Boeing 707: The Plane that Shrank the World

And what's even more exciting to me, Steven, is the cast of characters for this story is not what you would expect the company we're gonna cover. Boeing had less than 1% market share of the commercial airliner industry when they launched their first jet, the 7 0 7, and they were led by this former tax lawyer named Bill Allen. This is a great story. I'm really excited to tell, and I think everyone can find some resonance in it today.

Yeah. I'm really excited.

In fact, Steven Bill Allen didn't even think he was qualified for the job himself, and he actually initially refused the offer, but the board saw something in Allen that he didn't even see in himself and convinced him to take the job. So Bill Allen is an interesting character. He was a former corporate tax lawyer from Montana, but in 1930 he moved to Seattle and joined at the time a small aircraft manufacturer named Boeing as the corporate council. So Bill Allen is kind of quiet and unassuming.

He's almost like boring in a way. He's balding and he dresses in these like gray flannel suits. He could almost like be your grandpa, you know, you wouldn't expect him to be a CEO who's gonna lead an important company. But he's actually under that exterior, a natural leader who excelled at pulling people together to make complex decisions.

And he actually used his non-technical background as a strength at Boeing, and he would force engineers to understand their designs so well that they could explain them to him in simple and clear language. He was also known for being a great listener. He held these meetings and every meeting he had, he would start by going around the table asking everyone for their input before he would make a decision or give his opinion on the matter.

And this is really similar to stories I've heard about Jeff Bezos, who would do the same thing and basically waits for all the inputs from his subordinates before he biases anyone with his opinion or makes a decision. But hiding under this boring facade, Alan is actually a shrewd risk taker who will repeatedly bet the company on ambiguous Gambles to transform Boeing into the world's dominant aircraft manufacturer.

One of the largest factories they had in Kansas had to be closed, and 38,000 workers had to be laid off. Alan's first challenge as the new president of this company is to build a new vision for what Boeing will be after the war. One potential solution for Alan is to pivot to producing commercial aircraft for the airliners. But Boeing's not in a great position to pivot to this market.

They have less than 1% market share of the commercial airline industry, and they have a string of failed attempts to produce a commercial airliner so far. So Alan, this new president is already faced with a serious dilemma. Should he continue the familiar formula of building these bombers for the military even though business is slowing? Or would he be better off pivoting his company in a new direction to build commercial aircraft for the growing airline industry?

But pursuing the commercial airline industry will require a serious culture change for Allen and Boeing because at this time, Boeing had a reputation for not listening to their customers. The commercial airlines thought of them as a company where the military design was the priority, and then only later would they maybe try to pass off a contrived variation of one of their military aircraft as a commercial airliner.

And this fit into Boeing's culture because they were headquartered in Seattle off in the middle of nowhere in the Pacific Northwest at the time. And this created like an insular culture that thrived on technological advances, but they were not open to outside input at all. So Allen realizes Boeing culture needs to become more customer focused if they're going to succeed in the commercial airliner market. But this may be Boeing's only hope of surviving in the post-war economy.

People began to realize air travel could promise a new age of improved transportation. And so by 1946, just after the war, the Douglas DC six, which at the time was the state of the art in passenger aircraft, could cross the Atlantic in about 15 hours compared to six days by ship. But even after Lindbergh's flight, transatlantic travel by plane was only for the very few airline passengers were mostly movie stars and celebrities, kinda like the type of people who fly on private jets today.

And that's because flights were really expensive. So at this time, a flight from New York to London cost about $11,000 in 2020 $5 round trip. So it was prohibitively expensive for most people to travel at all. And for this reason, like you said, most people still cross the Atlantic aboard ships. But for those who did fly, intercontinental flights were glamorous and very cheek. So this era in commercial aviation was known as the golden age of flying.

And if you've ever seen these videos or pictures where people are flying in airplanes that look like basically luxury hotels in the sky, this is that era in the late 1940s. And what's really interesting to me is the reason that it was such a luxurious experience, and that was because at the time, airlines were competing with the luxury ocean liners like the Queen Mary and these other elaborate floating hotels. So to compete with them, they offered similarly luxurious experiences.

Flights in this golden age of flying would have five course meals with literally caviar and champagne served. They would have gold plated cutlery. The airlines had cocktail lounges and sleeper berths because they weren't trying to cram as many passengers onto the flight as possible. They were just trying to sell really high priced tickets. And so passengers dressed up to fly.

They wore suits and dresses, and then the stewardesses on the flights were also dressed in these really fashionable uniforms from designers like Coco Chanel and Christian Dior.

So this time a flight from New York to London on the state-of-the-art DC six was about 15 hours, and that included two fuel stops along the way. But a modern 7 87 jet liner can do this trip in six and a half hours nonstop. But they didn't just take longer than today. The flights could be much more uncomfortable compared to flying today. So at the time, most of the aircraft could not cruise at a high enough altitude to fly above the weather, so they'd have to fly through it.

And so you can imagine flying through thunderstorms, there's an incredible amount of turbulence. It's not like the comfortable, relatively smooth flights that we enjoy today. And then also at the time, these are all propeller driven aircraft, so they're incredibly noisy. They create a lot of vibration.

There were also higher accident rates, unsurprisingly, because the planes were more mechanically complex, flying wasn't as developed as today, and so there was a much higher risk every time you flew as well. But that's all about to change after World War II because the advances during the war in military airplane design are poised to usher in a new age of commercial, a aviation.

And there's kind of two key factors that are setting up the aviation industry to really take off after World War I. The first is jet engines. So jet engine research during the war promises faster and smoother and more reliable aircraft. Also, a lot of the former military airfields created during World War II are going to offer the necessary infrastructure for global air travel because before this time, there wasn't as much demand for airfields.

And building an airfield is a very intensivess project. There just weren't that many airfields to begin with, but a lot were built for World War II because of the war, and so they're going to provide a springboard for the commercial aviation industry to really take off.

It was their first commercial plane, and it was actually technologically ahead of its time at a time when most companies were still building biplanes out of wood. The 2, 4 7 was actually a single wing design with an all metal cabin. But critically, the 2, 4 7 was held back by an internal disagreement within Boeing on if the plane should prioritize performance, like speed and maneuverability or passenger comfort.

And so Boeing's engineers at the time made this fateful decision to sacrifice comfort and economy for better speed and performance. And this would go on to set the tone for how Boeing would design all of their commercial aircraft. But that's by no means the only way to design a commercial aircraft because just down in Santa Monica, California, another company called the Douglas Aircraft Company led by Donald Douglas releases their own commercial airliner called the DC one.

And so the DC one was actually heavily influenced by the design of the Boeing plane because at the time and even up into World War II and afterwards, Boeing was the technological leader in airplane design. So Douglas heavily based their design of the DC one on Boeing's plane. The engineers at were really friendly with the Caltech technicians who were doing all the wind tunnel testing for Boeing. And so it was suspected maybe they kind of passed their design along.

It's interesting because Donald Douglas ran his company kind of the opposite to Boeing. He wasn't as innovative and technologically ahead as Boeing, but he was great at listening to his customers. Boeing released their plane immediately into service, but Douglass continued to refine their design based on feedback from the airliners.

And they developed very close relationships with the airline executives, and they made extensive modifications to their design and ultimately created a new plane called the Douglas DC three. The DC three had twice as many seats as the Boeing, a wider passenger cabin, and was also much more comfortable to fly on. And so the results of working closely with the airlines were immediately clear, and the DC three became the dominant airline for the commercial flights.

And the DC three is an important aircraft because it basically kickstarted the commercial airline industry for the first time with the DC three airlines could make a profit without flying air mail subsidies. So within a year, the DC three had completely captured the commercial airline market and was carrying 95% of all airline passengers in the United States.

The DC three made Douglas the dominant commercial airplane manufacturer for the next 30 years, and the Boeing 2, 4, 7 basically became a forgotten airplane. There's a clear leadership lesson here to me, Steven, and that's the importance of listening to your customers. It really stands out here because despite the superior technology at Boeing, they lost out to Douglas because they refused to listen to their customers.

Right? And so it's clear that Douglas struck a balance here, apparently, and built a very successful airplane.

And so Douglas really struck that cord of having a great product to start out with, but also iterating it to make sure they had that product market fit with the airlines.

It was kind of this mutation of their B 17 bomber design. And this design was known as the Boeing 3 0 7 strato liner, but its success was eventually overshadowed by first, a tragic test flight that killed several of Boeing's key designers, and then also the start of World War ii. The USS entry in 1941 really reduced the demand for commercial flights, and so it was the wrong plane at the wrong time.

In later stages of the war, Boeing also built the B 29 Super Fortress, and this was a long range strategic bomber used in the Pacific, and this was ultimately the plane that dropped the atomic bombs on Hiroshima and Nagasaki. But what's important to highlight here is the design criteria for military and commercial aircraft are very different.

And so designing these military planes reinforces Boeing's bias towards speed and performance rather than the comfort and economy that are important for commercial aircraft.

And so this model 3 7 7 Strato cruiser was the most powerful piston engine aircraft ever produced, but it suffered from reliability issues because of the huge engines that needed to produce this much power. And really the theme here is that piston engine technology had peaked during World War ii. And so by the late forties, the tech had been pushed way beyond its limits to the point of diminishing returns.

So only 55 strato cruisers were ever delivered because of the serious reliability issues compared to about 700 of Douglas's competing plane, the DC six. So again, Steven Boeing developed the more technologically advanced airplane, but lost out to Douglas who prioritized what mattered to customers.

But in the closing days of World War ii, the discovery of a secret research lab hidden in the forest outside the German village of Vulcan Road would give Bill Allen the breakthrough he needed to challenge Douglas for commercial airliner supremacy. During World War ii, the Germans were actually the leaders in Jet Technology. They developed the first mass produced jet engine called the JUMO oh oh four, and they also deployed the first operational jet fighter, the ME 2 62.

And so the German LFA established a secret research complex outside the village of Vulcan Road. And these buildings were actually camouflaged as farm houses and hidden below ground and under the tree line to hide them from Allied Bombers. Because the research these scientists were doing was so critical for the war effort. And the German scientists and engineers at Vulcan Road were working on a very specific problem.

And that was how to design a plane that could fly just as fast as these new jet engines the Germans were developing. And so in the final days of the war in Europe, Boeing's chief Aerodynamicist, George Cher, was selected to join a scientific advisory group code named Lusty. The goal of this scientific advisory group was to find and collect German research before it could fall into the hands of the Soviets or be destroyed.

And this team actually discovered the Vulcan Road Research Center, and they found wind tunnel data showing how an airplane with swept back wings and jet engines could achieve these incredible speeds. Speeds approaching the speed of sound. So sharer urgently wrote a letter to Boeing engineers back in Seattle, and he explained his findings, urging them to make these changes to Boeing's next generation bomber, the XB 47.

And so because they were so separated and not able to coordinate during the chaos of World War ii, they were never able to pair these two technologies together. The problem with the jet fighters was that they couldn't go fast enough, but then the swept wing design was the solution. They just hadn't put the two together.

And so Boeing's breakthrough was they got all of this data together and they were able to see that these jet engines will make incredibly faster aircraft, but they're gonna be unstable at high speeds. So the solution to that is a swept wing design.

But the British and the Americans were never able to operationalize the jet engines during World War ii.

So this XB 47 was one of the most advanced aircraft of its day, and it would go on to define Boeing's entire design philosophy for military and commercial jets. So then building on the success of the XB 47, Boeing would go on to introduce the first long range jet bomber, the B 52. And this has been incredibly successful as a bomber for the Air Force and B 50 twos are actually still in operation today.

Does he want to ride the new success of building these long range jet bombers, or does he wanna diversify Boeing's operations a little bit and try to also build a commercial jet? So Alan decides to find out for himself, and in the summer of 1950, he plans a test flight on the XB 47. And I think this is a great leadership lesson here, Steven, because it highlights the importance of getting out of the office and seeing for yourself and touching some grass.

Yeah. 'cause at the time, most people dismissed Jair aircraft as only a military technology. But also most people had never flown on a jet themselves because these were just experimental military aircraft. So Alan decides to fly along himself and see what it's actually like. And he comes to this realization that these jets are much faster, much quieter, and a lot smoother than the propeller driven aircraft that he's familiar with.

And so he realizes firsthand at this time, the tremendous opportunity of jet engines for producing a better commercial aircraft. But most of the top engineers at Boeing were reluctant to invest in a commercial jet, and they had good reasons at this time. Boeing's expertise had always been in producing these military aircraft, and so they'd done really well with the jet bombers, but they had this long list of failed Boeing commercial airliners.

But then also at the time, even outside of Boeing, jets were considered as a military technology. They were incredibly loud. They consumed a lot of fuel. They left these black trails of soot in the sky. These were very early iterations of jet engines, and they weren't nearly as well developed as they are today. And so even the leaders of most of the prominent airlines agreed that it was too early for a commercial jet to be viable.

So at this point, Boeing doesn't even have an interested customer if they decide to produce a jet airliner. So I think Clive Irving sums up Bill Allen's decision here with a really good quote from his book called Jumbo. And he says, as a company strategy, you could look at the jet decision two ways. Either in one leap you would leave the opposition looking archaic, or you would end up with a speculative airplane, one that no one had asked for.

That would involve changing every detail of operations from maintenance to airport handling, and they would have to get safety certification according to rules that did not even exist for jets. There was no real evidence that the world was ready to switch to the jet.

But the design secrets from Falcon Road offer a new, more ambitious kind of aircraft, one that's faster and more comfortable than any propeller aircraft at the time. So now Bill Allen is faced with a tough choice. Does he double down on military aircraft or does Bill bet the company on the new jet engine technology and challenge Douglas for control of the commercial airline market? And

So Steven, I mentioned earlier that behind the Germans, the British had the most advanced understanding of jet engines in the early 1950s. And in May, 1952, the British Aircraft company Dhaval Land, launched the D Haviland, DH 1 0 6 comet one jetliner. And this was the first jet commercial aircraft. And it was kind of a taste on how the dead engine could transform passenger air travel. The comet cruised at 500 miles an hour versus 200 miles an hour.

For the DC six, which was the state-of-the-art propeller aircraft. The comet could cruise at 35,000 feet versus 20,000 feet for the DC six. And critically, this cruising altitude allowed the comet to fly above the weather, making travel much more comfortable, much less turbulence because they're flying over not through the weather.

And the comment was also a source of national pride for the British government who had subsidized its development in this attempt to make Britain a dominant player in the global airline industry after the war. But surprisingly, the comment did not include many of the improvements Boeing had included in their XB 47 experimental jet bomber, like the swept wings or the potted jet engines.

So Alan decides to see for himself what this comment is all about, and he travels to the annual British Air Show at Farmborough to see firsthand. Alan is joined by Maynard Pinnel, a rising star at Boeing. Now, Maynard Pinnel is a 30 5-year-old structural engineer who had actually come to Boeing from Douglas, and he had designed bombers for Boeing during World War ii. But Pinnel really wanted to design a commercial jet for Boeing.

He said, I enjoyed working on commercial programs, more serving humanity rather than threatening it. And penal is very conscious of the culture differences between Douglas and Boeing. And he felt that Boeing could learn a lot from Douglas on their attention to customers. And Allen identified penal as someone who could be an ally in his quest to transform Boeing's military bomber expertise into a commercial airliner.

So after the air show, Alan asked Pin, what did you think about the Comet and Pin's answer is We could do better. And pin's answer is going to be confirmed when they visit the factory where the comet is produced in Britain. And they're surprised when they arrive because it's nothing more than a workshop and they don't really have a production line. They're only producing a few of these comet jet liners.

And really it reminds Alan of Boeing's first plant at the edge of Lake Washington in the early 1930s and with the success of the XB 47 and now the Comet Allen starts to seriously consider green lighting a commercial jet program at Boeing.

During the Korean War, the government had instituted an excess profits tax to ensure that no companies profited too much from the wartime increase in demand for military jets and that sort of thing. So obviously Boeing did really well during the Korean War supply and military bombers, but because their profits had been so low during the post World War II slump, the increased 1951 profits faced an 82% tax.

Wow. Wow. I mean, it makes perfect sense and I think it's something that only Bill Allen could have found out because of this unique background as a lawyer. But you know, it's a much easier decision when you're trying to think, should we green light this project when two thirds of the cost are going to be money would've lost otherwise.

I think at the time, you know, Boeing had this really engineer heavy management structure, so just adding another engineer to that mix is just going to make Boeing more focused on these science projects than actually delivering something that they can sell.

It's almost better to have Bill Allen, who's someone non-technical who can restrain these impulses from the engineers, and so it's kind of this balance, this push and pull between investing in r and d and solving these engineering problems, but also being a profitable company that responds to customers and delivers a product that people are willing to pay for.

And then they chose 7 0 7 because it's an iconic number. It is. Gotcha.

You know, usually there's a military contract in place, or they've partnered with some airline who says, we promised to order at least X number of initial aircraft, but Boeing is just going out on a limb here. And really, they haven't even socialized this with any airlines yet. Alan has greenlit this project all by himself, but Alan is not completely betting everything on this.

He's also hedged his bets a little bit, and so the engineers at Boeing promised him that this prototype could also be used to inform the design for a new military jet tanker to refuel the B 52 penland Steiner kick off the design of a 7 0 7 prototype. The goal here is to be a proof of concept design. It's not intended to be mass produced or sold. It's going to be a prototype that can inform a future jet airliner or this military tanker that I just mentioned.

But before the design started, Alan made one more key change to disguise this new jet airliner strategy from Douglass and some of the other competitors. He renamed the program from the 7 0 7 to the 3 6 7 dash 80. So Steven, the reason he does this is because 3, 6, 7. Was one of the model numbers for an existing military plane that Boeing produced. And so calling it the 3 6 7 dash 80 suggested, it's nothing more than a variation on an existing design.

So key to Alan's strategy here is that he's counter positioning Boeing against that idea. Pendulum Steiner start the design of the 3 6 7 dash 80 prototype, but it becomes known within Boeing as just the dash 80. And so for the dash 80, they're going to incorporate two key design features that were used on the XB 47. That's the swept wing design and the podded jet engines. So to start with the jet engines, the dash 80 was designed to use four Pratt and Whitney, JT three C Turbo jet engines.

And these are the same type of engines that were used on the B 52. So this is a proven turbo jet engine that Boeing knows will work.

So adding more power doesn't necessarily result in a faster propeller and more thrust, but a jet engine, on the other hand, it compresses air, combust it with fuel, and then shoots it out the back of the engine to create thrust so they're not limited by the speed of their moving parts. In the same way, the propeller and piston engine is also, jet engines are much more reliable than piston engines, and this is two main reasons. First, they're just simpler than piston engines with less parts.

And then also jet engines have a smooth and continuous combustion and rotation cycle compared to piston engines that rock back and forth in the four stroke cycle. So interestingly, when engineers at Boeing were working on one of the first jet bombers, the XB 47, 1 of the questions that came up was, how should we mount the engines? And this is really interesting to me, Stephen, because on the comment, the engines are buried inside the wing, close to the fuselage.

And this is exactly how propeller airliners were designed. So by default, that's how the Deha land engineers thought that jet engines should be mounted. It reduced drag a bit, but it was also just kind of the way it had always been done before. But for the dash 80, the Boeing engineers drew inspiration from the XB 47. And for the XP 47, the engineers went through a few iterations of where should the engines be mounted.

So their first idea was to mount the engines inside the fuselage within the structure of the airplane. But the military didn't like this for their bomber because just a few hits to the engine would destroy the entire airplane and set it on fire.

Also, if the turbine blades inside the jet engines failed, they could shoot metal fragments through the wing. And so basically if you lose an engine, you're also losing a wing, which basically means it's going to be a disaster.

So at this time, jet engines were much less reliable and they also produced much less thrust. So one, there's concerns that, you know, if you lose an engine in flight, you wanna have some redundancy so that you can still fly with fewer than four engines. The other concern is these early jet engines didn't produce near as much thrust as jet engines do today. And so they need more engines to be able to meet the range and payload requirements of jet aircraft.

And what I mean by that is that the de haviland engineers didn't question the assumption that the engines should be attached to the plane, just like propeller engines had in the past. They were stuck in the propeller age when Boeing had moved on to the jet age. And this really highlights to me that you should always question your assumptions. And the new paradigms call for new thinking jet engines were an entirely new paradigm.

And so it's not obvious that we should just do things the way we did in the propeller age. And to me, the Boeing engineers got this right because they solved the problem from first principles, not by doing it the way it was done before. Now with these faster jet engines, there also need to be innovations in aircraft design to ensure the stability at these new super high speeds near the speed of sound, the aerodynamics of an aircraft actually start to change in unexpected ways.

And some World War II pilots had actually noticed this in some of the fastest propeller driven fighters during the war. There were several unexpected crashes at high speeds near the speed of sound due to these mysterious instabilities that would arise. And engineers have been struggling for a long time to understand the cause of this phenomena.

But the wind tunnel data from Vulcan Road offered a solution as an aircraft, approaches the speed of sound, which is about 760 miles an hour at sea level. The air molecules in front actually don't have time to move out of the way because the airplane is traveling so fast. Instead, they start to bunch up and compress like a traffic jam in the sky. This creates these shock waves or sudden jumps in air pressure and a dramatic rise in drag.

So engineers call this effect compressibility, and it was a huge barrier in early high speed flight. This meant the propeller tips, control surfaces and the entire aircraft could suddenly lose effectiveness or even break apart if they weren't designed to handle it.

Interestingly, the comet had a relatively modest wing sweep of only 20 degrees, and that limited its cruise speed to only 450 miles an hour. So that 450 miles an hour is faster than the fastest propeller driven aircraft at the time, but it was significantly slower than the dash eighties, top speed of 600 miles an hour.

Now, the dash 80 rolled out to the public in 1954, and it was painted in this really iconic brown and yellow paint style, and it was a big festivity at the Boeing factory when it was first introduced. Actually, bill Boeing, the founder of Boeing, who had long since retired, came back to see the dash 80 because it was such a revolutionary aircraft for the time.

And so because of this, Boeing engineers are able to create a design that's faster and safer than the comet.

So I mentioned earlier that the technological innovations Boeing discovered at Vulcan Road and implemented on the dash 80, like the swept back wing, and the potted engines allowed the dash 80 prototype to be not only more performant than the comet, but also safer. Oh, did something happen to the

Now this detail will turn out to be critical because at the same time as the dash 80 was being introduced, the comet was actually grounded by several fatal crashes.

And so the comment in contrast to the dash 80 had square windows in hatches, and this concentrates fatiguing stresses at the corners. And then this fatiguing stress was accentuated during the repeated pressurization and depressurization of the cabin during these high altitude flights. No kidding. Yeah. Remember I mentioned earlier the comet flew higher than any commercial aircraft ever had before.

So at the time, most of the airline industry didn't know enough about the effects of repeated pressurization cycles on an airliner. Boeing, however, was on the leading edge of pressurized flight research and had designed the dash 80 with rounded windows and corners to evenly distribute the fatiguing stresses.

But Bill Allen presses on with the development of the dash 80 prototype and has its first test flight in June of 1954 for this first test flight. It's piloted by test pilot Tex Johnston. And so Steven Tex Johnston is quite the character. You know, it's like he walked out of a Hollywood script or something. Clive Irving in his book, jumbo, describes him as part cowboy, part scientist.

Johnston fell in love with airplanes at the age of 11 when he saw a pilot land in a cow pasture, and he just decided to hitch a ride with him. After that. He started out flying as a daredevil in the circuses at the time, and this is again, like early wooden by planes. So he is a bit of a risk taker and he eventually became a test pilot and he was actually one of the first test pilots to pilot a aircraft with jet engines and also the swept wing design.

So he is a good fit for Boeing and he has this interesting ritual of every time he tests a new plane, he wears a new pair of cowboy boots. He is also seen sometimes wearing his Stetson cowboy hat as he's piloting these test aircraft.

So this character texts Johnston joins Boeing in 1949 as the lead test pilot for the XB 47, and then he goes on to be the lead test pilot for the dash 80 and the first test flight actually goes really well. Johnston likes the maneuverability of the aircraft. He thinks it flies well. But there is just one concern, and that's the tendency for the dash 80 to exhibit what's called Dutch roll. What is a Dutch roll?

So the Dutch roll is this tendency for the aircraft to kind of wiggle and roll side to side unexpectedly due to a reduction in directional stability. And so an uncontrolled Dutch roll can actually lead to a loss of control and eventually a crash if it's not damped out. Interestingly, swept wing aircraft are actually more susceptible to Dutch roll because they inherently have less directional stability.

Johnston had already encountered this Dutch roll issue on the XB 47, and there it was solved by installing a yaw damper that automatically damped out oscillations before they could grow.

So during a boat race that summer on Lake Washington in Seattle, Alan hosted several of these airline executives on the company boat, and he arranged for Tex Johnson to perform a flyover in the dash 80 during the race.

So Johnston took off from Boeing Field with a crowd of about 200,000 people gathered on the lake shore, and he brought the dash 80 in at a speed of almost 450 miles an hour, and skimmed just 300 feet above the lake with these turbo jet engines screaming and drawing everyone's attention. Then Johnston pulled up on the dash 80 into a steep 35 degree climb, and circled around for another pass.

This time, as Johnston crossed high over the lake, he flipped the plane over and looped into a barrel roll. And so as he flies over these airline VIPs on the lake, the plane was actually upside down.

It's not done in like a commercial airplane.

But while it might impress some of the airline CEOs, they don't wanna see their passenger aircraft doing barrel rolls and high speed maneuvers. Yeah, exactly. Wow. So at this point in the mid fifties, Boeing's competitors, Douglas and Lockheed are still building propeller driven airliners. But the dash 80 success is making it more and more obvious that Jets are going to be the future.

And so the engineers at Douglas realize this, and they urgently begin work on a jet airliner of their own, hoping that they can catch up to Boeing before it's too late, and eventually reports filter back to the Boeing team that Douglass has started pitching airlines on its own version of a jet called the DC eight. But despite the previous humiliations of losing out to Douglas, the Boeing engineers don't really take this that seriously.

They don't ask for the airline's input on their design, and they still believe that their technological superiority will be enough to win the airline's business.

So you know where Boeing went on this bet and they designed the dash 80 prototype and then in spectacular fashion reveal it to the airlines and said, look at this awesome airplane that we designed. Don't you wanna buy one? Douglass did the opposite. Before they even kick off their design, they go to the airlines and say, what would you like a Jetta airliner to be like, let me get your input. And they start the design process there. So two very different ways of trying to solve a problem.

And it's gonna be interesting to see what works better.

Alan also picks an engineer named Milt Heinemann to perform the interior design for the 7 0 7 because, well, a lot of things from the dash 80 could be carried over to the 7 0 7. There wasn't any interior design done. You know, this was just a test prototype, so it didn't have passenger seats and bathrooms and that kind of thing. But interestingly, Heineman's only previous experience was doing the interior design for bombers designed for the Air Force.

So these are designed for military pilots and nuclear bombs. It's not really the same kind of design you want to have for a passenger jet. So Heinemann brought in a design firm named Walter Durwin, Teague and Associates to consult on the interior design for the 7 0 7 and Tegan Associates basically go on to design the basic template for what the inside of a jet looks like even today.

They designed this cabin to be bright, clean, and efficient in stark contrast to what previous airliners had been styled to kind of look like an ocean liner because they had these window curtains and tablecloths and nautical designs. But Tegan Associates decide that it's time for a new design language for the high speed jet age.

And overall, the design language of Tegan Associates is to optimize the airplane to be cleaned quickly and for faster turnaround times, because these jets are gonna be faster than the propeller airliners. So it's gonna be much more important to turn these around quickly so they can be carrying passengers as much as possible. So to sum up, instead of a flying ocean liner, the inside of a 7 0 7 was given a sleek and efficient modern design.

Now, as the engineers at Boeing are finalizing the design for the 7 0 7, there's an internal disagreement on how wide the passenger cabin should be. And Stephen, the width of the cabin is one of the most important factors for the airlines because it determines how many seats with paying customers can be added. And the width of the passenger cabin is also very much a one-way door decision.

A lot of modifications can be made to an aircraft after the initial design is complete, but changes to the fuselage and the overall structure require a change to basically every major system, and it's usually cost prohibitive. Yeah, I think

But at the same time, remember I said that Alan had hedged his bet and engineers were also working on another idea for the dash 80, a derivative Air Force tanker to refuel the B 52. And the engineers had actually designed a wider fuselage for that plane that was 144 inches wide. Side note here, this plane would go on to become the C 1 35 military transport and the KC 1 35 tanker, both of which are still used by the US Air Force to this day.

So penal and Steiner get permission from Allen to use the wider 144 inch fuselage from the C 1 35 for the 7 0 7,

Now at the same time, Douglass is also working on their own commercial jet, the DC eight, and they started off behind Boeing and technical understanding of the jet engine and the swept wing design. But Douglass did have one key advantage, and that was the respect of the world's major airlines. Douglass was also kind of helped out by a delay at Boeing during the design of the 7 0 7.

So interestingly, since Boeing was also selling this KC 1 35 military tanker to the Air Force, they needed permission from the government to use the same tooling and assembly lines for the 7 0 7 because obviously it's a tremendous efficiency advantage if you can use the same production line for two aircraft. But since the Air Force wanted to ensure that Boeing could produce a certain number of KC one 30 fives for military purposes, they needed permission to use that same tooling for the 7 0 7.

And this ended up resulting in a delay of several months while Boeing waited on the Air Force to grant them this approval. And so during that time, Douglass worked closely with the airlines on the design of the DC eight. They decided on a design that was remarkably similar to the 7 0 7. It would also feature four turbo jet engines and swept wings. But interestingly, it would have a 147 inch wide passenger cabin, and that's three inches wider than the 7 0 7.

And critically, it allowed for a three plus three seating configuration or 165 seats to the seven oh sevens, only 140. So despite being only a design on paper at this point, the DC eight is a favorite for the airlines. One because it's got more seats and it can carry more paying passengers. But also they've helped design it. And so. They've been able to provide their input and influence the design of Douglas aircraft.

And interestingly, Douglas kind of stirs the pot a bit and they tell the airlines that Boeing is once again trying to sell them just a secondhand military design. So they point to the KC 1 35 tanker and they say, oh, you don't want just another Boeing derivative of this military jet. You want something that's purpose built and that is gonna be the DC eight.

The success of any new airliner hinges on these pre-production orders that airlines place to basically commit to buying a certain number of this new design. And at this time, there were three key airlines that basically determined the direction for the entire industry. Those were Pan-American World Airways. United and American Airlines, and these were the largest and most influential airlines.

And all the other airlines would basically follow their lead when it comes to which plane should they buy. So whoever can win the launch orders for these three airlines will dominate the jet age. Maynard Pinnel kicks it off by leading a delegation of engineers to meet with United, and at this time he's feeling confident because he knows Boeing has the most technologically advanced jet.

But unfortunately, Pinnel is in for a surprise because Douglas has already been working with United to design their DC eight. So when Pinnel arrives, United shows him this mockup of the 7 0 7 and the DC eight passenger cabins. And like I said before, the DC eights cabin is actually three inches wider, but this three inches allows for the three plus three seating configuration.

And it also makes a disproportionate difference because Douglas had also lowered the cabin floor so that the shoulder and head room was significantly better compared to the 7 0 7. So when penalties these mockups, the difference is so obvious that there's not even room for negotiations with United and all of United's pre-orders go to Douglas.

And for Alan, it's looking like Douglas will go on to dominate commercial aviation for 30 more years. And Steven, for me, this highlights another critical leadership lesson that selling an idea or a product is just as important as the idea or the product itself. And to me, the Boeing engineers are just thinking about their product from an engineering perspective. They're designing the plane they want, not necessarily the plane the airlines want.

And so on paper it might be more technologically sophisticated, but they're not doing a good job of selling that to the airliners.

And so he calls Alan and urges him to approve a second increase in the passenger cabin's width to 148 inches, which would be one inch wider than Douglas, and allow for the three plus three seating arrangement plus 189 total passengers, which would be 24 more than Douglas. This sounds like it's gonna be very expensive. Absolutely, because Alan realizes the tremendous financial consequences of this.

Like we said, changing the fuselage in the cross section would require a significant redesign, and it's gonna cost time and money even more critically. The wider fuselage means Boeing will not be able to use the same assembly lines as the KC 1 35 for the 7 0 7. And we talked earlier about they lost all that time 'cause they wanted to use the same assembly line. That advantage will be erased if they widen the cabin again.

But Alan also remembers the humiliation of the Boeing 2, 4 7 losing out to the DC three and all these other times that Douglas pulled the rug out from under their feet just when they thought they had won the commercial airline industry.

Of course, Douglas notices this and they enter the race and they've already netted all of United's jet orders. So now panel is basically fighting for the seven oh seven's life, and he's begging Alan to approve a last minute cabin with change to hopefully win over American Airlines.

And after several tense hours, Alan and the CEO of American come out smiling. Alan has promised the wider cabin, and American has chosen the 7 0 7 for its launch orders. So Boeing is still in the fight with Douglas for supremacy in the jet age, but it's all going to come down to the International airline

heavyweight Pan-American World Airways. Okay. So they each have one of the three major airlines and now it's a battle for the third. Yeah, it's one for one. Douglas and Boeing. With that last minute increase in the passenger cabin, they were able to win over American, but Pan Am is gonna be a bit tougher. So Pan American World Airways, better known as PanAm at the time, they're the world's largest and most important international airline.

The Blue PanAm Globe is one of the most iconic logos of the time. You know, it's similar to the Nike Swoosh or today's McDonald's arches and am really epitomized the luxury and glamor of international air travel at the time. And this is really important because the 7 0 7 is primarily going to be an international airliner. And leading this most important airline was a legendary figure in the airline industry, known as one trip.

And one trip is this really forceful personality, but he's also a visionary. You know, he had started one of the first international airliners in the early 1930s using these island hopping sea planes. And so he built Pan Am from just this small international seaplane company into eventually having basically a monopoly on US international routes. But being a visionary, he's also known for his authoritarian style of leadership.

He doesn't really react to changes in the market like other airlines do. He creates them and he has this very distinct vision of a future where everyday people can fly across the oceans on a PanAm airliner.

And interestingly, Stephen, part of the impetus for airlines finally accepting the idea of a jet airliner as something to be feasible was like we talked about the dash 80 and its impact on the aviation industry, but also when the d Havelin Comet was first introduced one Trip, made some pre-purchase orders for the Comet, and really shocked the airline industry that he was going all in on jets.

Now, he never accepted these delivery orders because of course there were those failures with the comments we talked about. But you know, he sets the pace for the airline industry. So as soon as he decides to start purchasing jets, every other airline is lining up to make sure they don't miss out. So Boeing had struck a deal to sell the 7 0 7 to American Airlines, but at the time, American was mostly a domestic carrier, whereas Pan Am was the world's premier international airline.

And so they planned to use the 7 0 7 to fly their profitable transatlantic routes. But at the time, pan Am and one Trip, were not happy with the payload and range of the 7 0 7 because the Turbo Jett's thirst for fuel made it really difficult for the 7 0 7 to fly transatlantic routes without refueling stops.

So with this in mind, one trip summons Bill Allen to Pan Am headquarters in New York City, and he sends 'em down and bluntly tells him that the 7 0 7 is only a half great airplane. And trip said, we'll buy 25 DC eights and only 21 7 oh sevens because the Douglas aircraft just had better range and passenger payload. Reading between the lines.

What's really happening here is this is the legendary negotiator of one trip coming out and he's basically playing Douglas and Boeing off of each other to try and get the best deal for his airline. Oh, okay. So he's telling Douglas similar things that, oh, I, maybe I'll actually buy more seven oh sevens than DC eights. And so he, he's playing em back and forth.

'cause at this time, one trip in Pan Am are kind of like Apple is today, in that they have such large market share and they're such a large customer that they can really kind of force their suppliers to meet whatever their needs are. But Alan knows that ultimately he's going to buy whatever the best airplane is for his company. So Alan meets with its engineers and explains the requirements for a transatlantic modification to the 7 0 7 to fly these popular Pan American routes.

And his engineers tell him that the only way to meet trips, strict performance requirements is to redesign the entire wing to make it larger. And that's to fit more fuel, I would imagine, to fit more fuel, but also to give it better performance characteristics of increased range and that sort of thing. Oh, okay. Got it. Yeah. Got it. But it's obviously a significant undertaking because you know, next to the fuselage, the wing is one of the most critical parts of the airplane.

Yeah. It requires a lot of design time, critically, a lot of wind tunnel time. Wow.

And the engineers work in the wind tunnel 24 7 in three eight hour shifts for six weeks straight to design this entirely new wing and meet Pan AM's strict deadline. But when Douglass gets wind of this, they fire back by adding the new Pratt and Whitney JT four Turbo jet engines to the DC eight.

Basically, this is the next generation of the Turbo jet engines, and these offer a substantial performance upgrade and give the DC eight better performance all around that, even the newly upgraded 7 0 7 with the better wing. But Bill Allen doesn't miss a beat at this time. He's fully committed to beating out Douglas, and he immediately also adds these new engines to the 7 0 7. So both planes are using the exact same engine?

Yeah, so both planes have the exact same engines, but Boeing has this new and improved wing that their engineers have been sweating over in the wind tunnel. So Boeing delivers this new and improved 7 0 7 variant with a longer body more fuel capacity, more seats. And greater range. And this became known as the 7 0 7 dash three 20 intercontinental, specifically designed to meet Pan AM's long international routes.

So at the end of the day, the DC eight and 7 0 7 were well matched, but the DC eight's wing was more conservatively designed and turned out to be about 5% less efficient than the seven oh sevens redesign wing. But when it comes to airplanes and the economies of scale that they operate, 5% less efficient gives the 7 0 7 a tremendous advantage in performance over the DC eight. And so it turns out that the 7 0 7 intercontinental is perfect for Pan AM's transatlantic routes.

And Pan Am goes on to buy more than 60 of these modified seven oh sevens. And in the end, Boeing wins the majority of Pan AM's business and the other airlines follow suit. Pan Am was the industry leader. And so when they see that Pan Am has tilted towards the 7 0 7, it becomes basically the defacto jet aircraft for this new jet H.

But Douglas would only deliver about half as many DC eights, and eventually the 7 0 7 would be the plane that's most associated with the new jet age Bill. Allen has suffered through the humiliation of losing out to Douglas on three different commercial airliners during his tenure at Boeing. But now Boeing has surpassed Douglas as the leader in the commercial aviation market.

But it's not over just yet because just when Boeing seems to have won the battle for jet supremacy, the 7 0 7 suffers a crisis of confidence in 1959, just one year after the 7 0 7 has entered service during an American Airlines training flight over Long Island, the pilots are practicing these simulated engine failures. And when coming out of the left turn, the plane suddenly begins to wiggle with the unmistakable onset of Dutch roll.

Oh, this is the issue that Tex Johnson encountered on the test flight. Yeah, but critically, the American Airlines pilots weren't prepared for this. They hadn't been told about the 7 0 7 susceptibility to Dutch roll. And so when they encountered the Dutch roll, they're not prepared. And the 7 0 7 flipped over on its back, hit the ground and exploded on impact,

And this sets off an internal argument within Boeing on how to address the problem. So some argued that the incidents were due to pilot air and that it was the responsibility of the airlines to operate the plane in accordance with the training manual because this susceptibility only occurred in kind of these strange situations like they were practicing the double engine failure. You know, it was not common and it was outside of the seven oh sevens operating envelope.

But Tex Johnson believed that Boeing had not been totally forthcoming with the unexpected tendency to exhibit this Dutch roll. And he felt Boeing should stand behind the safety of its airplanes.

So ultimately Bill Allen agreed with Tex Johnston and he decided the Boeing would solve the issue at its own cost. So he tells the airlines, Boeing will modify the existing seven oh sevens to add more lateral stability and they're gonna do this at Boeing Zone cost. And eventually the modifications lead to a cost overrun of $150 million on the first batch of seven oh sevens. But it ends the accidents. And fortunately, Dutch roll never jeopardized any 7 0 7 on a commercial flight.

So for me, Steven, this is a critical episode here because paying for the modifications to solve this Dutch role issue shows that Alan has finally transforms Boeing's culture from this snobbish group of engineers who are focused on military aircraft and think they can tell the airlines what kind of plane they need to a more customer centric company that can work with the airlines and ultimately take responsibility for the design.

So it's not clear what decision Allen should make, but the fact that he decides to stand behind the safety of the airplane and compromise the first run, there was a cost overrun on the first run of seven oh sevens, but he does something invaluable and that's build trust with the airlines. Yeah, absolutely.

Or does Boeing need to make it basically foolproof and able to operate in any circumstances once the Dutch royal crisis is resolved? The 7 0 7 is an immediate success with the airlines. It was just the third jet airliner released in service, but it got the formula right and went on to pave the way for an entirely new way to travel.

You know, Steven, we talked about in the past how despite their technological superiority, Boeing had lost out to Douglas with the first commercial aircraft like the 2, 4 7, the Strato liner and the Strato Cruiser. But they finally win with the 7 0 7 and it's an immediate hit with passengers and airlines. The passengers love it because the flights are much more comfortable. Similar to the comment, it can cruise at altitudes high above the weather, so there's not as much turbulence.

The flights are a lot quieter because the drone and vibration of the propeller engines is gone, and then the travel times are much shorter as well. And so the improved passenger experience is really encapsulated in this ad that appeared in Life Magazine called The Coin, the Watch and the Flower. And I'm gonna quote from Sam Hal Verve in his book Jet Age to describe

this ad. The ad depicted a woman in a neat blue dress as well as a fresh corsage, sitting happily next to a boy holding a wristwatch to his ear. A coin was balanced on its edge, so smooth was the flight plus the ad promised. The 7 0 7 cabin will be so quiet, you will be able to hear the ticking of the watch. And the flower you bought when you left will be fresh when you arrive. And so for me, this just sums up the entire improved passenger experience.

It's quieter, it's faster, and it's smoother. And today we really take for granted. Flights may seem a little bumpy sometimes when we're taking off or landing with the turbulence, but you gotta remember prior to that it was much louder and you were experiencing that turbulence the entire time because you were flying through the weather.

And so for all these reasons, the 7 0 7 went on to pave the way for fast and regular air travel and was really the nexus and the beginning of air travel today as we know it. The 7 0 7 for this reason was known as the plane that shrank the world. And shortly after it entered service, for the first time, more people crossed the Atlantic in planes than on ships.

And so for me, Steven, that just encapsulates everything you need to know before the 7 0 7, before jet airplanes travel on propeller aircraft to cross the Atlantic was, you know, something that businessmen used if it was a really urgent trip. Or you know, maybe the president used when he went to do the negotiations after World War ii. But now finally, these planes can fly so much faster and so much more comfortably that that's the default way to travel across the Atlantic.

This also signaled the beginnings of the transition from the luxuries of the golden age of flying to the mass air travel focused more on economical and widely available flights that we recognize today. And for the first time, led by Pan American and one Trip Airlines started to offer a tourist or economy class. 'cause basically before this, all flights had just been first class. So just to put into perspective the dramatic change in flight times and flight cost.

I wanna kind of break down a trip from New York to London in 1946 on a Douglas DC six, which was the state-of-the-art propeller aircraft. This would take about 15 hours by 1960, just 14 years later, flying on a 7 0 7. You could accomplish the same trip in seven hours, and it would be a direct flight. The propeller driven aircraft cost would've been about $11,000 in 2020 $5 to cross the Atlantic.

So jet lags not an issue. But if it's only seven hours, you can, as they said, have breakfast in New York and dinner in London. And so jet lag is a issue for the first time. But then just to put a cap on this idea, Steven, today, a flight across the Atlantic from New York to London on a modern jet liner like the 7 87 still takes about seven hours.

The cruising speeds are about the same, so it takes about the same amount of time, but the price has decreased from in 2020 $5, 4,500 to fly on the 7 0 7 versus today I looked up prices. It's about $700 to get a flight. Yeah, that's incredible.

And all the changes in air travel since then have basically been in reducing cost. And so just to summarize the outcome of these dramatic changes in how the airlines operate, the lower cost in the 1960s, after the introduction of the 7 0 7 international air travel would grow at a rate of 15% per year. Yeah, that's a huge increase in anything but 15% per year in increased air travel is just an explosion in air travel, right? Yeah, absolutely.

And with the success of the 7 0 7 Boeing is the leader in this new and growing market of commercial aircraft. Capitalizing on the success they would go on to produce several successful variants to extend their market share using the same 7 0 7 fuselage and kind of the same idea of the 7 0 7, they would develop the 7 2 7, which was a slightly smaller airplane focused on medium haul domestic flights.

They would make an even smaller airplane called the 7 3 7 for these short range flights out of small airports. Interestingly, another famous adaptation of the 7 0 7 was to be used for Air Force one flying the US President. So it's kinda interesting how this happened In the mid fifties, Americans were embarrassed and it was kind of a, a public scandal when Soviet Premier Nikita Khrushchev became the first head of state to fly on a jetliner, the Soviet Tupelo TU 1 0 4.

When this happened, it's like I said, a bit of a scandal. And so the White House immediately ordered three modified seven oh sevens to serve as Air Force one, and this plane went on to serve presidents Eisenhower through Reagan as the presidential transport.

Okay. But eventually Boeing would go on to drive all of its competitors, Douglas and Lockheed, out of the commercial airliner industry. And so McDonald Douglas eventually actually merged into Boeing in 1997. On paper. This looked like a merger where Boeing had the upper hand. But in reality, a lot of people in the industry say that this was kind of the beginning of Boeing's present day decline and troubles. Because a lot of the cost-focused management techniques and some of like the cultural.

Rot, you could say from McDonald Douglas was infused into the Boeing company and started a big cultural shift from the Boeing that we talked about in this story.

And then after that, he would go on to lead Boeing's Supersonic transport project, which would be known as the Boeing 2 7 0 7 Tex Johnston, the kind of crazy barrel looping cowboy test pilot. Unfortunately for him, as Boeing became more profitable and more corporate, Johnson's freewheeling like Cowboy way of doing things was not welcome. Bill Allen never really forgave him for the dash 80 barrel roll episode and how he almost cost the company at that time.

And finally, after years of suffering under Douglas as the leader of the commercial airline industry, he got to see Boeing overtake Douglas for the dominance of the airlines business. Bill Allen would continue to serve as president of Boeing until 1969, and then he would lead as chairman until 1972 when he would retire.

It's hard to underestimate Bill Allen's impact on Boeing, but to try and sum it up during his tenure, he increased Boeing's valuation from just $14 million to 3.3 billion when he left. That's incredible. That's over what, 200 x?

Yeah. Yeah. He drove a massive amount of value, and he wasn't even done with the 7 0 7 because in the late fifties, after the incredible success of the 7 0 7, Alan is already looking to the future and another gamble that would submit Boeing status as the world's premier commercial aircraft manufacturer. So despite the success of the 7 0 7 international air travel still remained primarily a luxury for these wealthy businessmen, celebrities, and politicians.

With the introduction of jet aircraft, wealthy travelers became known as the jet set, and they were photographed flying in these designer clothes, still sipping their glasses of champagne on their way to exotic playground destinations like Rome or Rio de Janeiro. But for the average person, crossing the Atlantic by air was still only a dream, even as the 7 0 7 was shrinking the world.

Bill, Allen and Pan Am president one trip, were already making plans for their final act, an airliner more than two and a half times the size of the 7 0 7, that would finally bring the dream of quick and safe air travel to the masses. So this is the part of the show now where we break down some of the themes and takeaways that we learned from the story.

And to start us off, Steven, I wanted to kind of explore this idea of what led to Boeing's success in the jet age when they had failed three times before in the propeller age to be successful with commercial aircraft. And for me, there's kind of three key ideas, and I'd like to get your feedback on these. The first, and I think the most important is, you know, I was trying to think about like what changed because Boeing had tried with three different aircraft to beat out Douglas.

They'd all been failures, and then what changed? So kind of the easy answer would be to like, well, there was. This new jet engine technology and Boeing was more technologically advanced and that's how they were able to win out. But I don't think that tells the full story because even in their failures, Boeing had been more technologically advanced. You know, the 2, 4 7 was one of the first all metal airplanes with a mono wing design.

They had the first pressurized airliner, but they still lost out to Douglas. So I don't think it's just technology. I think the key difference here was leadership, and I think it was Bill Allen and specifically I think Bill Allen saw the potential for Jet Airliners. You know, he took that flight on the XP 47 he saw for himself and he had this vision and he gambled on it.

He committed the company to it and he was most importantly willing to change the company's culture to adapt to the evolving aviation market.

originally a company where they just sort of built their own products and expected customers to like them. But it seemed in, for the 7 0 7 was the first time where they kind of pivoted to listening to customers. All the airlines wanted a wider fuselage and then at least Pan Am wanted more range. And so, yeah, it just struck me as the first time Boeing started listening to customers. And that was a direct result of this culture change that Bill Allen initiated.

But for me, what really stuck out with Bill Allen is when all the chips were down and he had to, you know, spend all this money to redesign the fuselage, or he had to spend all this money to redesign a new wing or to take accountability for the Dutch roll incident, he ultimately chose to go with the customer centric approach and to push back on some of the more senior engineers in the company. Yeah, I absolutely agree.

The other variable in their success, I think is important too, is their commitment to r and d and safety. You know, they continued to be an industry leader in research and design with the swept wing design, the potted jet engines. They had been great at this before, but they continued into the jet age and so, you know, it's difficult for a technology company to always be hitting that next technological wave.

They started out strong with the, the pressurized airliners and some of these advances, but they continued that with the swept wing design and really hit the jet age too, and kind of reinvented the company. You know, they were successful with like military bombers and propeller aircraft, but they had to reinvent their approach to be successful in the jet age.

And then finally, for me, I think it's difficult to measure this factor, but I think the rivalry with Douglass did play a little bit into Boeing's success.

You know, just in the US there was Boeing, Lockheed, and Douglas, and then there was also De Haviland and other companies around the world. So there was much more competition and so I think probably better for the airliners 'cause just like one trip did, he kind of played these airliners off of each other to get the plane that he wanted. I think less of that today since there's only two major manufacturers.

What do you think, Steven, anything else you think contributed to Boeing's success when they had failed so many times before?

Also, I guess to your point, like the bold decision making of Bill Allen and his sort of strong leadership and ultimately A CEO who was willing to touch grass and like literally sat on the XB 47 and experienced it for himself.

We're gonna create something that they didn't even know they wanted. And for me, that's kind of like Boeing with the jet airliner. When Alan commissioned this prototype, the dash 80, the comment had just had these spectacular failures and there wasn't really much demand at all or any customers for jet airliners, but they built one anyways. But then the caveat to that too is you can't just be kind of arrogant and say, well, we're gonna build what the customers don't even know they need.

They don't know what they want. Once you have that initial idea, you need to continue to iterate to get customer feedback, because in addition to releasing the first jet airliner, Boeing also worked with their customers to do things like widen the cabin, improve the range by creating a larger wing.

So to me it's this really interesting interplay between when do you create something that nobody has asked for versus when do you try to optimize and solicit customer feedback to improve a design that you already have.

So Will, another idea that I thought was interesting from this story is sort of like, when do you want to build a product from scratch versus building on top of something that already exists? There's a sort of tension between the two because if you build something completely from scratch, you can spend a lot of cycles sort of reinventing the wheel.

But if you build on top of something that already exists, you might save some of those cycles of reinventing the wheel, but you're also marrying yourself to sort of legacy to techniques or product features that are no longer relevant in the new product that you're kind of shipping. And I feel like we kind of saw that here with the 7 0 7.

It's been kind of subsidized by the government and you know, that they got funding from the military to initiate the project. And so it's a lot easier to kick off a commercial plane if it's just a derivative of the military aircraft. But kind of to your point, you keep those gremlins or problems or you know you're trying to fit a square product into a round hole.

I think at the end of the day here, the, the, the sort of takeaway here is don't try to build a commercial passenger jet on top of a military bomber, but maybe it's okay to build a military bomber and a commercial jet on just a generalized platform.

They also had to sell it and advertise to people and make the public believe that it was the tallest building in the world. And we see that again here in the 7 0 7 story when with all these failed commercial airliners, Boeing had the best technology, but they didn't sell it to their customers, and they didn't do a good job of telling that story. And so Douglas, who was good at selling to their customers, was able to leapfrog Boeing even though they didn't have the technological superiority.

And they did a lot of these big events. The barrel roll over Lake Washington, I think would fit into this category too. And so they really try to sell the airplane, not just on its own merits as a technologically advanced jet liner, but they actively kind of court the airlines and put together like for the first time, it seems like to me, like a real marketing department at Boeing.

And even today, every smartphone is kind of a clone of the iPhone in a lot of ways. Yeah. Just like some micro iteration on that original design 20 years ago. Yeah. It, it set the design and like the overall idea for this entire smartphone paradigm. So it's, it's really interesting to me.

'cause I think with the iPhone and also with the seven oh seven, you can go to like these simple decisions made by just a few engineers that had an outsized impact just because it was the first jet airliner, they were doing something that had never been done before. So like, for example, the potted engines under the wings, that was a, a relatively straightforward idea that the engineers came up with.

But at the time they didn't know that all commercial airlines basically to this day have potted jet engines under the wing. But it also to me, really highlights how well they got it right with the design of the 7 0 7 because it's been like this evergreen design.

And to me that's the ultimate test of a design is that thousands and thousands of engineers have iterated on commercial jet designs over the years, but they haven't come up with anything better than some of these very fundamental concepts.

We didn't talk about this too much during the story, but Alan also sold the initial seven oh sevens at a loss to gain market share and establish Boeing as a key player. So I think this is just a really good example of how Alan, he's been with the company for a long time. He's part of the Boeing family, so to say. He's not just this transplant CEO. And so I think that allows him to take the long-term view. You know, he has grown up with Boeing. He wants to see it become a great company.

He's seen the humiliations of losing out to Douglas and so he's not interested in quarterly financial results or boosting the stock price. And he is able to do a lot of decisions that I think A CEO that is focused on the short term wouldn't be able to like betting the company on a big project, like foregoing short term gains to capture market share and eventually create Boeing into the duopoly in the commercial jet industry.

There was a lot of trust in Bill Allen because he had been with the company so long and there was a lot of, like basically the board of directors ultimately deferred to him because he'd been around so long. He had this vision for the company that A CEO who is just airdropped in, wouldn't be able to have. Yeah, and I imagine

Like I said, there was $150 million deficit on the first run of seven oh sevens because Bill Allen said, no, we're gonna stand behind our airplane. We are ultimately responsible with the safety. The buck stops here basically. And that's a really long-term view because you know, yeah, he made up for it on the back end with more Boeing sales. But if he had deferred and said, no, actually we really need to pump our stock price this quarter, so we're not going to accept a loss here.

That would've been a short-term gain, but they could have really lost out on dominance of the commercial airline market. And what's even more incredible here to me, is that this is in stark contrast to Boeing as a company today. So I wanted to bring in the recent issues at Boeing with the 7 37 max eight, and the MCA system. Just a little bit of background. So MCA stands for Maneuverability Characteristics Augmentation System, and it's kind of eerily similar to the Dutch roll incident.

Basically this new generation of 7 37 called the Max eight, it had this system on board called MCAS that was supposed to correct this tendency for the airplane to pitch up in certain situations. But similar to Dutch roll and the jaw dampener, Boeing didn't tell pilots that the system was onboard the plane. You know, in this case, they were concerned about reducing the amount of new training that pilots would need. So they kind of covered it up and left it out a bit.

But then unfortunately, it was passenger flights that this vulnerability came to the surface and a couple of flights crashed because the MCA system fired incorrectly and drove the nose of the airplane into the ground. But in stark contrast to Bill Allen, Boeing did the exact opposite. They pushed back and said, you know, the pilots should know what to do. It's in the manual. They just need to take this procedure. It's not Boeing's fault. We're not gonna change anything, et cetera.

And as we can see, you know, the idea that comes to my mind is this quote that it takes years to build a reputation, but just five minutes to lose it. And Boeing basically throws away their reputation in this example, because it's revealed in later crashes that even Boeing's fix for this sim a system wasn't enough. And they eventually had to ground all the 7 37 max eights.

You know, anyone who falls to the news, Boeing's reputation is really in shambles now because unlike Bill Allen, they kind of pushed back and they didn't assume ultimate responsibility for the safety of the airplanes. So Steven, we've talked a lot about the transformative 7 0 7, kind of ran through some of the ideas that we learned, but I'm curious what sticks out to you after listening to this whole story? What can't you stop thinking about?

Yeah, they really defined the new generation of airplanes and the fact that there's been so little change just shows you how much of a success that really was. Yeah, absolutely. That's a great point. How about you will, what can't you stop thinking about from this whole incredible story of the 7 0 7? You know,

Yeah. But then he goes on to be super successful. He's exactly what Boeing need, and really importantly, he transforms the entire culture of Boeing and sets it up for success with the 7 0 7, but eventually the variations of the 7 0 7. He's instrumental in the 7, 4 7, and he really created Boeing and the airliner industry as we know it today.

So just really impressed with Bill Allen's unassuming leadership style, but how he was able to drive results and change a culture, which is not something that's easy to do at a big company like that. So ultimately, I think Bill Allen is one of these great leaders that we don't hear about much today because he is not a really flashy personality. But he's a great leader and sometimes the greatest leaders are who you would least expect them to be.