00:00welcome to the a 16z podcast in this
00:02episode recorded as part of the a 16 z
00:05summit jonathan downey from air we're
00:07and grant jordan from sky safe discussed
00:09with a 16 z partner Kyle Russell all
00:12things drones they take a close look at
00:14the FAA regulation for drones released
00:16this past summer where we are now and
00:18where we're going in the drone market
00:20thanks for joining today
00:21so drones at agency were incredibly
00:25excited to see today cameras tomorrow
00:28flying computers are excited to see them
00:30take humans out of dangerous jobs like
00:33climbing towers or oil rigs but even
00:37with all the excitement about what they
00:38could do there's this kind of dark cloud
00:40hanging over the ecosystem regarding you
00:43know what is government going to do
00:45about flying computers over cities or
00:47over workplaces and so Jonathan just for
00:50those of us who haven't been following
00:51that story what was the regulation
00:53introduced this summer were they kind of
00:55key takeaways that people should know
00:57about regarding like how that's gonna
00:59shape the ecosystem yes this was
01:00definitely one of the biggest concerns
01:02when we went out and raised our first
01:03round of financing there's a big
01:04question of will this ever even be legal
01:07to do and finally as of this summer
01:10it's called part 107 it's essentially
01:12the rules of the road for using drones
01:15for commercial applications and what it
01:17says is that commercial companies can do
01:19this they can do it up to four hundred
01:21five hundred feet they can do it when
01:24there is an operator who's responsible
01:26for the vehicle who can see the vehicle
01:28although they don't have to actually be
01:29flying it and in fact in most cases the
01:31drones are usually flying pretty
01:33autonomously but those that's kind of
01:35some of the basics of it so there's also
01:36some limitations the the converse of
01:38that it means you cannot fly aircraft
01:40beyond your visual line of sight
01:42although there is a waiver process now
01:45where the FAA is gonna grant kind of
01:47case by case based permissions to
01:49companies that are going to allow them
01:50to do that in the future you've been
01:52doing this for five years now I imagine
01:54that the conversations kind of evolved
01:56once the groundwork was starting to be
01:58laid by regulators how the conversations
02:00changed what people you're talking about
02:02you know whether they knew what they
02:05wanted to do with drones or maybe if
02:06they were just kind of speaking to you
02:07in an exploratory way how are those
02:09conversations changed so I've actually
02:11been in the drone space for about twelve
02:132004 and I remember a 2004 it was this
02:16was unquestionably only a military thing
02:18and around six or seven years ago
02:21started to see a lot of large
02:23enterprises go in many cases to military
02:26companies and say hey is there a version
02:28of this can we use this for powerline
02:30inspection and monitoring vegetation
02:32encroachment and monitoring you know oil
02:35and gas and infrastructure applications
02:37and things like that and so the
02:38conversations definitely changed and I
02:40think six years ago when some
02:42enterprises were looking for this there
02:43were a lot of missing pieces there was a
02:45you know missing commercial version of
02:47the technology a lot of the software was
02:49missing to actually make the images in
02:51the video taken by drones useful
02:53business intelligence and of course
02:55there was a missing regulatory framework
02:57so a lot of those things now exist and
02:59have been accelerated by the
03:00introduction also of a consumer market
03:03which has further driven down the price
03:05of the technology gotten it as smaller
03:07and smaller form factors and made it
03:09really Vic witness and so now with you
03:11know Silicon Valley is best at which is
03:13in you know building a lot of software
03:15that makes this really useful for a
03:17variety of different applications is
03:19making this available to just about
03:20every industry and so it's not obvious
03:23for every business how drones might fit
03:25into their workflows or transform their
03:27workflows and given that grant I'm
03:30curious to ask you what are things that
03:31your businesses should be considering as
03:33the unmanned aerial systems become more
03:36pervasive because we're kind of on the
03:38security and drone protection side we
03:41talked to a lot of customers that their
03:43biggest focus right now is on thinking
03:45about protecting themselves from other
03:47people's drones but I think along with
03:49that conversation about you know
03:51airspace enforcement and what the rules
03:52are and how the regulations are changing
03:54part of that is also a conversation of
03:56how can they actually use drones
03:58themselves in the future right so
04:00prisons can use drones for all sorts of
04:01things like inspecting you know they
04:03have really large physical perimeters
04:04there can be all sorts of inspection
04:06kind of constant you know perimeter
04:08security applications stadiums would
04:11love to use drones in the future to do
04:12their filming and to do all kinds of
04:14other stuff but their big concern is you
04:16know they they don't want to just roll
04:18drones into their infrastructure if they
04:20can't control what drones are there and
04:22what drones aren't I think we've all
04:23probably seen viral videos or tweets
04:27uses a net gun to shoot a drone out of
04:29the air or sends a falcon after one
04:31house the Falcon as a service business
04:32going or is that not what you do sorry
04:35it's not what we do uh unfortunately it
04:36sounds very exciting and awesome
04:38we don't have a falconry but know our
04:41focus is more on the communication side
04:43on the drone protocols on identifying
04:45what drones are flying in an area so
04:47that that can lead to actual airspace
04:49management of authorizing drones to be
04:51in an area and knowing when there are
04:52drones that aren't authorized to be
04:53there instead of just saying oh there
04:55are drones here we don't want drones at
04:57all you know we're all about
04:58facilitating actual proper use of drones
05:01and making sure that they can control
05:02those phases so Jonathan back to you
05:04beckylyn air were started you had more
05:06of a horizontal approach and you since
05:09switched to some more specific verticals
05:11but with you know big problems to tackle
05:13if you want me through kind of the
05:15evolution of that kind of set of
05:17approaches you know what why initially
05:19go horizontal if we didn't know what to
05:23so back in 2010 and 2011 was when we
05:26started to hear a lot of large
05:28enterprises asking about drone
05:30technology and trying to figure out how
05:32could they incorporate this into their
05:33business and we didn't have great
05:35visibility into where was this gonna be
05:36adopted earlier and where was it going
05:38to be adopted later but we had a sense
05:40of for any of these different
05:41applications there's kind of a lot of
05:43the fundamental building blocks that are
05:45just missing from the ecosystem entirely
05:47and so we really focused on building out
05:49a lot of that so think about you know
05:51software for operators in the fields
05:53that you don't have to be a pilot or an
05:54engineer to operate the drones and back
05:57everyone who was doing any software for
05:59drones assumed the operator was some
06:01military pilot or some incredibly
06:04experienced you know software an
06:06electrical engineer and so we were hire
06:07a bunch of game developers and build a
06:09UI that's just really easy to use we
06:11knew that that was going to be required
06:12another thing was our cloud back-end and
06:15kind of a web UI for managing all of the
06:17aspects of collecting data across
06:19multiple drone operations either at
06:22individual site over a time history or
06:24over a lot of different geographic
06:26locations and we knew whatever the use
06:27case was you needed to be able to manage
06:29the data you needed to be able to manage
06:31who was flying what drones at what
06:33locations where and you need to make it
06:35really easy to use for the operator in
06:36the field so we started to really get
06:38kind of pulled into the verticals where
06:41there was the most urgency from large
06:43enterprises where the enterprise has had
06:45a real felt business problem and where
06:48drones could be a big part of that
06:50solution and I was actually surprised
06:52you know one of the the verticals is the
06:54insurance vertical we're working with
06:56some of the largest carriers in the
06:57United States to transform their
06:59residential claims inspection process
07:01and also the commercial underwriting of
07:04buildings so that might not be obvious
07:06when I hear insurance and drones what
07:09that actually means you know is there
07:11gonna be a drone following me making
07:12sure I'm safe as I Drive or yeah how is
07:15that actually gonna be applied in you
07:16know their their model their businesses
07:18so today if if you have wind or hail
07:20damage and you call your insurance
07:22company it means most of the time
07:24there's probably someone coming out to
07:25your house and they're climbing up on
07:26your roof if you have a one-story house
07:28it's probably with a ladder if you have
07:30a two-story house or with Steve fruit
07:32Tufts it's often with ropes and
07:34harnesses it can take as much as half a
07:36day to do the inspection in many cases
07:38their actual roof actually can get
07:40damaged as a result of the inspection so
07:43it's really a process that I think in
07:45five years we're gonna look back on and
07:47think it was totally archaic that
07:48somebody would climb up on your rooftop
07:50because you have hail damage when a lot
07:52of this damage can clearly be seen from
07:54an aerial perspective and instead of
07:56filling out a paper report describing
07:58the damage all of this can be collected
08:00digitally stored in the cloud is
08:02available to be viewed over time and as
08:06much more accurate I'm gonna ask maybe
08:08an unorthodox question because you know
08:10obviously it's important to have a
08:12certain groundwork laid certain
08:14guidelines about how things should work
08:15but you know we want to have freedom to
08:17experiment and so maybe counter to that
08:20tendency I'm gonna ask what in the
08:22existing regulation or you know the new
08:24rules that kick in this summer do you
08:25feel is missing what do you think isn't
08:27addressed I mean I think there's still a
08:29lot of things that we haven't quite
08:31worked out not just come from a straight
08:33regulatory we need to make a lot about
08:34it but I don't think we've quite had the
08:36conversation about what we want that
08:38drone future to look like where we want
08:40drones flying where we don't want drones
08:42flying you know right now it's been kind
08:44of an ad hoc thing because it's worked
08:46because for the most part we don't have
08:48drones everywhere you know we don't have
08:4910,000 drones over our heads in the sky
08:51but as we move to the point where it
08:53becomes commonplace for you know
08:54every house to be inspected by drones
08:56for drone delivery to happen medical
08:58supplies all that stuff we need to
08:59actually kind of sit down and think
09:01through like what are the privacy
09:02implications what are the safety
09:03implications and how do we navigate that
09:05I think there's a real danger that we
09:07kind of move ahead like okay here's the
09:10current area we can just kind of fly
09:12wherever and we end up having kind of
09:14major backlash because you know we have
09:16major public incidents that happen and
09:18you know the public kind of sours on the
09:20idea it's really easy for us to say well
09:21we have all these great applications but
09:23you know if we don't think through the
09:25privacy the noise the whatever you know
09:28it's I think there's a good chance that
09:30we could kind of set ourselves back and
09:31follow up on that you know it's one
09:34thing when you're deploying drones as a
09:36business and you don't want to annoy
09:38customers you don't want to cause an
09:40incidences because I made two bad press
09:41at the same time drones are also in the
09:44hands of consumers who are gonna push
09:46rules they're gonna use it for you know
09:48just getting footage of a wedding or you
09:51know right random random events that
09:52they just thought I wanted a camera with
09:54unique perspective yeah and so given
09:56that tension you know how do you think
09:58about kind of regulation versus like a
10:00normative Glee deciding you know where
10:03we should lie on things I think some of
10:04that is kind of tough partly because you
10:06know and from like a kind of safety and
10:08accountability perspective you know I
10:10have very few concerns about the
10:12commercial drone space right like
10:13they're they're the ones who have all
10:14the incentives to be a good actor to you
10:17know think about these issues and not
10:19try to upset people but I think what are
10:22the dangers right now is the the
10:24consumer drone market and the major
10:26companies that are pumping out all these
10:28consumer drones they're doing so in a
10:30way where they currently just don't want
10:32any regulations that restrict their
10:34ability to sell drones you know they
10:36want as little friction as possible and
10:37that's good but the danger is that we
10:41have you know bad events that happen
10:43before that regulations quite worked out
10:45before kind of we figure out what we
10:47want the restrictions to be and just the
10:49whole market kind of sours on the idea
10:51of just having drones and bad actors
10:52hurt the potential for that commercial
10:54use another kind of tendency that I've
10:57noticed quite a bit is wanting to
10:59connect new trends emerging to
11:01historical kind of analogs looking at
11:04you know desktop computing for instance
11:08see that things tend to start with
11:10something built for work it's made to
11:12accomplish specific sets of tasks and
11:14then eventually something emerges
11:17typically maybe in the consumer space or
11:19just lower end where a little bit more
11:21approachable but not as powerful for
11:23getting work done but eventually there
11:25tends to be kind of a convergence where
11:27do you feel we are in that process or is
11:30drones maybe kind of separate from that
11:32different things are going on I think
11:34what you said is often true for hardware
11:37and for the devices where if you're
11:39using a phone at your office now it's
11:41probably you know the consumer phone
11:43that you're using with your family and
11:45stuff as well but maybe with some
11:46different software loaded on it or
11:48accessible to you when it comes to the
11:49software there's usually companies that
11:52are really successful targeting the
11:53consumer market or the kind of prosumer
11:55market who are much more focused on
11:57volume transactions and then there's the
11:59companies who are focused on the
12:00enterprises and putting all of the tools
12:02in place that enterprises need to be
12:03successful including the ability to
12:05manage users enterprise security
12:07permissions rules and approval workflows
12:10and things like that but the hardware in
12:12a lot of cases can be the same so in the
12:14drone space what we're seeing is with
12:16some of the companies who made the most
12:18kind of ubiquitous consumer drones which
12:21in the beginning weren't that great and
12:23crashed a lot and people got them under
12:25their Christmas tree and they probably
12:27put them aside after a few weeks or
12:29crashed it into a tree now in years kind
12:32of two and three have just gotten better
12:34and better at a really rapid pace and
12:36those companies have started releasing
12:38models that are you know more geared
12:40towards pursue more and even enterprise
12:42use cases but are lacking the software
12:44that enterprises need to make them
12:46successful and so now you have this kind
12:48of stack of different software companies
12:50some of them focused on consumers and an
12:52app that can help you plan a trajectory
12:54that takes an incredible you know video
12:57of your friend you know as they're
12:59skateboarding and you have companies who
13:01are focused on kind of the enterprise
13:03data collection and business analytics
13:05of it and how you integrate that data
13:06back into you know all the other things
13:09that your company is doing number of
13:11companies to point drones for highly
13:13valuable use cases where they say you
13:15know the DJI drones even at the highest
13:17end just don't quite cut it so where
13:19what is the set of I guess capability
13:22where you leap from maybe spending a
13:24couple thousands of dollars per vehicle
13:25it's moving up to something that's tens
13:27of thousands of dollars what what are
13:28the requirements where you kind of need
13:30to make that leap today so actually I
13:32would say the DJI vehicles are great for
13:34all kinds of applications and three
13:36years ago we were tracking about 700
13:38manufacturers of commercial drones
13:40around the world and most of you will
13:43have never heard of most any of those
13:44seven companies because they've all been
13:47passed now by the company who made the
13:49best consumer drone who's now making
13:51some of the best drones regardless of
13:53use case consumer or enterprise and the
13:56only differentiating factor really is
13:57what software you're using along with
13:59the drone and whether you're using the
14:01consumer software that can in many cases
14:03provided by the drone manufacturer
14:05themselves or whether you're using the
14:07enterprise software that's provided by
14:09one of the companies focused on
14:10enterprise use cases kind of so when you
14:14think about you know there's companies
14:16now like if you talk about cars we don't
14:18really know is it going to be one or two
14:20companies selling autonomy capabilities
14:23to car makers or it's going to be five
14:25or six we kind of just don't know how
14:26difficult it is when you think about
14:28autonomy as really sick you know aerial
14:31vehicles you already mentioned that
14:32they're increasingly autonomous but we
14:34still have that line-of-sight
14:35requirement baked into the new
14:37regulations that came into effect what
14:39use cases are unblocked as we maybe get
14:42rid of that requirement and what's it
14:44going to take to make the federal
14:46government kind of feel comfortable with
14:48that transition you know I assume that
14:50you're having more conversations with FA
14:52than most startups in the space even
14:54yeah we we've been one of the first
14:55companies to really lean in and work
14:57really closely with the FAA when he
14:59comes through tana me I think it's
15:00important to understand autonomy for
15:03what for what for what purpose autonomy
15:05just to be autonomous isn't necessarily
15:08inherently good we think about autonomy
15:11in terms of automation and taking
15:12something that maybe you could do it
15:14manually but if you go and you do it
15:16manually it's often not repeatable it
15:18may not be accurate enough and it may
15:20just consume too much human capital and
15:23other capital to be able to do it
15:25repeatedly and all the time
15:27and so we think about automation
15:29throughout the entire workflow
15:30automation in how you transform the
15:33photos and the video into actionable
15:34business intelligence but all
15:36so of course autonomy for the vehicles
15:37in the field and whether you need that
15:39person there to operate it whether the
15:41person is there just in case something
15:42goes wrong or whether the person is
15:44there not at all and so there's you know
15:46our main focus and I think the
15:47industry's early focus is on a lot of
15:49the applications where the person has to
15:51show up no matter what to get a job done
15:53like in the case of the insurance claims
15:55inspections the person's there to shake
15:57the hand of the customer they're often
15:59doing an internal inspection of the
16:01house but we're taking one of the most
16:03difficult aspects of their job and we're
16:05automating it substantially by bringing
16:06in a new tool into their toolkit there's
16:10other inspections and jobs that are
16:11similar to that I think over time as
16:13autonomy is enabled and as the
16:15regulations allow for flight operations
16:17that don't have a person there at all
16:18we're gonna see a lot of applications
16:20enabled where you know the person
16:22doesn't need to go out into the field at
16:23all one of the other industries is the
16:25mining industry where right now people
16:28are flying drones weekly in some cases
16:30even daily but you need that person
16:32there who's operating them I think
16:34that's a great application or market
16:36where as soon as the regulations enable
16:37it and the technology enables it they'd
16:39prefer to not have a person operating
16:41the drone at all and this the drones
16:43regularly flying day or after day on
16:45their own and automatically the other
16:47piece that that beyond line of sight and
16:49greater autonomy gives you over time is
16:51scalability of all these things it means
16:53that you eventually break the one to one
16:56ratio of one pilot operating one drone
16:58you know that's the thing that the
17:00military started thinking about a long
17:02time ago you know when they started
17:03thinking about you know drone operators
17:05in the field and how do you build that
17:07autonomy to the point where you could
17:09have one operator operating essentially
17:10five drones or ten drones
17:12and that operator is really only called
17:14into service when there's something
17:15weird going on or there's something that
17:18requires you know manual operation but I
17:20think I think that's for like the real
17:21advantages start to come in you came to
17:23the drone space from working in the Air
17:25Force correct yeah yeah I was an Air
17:27Force officer doing small UAV systems
17:29got it and and so in the course of your
17:32career what from that side of things has
17:34kind of made its way to the consumer
17:36space well honestly a lot of it I would
17:40I would almost say all of it a lot of
17:41the things that the military was
17:43thinking about back in kind of the early
17:442000s about autonomy and about building
17:47out mission plans and running these
17:49operations and things
17:50that's all trickled down to the consumer
17:52side you know thinking about I mean even
17:54you know you buy an off-the-shelf drone
17:56and you can do what you know in 2005 was
18:00really advanced for military small UAVs
18:02of like planning on a mission hitting go
18:04it takes off flies a thing comes back I
18:06think that's amazing and even the the
18:08sensor systems you know have trickled
18:10down drastically like the fact that you
18:12know DJI sells a system with a you know
18:14high-end thermal imager on it is huge
18:16Jonathan mentioned that for instance
18:19they he had to hire video game designers
18:21in order to make a UI that was actually
18:23like understandable and you yeah so what
18:25on the consumer side you know with
18:27billions of dollars of capital going
18:29into drones for companies like DJI and
18:31unique and 3d robotics our portfolio
18:34companies K do what what's making the
18:36opposite kind of taking opposite paths
18:38where things that initially they were
18:41you know done for the consumer space or
18:42making the way over to the military oh
18:44that's a good question
18:45I I think a lot of that thinking about
18:48ease of use and thinking about you know
18:50breaking some of those traditional
18:51assumptions on the military side of like
18:54oh we have a thing flying in the air
18:55there has to be a pilot like that person
18:58has to have been traditional aviation
18:59they know how you know piloting an
19:01aircraft works like that's starting to
19:03break down on the DoD side as you know
19:05the consumer and the commercial space
19:06proves out like no you know autonomy
19:08helps you you know handle that actual
19:11flight a few years ago if you had a
19:13drone you also usually had this giant
19:16box that you wheeled around with you
19:18called a ground control station and it
19:20had joysticks and it had the screen and
19:23all of that is being replaced for most
19:26drone operations by an iOS or an Android
19:29device with software that you touch with
19:32your hand and that consumerization of
19:35this technology is also a big part of
19:37what's actually gonna make it really
19:38scalable because the military's approach
19:40to a lot of these things is not scalable
19:42okay nature of with a stopwatch
19:45contracts and such thank you both for
19:46your time I really appreciate you
19:48catching us all up with where things are
19:50today and where they're going Thanks
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