The biggest IPO ever
Are you invested in the transportation revolution?
In today’s Diary:
New York to Tokyo in 90 minutes
Tesla vs. Waymo
The “Waymo dividend”
Real flying cars
The biggest IPO ever
Dear Rational Optimist,
I’m writing you from Abu Dhabi, a place willed into existence by pure ambition.
People here don’t waste time fretting over politics and social media like in the West. They’re too busy building real stuff.
The results speak for themselves. Abu Dhabi transformed from flat desert in 1970 to a booming, gleaming metropolis today:
Compare this to the West, where our physical infrastructure deteriorates. Sure, we have amazing digital innovation: the internet, social networks, and “an app for that.” But our sharpest minds have focused on bits, not atoms. We stopped going to the moon and building nuclear power plants. We banned supersonic flight.
We are lucky to live in 2025, when this trend has finally reversed. Technology is breaking out of our screens and improving our real, physical lives. You can hail a driverless car in LA or Austin and watch a hypersonic jet take flight over the Mojave Desert. Soon you’ll be able to get in an electric flying taxi here in Abu Dhabi.
Put it all together and we are clearly in the early days of a sorely needed revolution in transportation technologies.
Let’s look at the companies and founders making it happen. We’ll also debut a new feature: the Rational Optimism Meter, which I’ll use to judge how realistic, imminent, and impactful each breakthrough is.
Can you believe supersonic flight was illegal for 52 years?
Supersonic flight can get you from NY to London in 2.5 hours, instead of the 8 hours it currently takes. We’ve had the technology to do this since the 1970s, but the US government banned it due to the loud supersonic booms it emitted, among other not-so-good reasons. Read our Deep Dive on supersonic flight here.
But instead of banning noisy aircraft, it banned all supersonic aircraft. This destroyed any opportunity to solve the problem and create companies and wealth in the process.
We’re finally righting that wrong. In June the President signed an executive order overturning America’s ban on supersonic flight.
Meanwhile, Boom Aerospace went ahead and solved the noise problem anyway. It uses AI to take advantage of a phenomenon known as “Mach cutoff,” which allows for “boomless” supersonic flight.
Earlier this year Boom’s demo plane XB-1 broke the sound barrier six times without generating a boom audible from the ground.
Affordable supersonic travel will radically shrink our world.
The Marchetti Constant is the idea that humans are willing to commute for roughly an hour per day. When you can go faster, your world expands. New relationships and businesses become possible.
I generally like travelling, but I hate missing bedtime stories with my kids. I’d pay good money to never take a redeye flight again. Daytime meetings in New York, home for dinner.
Boom founder Blake School is a real-life Tony Stark (Iron Man). He started Boom eleven years ago from his basement. Now he’s overcoming The Blight and unlocking a new golden age of travel.
Supersonic flight’s score on the Rational Optimism Meter: 10/10. Can’t come soon enough!
Where will you go when you can fly anywhere in single digit hours?
If you think supersonic jets are cool…
How about hypersonic? Meaning 5X+ speed of sound.
Hypersonic startup Hermeus recently completed the first test flight of its Quarterhorse 1 jet. It’s a thing of beauty.
I had coffee with Hermeus co-founder Michael Smayda in LA. He was an engineer at SpaceX in its early days and helped design the Falcon 9’s rockets. He has great war stories about getting SpaceX off the ground.
His whole team quit their high-paying SpaceX jobs to start Hermeus because nobody else was building hypersonic jets. They’re taking a page out of SpaceX’s playbook, with rapid, iterative development, aiming to build a new test aircraft every year. They’re already piecing together the Quarterhorse 2 in Atlanta.
Smayda’s ultimate goal is to build the Halcyon, a Mach 5 passenger aircraft that could fly from New York to Tokyo in 90 minutes.
90 minutes!
I stumbled across an old BBC newsreel from 1953 announcing a new London to Tokyo flight. "In a day and a half, the comet… travelled over halfway round the world, and cut what until this morning was an 86-hour journey, into a 36-hour one."
Finally, real innovation is happening in aerospace again. Boom is forging quiet supersonic travel. Astro Mechanica is reinventing jet engines. And now Hermeus is going hypersonic.
They’ll push each other to be better, faster and cheaper. It’s a welcome change from the sleepy Boeing-Airbus duopoly.
Hypersonic’s score on the Rational Optimism Meter: 9/10. A gamechanger, but probably 10 years away.
"We wanted flying cars. Instead we got 140 characters."
That famous line from billionaire investor Peter Thiel has been the rallying cry of tech optimists for years.
Now two leading flying car players – Joby Aviation (JOBY) and Archer (ACHR) – are finally making real, piloted test flights.
Joby aims to launch its air taxi service in New York next year in partnership with Delta. Archer is the official air taxi provider for the 2028 Olympics in Los Angeles.
Sounds cool, but what exactly are these things?
Imagine a helicopter and an airplane had a baby and gave it an electric motor. Also known as eVTOLs, they can hover in place and land almost anywhere like a helicopter. But they fly forward, and fast (200 mph) like an airplane.
Here’s a vision that’s hard to resist: You fly from a downtown Manhattan vertiport to JFK in 10 minutes, soaring over the gridlocked traffic below.
Love the ambition. But there are obstacles:
Regulations. In June the President signed a new executive order meant to help clear a regulatory path for flying cars (and support America’s drone market, which Dan Steinhart and I have written about at length here and here). This is big news. But we’re still talking about the first new category of civil aircraft since helicopters debuted in the 1940s. It will take time to sort out sensible regulations for a new category of aircraft flying over dense urban areas.
Batteries. The energy density of jet fuel is about 50 times greater than the best batteries we have today. 100 lbs. of batteries generate the same power as 2 lbs. of gas. That’s a brutal problem to overcome. It limits the range and passenger load of these vehicles, which hurts the economics.
Safety. Would you get in one? I wouldn’t. Not yet. Helicopters have a sketchy safety record. I’ll let the brave early adopters test these things out for a few years.
Flying cars are still a few years away from primetime. But brilliant people are working on it, and we’ll get there eventually. Expect to see them on a few exclusive routes like Beverly Hills to LAX first.
Flying cars’ score on the Rational Optimism Meter: 5/10
Last but not least:
Self-driving cars are finally happening
Tesla (TSLA) has launched its robotaxi service in Austin TX, a milestone it’s been building toward for years. In 33 months, Tesla’s cumulative fully self-driven miles surged 100X.
AI is the reason Tesla’s self-driving tech improved 100X in 2024, measured by how often humans needed to take over the wheel.
I took an Uber in LA recently, and the driver arrived in a Tesla. He turned on “self-driving” mode. It flawlessly drove us from El Segundo to Long Beach through gridlocked traffic, 75mph highways, and confusing side streets without a hitch. He never touched the wheel. And it’s only going to get better.
Carl Sagan famously said, “It was easy to predict mass car ownership, but hard to predict Walmart.”
We can all imagine a city filled with robotaxis. But what happens to real estate when you need fewer parking lots? What kind of businesses spring up when people reclaim 10+ hours a week of commute time? Who is the Walmart of the robotaxi era?
Tell me what you think in the comments below.
Tesla robotaxis’ score on the Rational Optimism Meter: 8/10
Waymo robotaxis are already doing 1 million rides per month.
Waymo started as Google’s self-driving car project in 2009 – with a dinky little one-person rickshaw. Now it completes 27% of all ride shares in San Francisco.
Within a month of launching in Austin, Waymo owned 20% of the market.
I took a Waymo in LA, and it was magical. The car arrives empty. The doors unlock, you get in, and it silently pulls away. Riding in a normal Uber afterward felt like going back to a flip phone.
And Waymos are very, very safe. A peer-reviewed study showed Waymo vehicles have 90%+ fewer serious crashes than human drivers.
Think about that. Every robotaxi we put on the road makes our streets safer. We have a moral imperative to scale this as fast as we can.
My heretical view: within our lifetimes it’ll become socially unacceptable to take the wheel yourself.
Even if you’re not ready to get in a robotaxi, you should root for them. Fewer accidents mean lower insurance prices for everyone. Call it the Waymo dividend!
I’m often asked if Tesla or Waymo will win the robotaxi race.
It comes down to whether you favor Waymo’s "hardware-heavy" approach (using expensive LIDAR and pre-mapped areas) or Tesla’s "software-first" approach (using only cameras).
Waymo has a hardware problem – their cars are expensive. While Tesla has a software problem – their AI must be perfect.
My bet: both win because the market is colossal. We aren’t just talking about replacing taxis. We’re talking about upending the entire concept of car ownership. What happens when getting anywhere in your city is as cheap and easy as summoning a quiet, private, electric pod?
This is the birth of a new trillion-dollar opportunity that will make a few companies wildly rich.
Two more thoughts—
Google will spin out Waymo in the next few years. It will likely be the biggest IPO in history, though maybe SpaceX or OpenAI will claim that crown first.
Fleet management is a multibillion-dollar opportunity. Waymo is building partnerships with maintenance businesses to service its fleet. Put on your entrepreneur hat and think about how to get a slice of that pie.
Waymo’s score on the Rational Optimism Meter: 10/10. For now, they are ahead of Tesla.
Rational optimism is winning.
The innovation avalanche is accelerating.
Regulators are getting out of the way, letting innovators innovate again.
It’s an exciting time to be alive.
Spread the word by hitting those Like and Restack buttons below.
Let’s go!
—Stephen McBride
Stephen McBride is a co-founder of the Rational Optimist Society.
Just rode my first Waymo last week. Flip phone is the right analogy. It felt better than any driving experience I have ever had.
Regarding the so-called “Waymo Dividend” of cheaper car insurance for all — won’t insurers quickly figure out that cars with human drivers should actually cost more to insure? And probably much more, very quickly. That would push more people toward driverless cars, creating a feedback loop where driving yourself becomes so expensive that it’s only viable on private tracks for leisure.