Larry Page-backed drone guru expects you as a future passenger

In this weekly series, CNBC will cover the companies that created the first Disruptor 50 list 10 years later.

For Chris Anderson, who co-founded 3D Robotics, one of the first prominent drone companies in the United States, imagined the sky in 2007 rather than starting with a spectacular vision of a billion-dollar market payday. It was just a community of drone lovers. Full of autonomous innovation.

“We started out as an open source community,” Anderson recalls today. “It was the dawn of the iPhone release, and the Silicon Valley maker movement and unlimited enthusiasm for the pace of innovation that could impact any industry.”

Aviation was still a big opportunity. Paper: The one-to-one aircraft-to-pilot model is ripe for confusion.

The drone software community has become a company, and the company has become a business model that plans to provide a booming market with the hardware it needs, but the drone market grows in a way that enables 3D Robotics, a member of 3D Robotics. Did not do the first CNBC Disruptor 50 list in 2013 – to prosper or eventually survive.

The rise in flight automation, which reveals new use cases and is expected to create new markets, has failed to overcome the major headwinds of regulation. All the permits required for the drone industry to fly out of sight, fly at night, fly over people, and break the one-to-one ratio have not been realized on a large scale, not in the testing phase. More than a decade later, it’s still approved to fly beyond sight, including Amazon Prime, UPS, and Alphabet drones.

Anderson, who knows the drone’s FAA process better than anyone else, says it can still take years for the FAA to become accustomed to its safety profile. In short, the pace of innovation that Silicon Valley is accustomed to working on remains second. At the pace of regulatory reviews from Washington. “The fact that the sky is empty is still a matter of FAA,” he said. “Everyone in aerospace probably said,’Of course, it’s going to take this long, how it works,’ but we were engineers and a little naive. It works in Washington time, not Valley time. “

“After showing more use cases, not just toys, we thought prices would be higher and sandboxes would grow. That day hasn’t come yet,” Anderson said.

Instead, 3D Robotics was forced to succeed in the consumer drone market, primarily by taking pictures and videos. “This was by no means our strength,” says Anderson, but the power of the consumer electronics market leader, the Chinese company, and DJI, which today accounts for 90% to 100% of consumer drone manufacturing. Directly affected. market.

“We had ultra-advanced drones that were really optimized for robotics, and they had a simple drone with a great camera, and that’s what consumers wanted. And it was cheap, said.

Partnerships with GoPro designed to take advantage of high-end consumer opportunities have become an engineering challenge, and from a market perspective, the GoPro brand embodies a differentiator that allows 3DR to charge the required premium. It was not converted. In fact, within nine months of launching the Solo drone, the price of high-end drones has dropped from over $ 1,500 to $ 500 to $ 600.

“It was a race to the bottom,” Anderson said, and China’s supply chain had an unbeatable advantage.

Today, there is one major commercial drone success story. It is an autonomous crop dispersal in China, a large industry. China’s crop spray market is accelerating rapidly, partly because the Chinese government has subsidized the use and purchase of farmers, and it is classified as a unique industry in the market analysis by Drone Analyst. According to the data, DJI and Chinese rival XAG are “neck and neck” in the commercial market, and the concept is beginning to expand globally, mainly in Southeast Asia.

Similar to drone manufacturing in the United States, the domestic commercial drone market is growing, accounting for up to 16% of commercial hardware, according to DroneAnalyst. “We’ve seen many new hardware startups in the United States gain market share,” said industry research firm David Benowitz.

According to the survey, US companies that manufacture drone hardware rose from 7% of the market in 2017-2018 to 16% in 2021. “Everyone gave up,” Benowitz said while trying to compete with DJI on the consumer side. “DJI owns the market, but it doesn’t operate in so many categories,” he added.

This offers new hardware entrants an opportunity, but he believes that hardware opportunities alone will not develop into a market giant. “It’s not a fast-growing business, but we won’t see the next Airbnb or Uber in the US. Drone hardware.”

“It’s still pretty small, in the early stages, and a key part of moving the market,” said Benowitz, who said it could grow further as US companies and governments seek to diversify their drone procurement. I don’t think there is. “

From the latest drone unicorn, Skydio, and for the first time in a while, a business model that leverages a variety of niches, focusing on cell towers, is growing. A model that has the potential to evolve into a broader global strategy for multiple disruptor ziplines and healthcare delivery in emerging markets. However, more than a decade after the early days of the drone industry, these industries remain in the early stages of development.

Wal-Mart and Amazon are evolving their last mile delivery and drone investment efforts, and Alphabet has a wing business, but none of them are large enough to solve all the problems of rural, suburban and urban environments as a whole.

Anderson believes that commercial drone players may still have a brighter future than 3DR, but those industries are still in the early stages of development and into Anderson’s agriculture as a huge market for drones. Enthusiasm is a belief that he had early in his career, but for now it is certain.

“I was convinced that the answer was agriculture. It’s clear that I don’t have a detailed understanding of what’s happening with the crops,” he said. “I’ve always thought of it as a higher resolution satellite. If I could get the cam to fly into the air anytime, anywhere and get submillimeter resolution, these would be 100 times better than the satellite. ”

But so far, data research made possible by drones has proved to be less useful in the field, despite the boom in Chinese crop-spraying drones. “The data is useless in the United States. It’s a wrong model, and I’ve tried it over the years and only learned it because it didn’t work,” Anderson said. “We need to try things out in the real world and get the chance to understand what’s big,” he added.

Commercial customers like utilities move slowly, but the real test of commercial drones is a combination of both ground and aerial robots like the Boston Dynamics Spot already used in utilities. If you have an internet system. According to Benowitz, a drone. “In the future, we will be more integrated with other industrial robots,” he says. “I’m seeing companies starting to think of drones as just another robot in the fleet …. Spots are very good for mapping indoor areas and drones outdoors.”

Meanwhile, Anderson turned to new opportunities. Most of 3D Robotics was sold to Kitty Hawk, a Larry Page-funded autonomous air mobility startup. Anderson is currently Chief Operating Officer and CEO of former Google engineer Sebastian Thrun, one of the founders of online education company Udacity. , Former disruptor company too.

Kitty Hawk has just passed its own business pivot in line with Anderson’s dream of autonomous aviation, shifting its focus from a pilot-led model of air mobility to a remote model.

“The unit economics of flying without a pilot is very good,” Anderson said. “It’s another seat.”

Drones are primarily the data industry, much smaller than the transportation sector, and have air mobility opportunities. Also, the idea of ​​a remote pilot network with one operator distributed across many vehicles looks exactly like the drone model Anderson had long wanted to build. “I’m a drone guy. This was the next chapter, perfect and obvious. It’s a bigger drone, the use cases are much more obvious, and it’s as fast and cheap as a car to move people from A to B. That is a kind of mission. You can be late. “

The market has already seen the introduction of Joby Aviation, the first listed air mobility company. Electric aircraft are mechanically simple and cheap, and autonomy also excludes pilot costs from the equation.

“Technically, there’s no reason why a significant percentage of people can’t move from the road to the sky,” Anderson said.

Kitty Hawk is targeting 10% of the city’s current road miles.

Benowitz says that the talent of 3D Robotics, especially Anderson himself, makes sense because it brings deep connections and knowledge from the drone world to new initiatives. However, the idea of ​​advanced air mobility remains an unproven economic model. “It’s still very early to think of it as a viable business model,” he said. “It may work, but everyone thought helicopters would be used every day, just like planes, so it would take a while to make the leap,” he said.

According to Anderson, Kitty Hawk was well-funded and refused to talk about a particular timeline to the public market. He doesn’t seem to be worried about the helicopter. He said, “Helicopters are annoying, noisy and dangerous, so you can’t land anywhere.”

China has already entered the air mobility market, as it was in drones from the beginning. China’s autonomous air mobility company EHang already has a tourist flight that Anderson describes as “very impressive” in terms of technology and safety, but in this case, due to regulations, it is competitive compared to DJI. There is no threat of. Scrutinized by the US government. Commercial autonomous air mobility has evolved on the basis of national certification, and unlike DJI drones that take over the consumer market around the world, EHang is not easily certified in the United States.

“I’m convinced it’s time for the aviation revolution, and I was convinced on a small scale 10 years ago,” Anderson said. “Now we see that the same paper applies on a larger scale. There are still regulatory challenges before us.”

What’s the difference this time? “This time I’m going into this with my eyes wide open,” Anderson says.

Kitty Hawk is working with the former FAA chief, and Anderson was calling the FAA the morning of our conversation. “FAA has learned a lot, and it will be a long way, but it will happen,” he added.