Boeing: The perfect story of what’s wrong with America’s economy?

Gautam Mukunda: Oh my goodness, Boeing is the leadership issue. So I have been obsessed by Boeing for, I think, almost 10 years now, largely because what has been going wrong at Boeing for, as I said, more than 10 years, was so perfectly emblematic of everything that has been going wrong in the American economy for much longer than that. But Boeing was just sort of the perfect story that explained everything. Hi, my name is Gautam Mukunda. I am the author of Indispensable: When Leaders Really Matter and Picking Presidents: How To Make The Most Consequential Decision in the World. I have taught on leadership and have been on the faculty at both Harvard Business School, the Yale School of Management, and Schwarzman College at Tsinghua University, among other places. I wrote an article about the financialization of the American economy that came out in, I think, 2014, about how the dominance of finance over the rest of the economy is destroying sort of, you know, the rest of the economy. And it started talking about Boeing because Boeing was the case of how this went wrong. Right. And then when I revisited the topic four years ago, I went back and I started talking about Boeing because Boeing was the example that we could use over and over again of every kind of the perfect example of making the worst possible decisions over and over and over again and being rewarded by Wall Street for it up until the very last second when everything falls apart.

Simone Del Rosario: Tell me about this. Why is Boeing the perfect example of this leadership failure and what I’m hearing from you is a lack of proper priorities?

Gautam Mukunda: Yeah, so let’s go back in history a little bit. So why is Boeing so special? Why is Boeing so iconic? If you tell the story of aviation in the world, you are essentially telling the story of Boeing. That is how dominant it is, and it has been historically in the field. And what it was, the people would joke, but it was actually basically true, that Boeing was a collection of engineers dedicated to making great airplanes. And they would incidentally make money in the process of doing that. And in the process of doing that, they made enormous amounts of money because it turns out if you make the best airplanes in the world, you make lots of money. So then in the 1990s, when the United States had massive defense cuts because of the end of the Cold War, the United States government essentially forced Boeing to merge with McDonnell Douglas. McDonnell Douglas was a rapidly failing defense contractor. Boeing was an incredibly successful manufacturer of both civilian and defense airplanes. In the merger, one of the reasons, maybe the most important reason McDonnell Douglas was failing, was because it was run not by engineers, but by finance people, right? People who really, really cared about short-term profits and earnings per share. And they cared about that a lot more than they cared about airplanes. And so you took a bunch of engineers and a bunch of finance people and you put them in the same company. What do you think happens? The finance people, the ones who ran the failing company ended up in charge of the whole organization. In fact, the very bitter joke at Boeing by the time this was all over, was that McDonnell Douglas bought Boeing with Boeing’s money. So you took a successful company and a failed company and you had the people running the failed company ended up running the whole thing when it’s all over. This is not a recipe for success to put it mildly, right? But it gets worse from there. Because at the least, McDonnell Douglas was something that looked like a successful, you know, like not successful, but at least it was an aviation company, right? Like they built airplanes.The F-15, which is a McDonnell Douglas airplane, is probably the greatest fighter plane ever built. Like, they knew how to build airplanes, even if they weren’t nearly as good at it as Boeing was. But after a while, they went in and they got Jim McNerney, who was the CEO of 3M, and they brought him in to run Boeing. And what he was, was a Jack Welch product. He had been brought up in the Jack Welch system under GE. He went to 3M, which he crippled. And then he went to Boeing, which for all practical purposes, he destroyed. Because McNerney wasn’t an airplane guy at all, right? He was a Jack Welch guy, where the only thing that mattered was hitting those quarterly earnings, hitting that earning per share number, keeping the stock price going. That was what he focused on, not building airplanes. Right? So Boeing moves its headquarters from Seattle, where it’s right next to all the manufacturing, and it moves it to Chicago. Why? Because the CEO at the time says, I don’t want to be distracted from my job by the details of making airplanes. I am just dying to get this guy in a room and just ask him, what did you think your job was? Right? I mean, if the job of the CEO of Boeing is not building airplanes, what is his job? And I have genuinely no idea what his answer to that question would be. But McNerney essentially came in, right? And he said, we’re going to make this a GE-type style organization. And Jack Welch, the best biography of Jack Welch is named, The Man Who Broke Capitalism. Right? The man who broke capitalism. That’s why it has that title. And so Jack Welch took GE, when he took it over, the world’s greatest industrial corporation, and he turned it into a hedge fund that happened to own some factories. And it wasn’t even very good at running the factories. And he managed to keep the stock price going up because Wall Street loves the sort of returns that financial companies can produce. And he could pretend that it was an industrial company. It was like making money like a financial company, but he could pretend that it only had the risks of an industrial company. So he got this fantastic earnings multiple. GE stock became the most valuable company in the world. Jack Welch got paid almost a billion dollars to be the CEO of this company. But when he left, it was a hollow shell propped up by financial returns and accounting fraud. Right? And so then the financial crisis exposed what a catastrophe that was. Jeff Immelt had 16 years to put the pieces back together. He failed. Right? We went through one and we finally end it with Larry Culp having to unwind the whole thing. And Culp is, you know, one of the best CEOs in America. And he managed to sort of salvage something from the wreckage that looks like a very successful company. But that’s what he was doing. He was salvaging from the wreckage. That’s Jack Welch’s story. That’s what his proteges have done all over the world, all over the place. That’s what McNerney did at Boeing. And guess what? After McNerney, right? We had another Boeing CEO for a while. He was actually an engineer, but he was a product of this culture. And then they had Calhoun, who famously was also a product of GE. In fact, the books about GE used to say that of all of the Jack Welch guys, the one who was most similar to Jack Welch was Calhoun. So this is a story. So it is a story about leadership because you can point to the CEOs who failed over and over again, because their focus again was on making numbers, not making planes. But it’s not just a story about leadership. It is a story about a larger pathology in the American corporate sector that just devastated the American economy and turned it from an economy that was focused on making things to an economy that was focused on playing games with spreadsheets. And that story is why Boeing is the perfect example of everything that’s gone wrong. And Boeing is both maybe the worst example of it, but also the most pressing one because we all fly on Boeing airplanes and we really would like it when they don’t fall out of the sky.

Simone Del Rosario: Yeah, I would say that the scariest part about a Boeing that is unraveling is the fact that we rely on Boeing so much as a company to keep us safe, to get us where we need to go. And that’s a terrifying reality when you continue to see this massive company go after crisis after crisis within their own ranks, outside, safety issues. And I think about, what are the options out there? We really only have two viable options in the world. You have Boeing and you have Airbus. So what is the solution when you’re so heavily dependent on two companies to do it right? And one of them is going through a series of catastrophes.

Gautam Mukunda: So the solution is we have to fix Boeing, right? I mean, Boeing up until fairly recently was, every year, America’s largest exporter, right? It is a national champion. It is probably the most important manufacturing company in the United States with, you know, like, the only argument you could make for a rival for that is like Intel, which is a completely different type of manufacturing, right? And Intel is having its own disastrous struggles right now. Rooted, by the way, in the exact same causes, which is worth noting that Intel, the story of Intel’s failure is essentially indistinguishable from the story of Boeing’s failure. But in the case of Boeing, the answer is, there is no alternative but to fix Boeing because the United States has to be a player in very sophisticated aviation manufacturing. We should be very clear as to why that is, right? What Boeing does and Boeing suppliers do is push the absolute technological limits of manufacturing. If you want to work titanium, if you want to work carbon fiber, you start out doing that in the aviation sector and the technology that you develop in doing that spills over into the rest of the economy. So if you want the United States to be a world-leading manufacturing country, and that might be the only thing that both Republicans and Democrats agree on right now, the United States needs to be that, you cannot do that without Boeing. So the process of fixing that, right, is multifold. So one is they do have new leadership. Everyone in the industry seems to think that he was a really good choice. Right. I think, I think like, he has a background in aviation. He has success in operations. I think a lot of people were really hoping it would be Larry Culp, but Culp just did the genuinely heroic work of turning GE around. He probably wants to sort of enjoy the fruits of that, not take on another gargantuan turnaround project. If I were in his shoes, I would say like, you know, one of these is enough for a lifetime. That’s okay. But Ortberg, right? This is a good start, but we need to do a lot more than that. So one is we need to re-empower the FAA. A lot of the failures that happened in Boeing were because the American government had so crippled its own regulatory abilities, so defunded the regulatory agencies, so disempowered them and sort of outsourced all of this management to the companies. The idea that you could allow Boeing to regulate the safety of its own airplanes was an idea that only an economist could believe was the right one, right? Like this was a disaster and it was a disaster. It was a self-inflicted disaster. We have started to reverse that project, but I don’t think we’re done on it. There’s a lot more to be done there, right? But the second –

Simone Del Rosario: Let me interject before you get onto the second. So don’t lose your second thought here. But my question is, how did that balance happen? How did we allow Boeing to get so big that the government just trusted them to do whatever it is that they needed to do to the point that we are seeing such safety failures and really kind of drawing the curtain back on the type of culture that’s been there at Boeing, which has really changed away from, you know, safety and good engineering to we have all these whistleblowers talking about how these things were just pushed aside for speed.

Gautam Mukunda: Yeah, so the issue isn’t that we let Boeing get so big, right? We didn’t specifically cut these favors to Boeing. We did this across the board, all across the United States government, right? What did Ronald Reagan say? Government is not the solution, government is the problem, right? Now, sometimes government is the problem. I would be the first person to say that. I am a very enthusiastic capitalist. But sometimes government is the solution, right? And if your only answer to what the role of government is it should always be smaller and weaker, then you are just as wrong as people who say that it should always be bigger and stronger.

Simone Del Rosario: Don’t you think there was a particular blind eye to what was going on with Boeing? Like this is a company that has innovated so much, the government can’t possibly really know exactly what it is they’re doing over there and how they’re able to come up with these innovations, so just let them work.

Gautam Mukunda: I think people had faith that Boeing would get it right because it had such a long history of always getting it right. Or when it makes a mistake, sort of self-correcting and doing it because it had that culture, because it had that engineering excellence. Because like that’s what engineers do, right? Like they solve problems, they get it right. That is the culture of engineering. And I would say, we cut Boeing more slack than we did almost any other company, because it had earned more slack than almost any other company by being so good at what it did for so long. Right? Not just on the civilian side, but on the military side, the B-29 that dropped the nuclear weapons on Hiroshima and Nagasaki was built by Boeing. Right? Like these guys really changed the world. Not once, but many times over. So it is true that we gave more slack to Boeing than we did to almost anyone else. But that is just the most egregious example, again, of a much larger problem. If you look just broadly in the defense sector, for example, many of the problems that we’ve had, as you see in the American government, right, defense programs, always end up massively over budget and massively delayed. It’s because we essentially outsourced much of the management of these programs to the companies. We used to have huge pools of people within the government who knew how to manage complicated programs, and we essentially forced them all out. So it’s a great question because it’s exactly the same, right? It’s the same thing. Boeing is just the most egregious example of a much larger problem.

Simone Del Rosario: Talk to me, is Kelly Ortberg the right guy? You said people are feeling like he is. He is replacing a finance guy. He does come from an engineering background and has exhaustive experience in aerospace and also was critical in a merger, which I think they like from the financial side. Is he the right guy or can one single CEO make a dent in the culture that has been set at Boeing for a long time?

Gautam Mukunda: Sure, I absolutely believe one single CEO can do it. If I didn’t believe that leaders could have such a large impact on organizations, then I would have wasted my life, right, since I’ve spent most of my professional life studying leadership. And we have plenty of examples of that, of a single CEO doing that. The best example, ironically, is from Boeing. It’s Alan Mulally, who left Boeing, went to Ford, and rescued them before the financial crisis. And if you want to know what encapsulates, in a single sort of paragraph, why Boeing was a disaster, it’s that it had maybe the best leader in American business working inside Boeing and he had to go somewhere else to be the CEO. I mean, what’s a worse indictment of a management culture than that? So yes, Mulally did it at Ford, you know, Culp did it at GE. I absolutely believe that someone else can do it. I don’t envy Kelly Ortberg, this job, right? It is herculean because Boeing has been on the wrong path for a very, very long time, for more than, you know, more than 24 years since the merger. But yes, he has the right background. He has a history of doing these things. And I’ll say this, he has a safety net, which no one’s going to talk about, but exists, which is the U.S. government is never going to let Boeing fail. Right? It’s not, it is a national champion. It is far too important. So if at the end of the day, things go badly and they need to be bailed out, the U.S. government is going to go be there for them because there simply is no other option.

Simone Del Rosario: How are these failures impacting their government operations, their government contracts? A lot of the public failures that we are seeing are on the commercial side. But now we’re seeing an FAA and a Congress that is really waking up to all of the repeated failures, especially safety failures happening on that commercial side. How might that impact their relationship with the government?

Gautam Mukunda: So the first thing I’d say is, well, the failures that make the front page of the newspapers are on the commercial side. The failures on the defense side are just as bad. They are just as serial. They are just as constant. They are disastrous. Boeing, for example, had the contract for mid -air refueling tankers, right, and was years behind schedule and unbelievably over budget. And they delivered planes that the Pentagon actually had to sort of declare a safety hole because they found debris in the fuel tanks, right? Not once or twice, but over and over and over again. So many of those most egregious stories that are coming out of Boeing are actually not from the civilian side. They’re just as much from the military side and from the government contracting side. And we’re seeing right now, right, we have two astronauts trapped in orbit because Boeing failed in a task that SpaceX has been able to execute successfully on for quite a long time. So I think everyone’s assumption. So if Boeing is found criminally liable for violating the consent decree that it agreed to after the 737 max crashes, in theory, Boeing could face severe sanctions and limitations on its ability to work with the government. I think the common belief is that, that will be waived just because Boeing is so critical as defense contractor that the U.S. government essentially doesn’t have the option of not buying from them. But, that being said, so I talked to people, I have, you know, when I have written articles, it just blows my mind. I have written articles about Boeing and had people reach out to me as whistleblowers saying like, this is my experience at Boeing. This is how bad it is. Like, however bad you think it is, and you’ve been beating this drum for 10 years, it’s actually worse than you think. Right? I had somebody prepare for me like an hour-long PowerPoint presentation that he took me through of what he had seen while he was at Boeing. It was nightmarish. And so what I sort of emphasize from that, right, is the government side will only be fixed when Boeing as a whole is fixed. But within the government, right, the defense, the program managers who used to kind of trust Boeing to get it right, that is gone. And they will tell you they do not trust Boeing to get it right. So, you know, I say a very close friend of mine was a very senior program manager in the government on a gigantic government program. When he saw me writing about the stuff, he called me up and said, let me tell you about my experiences with Boeing. And they were awful, right? So that word has gone around and that trust has eroded quite deeply. And I think it’ll be, like even assuming Ortberg succeeds, it will be a generation before that is rebuilt.

Simone Del Rosario: Because you have these contacts, because people are coming to you from behind the scenes to say, this is my experience at Boeing, this is what it’s like for me working there, this is what I see. Can you describe to me what is the culture there? What are you hearing about what it’s like on the ground to be working at Boeing and trying to pull off these massive projects?

Gautam Mukunda: Absolute obsessive focus on making day-to-day numbers and a complete unwillingness to hear of anyone in senior management to hear from anyone lower down that this is not working, right. There’s absolute unanimity, everyone I have spoken to, and you read about this, right, this shouldn’t shock you if you’ve been reading about Boeing, right, that these guys are not interested in anything other than people below them telling them everything is fine. All right. It is a deeply pathological culture.

Simone Del Rosario: So what is Ortberg’s to-do list? How can he right this ship?

Gautam Mukunda: So he started off in the right way. And I was thrilled to see this, where he said, I’m going to work out a Seattle because you know, I need to be close to the plants and my job is making planes. That’s the ideal best start, right? Good job. The second is I think he needs to come out and say like, Hey, this is going to be a long problem, right? Like, we are the greatest aviation company that has ever been created and we will be that again, but we’re not going to be that again next quarter. So Jeff Bezos’ first investor letter to shareholders, I always talk about it to my students, right? Because he says, look, we are going to run this company for the long term. And if you are not comfortable with that, you should invest with someone else, right? He needs to be willing to say that to investors, right? I’m going to deliver great results to you, but it’s not gonna be the, great financial results aren’t coming next year. Because if I did deliver them next year, I wouldn’t be doing my job. I wouldn’t be fixing the company the way it needs to be fixed. If you are not comfortable with that, you should invest with someone. I hope he uses language that explicit and pushes back on that. Once he does that, once you’ve done that, you’re not just one engineer at the top, one CEO. He needs to bring these people from all through the company, either internal, and there’s still great engineers at Boeing, right, whether it’s internal promotion or bringing in from the outside, he needs to rebuild a culture that is centered around, our job is making great airplanes. Right? And sort of say, if you are not interested in doing that, don’t work here. Right? Like just say, if what you’re really motivated by is making your bonus, there are lots of companies where you can do that. Here, you should be interested in making something great that flies. Third, what I would say I really think he is, you rally people around doing great things. Boeing used to be an institution that people were loyal to because it was Boeing, because it was one, because it treated its people really well. That loyalty has been eroded deeply, right? So both in terms of reestablishing it, like you have engineers going out on strike at Boeing, right? Not because they want better pay, but because they were just trying to be free to do their jobs better, right? If I were him, I would be sitting down with the head of that engineering union to be like, ask them, what do we need to do differently? Because it’s pretty clear that you guys were sending warning bells when no one else was. So maybe you have some good ideas about how to fix it. But what he needs to do is announce a new airplane. So Boeing has not made a new clean sheet airplane since the 787, which was a really long time ago. Calhoun amazingly said that Boeing would probably not do another one for another 10 years. And he said, we wouldn’t even start one for another 10 years. And remember, once you start one, it’s another 10 years after that before you actually launch the plane. So he essentially said that two generations of Boeing engineers were never gonna build a new airplane. So there’s a reason Richard Aboulafia, who is the best aviation analyst in the world, Richard would say that, you know, Calhoun was the best Boeing CEO Airbus could have hoped for. Right. And, in this particular scenario, what he needs to say is, you know, one is they need to launch a new airplane because if they don’t, they’ll forget how. The particular skills involved in building a new airplane need to be refreshed every generation or you just will lose the skill, the capacity to do it. But second is, you could get people excited. What engineer right now, what brilliant aeronautical engineer who had the choice between SpaceX and Boeing, would pick Boeing? Right now, I think that would be a hard, you’d be really, really hard pressed to find someone who would do that. He needs to turn Boeing back into where it’s the first choice, not the last one. And that would come about from saying we’re gonna build a new airplane and it’s not gonna be, you know, copycat of Airbus’ latest thing. It’s going to be new and it’s going to be great. It’s going to be better than anything else anyone else in the world could build. It’ll be the airplane that only Boeing could build. And there are openings in the market to do that. He has an opportunity.

Simone Del Rosario: Okay, so what does he do about the 737 MAX?

Gautam Mukunda: I mean, the 737 MAX is like, it’s where Boeing’s money comes from, right? It is a phenomenally profitable airplane. My guess would be that that airframe is at its limit, so they cannot iterate it any further, but they’re gonna keep selling 737 MAXs. They are flying again. They have the two, the nine and the 10 that they still haven’t gotten FAA approval for. My assumption is that they will get it, but they also need to be very explicit that this is, you know, this far and no further, right? We have taken that airframe not just to its limits, we’ve taken it far past its limits. And so obviously it is demanded, they need to have absolute assurance that they have made the fixes necessary. The note that the 737 Max’s safety record is like something you would see out of the 1960s. Its rate of serious incidents is something that no other equivalent modern airframe even approaches. So they need to get that under control to put it mildly. That is a very, very serious problem. This is not just a story about two airlines in Africa. There are many, many similar incidents. But once they do, they say, look, we’re going to keep, though obviously the world’s aviation markets demand seven more 737 Max’s, but we’re going to have something better and we will have it as soon as we possibly can.

Simone Del Rosario: You talked about how important it was that Kelly Ortberg said, I’m going to work out of Seattle. This is where the planes are built. I’m speaking to you as someone whose home base is in Seattle. So I’m very familiar with the tension that was created by Boeing leaving Washington state. How much of that led to Boeing’s problems? How much of that move disrupted a culture at Boeing? And would there be a move back?

Gautam Mukunda: I’d say it is both cause and symptom. Right? So clearly taking the leaders of the company and moving them out of Seattle did not help the situation. But those leaders of the company would not have helped the situation if they were in Seattle anyways. Right? You only make that move if you’re not interested in the planes in the first place. Right? I was saying, you know, if Alan Mulally had been the CEO of Boeing when this kind of problem happened, he would have been out on the shop floor with a wrench saying, you know, tell me what went wrong so I can help you fix it. Right. Like, you couldn’t imagine him, you know, that his answer would be, let’s give a press conference from Chicago or Virginia now, which is where they just moved again. Like it’s just inconceivable that he would have done that. I think Alan would laugh at you if you suggested that that would be there. His response would be anything but get out on the shop floor. I would love to see them move the headquarters back to Seattle. I think that would be a great idea. I don’t know if he’ll be able to do that in the short term. And so many of Boeing’s profits are driven from its government business that there’s certainly an argument for them having a very large presence in Northern Virginia. But at the end of the day, Boeing is the company that built the 747. That’s what made Boeing Boeing in the eyes of the world. And I think their focus should be back in all the plants in Seattle. The other thing I’ll just sort of add to that is one of the many legacies of the GE sequence was putting the plants over and over again in non-union states, so they didn’t have to deal with those union workers who would, you know, insist on having time to do their jobs right and sort of inconveniences like that. I would think it would be really helpful for Boeing to say, we’re not going to do that anymore. Like, we’re going to work with our unions, we’re going to build our planes in Seattle, we’re going to build planes in places where the workers are, you know, have enough independent stature that they can tell us when we’re making mistakes.

Simone Del Rosario: We talked about this a little bit before, but I’ll go back to this idea of a duopoly in the skies. We have Boeing and we have Airbus. They’re not in antitrust trouble because they’re not stifling competition. Why can’t there be more competition in this space?

Gautam Mukunda: So I mean, there’s the Embraer, right? So there are companies that are trying to enter this market. But the basic reason, I think, is just that the capital costs of building a new airplane are so gargantuan, and the profitability of them is so marginal, right? So you have to remember, Warren Buffett famously said that when the Wright brothers launched their first airplane, some enterprising capitalist should have done us all a favor and shot it down. Or Richard Branson famously said, the best way to become a millionaire is to start out as a billionaire and then invest in an airline. Right? This is an industry that for all of its wonderful spillover effects and how excellent it really is, is sort of historically, economically, unbelievably unprofitable. Most of Boeing’s airplanes have actually not made money from what we can tell, right? So two is probably, I mean, in some economically parational world, it’s possible that two is pushing it, right? The global economy may actually not be able to support more than like one and a half of these airplane manufacturers, given the current state of what it takes to build these airplanes. That may change. Right? Like, like you could imagine changes in technology and have sort of different, you know, new engine technologies, there are lots of things, discussions like that, that might allow a new entrance to enter in that space. But I actually wouldn’t bet on it. Outside of a couple of companies that are in the space right now, there’s a reason that it’s so hard to enter it. And there are a bunch of barriers to entry that make it very difficult to break out of that duopoly system. Your first airplanes always lose money, always. What you’re counting on is what we call the learning curve, right? That as you keep making them, you get better and better at making them and your costs go down and eventually you start making money. But it takes a long time and you don’t always, right? If your plane just fails, right? So Lockheed Martin, which has just exited the civilian aviation market, know, the L-1011, the L-1011 never made money because they just didn’t make enough of them to ever go down the learning curve. You know, Douglas had the same problem. That’s why they exited the civil aviation market as well. So you need a lot of scale in order to actually to make an airplane profitable. Even Boeing, when it dominated the industry, didn’t do it with all of its planes.

Simone Del Rosario: So are you surprised that Airbus hasn’t been able to capitalize on this moment a little bit more to capitalize on Boeing’s failures?

Gautam Mukunda: I mean, they’ve capitalized on it a fair amount, right? They have the largest market share they’ve ever had. If I recall correctly, for the first time in history, last year, there were more like plane minutes of Airbus planes flying than Boeing planes. Like that had never happened before. First time that did. But the answer is Airbus is capacity constrained too. If there’s one lesson that everybody should take out of this, that’s sort of important for lessons for things that go beyond aviation, it’s that manufacturing is hard, right? Manufacturing is really hard. And the more complex a system is, the debt difficulty does not scale linearly, it scales exponentially. So we see this all the time, right? Tesla makes cars that have sort of lots of amazing characteristics, but their manufacturing quality is actually quite, even to this day, even after they’ve been in business for 20 years, their manufacturing quality is pretty poor by the standards of say the big three or certainly by Japanese manufacturers. And it’s not because Tesla’s bad at what they do. It’s because manufacturing is difficult. Airbus is having this problem, right? Like if they could, I’m sure they would love to increase their production by 20 or 30% and make up for all the people who really don’t want to buy Boeing airplanes right now. But they can’t. They are at max and I’m sure, and the investments that it would take to increase their capacity by so much would not pay off for some years. And by the time they scale up, aviation market could look a lot different.

Simone Del Rosario: Final thoughts?

Gautam Mukunda: Boeing is really, really important. And there are individuals who profited hugely from Boeing’s failures, who should be held responsible, at least morally, for what they did. But at the end of the day, this is not a story about individuals. It is about an entire system that went haywire and stopped doing what it was supposed to do, stopped producing, in the case of Boeing, producing great planes, but in the case of the country as a whole, creating an economy that worked for every American and became one that was about playing games with numbers and that profited only a tiny handful of us. Boeing’s problems will not be fixed at Boeing. They will be fixed if we re-engineer the entire economy to go back to the economy that made the United States the best place to live in the world. One centered on actually making things and on services that are value added, not on playing games with spreadsheets on Wall Street.

Simone Del Rosario: What companies right now are headed down Boeing’s path that need to hear that warning more than others?

Gautam Mukunda: Intel. Right. So Pat Gelsinger, the CEO of Intel, he doesn’t need me to tell him this story. He knows exactly that this is the right, this is what he has been trying to do is to unwind this. But Intel, just like Boeing, spent two generations prioritizing short-term shareholder value and not investing in R&D and it’s paying the price right now.

Simone Del Rosario: And who’s lapping Intel because of it?

Gautam Mukunda: And you know, Nvidia, AMD, right? So TSMC out of Taiwan is actually manufacturing chips. And if Intel, there’s a really question, and I don’t know the answer, right, is whether it makes sense for…So the United States must have a leading edge fab, right? It must, it is strategically critical that it have that. At the moment, it doesn’t because Intel has not been able to keep up with TSMC. It has not come close to being able to keep up with that. And had you told anyone when Andy Grove was still alive, that Intel would one day not be the leading chip manufacturer in the world, he probably would have killed them on the spot, right? Like just unacceptable. But now that is just true. Whether it makes sense for Intel to be an integrated company that both designs chips and manufactures them is less clear. And I guess we’re gonna, you know, we need to know more about that. But that question, so I’ll tell you another one that’s not a manufacturing company, but it’s really striking, Amazon.

Simone Del Rosario: Okay, why’s that?

Gautam Mukunda: The experience of shopping on Amazon. I was like a very, very early customer at Amazon way back in the day. And the experience of shopping at Amazon for years was fantastic. You didn’t just shop at Amazon because it had better prices. You shopped on Amazon because it was easy to find what you needed. You could trust the reviews and you get what you wanted right away. And now when you go on Amazon, what you see is hordes of promoted products, some of which, many of which, may be counterfeit. Like the experience of shopping on Amazon has degraded massively. And that is because they are focused on the fact that they can make huge amounts of money from sponsored placements. They can make huge amounts of money from advertising. They can make huge amounts of money by fulfilling other people’s orders without the guarantee of quality that they actually know that they’re selling, right? There are actually cases of American football players who bought, high school football players who bought football helmets on Amazon, and got brain damage because they were counterfeit and did not have proper concussion protection. Right? So if you wanted a company that’s that has learned all of the lessons of Boeing in exactly the wrong way, Amazon’s choice to sacrifice its central competitive advantage of just being a great place to shop for short term profits, however vast they might be, I think that’s a mistake.

Simone Del Rosario: This has been an incredible education. Thank you so much for your time today. I hope to talk to you soon.