybe replace the regular car. That certainly seems the way things are headed. But I think if we were to go a step further, there is potentially
9:58 Ed Elson? an argument to be made, or it seems as though that the EV tolls are going to replace many other forms of transportation. 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. It's just is a better way to travel. So with that in mind, give us your view on the future of transportation. And, you know, to the best of your ability, without talking your own book, where does the EV toll sit in that
10:41 Ed Elson? conversation? Is this the future of transportation? Is this going to do?
10:47 Ed Elson? What the robotaxis are doing to the car.
10:50 Speaker 07 I genuinely believe this is the first step to highways in the sky. So the goal here is mass transport. This is not something for the luxury. This is the goal is mass transport.
11:04 Speaker 07 And just to bring that to life a bit, we've modeled out over 1,200 routes with our customers. So we get our customers together twice a year for three days. They tell us how they're going to deploy the aircraft. We look at mobile phone data for the density of population movement on the routes they're talking about. And then we map out, okay, how many people do you think we can attract onto this type of product? Without stressing the deployment of the app, so you don't have to run it 24 hours a day or anything. You can run it a pretty normal way. You get to a cost per seat per kilometer of $2, which is the same as an Uber Black or for your listeners in London, a Black Cab. Now, that is a truly mass market cost point.
11:50 Speaker 07 Now, of course, that won't be the price point because we are an OEM. We design, engineer, sell, service the aircraft, we'll sell it. But we're putting in the hands of our customers, something that creates an incredible economic opportunity for them. So this is that first step to highways and sky. 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 have a helicopter pad on top of them. And then they were just pushed out because the noise, like residents hate helicopters. So they were licensed that pretty much every city around the world, apart from maybe Sao Paulo. Every city will have one or two routes, but they're not everywhere.
12:34 Speaker 07 And I'm sure you know in Manhattan, there's a huge, you know, pushback against helicopters. And then you have the terrible tragedy with the crash recently. What this does is it creates a product is putting something out there that truly revolutionizes the skies. It isn't just me that's saying that. A great reference report Morgan Stanley wrote four years ago, they talked about a trillion dollar market in 2040. They just updated it actually about a month ago and they doubled down and said this is a trillion dollar market in 2040 and a nine trillion dollar market in 2050. Now, those are staggering numbers and it kind of doesn't matter if they're plus minus,
13:16 Speaker 07 you know, 20% right or not. This is genuinely what we see out there. And from a business perspective, what I see is demand way exceeding supply through 2040.
13:27 Scott Galloway? Stuart, good to see you. So I'm fascinated by aviation. This is my second investment in aviation. I invested in Boom Technologies, the company trying to build the first commercial supersonic plane since the Concorde. And quite frankly, it's been a graveyard for investors. It's just been a terrible place to invest. And we've seen is exciting. All the numbers make just so much sense around replacing this kind of dirty, dangerous technology and the last mile is the problem to be solved in transportation. Everyone knows the market is there, but a bunch of these companies have already started and gone out of business. There's sort of three holding on, right? Archer, Joby, and Vertical. What's
14:07 Scott Galloway? different this time? Why will this category return the investment or have a return for shareholders versus almost every other aviation company? Why has aviation traditionally just been such a terrible place to invest? And what's different about this category?
14:24 Speaker 07 When I was looking around, I was first approached to join Vertical. Gosh, two years before I joined the business 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? 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. And in the last twelve, and it was, you know, coalesced become real, like the technology, if you had the right design, the technology was capable of working. And what's happened in the last twelve months, as you say, there's been a huge shakeout.
15:09 Speaker 07 There are really only three, four at best, kind of hanging on in there of which vertical's one. The first defining thing is physics. You have to have an aircraft that works with the current technology. We've seen lots of people have designs where the physics needs next generation or two generations away battery technology. Um, I'm sure your listeners can look at our social media and see our aircraft flying. We did a flight in and out of the world's largest military aircraft show last week and then flew home yesterday. This works and it works because our physics is right because we've got a wing. And a wing means you are incredibly efficient.
15:51 Speaker 07 So all of the companies that are left have broadly similar designs because that's the physics that works. The second thing is funding. 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. There's been two and a half billion dollars flown into this sector in the last nine months. And that's picking out the winners. That's the market really picking the winners. And within that, why is vertical, you know, a success? We have been able to get out and access capital and we've raised a hundred and sixty million in cash in the last seven months, which is fantastic.
16:30 Speaker 07 And that sets us apart with our other peers as being in the game, the right physics and access to capital to drive to certification. So against that, why can we get a return? Why vertical is best placed for the highest return? If you look at some of our peers that you mentioned, as you know, Scott, pick one, Joby is valued over $12 billion. It's sat there with about $1 billion on its balance sheet. Vertical, we're sat here valued about 600 million. We've got $150 million on the balance sheet, good for about a year. They're valued 20 times more than us, yet our progress is very similar.
17:11 Speaker 07 We've got aircraft designs that are similar. We're flying full-scale piloted prototypes. They are valued higher because they've got a track record of raising money and cash on the balance sheet. I'm just starting that journey with Vertical. You know, we didn't raise any cash for three and a half, four years until December, January, and I'm gradually building up the balance sheet, hitting all the performance milestones we've said and building the credibility. And I think that puts us in a brilliant position to generate very significant returns for investors.
17:40 Scott Galloway? I see a big part of that. Delta, quite frankly, is the two of the companies, Joby and Archer, are headquartered in the US and have that sort of technology halo. You guys are headquartered in Bristol. So talk about building an aviation and aerospace slash technology company in the UK versus building it in the US.
18:01 Speaker 07 I think the first thing I'd say is Silicon Valley hasn't certified any aircraft. And I love Silicon Valley in terms of their move fast break things, et cetera. Unfortunately, you can't launch a beta product on a global stage. You might be able to do it at somewhere in the Middle East, maybe. But to get this market really working, to make your business work, you have to get certified under Civil Aviation Authority in EASA or the FAA. They unlock the global insurance markets, which means you can sell the product globally. And that's how you get scale. So we are based in Bristol, which is the European hub of aviation.
18:42 Speaker 07 It's where the Concorde was designed and developed. We've got tier one aerospace suppliers all around us here. We've got great education and universities, Oxford just down the road, Bristol, Bath. We have incredible technology and capability, right air, and we know how to certify an aircraft, which is the secret sauce from my perspective. And I think importantly on this moving fast. I've been an incumbent in prior jobs in automotive. I don't have any of that incumbent baggage where I can't put my best people on it. I can recruit the best talent from around the world to come here to Bristol. They know this aircraft works. They want to be signing the fuselage of the first certification one.
19:24 Speaker 07 And we are so focused on bringing it to market. We're not distracted by anything else. And that gives us an edge. It lets us move at a pace unrivaled in aviation. And remember, this is an aircraft we're building that you've got to get certified. So we bring speed comparable to Silicon Valley, but we bring the knowledge of how to certify.
19:47 Ed Elson? We'll be right back. If you're enjoying the show so far and you haven't subscribed, be sure to give Prof. Two Markets a follow wherever you get your podcasts.
20:03 Speaker 00 Are your ad campaigns lighting up the dashboard, but not the pipeline? That's bull spend and marketers are calling it out in dashboard confessions.
20:13 Speaker 01 My boss asked for results, so I opened my dashboard for the only positive sounding metric I had, impressions.
20:20 Speaker 00 Cut the bull spend. See revenue, not just reach. LinkedIn delivers the highest return on ad spend of major ad networks. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.
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21:07 Speaker 03 Hey, Bose here. When your next track starts, listen for the decisions that the artist makes. The vocal pushed right up front, the bass that waits half a beat, that sample from a seventies underground gem. Every choice deliberate. With Bose, you'll hear it all. Your music deserves Bose.
21:38 Ed Elson? We're back with prophecy markets. What would prevent this from working? And, you know, I could throw out an example of something that that pops into my head and then I'd like for you to add some more. One thing that pops into my head is we have millions of flying taxis in the sky. How do we figure out how to make them not crash into each other? And you talk about highways in the sky. How do we figure out a way to, yeah, to make sure that people can operate these vehicles and not crash? That's the first thing that comes into mind. One, is that legitimate?
22:21 Ed Elson? And two, what are some other things that would stop this from actually happening?
22:25 Speaker 07 In terms of what would make this not work and highways in the sky? I guess I'll give you two examples. First, 20 plus years ago, I was working in automotive. 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. It was incredibly difficult because there's always things around the vehicle. If you look up in the sky, there is nothing there. All you need is a little transponder on the aircraft. They all talk to each other and they just stay apart. It's actually really easy to solve that staying apart once you're in the sky.
23:06 Speaker 07 That is quite easy and it kind of links to the next generation, which will be autonomy. When again, these things can like, they can fly on their own and stay apart. Very, very easy to achieve. So I think you can get there and there is a route through that crashing, et cetera. It's not a massive technical challenge. It's all there already. In terms of regulation, in another former role, I was Chief Operating Officer of a company called International Delivery Systems, the equivalent of the US Postal Service. It was a FTSE 100 company. Now, as part of that, I did the first commercial drone delivery in the UK.
23:48 Speaker 07 Took about 18 months worth of negotiation with the UK government to let us do it, but it was front page news for kind of three or four days when we did it. So I've worked through the regulatory challenges of putting something in the sky. Analogous to that now is something called, in the UK, it's called the Future of Flight Industry Group, it's chaired by the government in the UK, they put $30 million behind it, they've committed to the skies being open in 2028. And in the US, you have the Trump presidency recently issued an instruction and executive order to the FAA to effectively do the same, to keep up with what regulation is evolving
24:29 Speaker 07 in UK, Europe, Korea, Japan, where there is a huge pull for this to happen. So, you know, you asked what are the things that could stop it? Regulation, but the whole industry is front-footed on that now. Complete change from two years ago, when everyone was wondering how it was going to evolve. There is a massive push to get this up and running now, which is fantastic for the industry.
24:50 Ed Elson? So let's assume it does work and let's assume it works fantastically. Let's assume full adoption of EV tolls. What would that do to the current transportation industry? What would that do to cars, trains, planes? And also, what would it look like in everyday life? Are we taking these vehicles to work? Are we taking them to go on vacation? What does a full adoptive world of EV tolls actually look like?
25:24 Speaker 07 I very much see this back to those highways in the sky. So, yes, we will be using them on a daily basis. If you look at cities like Seoul, Mumbai, New Delhi, LA, where...
25:37 Speaker 07 The infrastructure is creaking already.
25:39 Ed Elson? Yeah.
25:40 Speaker 07 Where people just can't get around in the cities. You can't build your way out of it. There's no space for roads. You can't tunnel your way out of it because it takes forever and it's so costly. So everyone is looking to the skies. So this is the future of transportation. 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. So as supply chains grow, as you manage to put more of these out there, this has the ability to be mass transport. You can easily imagine it taking it from one side of London into the city every day as a commute. You could be, you know, my commute, I'm sure Scott, you recognise this in London.
26:23 Speaker 07 I commute about an hour a day. That's seen as not a bad commute. You could, I'm only 11 miles out from the centre. You could do that in five minutes in one of these. Yeah, you can have a local vertiport somewhere, fly straight into the centre. It is truly revolutionary and that is what we are all doing it as an industry. And I do think this is what we want to create. We want to create the industry here. We want the whole industry to thrive.
26:48 Ed Elson? And logistics and delivery, I mean, we're already starting to see Amazon delivering stuff to our doorsteps with drones. Uh, will EV tolls have a role to play in that story? Are we going to be seeing, are we going to be doordashing our burritos with these vehicles?
27:05 Speaker 07 Um, I don't think we'd be doordashing them. I think a drone is far better for that.
27:09 Ed Elson? Okay.
27:09 Speaker 07 But in terms of bigger things, yeah, absolutely. Um, 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. 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. So I signed off a hybrid powertrain that takes the range from 100 miles to 1,000 miles. It takes the payload from 600 kilos to 1,200 kilos. Well, all of a sudden you open up logistics. Now, importantly, military logistics is something that drops in very nicely to that. Um. Hugely interesting from a military perspective because you've got silent takeoff
27:53 Speaker 07 and landing, you've got a very low noise signature, a very low heat signature. So this opens up a huge other market that, you know, it isn't the core product, it is distinctly different and a huge opportunity. Um. I think the numbers I was looking at just last week, when I put this out in public about a month ago, the geopolitical environment has changed, as you know, from, and I think this has been one of the successes of Trump's presidency, he has got NATO putting their hand in his po- in their pocket. And that means for Europe, it's going to go defence spending from around three hundred billion dollars up to nearly a trillion dollars. Now that is going to go somewhere. We are the only European player
28:36 Speaker 07 in this space. The other competitors are North American based and in a North American first, Europe first. We are brilliantly positioned for that. And since I announced the hybrid, we've had a load of thing coming from European military. We're at the world's largest military airshow last week, had many meetings with military across Europe. So that plays directly into that kind of the other verticals for the aircraft, whether it's logistics and then additional to that military.
29:05 Ed Elson? The military angle and the military use case, was that always part of the plan for vertical aerospace? Was that always built in? Or was that a reaction to, as you say, a heightening of geopolitical tension, which is causing this massive increase in defence and military spending, not just in Europe, but basically across the globe? In other words, were you as the CEO already positioned to offer that as a product? Or did you see what's happening and say, okay, we need to start offering something uh that captures these defence budget, these massive increases in defence budgets?
29:44 Speaker 07 Yeah, well, I signed off the investment in this eighteen months ago. And the reason for that is we just have a bigger airframe, a more capable airframe. You can take up to four, eight full-size marines in it with all their kit. So we knew that defence was an opportunity from some time ago. To get the range, you had to have a different kind of powertrain, which is why I signed off the hybrid eighteen months ago. We actually had it working on a bench last summer. It's fantastic. We've done the difficult bit of the control algorithm between the battery, the auxiliary powertrain and the electronic power unit. That all works. We put it out in public because of the geopolitical environment. We probably would have announced it maybe later this year. But it felt the right thing to do. We already have the technology. It's working.
30:29 Speaker 07 We will be putting the hybrid powertrain in the aircraft next summer and flying it. The goal being to take it to the, again, to react the largest military airshow and to be flying it there next year. Um, and it's a great opportunity. Really, really exciting.
30:46 Scott Galloway? So Stuart, just to wrap up here, and you touched on this. One, how much additional capital do you think Vertical needs to get to, to get to the first one rolling off the assembly lines for commercial use or military use? And what is that target date in terms of the, we're open for business and actually delivering against those orders?
31:04 Speaker 07 We are the only one in the space with clear financial and operating metrics from twenty five through twenty eight through thirty. And that's because I can be certain about certification in twenty twenty eight. Under the EASA protocol, their regulation, you can go on the website, double click, download the engineering work stack and say, right, we're going to certify in twenty twenty eight. And that opens up the global market. So that's when we will be putting aircraft in the hands of customers. In terms of cash, we haven't been out to the market and said, this is exactly how much we're going to spend. But the way I kind of frame this up is I'm going to spend about a hundred and twenty million dollars this year, round numbers.
31:46 Speaker 07 Um, even if I double that spend for the next three years, which probably the outer limit of that, that is what our peer group spend in a year and a half. And they have no clear certification date for the global market. So the potential return from investing in us is just way higher. Because even if I did double the spend, we'll be certified in 2028. Cash break even almost immediately thereafter, 2030 at the latest. And we've got access to the global market because we're certifying to the highest safety standard in the world.
32:27 Ed Elson? Stay with us.
32:37 Speaker 00 Are your ad campaigns lighting up the dashboard? But not the pipeline? That's bull spend and marketers are calling it out in. Dashboard Confessions.
32:46 Speaker 01 My boss asked for results, so I opened my dashboard for the only positive sounding metric I had. Impressions.
32:54 Speaker 00 Cut the bull spend. See revenue, not just reach. LinkedIn delivers the highest return on ad spend of major ad networks. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.
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34:11 Ed Elson? We're back with Prof G Markets. How do legacy transportation companies view this space? 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. There was a reluctance to embrace them, probably because it was a pain in the arse to have to shift your supply chains and start offering a new product. So now, obviously, they're all getting into it. Basically, every legacy vehicle company is figuring out some electric vehicle offering. And I think that's generally what happens with innovation.
34:53 Ed Elson? The legacy industries and the legacy companies are a little hesitant, reluctant to let go. And then eventually it becomes so obvious that they concede. 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 defence companies, Lockheed Martin, whatever it is, how do they view you? And what is your role in terms of disrupting the industries that they have had a hold on for so long?
35:24 Speaker 07 Yeah, you've hit the nail on the head, Ed, with the incumbents' challenge. So I've been there in automotive. General Motors back in the mid 90s had the GM EV1. It was an electric car who was driving around LA. And then they stopped it. They completely lost it because there's an incumbent, you're sat there and you always end up putting your best people on 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? You can never get the focus to put the best people and the right amount of capital on the new and the innovative. And you see that all the time with incumbents. I don't face that problem, right?
36:08 Speaker 07 I am laser focused on this one product. And if you draw that parallel into the aerospace industry and the defence industry, they've all had a go at this. And they've all come up with things that don't work because they can't put their best people on it. They can't put their focus on it. They can't, you know, when push comes to shove, you're trying to hit a quarterly earnings. What's the thing you cut? You typically cut that thing because you've got to keep hitting your numbers. And we don't have that. So we are brilliantly positioned, laser light focused. And despite the fact they've got a huge scale, they just can't bring the focus to bear. And it's pretty common, you see it across a lot of industries.
36:47 Speaker 07 Um. And I'd say that's the same for the automotive. I'd say it's for the aero OEMs and also the defence OEMs.
36:54 Ed Elson? You have a long history and a long career working in business. You had leadership roles at Bentley and General Motors, as we discussed, and Rolls Royce. You were the CEO of Royal Mail. Uh. You're also the CFO of a cybersecurity firm. You've, you know, a lot about business. With this new role at Vertical Aerospace, what have you learned about business that you didn't know before? Um. And what could you share with any young people who are starting with, starting their, starting up their careers? Um. What have you learned over the last few years?
37:30 Speaker 07 I've been incredibly lucky with my career. I worked at most amazing businesses. I've had a fantastic time. The thing I'd say to young people, I say it to my kids, you do what you're passionate about. Because that's how you put the discretionary effort in, that's where the interest lies. And because you put the discretionary effort in, because you're interested, you just get a better result. 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. So you've got to just do what you're passionate about. And I was really lucky. I was sat, you know, 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?
38:13 Speaker 07 And I came to the conclusion of joining here because I was incredibly passionate about the opportunity to create.
38:21 Speaker 07 A multi-billion dollar company right here in the UK, a world leading company here in the UK. 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. And in terms of what I learn, I'm working with the most amazing engineers in the aerospace world. 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 because everyone wants to be part of changing aviation and changing the future of transport.
38:55 Ed Elson? Stuart Simpson is the CEO of Vertical Aerospace, a UK based company developing electric vertical takeoff and landing aircraft. 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, 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. Stuart, this was great. Thank you for joining us and sharing everything EV toll.
39:27 Scott Galloway? 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. So.
39:36 Speaker 07 I'm not sure I believe that, Scott, but we are executing.
39:39 Scott Galloway? My kids are really hoping that you bring it. So get on it, my man.
39:44 Speaker 07 I'm absolutely on it, Scott. We've had an amazing few weeks. I don't know if you saw the flying in and out of Riyadh video. There's another couple that'll.
39:54 Scott Galloway? I've been watching it over and over and showing it to everybody I know. Thanks, man. Well done.
39:58 Speaker 07 Fantastic. Fantastic.
40:09 Ed Elson? 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.
40:17 Scott Galloway? So I'll start with the vehicle. We did a pipe into the company of, I think it was 80 million and we bought, I put two and a half million dollars into the round at five bucks a share. In addition, we were given warrants, an equivalent amount of warrants that I think expired in 2030 at that price, five dollars a share. And then we did another raise just a few weeks ago and I put in another 2 million. So I'm about four and a half million bucks into this thing, which is a lot of money for me. Uh, I'm really excited about this one, probably more excited about this than almost any investment I've made in a while. And by the way, I've had total wipeouts and things I've been really excited about. So I'm, you know, who knows, but I'm excited about this one for the following reasons.
40:59 Scott Galloway? One, the use case in the TAM, the total addressable market, I love aviation. 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. Helicopter value proposition of vertical takeoff and landing is enormous. I was in Sao Paulo, the concierge calls me and says, there's traffic. You need to leave now. It's a four hour trip to the airport. And I take a helicopter from the roof. They don't have the same noise regulations in Sao Paulo and I'm at the airport in 22 minutes. The problem is when you're in a helicopter, you just look around and it's, it's super loud. It smells, it's dirty, it's dangerous.
41:43 Scott Galloway? I mean, helicopters, I just think are really old technology waiting to be disrupted. 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, the data kind of bears that out. So the total addressable market here, the value proposition is clear. The hard part is that aviation just gorges on capital. 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. Otherwise people would never fly.
42:23 Scott Galloway? That typically any plane takes much longer, any aviation takes much longer and is much more expensive than people originally anticipate. So there's real capital risk here. 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. 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. So the latest round was only done two or three weeks ago. Another dilution, another 60 million of the company, company has to issue another, you know, 12 million shares. Stock goes down and now the stock is up, I think 25% since then.
43:07 Scott Galloway? Because the market just wants to see that these companies have the runway to get there. We did a bunch of diligence around the technology itself. I'm obviously talking my own book here, but the people who looked at this company said they have the best technology. So I see it as sort of a capital war. And the guy I partnered with on this is a guy named Jason Mudrick. And Jason has an ability like no one I've met to raise capital. So the real delta, the risk here, and the reason why, as he referenced, as Stuart referenced, that vertical trades at five or 10% of the market cap of the other guys, is they don't have the same amount of capital. But I believe that delta, I believe that insecurity is going to be, or that hole's going to be filled.
43:50 Scott Galloway? Because quite frankly, Jason Mudrick is now on the, is now on the balance sheet and is, is, has an ability to just raise a shit ton of capital. In addition, the kind of free gift with purchase here is I got very excited, and we've talked about this on the show, NATO or European EU countries are, have announced they're going to take their, increase their military spending from about 2% to 3% of GDP. That's an incremental $200 billion. And there just aren't that many aerospace or defense companies in Europe. And I don't think they're going to take any of that 200 billion and send it to the US, given what an asshole Trump is making to Europe right now. So I look at this as, I generally think this could go up 3, 5, 10x.
44:33 Scott Galloway? I also, to be clear, think this could be a zero. If the technology proves to be much harder than we all think it's going to be, it's going to hurt everybody. If we're not able to raise the capital, this thing could easily go to zero. There's been like 12 of these companies and nine, eight or nine of them gone out of business. So I look at this, just trying to be very honest with myself. I think there's a real possibility this could go 3, 5, 10x. I also think there's a real possibility it could be a zero. But when I do that math, I think it's asymmetric to the upside. And I've made, you know, I voted with my wallet here. Any thoughts or reactions, Ed? Where do I have this wrong?
45:09 Ed Elson? No, I think you got it right. The only thing that I would flag, and I'm, I'd be interested to hear how you think about this. As you say, four and a half million dollars for you. I mean, four and a half million is a lot for many people, but I think it's an important point that you make that this, this was not like a throw a quick angel check in there. This was a significant investment for you. You have real money on the line here. There's, there's something at stake. At the same time, you have a real passion for this industry and for aviation. It's something that you are drawn to in the same way that I might be drawn to Chelsea and to football teams.
45:49 Scott Galloway? And to glass dildos. I'm sorry, go ahead. I'm sorry. I'm sorry. I didn't mean to, I didn't mean to reveal some of our, our hobbies, some of your hobbies.
45:58 Ed Elson? Those are our private conversations. Yeah.
46:01 Scott Galloway? Details.
46:04 Scott Galloway? Go ahead.
46:05 Ed Elson? So the question I would ask to you, how do you, how do you think about the fact? 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. And, and by the way, I agree with the investment thesis. I just also recognize that you're very excited about this. It's something that is fun for you. 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, that is significant here?
46:39 Scott Galloway? So it's a fair point. And I've always said that you got to be careful when you get emotionally invested in something. Cause what that means is, you know, the categories you're really interested in, it gives you some psychic return, right? It's fun to, I just, I'm part of an investor group that just bought a football team in Bogota, Colombia.
46:58 Ed Elson? Well, the difference there is you didn't invest four and a half million dollars into it. I think with that investment, you recognize this is more of a passion investment. I'm not.
47:06 Scott Galloway? Inception. Yeah. Yeah. I put a million bucks in, but that's real money for me. That's something I want to lose. But yeah, that's, that to your point, that probably says my thinking is a little bit clouded here. I'm fascinated by aviation. It's something I've spent a lot of money on. I spent a disproportionate amount of my money on aviation. I'm drawn to these investments and the reality is this sector has been a terrible place to invest. Not not not VTOL specifically, but just all aviation has been a difficult place to make money in. So you're right, it's probably it's probably a little bit clouded.
47:42 Ed Elson? I didn't I didn't say this in order to get you to say that.
47:47 Ed Elson? That you have clouded judgment, by the way. I was just wondering if you were factoring that in.
47:52 Scott Galloway? I get to go to air shows. I love that. I think it's fascinating and I love to look at the different equipment. I find these things really interesting. So there is some psychic. I do think I know a little bit about the space and knew some engineers to evaluate the technology and they said. There's still a lot of hurdles for the whole space, 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. That's just Bristol has this Bristol made the Hawker Hurricane. It made a bunch of the planes in World. It has a legacy of aviation extending all the way back to World War II and then through the Concorde. And Hawker and there's just a ton of aviation talent that quite frankly, it's just a lot less expensive.
48:35 Scott Galloway? 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 or the capital that what the American guys are spending. Because the American guys are competing against engineers designing, you know, the Oculus or whatever. It there is I see some advantage, but I'm I absolutely love this investment. I think it's better to be lucky than good. 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, but this is a this is a really risky one. And also, some of this is just I have so much faith in Jason, Jason Mudrick.
49:16 Scott Galloway? He just has an ability to find these small companies that are capital constrained and and recapitalize them and go raise a bunch of money. And also, I don't as excited as I get about anything, I never put more than call it three or 4% of my capital into any one thing. 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. I'm just really focused on not getting poor again. And where I have really screwed up before is getting emotionally invested in things that made sense. I mean, e-commerce just made a lot of sense. Red envelope was doing amazing. It just, everything made sense. But I didn't see O8 coming. And when our credit line got pulled and we could no longer buy inventory and there was
49:58 Scott Galloway? a software glitch and 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. And the stock went from seven or eight bucks to zero in like, I don't know, 22 trading days. So, you know, nobody knows, right? And the investments I've been most excited about in the last few years, some have done really well, some have gone to zero. 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. You know, Sam signs up 10,000 people at three bucks a month or 10 bucks a month and they
50:42 Scott Galloway? can text with health issues and AI overlay refers them to the right person. Amazing investors, solid CEO, great VC. I lost all of it in 24 months. I've never gone, I've never gone 5 million to zero in 24 months. It's usually longer, more painful. So with companies like this, nobody knows. So, you know, I don't, I don't want to make an investment recommendation here. I just want to say the math I've done and why I'm investing. But also, this is, there's no getting around it. This is a risky one, but I'm, yeah, I'm super excited about this one.
51:19 Ed Elson? This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Mia Severio is our research lead. Our research associates are Isabella Kinsel and Dan Shalan. Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Profitec Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.
51:56 Ed Elson? In kind reunion As the water
52:09 Ed Elson? And the brown flies In love
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