(FORTUNE Magazine) – We are coasting through the upper reaches of the night, somewhere between Milwaukee and Chicago, nestled in the cockpit of Vern Raburn's 1979 Turbo Commander. Dispatches from air traffic control murmur in the background as Vern talks. That is what Vern does. He steers the twin-prop plane. He steers the conversation. And his stout frame anchors him as he describes his latest, most fantastic, entrepreneurial adventure. Given his background (Microsoft employee No. 18, general manager at Lotus, CEO of Symantec, right-hand man to Paul Allen), you'd think he'd be launching a daring Internet company. Instead Vern has abandoned high tech to do something potentially more interesting: He is creating a new aircraft company to build small, affordable jets that he hopes will do for air travel what the PC did for computing.

Vern wants nothing less than to open up private air travel to many more people than can enjoy it now. He's not only going after traditional customers--both businesses and wealthy individuals--but also hoping entirely new air-limo services will spring up that can compete with the business- and first-class fares on major airlines. That won't be easy. His company, Eclipse Aviation, is still in the early stages of development. It won't start flight tests until late next year, and then it must win FAA clearance. The FAA also must approve Eclipse's breakthrough jet engine and its manufacturing facility. Vern is hoping to do all this by mid-2003, the earliest anyone would be able to buy one of his planes. But he's up against a 50-year history of inertia in a business filled with the carcasses of countless failed startups. "There is an old adage in the aviation industry," he chuckles as he prepares to land. "The best way to make a million dollars is to start with $5 million."

He should do a little better than that, if only because he is starting with $60 million--all of which he raised privately from a group of "angel" investors, including longtime pal Bill Gates, retired DaimlerChrysler CEO Bob Eaton, and retired Ford CEO Harold "Red" Poling, now the chairman of Eclipse. Later this summer he will seek $150 million more through a private placement with Bear Stearns. Vern also has a secret weapon in Sam Williams, a 79-year-old engineer who is the world's foremost authority on small jet engines. It is Williams who came up with the original concept for the plane, and it is his company, Williams International, that is building the engine that will make the Eclipse jet possible. The engine, the size of a prize watermelon, weighs all of 85 pounds--one-fifth the weight of the lightest turbofan jet aircraft engine on the market today, an engine that also happens to be made by Williams.

By combining the Williams engine with new automated airframe-manufacturing techniques, an all-digital avionics system, and creative partnerships with suppliers, Vern thinks he can get the cost of his six-seater jet under $850,000. That is less expensive than many turboprops and far cheaper than the best-selling business jet on the market today, the $3.6 million eight-seater Cessna Citation.

People inside the private-plane industry are skeptical about Eclipse's ability to deliver on its promise. "What Williams and Eclipse are talking about is mind-boggling," says Mac McClellan, editor of Flying magazine. "It would be unprecedented in the history of aviation." In the past every aircraft advancement has come at a higher price. But the Eclipse is supposed to fly almost as fast, go just as far, and burn less fuel than competing jets--all for a fraction of their cost. "I hate to say something is impossible," says McClellan, "because, who knows? It certainly will be very difficult." Most aviation executives agree. Cessna Aircraft CEO Gary Hay recently predicted the Eclipse would end up costing twice as much as Vern says it will. Chuck Suma, CEO of New Piper Aircraft, thinks the price tag will top $2 million. "Unless they have some really new technology or manufacturing technique," says Suma, "I don't see how they will hit their price point." Another industry veteran sent Vern a letter saying his math "seems to fly in the face of your No. 1 rule...to always provide the truth."

Vern just shakes his head. "They think we can't do it because they can't," he says. "It's the 'if it doesn't exist, it can't exist' theorem." That's a classic reaction to a potentially disruptive technology. But Vern comes from a different universe, where the exact opposite is true. "In the tech world," he points out, "if it doesn't exist, it's a market opportunity. If it doesn't exist, let's do an IPO." Stodgy plane industry, meet Vern Raburn. He'd like to turn your world upside down.

Before you can truly understand Vern Raburn, you have to fly with him. My own journey begins on a mid-June morning in the dry heat of Arizona. Eclipse's temporary headquarters are in a four-room office with an adjoining hangar at the Scottsdale municipal airport, where Vern works with his wife, Dottie Hall, and four other employees. He greets me wearing shorts, a blue Eclipse golf shirt, and a black FORTUNE baseball cap. "You want a tour?" he asks. "Turn around."

Vern is voluble, funny, blunt. His friend Ann Winblad of venture capital firm Hummer Winblad compares him with the Maytag repairman: "If anything is broken, he is there to fix it. Except nothing ever breaks." With the tour completed, Vern grabs his aviator sunglasses and leads me to the hangar where his white-and-red-striped Turbo Commander is parked alongside a bright-yellow tandem-cockpit 1944 SNJ-5 Navy trainer (with an engine he rebuilt himself). We are going to fly to Albuquerque to visit Eclipse's future headquarters, then up to Detroit to Williams International, with a pit stop along the way in Galesburg, Ill.--a typical day for Vern. Using a small Airtug, he pulls the Turbo Commander out of the hangar by hand. We get in, slide into the leather seats with sheepskin covers, turn on the engines, taxi through a gate to the airport runway, and are up.

It is only in the air, as he flies through three-dimensional space, that Vern's mind is set at ease and his story begins to pour forth. In 1976, when he was 26, he quit a job as a 3M assistant plant manager to open Los Angeles' third computer store. Three years later Vern joined Microsoft and started its consumer-products division. Bill Gates was best man at his wedding (to Dottie, Microsoft employee No. 25). It was so hot that day that all the men, including Gates, ended up in the pool in their wool tuxedos.

Despite the high jinks, Vern butted heads at the office with Bill and Steve Ballmer, now Microsoft's CEO, about the direction the company should take. As Vern puts it, "There were a lot of alpha males trying to stake out territory, and the company wasn't big enough." So he left Microsoft in 1982 and joined Lotus Development, where he helped launch Lotus 1-2-3. But another personality clash--this time with founder Mitch Kapor--left him looking for another job.

Vern learned from these experiences. He learned how to manage his ego and how to manage other people. And he put those lessons to good effect as CEO of antivirus software company Symantec and later as CEO of Slate, a pen-based software company he started with spreadsheet inventor Dan Bricklin. Slate was sold to Compaq in 1994. At Gates' wedding in Hawaii that January, Vern and Microsoft co-founder Paul Allen got into a discussion about business and technology that lasted deep into the night. By the end, Allen asked Vern to help him with his investments. As one of the perks of his new job as president of the Paul Allen Group, Vern would get to fly his own Citation jet.

Which brings us to the other side of Vern. "Planes are his life," says Bricklin. "It has always been that way. He likes computers, he loves Dottie, but he lives for planes." The son of an engineer who worked on NASA's Gemini project, Vern has been fascinated with flight since he was a boy growing up in Tulsa and southern California. He got his pilot's license at 17 and has always owned at least one plane since his days at Microsoft. An aerobatic pilot, he sits on the boards of the Experimental Aircraft Association and the Warbirds of America. "If you are a friend of Vern's, you end up learning about aviation whether you intend to or not," says Winblad. Once she was flying with Vern, and he wanted to take her to dinner at a lodge overlooking the Grand Canyon. "We had to circle as they cleared the elk from the field," she recalls.

There is one more salient fact about Vern: When he left Microsoft, he also left all his options on the table. It was 1982. Who knew? Microsoft wasn't even public yet. But Vern seems okay with this. "Would I be a billionaire today if I hadn't left? Yes. Do I really give a damn? No. That is not why I am in this." (Don't feel too bad for him; he owns five vintage planes and is planning to build a $1 million adobe house on a cliff overlooking the Rio Grande, with window frames imported from Morocco.) In a way, it is probably for the best that Vern left Microsoft. If he had been a billionaire, he never would have gone to work for Allen. Or learned about the Williams engine when he did. Which means he wouldn't now be having the time of his life.

It was in the fall of 1996 that Vern flew out to meet with famed aircraft designer Burt Rutan at his skunkworks in the Mojave Desert. "I was talking to Burt about some space exploration stuff for Paul," says Vern. He didn't know it at the time, but Rutan was secretly developing a plane called the V-Jet as a proof of concept for the new Williams engine. The two men got into a conversation about the older Williams engines in Vern's Citation. "Have you talked to Sam Williams lately?" Rutan asked cryptically. "No," said Vern, "I've never talked to him in my life." "You should," replied Rutan. "He's doing some interesting things." Rutan couldn't resist: Here was access to a fat cat who could throw in some sorely needed change to help fund the Williams engine, which would eventually get support from NASA. Allen never invested in the project--he thought it was "just a little airplane," Vern says--or in Rutan's space plane. But Williams contacted Vern, who became so fascinated by the engine that he eventually dreamed up the plan that is now Eclipse.

The truth was, Vern was growing bored with high-tech investing. "Venture capital is intellectually challenging," he muses, "but it is like eating Chinese food: You go through all the effort, and half an hour later you are still hungry. I like to make real things, and I spent 25 years in the most ethereal business there is." Being a globetrotting venture capitalist was also putting strains on his personal life. Although he and Dottie had a home in Arizona, he also kept a condo in Seattle and would fly up several times a week. He ate junk food all the time and weighed 220 pounds (he is now 30 pounds lighter). That Thanksgiving, in 1996, he was in Tokyo on business for Allen. His flight back to Seattle was delayed, and by the time he was able to fly the Citation back to Phoenix, it was 10 p.m. When he slunk in the door, Dottie was fuming. "Just as a point of reference," she asked, "are we still married?" It was not a happy time.

The Turbo Commander glides down toward a runway scarred with skid marks. After parking the Commander at Albuquerque's municipal airport, we walk across a lot veined with freshly poured tar to Eclipse's new facilities. This is where the manufacturing and assembly of the jets will initially take place. But for now there are only three employees here, lost amid the 18,000 square feet of office space and 70,000 square feet of hangar space. The city is giving the company a sweetheart deal, charging it below-market rates and only for the space it actually uses. When Vern and I finally stumble across Eclipse CFO Peter Reed in a bare office with a folding table for a desk, he beams, "I tell you, I love Albuquerque."

The place may be cheap, but it is also creepy. "This was spook central," Vern says, explaining that the previous tenant, the Air Force, was using the building for some "black" project. There had been motion detectors above the ceiling tiles, and the walls were built so that no one could crawl through the ceiling from one room to another. Andrew Wainwright, Eclipse's tech guy who sleeps in a trailer in one of the hangars and watches planes land at night from his hammock, asks me, "Do you want to see the scream room?" He takes me to a room with soundproof walls. "Maybe this is where they kept the aliens," I suggest.

The spook tour over, Vern, Reed, and I crawl into the Commander. We are going to Illinois to check in on Vern's prize possession: a 1948 Lockheed Constellation used during the Berlin Airlift, the sister plane to Eisenhower's Air Force One. Vern bought it for $100,000 from John Travolta in 1987, when Travolta's career was in free fall. He has spent about $1 million restoring it, and now it tours the country as a flying museum with a mostly volunteer crew. Today it is in Galesburg.

"You want to take her up?" asks retired airline captain Frank Lang. We clamber aboard. Vern's Connie is one of only five still flying out of a total of no more than 50 left in the world. There is a small dome skylight in case we want to navigate by the stars, and the cockpit is decked out with hundreds of levers and switches. Vern slides into the pilot's seat. The plane is shaking like a blender, even though we haven't started moving yet. A green gas mask jiggles on an ax attached to the back cabin wall. I pray we don't have to hack our way out of there. Finally, the plane starts rolling and rumbles into the air. It's a handful. By the time we land, a half-hour later, Vern is sweating but exultant.

Back in the Commander, we are spirited along by the lights of the cities below, handed off from one luminous pool to the next, until finally, close to midnight, we arrive in Pontiac, Mich. There are no lines, no airport to walk through. We simply park outside the Million Air hangar and get into a freshly vacuumed rental car. Over pizza and beer at a nearby pub, talk drifts to Bill Gates, the Justice Department, and how, in the 1970s, Vern almost opened a lingerie store instead of a computer store. It is time to go to bed.

In the morning we drive to Williams International. Eclipse's chief engineer, Oliver Masefield, is a lanky Brit who led the team that designed the PC-12 turboprop for Pilatus Aircraft. Part of Masefield's duties as head of development at the Swiss planemaker was to listen to crackpot ideas from people who wanted to produce breakthrough aircraft and perpetual flying cars. He has a finely tuned sense of skepticism. But Vern is a good talker, and Williams a living legend, and the two persuaded Masefield to leave his job of 27 years and take a chance with them.

Masefield, in turn, helped persuade another key Pilatus employee, Chris Finnoff, to defect. Finnoff is an airplane salesman extraordinaire. When he worked for Beech Aircraft in the late 1960s, he was their top salesman. Later, he was the top salesman at Learjet. He built up the largest Piper Cheyenne dealership in the country, which he sold in 1995. At Pilatus he was responsible for 90% of all PC-12 sales, or about $150 million of business. Now he is heading up sales and customer support for Eclipse.

Finnoff joined on May 26, the day Eclipse started accepting orders for its planes. The company was expecting no more than two-dozen wealthy, hard-core aviation fanatics to show up in Phoenix. It did not even bother with any advertising, except for an e-mail notice sent to those who had signed up on its Website. But people started arriving three days early to put down a $155,000 deposit guaranteeing them one of the first couple of hundred planes scheduled to be produced in 2003 and 2004. By 8:30 A.M. on the 26th, a throng of more than 150 people from as far away as Japan and Holland were camped out at the Phoenix Airport Hilton. Vern was giddy. "No one has ever lined up to buy airplanes before," he told me that day. More to the point, no airplane company has ever sold out 18 months of production on the day it first opened its doors for business.

Who were these people? Many were rich aviation buffs. One customer will be 81 by the time the plane rolls out. Another, from Portugal, reserved three planes. But there were also some who had never owned a plane before. And a few were simply entrepreneurs who lead increasingly hectic lives. "People want to get to places in the U.S., and they don't like all the hassle they have to go through with the airlines," explains Poling. "If you have to leave a day in advance to make a meeting, something is wrong with the system."

Blair McKendrick, who secured position No. 63, is one such entrepreneur. He needs a plane for his small automotive-supply company in Detroit. An aviation enthusiast, he caught wind of the project because he lives three miles from Williams International. McKendrick flies constantly for his business, and he plans to open another factory in Florida. He really needs a jet, but a Citation is out of his price range. This year he is trading in his $900,000 Piper Malibu Mirage for a $1.4 million Piper Malibu Meridian. But the Meridian is a turboprop plane, and only two-thirds as fast as the less expensive Eclipse will be. McKendrick can't wait. "What if someone offered you a Ferrari that got 100 miles to the gallon and cost $5,000?" he asks. He knows it won't be easy for Eclipse to produce its flying Ferrari, but he's convinced that if anybody can pull it off, Vern can.

If Vern can produce the Eclipse on time and on target, there should be no shortage of eager customers. He and Masefield explain how they plan to meet their goals. It all starts with the engine. By combining different functions into the same parts, using precision machining techniques, and rigorously assigning cost and weight targets to each part, Williams is able to produce a small engine with low fuel consumption and excellent thrust. The smaller the engine, the less fuel it needs and the lighter the aircraft built around it can be. Keeping things small keeps things cheap. The trick is not to make the engine so small that you lose speed.

Another design breakthrough is the digital avionics system. In most private planes, avionics are largely analog, each gauge on the instrument panel requiring its own box of electronics and wiring. That adds up to a lot of weight. The Eclipse will be equipped with three flat-panel screens combining all the display instruments in one system.

Eclipse is also exploring different methods of automated manufacturing that will cut down on labor costs. Instead of riveting everything together by hand, it may machine entire sections of the fuselage, complete with support structures, from one thick piece of aluminum. Vern's engineers are also considering laser welding, friction welding, and automated riveting techniques. And Masefield is talking to Sandia Labs in New Mexico about adapting robotic painting technologies used for the Stealth fighter and predictive algorithms that will speed the time it takes to go from design to production. "We are not going to get to our target price simply with a better engine or integrated avionics or better manufacturing," says Vern. "We are going to have to do all of that."

Eclipse also must persuade its suppliers to change their own manufacturing processes. "We won't get there unless we can convince suppliers to think on a different scale of production so they can come down to the same cost level," says Masefield. That is a pretty tall order. "Some don't get the message," he admits. But Vern is being innovative here as well, borrowing risk- and revenue-sharing models from the world of high tech. He is offering to partly fund suppliers' development costs for figuring out how to revamp their products and manufacturing processes, in return for preferential pricing and a royalty every time they use the process to sell a product to someone else. "We are paying for development," explains Reed, "in return for a long-term advantage."

Over the past two days, whenever I've raised any doubts, it is Williams' name that has been invoked most often to dispel them. Sam Williams is the man behind the curtain, the linchpin of the precarious project. He is the one who got Red Poling and Kent Kresa, the CEO of Northrop Grumman, to sit on Eclipse's board. And he was responsible for bringing in just as many investors, if not more, than Vern. But where is he? Vern leads me down a series of corridors and passageways. We pass through an exhibit hall filled with Williams products, mostly engines on stands, but there is also a mannequin with a James Bond jetpack and another standing in a red personal transporter with X-JET blazoned on the front. Finally we make it to Williams' office. His assistant opens the door. Inside, a dapper man rises from behind a desk with his ear tilted toward the door and his arm outstretched.

Although nearly blind--he began losing his sight as a young man--Williams is still capable of designing engines. He participates in engineering meetings and remembers details no one else can. On his desk is a row of minicassettes: His assistant tapes himself reading technical journals aloud so that Williams can keep up with the latest developments in his field.

During the 1970s, Williams developed a small turbine engine that made cruise missiles possible. The turbofans in his engines are made from a single piece of milled titanium instead of many individually machined blades. This makes his engines simpler, more fuel-efficient, and cheaper. He used the manufacturing processes he developed making cruise missiles to build small engines for jets. The Eclipse is the first step in his dream to make personal airplanes a reality.

Williams realizes there are skeptics who doubt his ability to produce the Eclipse. All he will say is, "After doing these exercises for a number of years, you get pretty good at it."

As I leave Vern's world, I wonder whether he can change the way we scurry to and fro. After talking to skeptics and competitors, I still wonder. And then I learn about the bird test.

Before an engine can be certified by the FAA, it must pass a test in which a bird, usually a duck, is placed into a compressed air cannon and fired at the engine, running at full speed on a stand. Do not laugh. The bird test is serious. According to government regulations, the engine must be able to withstand the impact and suck up the bird, feathers and all, without breaking into pieces. The problem is, the smaller the engine, the thinner its component parts and the more likely one of its blades will break off. Armed with this new piece of information, I call Vern. "The bird test?" Pause. "Yup, it's the biggie." Pause. "No, it's at least a year away." Pause. "Yes, the animals are dead."

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