00:02:33 · Adam Bry, Ty Morse
We want to be competing against the best, we want to be winning against the best, and so, they're the ones that we pay the most attention to. [00:02:41] S0: I remember there was a talk that Jeff Bezos did a long time ago where he said that he wants to be informed by competitors, but he wants to be customer obsessed. So, does that kind of equation work in your mind?
00:02:53 · Adam Bry
[00:02:53] S1: So, I think it's all context dependent, right? And I think in the best sense, competition pushes you to just be the best version that you can be of yourself. In enterprise markets, it's very kind of head to head, know, there's a specific number, you know, in public safety, there are, you know, a given number of agencies out there and they're generally going make a decision one way or the other on what drone solution provider they're gonna use. And so, know, it's a very like head to head kind of competition. Like you can look at the scorecard, you can win or lose them. You know, we have a very strong internal view on where this technology is going, what needs be developed to unlock the most value for customers, and that's where most of our focus is. Know, the grounds that we want to win on is just being the best partner for our customers, having the best overall solution. It's also natural and I think healthy that competitors are learning things from each other, like DJI over the years has copied a huge number of the things that we do. Like, if you look at our drones, they have fisheye cameras that see everything in every direction. We really introduced this idea of a computer vision centric drone, and DJI products, lo and behold, kind of look similar today. That's something that really started with Skydio. We publicly demonstrated a doc before DJI announced a product. They are now, I think, borrowing a lot of the things that we've done from kind of a software vertical integration standpoint. And look, that's just the way it goes. You know, competitors are gonna learn something from each other and ultimately it's to the better of the customers that we're working to serve.
00:04:29 · Ty Morse
[00:04:29] S0: There's kind of this interesting dynamic in most hardware companies where it takes a very long time, like with Elon's companies, it's typically like a ten year banking period, where you don't really ship the first car until year eight or nine. Same thing with the first three rockets blow up, and then the fourth one goes up, and that's about seven years in, and I think it's the same thing with Boring Company and Neuralink. Yeah. With this sort of thing, the business is starting to inflect, but it's been, I don't know, over a decade in the baking process. So, what is it kind of like going in those first few years to suddenly flipping a switch and saying, okay, now we scale and now we're actually gonna like really start manufacturing?
00:05:06 · Adam Bry
[00:05:06] S1: Yeah, well, I would say overall it's a lot more fun, you know. It's fun to be like in this mode now where we've got just this expanding incredible suite of products and we've got customers using them at massive scale. So, you know, our, just our online customers, so not including our military customers, they're averaging about 2,000,000 flights per year now. It's about 40,000 flights per week and that number's doubling year over year, and it's just awesome to see that happening with our customer. Every one of those flights has a story behind it, right? Like in public safety, these are finding a missing person, de escalating a dangerous situation, and in energy utilities, it's critical inspection work that helps them operate more safely and efficiently, so it's like, it's, I think it's just super motivating to get to be a part of that. It's fun to have a factory like we're in today that's running at substantial scale, and we'll, over the course of this year, we'll triple the output from our factory. So, there's a lot of challenges that go along with it, but it's super fun moment for us, but as you say, it's a journey to get here. Like, we started almost thirteen years ago, it took us four years to ship our first product, which was a consumer oriented drone, the Skydio R1, which was, I kind of describe it as like technology marvel, but commercial failure. Like everybody that saw that thing and what it could do thought it was incredible, but nobody bought it. And so it was like, it had great autonomy capabilities, and everything else about it kinda sucked. And it took us another couple of years of iteration to get to kind of like a more complete product, and then we decided to focus on the enterprise and government customers in 2020. And I'd say it took us probably three to four years to really get all the product ingredients right there, and then it's the last couple years that things have really kind of gone exponential, and I still think we're very near the beginning, like even in our most mature markets, I estimate we're around like 1% penetration with our existing products in terms of the use cases they can serve and the impact they can have, so we still got a lot of work in front of us.
00:07:02 · Ty Morse
[00:07:02] S0: If you take a factory like this one and you're suddenly going to be like doubling, I don't know, production in the course of a year, what are the biggest challenges and pain points that come along with that?
00:07:13 · Adam Bry
[00:07:13] S1: So the single biggest, I think it's different for different companies in different situations. The single biggest challenge that we face is in our supply chain. So, you know, we started talking about competition with DJI. There's a huge geopolitical backdrop to this industry. When we started the company, we started manufacturing our drones in house from day one, which was very counter trend at the time. Like conventional wisdom in Silicon Valley at the time was like, one, don't touch hardware, and two, if you're gonna touch hardware at all, make sure you outsource all of it to China and do as little yourself. And that's just not the path that we chose, you know, we felt like having manufacturing close to R and D was how we were gonna get the best products the fastest, maybe not the most cost effectively, but definitely the best and the fastest, which is what we were focused on. So we've always manufactured our drones in house, but like everybody else, we were getting components from China in '20... You know, with our first generation of drones in the twenty ten's. As we expanded to serve government customers and as geopolitical tensions with China rose, it became clear that that was not a sustainable future for us, and so we made a lot of investments to get our supply chain out of China, but two years ago we were sanctioned by the Chinese government. I was sanctioned personally, the company was sanctioned. The day that they announced the sanctions, they showed up at our battery factory in China and shut it down and seized, it was a supplier that we were working with, they seized all their equipment, said they couldn't keep doing business with us, so it was a very aggressive targeted action to try to kill the company basically. So over the last two years, we've had to basically rebuild huge swaths of the supply chain to get down to zero China dependence, which is still a kind of fragile endeavor, because for a lot of what we do, the historical component supply has all been in China, and we're in the position now of being a big enough company that we can be a great anchor customer for a new battery vendor, or a motor vendor, or a camera vendor to help them get started serving this industry, which we are happy to do.