Business model of Hyperloop One

Customer Segments

Hyperloop One has a niche market business model, with a specialized customer segment. The company targets its offerings at governments that want to introduce its transportation system to their regions.

Value Proposition

Hyperloop One offers two primary value propositions: innovation and performance.

The company places a strong emphasis on innovation. Besides the groundbreaking nature of its core product, it has developed various pieces of cutting-edge testing hardware. They are as follows:

Blade Runner – A test rig designed with the purpose of testing aerodynamic structures and scaled axial compressor blades in environments with as little as 1/1000 of atmospheric pressure. Powered by two 2,000 CFM Vacuum pumps, it enables the company to perform lengthy tests while concurrently adjusting flow variables. Futhermore, its unique variable throat geometry facilitates testing in speeds ranging from subsonic to supersonic.

Levitation Rig – A test stand kept in an 18 cubic meterr environmental chamber that can achieve as little as 1/1000 of atmospheric pressure. Its rotor can attain surface speeds higher than 300 m/s.

The Big Tube – The company’s largest piece of hardware, it is a carbon steel vessel that is 50 feet long, 12 feet wide, and weighs 70,000 lbs. It is used to validate orifice design, tube design, vacuum pass through design, manufacturing automation, weld design, and more. It is meant to be a central test vessel for all hardware development in the future.

The Tube Lab – A fully-equipped mobile data command center with the latest hardware and software. Set in a cargo container, it obtains information from the other hardware to assist with tube development. It contains data acquisition hardware, test monitoring stations, light hardware fabrication, and two CAD/FEA stations.

The company’s solution is expected to demonstrate strong performance. The system is expected to reach speeds as high as 800 miles/hour (1,300 km/hour) and to have an annual capacity of 15 million passengers. These numbers may be revised even higher depending on development progress.

Channels

Hyperloop One’s main channel is its business development team. The company promotes its offering through its website and social media pages. It has also introduced the “Hyperloop One Global Challenge”, a competition that invites groups worldwide to submit a case for their locations to host the first Hyperloop networks. The case must include economic, policy, and transport considerations.

Customer Relationships

Hyperloop One’s customer relationship is primarily of a personal assistance nature. Governments that are interested in setting up a system contact the company directly for information.

Key Activities

Hyperloop One’s product is not yet commercially available. However, its business model will eventually entail designing, developing, and manufacturing its transport systems.

Key Partners

Hyperloop One maintains partnerships with various organizations in the areas of transportation engineering, infrastructure financing and strategy, architecture, operations, and construction. Specific partners and their responsibilities include the following:

• Aecom – Will work with the company to develop port infrastructure in Long Beach and Los Angeles that reduces delays and emissions
• Arup – Will research possible geographic locations for Hyperloop passenger proposals
• Bjarke Ingels Group – Will develop the capsules that will carry passengers
• FS Links – Will work to create strong transport connectivity between Finland and Sweden
• Systra – Will develop high-speed mobility solutions in intercity and metro environments in Russia, France, CIS, and the Middle East

Hyperloop One will also work with Amberg Group, Cargos Sous Terrain, Arcturan Sustainable Cargo, KPMG, and Deutsche Bahn Engineering & Consulting.

Beyond these companies, Hyperloop One plans to partner with governments in order to ease the introduction of its systems. For example, it will work federal, state, and local transportation authorities and groups to help build a supportive environment for relevant regulations.

Key Resources

Hyerloop One’s main resources are its aforementioned hardware and Tube Lab, as well as its “Innovation Campus”, a 2.5 acre space in downtown Los Angeles, CA where it invents and tests all system components. The company also depends on its staff, which consists of global experts in technology, engineering, and transport project delivery. Lastly, as a relatively new startup it has relied heavily on funding from outside parties, raising $92.6 million from 12 investors as of May 2016.

Cost Structure

Hyperloop One has a value-driven structure, aiming to provide a premium proposition through extensive research and development. Its biggest cost driver is likely R&D, a fixed expense. Other major drivers are in the areas of product development, another fixed cost, and cost of goods, a variable expense.

Revenue Streams

Hyperloop One does not yet generate revenues as its product is not yet commercially available. However, when it does go on the market, revenue streams will likely include sales of the product and associated services such as training and consulting.