The Exchanges

Q What is the magic behind investing in drones?

A Yeah. So when I was doing that investigation back in 2014 and exploring this space, I had the opportunity to make a couple of angel investments. One of those was in Skydio. And, you know, I think that we're still in the very early days of this industry. There's not a lot of money being made yet in drones, you know, with the exception of the military market. Uh, the only company really making any revenues is, is DJI. And even that is quite small. So we have a long way to go before this is really a big scalable business. So I like to think about what are the key enablers that will take drones from being sort of a cool thing, relatively few people are playing with or experimenting with to really drones benefiting hundreds of millions or billions of people. And I think those key enablers, you know, really have to significantly increase the level of automation of the operation and provide a level of assurance of safety to the public at large. So what are those key enablers? You know, clearly I believe that platforms that provide navigation information for highly automated drones at scale are a good investment. That's why I put my life into air map, but I'm also really excited about things like sensors that allow drones to detect and avoid fixed and moving objects. So companies like Amazon, for example, can drop a package in your backyard when the dog is playing. You know, I'm really…

AI assessment note: “Those are the kinds of key enablers that I think will help make this a really robust industry.”

Q Well, thank you so much. And let's get the ball rolling today by discussing a little about you, where the love of drones really came from, and how you came to be the founder of AirMap. So what's your story?

A Sure. So I grew up right next to a very small airport in Southern California, the Santa Monica Airport. And as a young kid, I used to love to go and stand by the fence and watch airplanes taking off and landing all day long. And I just really fell in love with aviation. And so, you know, when I was four or five years old, I used to read as many books as I could get my hands on about flight. And in fact, in my kindergarten yearbook, I wrote that I wanted to become a pilot when I grew up. So it's really been in my blood since I was a little kid. And I used to build model airplanes quite a lot, remote control airplanes. I had a chance to take my first flying lesson when I was 10 years old. And over time, I got some jobs at the airport so I could pay for flying lessons. Sort of at an accelerating rate. And when I was 14, I started volunteering for a non-profit organization called Angel Flight West, which coordinates flights between volunteer pilots and medical patients that need to get to healthcare that may not be close to where they live. And it was through the volunteering I did for that organization that I sort of created this passion for extending the benefit of flight to more people. These were people that needed to get to medical treatment and couldn't get there if it wasn't for a volunteer pilot offering them this, this flight. And so throughout my life, I've really always …

AI assessment note: “I grew up right next to a very small airport in Southern California”

Q What is the magic behind investing in drones?

A Yeah. So when I was doing that investigation back in 2014 and exploring this space, I had the opportunity to make a couple of angel investments. One of those was in Skydio. And, you know, I think that we're still in the very early days of this industry. There's not a lot of money being made yet in drones, you know, with the exception of the military market. Uh, the only company really making any revenues is, is DJI. And even that is quite small. So we have a long way to go before this is really a big scalable business. So I like to think about what are the key enablers that will take drones from being sort of a cool thing, relatively few people are playing with or experimenting with to really drones benefiting hundreds of millions or billions of people. And I think those key enablers, you know, really have to significantly increase the level of automation of the operation and provide a level of assurance of safety to the public at large. So what are those key enablers? You know, clearly I believe that platforms that provide navigation information for highly automated drones at scale are a good investment. That's why I put my life into air map, but I'm also really excited about things like sensors that allow drones to detect and avoid fixed and moving objects. So companies like Amazon, for example, can drop a package in your backyard when the dog is playing. You know, I'm really…

AI assessment note: “key enablers that I think will help make this a really robust industry.”

Q Well, thank you so much. And let's get the ball rolling today by discussing a little about you, where the love of drones really came from, and how you came to be the founder of AirMap. So what's your story?

A Sure. So I grew up right next to a very small airport in Southern California, the Santa Monica Airport. And as a young kid, I used to love to go and stand by the fence and watch airplanes taking off and landing all day long. And I just really fell in love with aviation. And so, you know, when I was four or five years old, I used to read as many books as I could get my hands on about flight. And in fact, in my kindergarten yearbook, I wrote that I wanted to become a pilot when I grew up. So it's really been in my blood since I was a little kid. And I used to build model airplanes quite a lot, remote control airplanes. I had a chance to take my first flying lesson when I was 10 years old. And over time, I got some jobs at the airport so I could pay for flying lessons. Sort of at an accelerating rate. And when I was 14, I started volunteering for a non-profit organization called Angel Flight West, which coordinates flights between volunteer pilots and medical patients that need to get to healthcare that may not be close to where they live. And it was through the volunteering I did for that organization that I sort of created this passion for extending the benefit of flight to more people. These were people that needed to get to medical treatment and couldn't get there if it wasn't for a volunteer pilot offering them this, this flight. And so throughout my life, I've really always …

AI assessment note: “I grew up right next to a very small airport in Southern California”

Q With so many kind of avenues and opportunities within the market, it's very easy to get very excited, as I do, but I do like to address the alternate side. And with that in mind, regulations often cited as this barrier to drones. I'd love to hear How you view regulation and whether it's a fair and legitimate concern with regards to the space?

A Well, I think regulation is very important. I mean, until we had traffic lights and speed limits and lane markings on the roads, there was no efficient commerce on the road. So you need to have some regulation in order for you to have any scaled logistics transportation platform at all. And so the regulations are still very much in development. About a year and a half ago in the United States, we had a new regulation enacted called part one Oh seven. Which allows for commercial operations of drones. Before that, before a year and a half ago, flying drones for commercial purpose was not permitted unless you had a specific waiver. So regulations are starting to unlock capabilities, and pretty soon we're going to see regulations that allow for flights over people here in the United States and beyond visual line-of-sight flights. We're seeing many other places around the world pretty much in lockstep on the regulatory timeline with the FAA in the United States. There are some places that are more forward-leaning than others. So for example, in Rwanda, there's an amazing company called Zipline, which is flying blood to To people in outlying communities, because it's very difficult to get the blood there by road. And the Rwanda government chose to open up the skies for that type of operation sooner than maybe other countries, because they really had a demand for those services. And s…

AI assessment note: “I think regulation is very important. I mean, until we had traffic lights”

Q Absolutely. You mentioned that kind of the U.S. Army. Another one from him was, do you get concerned by the potential weaponization of drones, and does that act as a kind of significant concern for you?

A I think it's a legitimate concern. Drones have already been used as weapons in the battlefield, so, you know, there have been reports of ISIS using drones, for example, carrying grenades and things like that, and that's really scary, and you know, we don't want that to happen, certainly not in the homeland, right, whether that be in the United States or the UK or anywhere else, but it's horrible that that's happening with soldiers as well. You know, I think that there are a number of technologies being developed that are mitigating those risks, We're seeing all sorts of interesting companies working on detection of drones. There are some companies working on mitigation of drone attacks, but that's a lot harder to do, and interestingly, I think the most effective means for mitigating unwanted drones to date has been trained eagles, which you might find interesting. The Dutch police actually trained eagles to catch drones, so there's no sexy technology there, but it seems to be working pretty well.

AI assessment note: “I think it's a legitimate concern. Drones have already been used as weapons”

Q I'm going to raise my drone fund and invest solely in drones, but there's been a huge amount of capital going into the space in the last two to three years, say, and a question from one of your investors, Semel Shah. Do you think this will be a market of consolidation with so many players being funded at the early stages and that kind of seed capital going in?

A Yeah. I think there's going to be some significant consolidation. I think that to date, a lot of investors have been looking at sort of specific vertical use cases, going after specific industries, sort of really focused on enterprise sales and support that whole experience for sort of the fortune 500 company. And that's a great way to start building a decent business, but I don't think it's where the mega businesses are going to be created. And so I think we are going to see quite a lot of consolidation there. There's going to be some consolidation around things like analysis tools, photogrammetry pipelines, The drone hardware itself, you know, all of that is super important, but I don't think it's exactly where the mega businesses are going to emerge.

AI assessment note: “Yeah. I think there's going to be some significant consolidation.”

Q Absolutely. You mentioned that kind of the U.S. Army. Another one from him was, do you get concerned by the potential weaponization of drones, and does that act as a kind of significant concern for you?

A I think it's a legitimate concern. Drones have already been used as weapons in the battlefield, so, you know, there have been reports of ISIS using drones, for example, carrying grenades and things like that, and that's really scary, and you know, we don't want that to happen, certainly not in the homeland, right, whether that be in the United States or the UK or anywhere else, but it's horrible that that's happening with soldiers as well. You know, I think that there are a number of technologies being developed that are mitigating those risks, We're seeing all sorts of interesting companies working on detection of drones. There are some companies working on mitigation of drone attacks, but that's a lot harder to do, and interestingly, I think the most effective means for mitigating unwanted drones to date has been trained eagles, which you might find interesting. The Dutch police actually trained eagles to catch drones, so there's no sexy technology there, but it seems to be working pretty well.

AI assessment note: “I think it's a legitimate concern. Drones have already been used as weapons”

Q With so many kind of avenues and opportunities within the market, it's very easy to get very excited, as I do, but I do like to address the alternate side. And with that in mind, regulations often cited as this barrier to drones. I'd love to hear How you view regulation and whether it's a fair and legitimate concern with regards to the space?

A Well, I think regulation is very important. I mean, until we had traffic lights and speed limits and lane markings on the roads, there was no efficient commerce on the road. So you need to have some regulation in order for you to have any scaled logistics transportation platform at all. And so the regulations are still very much in development. About a year and a half ago in the United States, we had a new regulation enacted called part one Oh seven. Which allows for commercial operations of drones. Before that, before a year and a half ago, flying drones for commercial purpose was not permitted unless you had a specific waiver. So regulations are starting to unlock capabilities, and pretty soon we're going to see regulations that allow for flights over people here in the United States and beyond visual line-of-sight flights. We're seeing many other places around the world pretty much in lockstep on the regulatory timeline with the FAA in the United States. There are some places that are more forward-leaning than others. So for example, in Rwanda, there's an amazing company called Zipline, which is flying blood to To people in outlying communities, because it's very difficult to get the blood there by road. And the Rwanda government chose to open up the skies for that type of operation sooner than maybe other countries, because they really had a demand for those services. And s…

AI assessment note: “So the regulations are still very much in development.”

Q If we move to the other end of the quadrant, being the commercial versus the consumer offerings, where do you get most excited and see room for long-term opportunity, and why, when you look at commercial versus consumer?

A I think there's huge opportunity in both areas. In consumer, you know, we're seeing increasing automation, helping people Buy drones and feel comfortable flying drones without having to know anything about flying. You don't have to wiggle sticks on a controller anymore to be able to fly a drone. Pretty soon you're going to be able to go through a forest running or mountain biking or whatever, and the drone's going to follow you and take incredible video and be able to stream that live onto your Snapchat or Facebook feed or whatever, and that's awesome. That's going to get easier and easier, and I think more and more people are going to be capturing really cool imagery and video of themselves and their friends with drones. But I think on the commercial side, Drones become really interesting as a value add to society is when people can benefit from these things without having to even care about the drone, right? So today we're talking about consumer. We're talking about enterprise. This is where people go out and fly drones for their enterprise business. If that's collecting data about their construction site or their mine or whatever. But where this becomes really exciting is really where it goes B to C, which is, you know, I take delivery of a package or I fly to work on a flying car. And that's where drones are really going to touch hundreds of millions or billions of people. …

AI assessment note: “And I think that's the biggest growth opportunity”

Q I'm going to raise my drone fund and invest solely in drones, but there's been a huge amount of capital going into the space in the last two to three years, say, and a question from one of your investors, Semel Shah. Do you think this will be a market of consolidation with so many players being funded at the early stages and that kind of seed capital going in?

A Yeah. I think there's going to be some significant consolidation. I think that to date, a lot of investors have been looking at sort of specific vertical use cases, going after specific industries, sort of really focused on enterprise sales and support that whole experience for sort of the fortune 500 company. And that's a great way to start building a decent business, but I don't think it's where the mega businesses are going to be created. And so I think we are going to see quite a lot of consolidation there. There's going to be some consolidation around things like analysis tools, photogrammetry pipelines, The drone hardware itself, you know, all of that is super important, but I don't think it's exactly where the mega businesses are going to emerge.

AI assessment note: “Yeah. I think there's going to be some significant consolidation.”

Q If we move to the other end of the quadrant, being the commercial versus the consumer offerings, where do you get most excited and see room for long-term opportunity, and why, when you look at commercial versus consumer?

A I think there's huge opportunity in both areas. In consumer, you know, we're seeing increasing automation, helping people Buy drones and feel comfortable flying drones without having to know anything about flying. You don't have to wiggle sticks on a controller anymore to be able to fly a drone. Pretty soon you're going to be able to go through a forest running or mountain biking or whatever, and the drone's going to follow you and take incredible video and be able to stream that live onto your Snapchat or Facebook feed or whatever, and that's awesome. That's going to get easier and easier, and I think more and more people are going to be capturing really cool imagery and video of themselves and their friends with drones. But I think on the commercial side, Drones become really interesting as a value add to society is when people can benefit from these things without having to even care about the drone, right? So today we're talking about consumer. We're talking about enterprise. This is where people go out and fly drones for their enterprise business. If that's collecting data about their construction site or their mine or whatever. But where this becomes really exciting is really where it goes B to C, which is, you know, I take delivery of a package or I fly to work on a flying car. And that's where drones are really going to touch hundreds of millions or billions of people. …

AI assessment note: “I think there's huge opportunity in both areas. In consumer... But I think on the commercial side”

Q on. You've seen, as I said, a lot of investment going into the space, and I'm sure you get a lot of DD calls from investors. Where do you see a lot going wrong when investing in drones, either maybe in the way they think about the investment, the market itself, or the founder type behind it? Are there any kind of commonalities in the errors you see being made?

A Well, I think a lot of the money to date has poured into hardware. So, you know, the biggest companies that have been funded to date have been DJI, Three D robotics. They've really taken the majority of the investment and thus far it's been really hard to, to build a great drone. You know, the drone is a complicated device. Uh, there's lots of systems that have to be integrated with one another and it's not easy to do. So I think that conventional wisdom to date has been that drones were going to quickly go to commodity. And yet what we found is that DJI has remained pretty much untouchable in delivering this sort of complete hardware package for an end user. I think that's going to change over time. You know, we're seeing more and more investment from chipset makers like Intel and Qualcomm trying to make it easier for more OEMs to bring drones to market. We're seeing significant contributions to open source flight control stacks that help people make drones. So I think over time, we're going to see less consolidation around the hardware itself, and some of those investments may not necessarily pay off. And we've seen a significant transition, for example, with To being a service-centric company focused on delivering services for the construction market.

AI assessment note: “I think a lot of the money to date has poured into hardware.”

Q on. You've seen, as I said, a lot of investment going into the space, and I'm sure you get a lot of DD calls from investors. Where do you see a lot going wrong when investing in drones, either maybe in the way they think about the investment, the market itself, or the founder type behind it? Are there any kind of commonalities in the errors you see being made?

A Well, I think a lot of the money to date has poured into hardware. So, you know, the biggest companies that have been funded to date have been DJI, Three D robotics. They've really taken the majority of the investment and thus far it's been really hard to, to build a great drone. You know, the drone is a complicated device. Uh, there's lots of systems that have to be integrated with one another and it's not easy to do. So I think that conventional wisdom to date has been that drones were going to quickly go to commodity. And yet what we found is that DJI has remained pretty much untouchable in delivering this sort of complete hardware package for an end user. I think that's going to change over time. You know, we're seeing more and more investment from chipset makers like Intel and Qualcomm trying to make it easier for more OEMs to bring drones to market. We're seeing significant contributions to open source flight control stacks that help people make drones. So I think over time, we're going to see less consolidation around the hardware itself, and some of those investments may not necessarily pay off. And we've seen a significant transition, for example, with To being a service-centric company focused on delivering services for the construction market.

AI assessment note: “some of those investments may not necessarily pay off”