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.
00:09:08 · Adam Bry, Ty Morse
We're actually gonna spend about $1,000,000,000 with US suppliers over the next five years, specifically aimed at building up the supply base here, but it's still fragile. And so, you talk about doubling production, the biggest risk and the biggest challenge for us is upstream with our suppliers and putting ourselves and them in a position to do that and deliver that, and so we're getting more and more deeply integrated with all the companies that we partner with to help them get to the scale that we need. [00:09:34] S0: I've noticed a number of my friends are getting sanctioned, like earlier and earlier and blacklisted. [00:09:39] S1: You must have some interesting friends. [00:09:41] S0: Yeah. Well, if they haven't even gone to China to set up their supply chains, it's a little bit easier. Yeah. But if you're like twelve years into the company and suddenly your entire supply chain gets fucked, what does that feel like just in that moment?
00:09:41 · Ty Morse, Adam Bry
[00:09:41] S0: Yeah. Well, if they haven't even gone to China to set up their supply chains, it's a little bit easier. Yeah. But if you're like twelve years into the company and suddenly your entire supply chain gets fucked, what does that feel like just in that moment? [00:09:53] S1: You know, I kinda like the fight, and there's different, there's different ways companies can react to this, there's certainly different perspectives within Skydio. You know, there's one school of thought of like, let's see if we can work with the US government to get some relief here and maybe broker some kind of deal. My perspective is the other side of it. I think this is the right direction. Think... So it's like game on. Know, like let's... This is this is a forcing function for us to do what we knew to be right anyways and so let's accelerate it. You know, there's nothing like burning the boats to motivate you to like to solve some hard important problems. And and that's basically like the approach that we've taken. And I think it's worked out well for us. Mean it has not been pain free, like at that moment we basically had to go into a mode where we were rationing batteries. We had fortunately a healthy chunk on the shelf, but we had to cut down to shipping one battery per drone, which was painful for us, super painful for our customers. You know, we're lucky that they came along with us on that journey and our internal teams did an incredible job of standing up new cells and new pack manufacturing in just a truly insane timeframe
00:09:53 · Adam Bry, Ty Morse
[00:09:53] S1: You know, I kinda like the fight, and there's different, there's different ways companies can react to this, there's certainly different perspectives within Skydio. You know, there's one school of thought of like, let's see if we can work with the US government to get some relief here and maybe broker some kind of deal. My perspective is the other side of it. I think this is the right direction. Think... So it's like game on. Know, like let's... This is this is a forcing function for us to do what we knew to be right anyways and so let's accelerate it. You know, there's nothing like burning the boats to motivate you to like to solve some hard important problems. And and that's basically like the approach that we've taken. And I think it's worked out well for us. Mean it has not been pain free, like at that moment we basically had to go into a mode where we were rationing batteries. We had fortunately a healthy chunk on the shelf, but we had to cut down to shipping one battery per drone, which was painful for us, super painful for our customers. You know, we're lucky that they came along with us on that journey and our internal teams did an incredible job of standing up new cells and new pack manufacturing in just a truly insane timeframe [00:11:02] S0: to close the gap. Were you flying around and meeting with a bunch of suppliers?