Meanwhile, its been a year since Verizon acquired Skyward - which was a force in the drone industry pushing for better flight management tools, better collaboration with ATC, and an affordable product for small-time commercial operators that got most of their money as contractors/service providers.
At the enterprise level, Drones just didn't solve a lot of problems. At the small farmer, construction contractor, gravel pit, etc, drones solved a lot of problems, but drones were the anti-scale solution. They Reduced the work so drastically, and improved the result so much that there was no need to scale up software licenses. In many cases, it just did the work better, in a 10th of the time, at a much lower cost. But, there was not a giant amount of work in the queue for those companies. Just a steady flow of the same jobs that used to take longer.
Now, beyond visual line of sight (BVLS) flights might change that for the enterprise eventually, Power lines, rails, pipelines, and roads are all good candidates for remote, automated drone inspection. But, I suspect that it will be either DJI hardware, Custom Hardware, and some amount of custom software that really integrates drones into the enterprise process. Flight planning is only part of the picture. Maybe Airware had it all, but, if so, they were too early - they couldn't outlast the slow (and rational) pace of aviation regulatory change.
There wasn't a SDK or platform to build on and we didn't take any actual orders for anything (so we had minimal success stories or $$$). The hardware we showed was built by us, and ran a custom OS (not based on linux) that was nearly impossible to work with. We had a very talented engineer rage-quit after spending a week attempting to figure out how the OS handled the internal message bus system to debug an issue.
The hardware was also crazy expensive. We built literally everything: the vehicles, autopilot, the autopilot OS, the comms board that connected to motors (and enclosures), the sensor boards (GPS, gyro, etc), the radio that talked to the autopilot, the flight planning software, and later an entire enterprise cloud stack written in only the newest of the new JS frameworks and containers. The team often decided to do things such as not use off-the-shelf processors like the Nvidia TK1 or existing embedded software solutions -- nothing was 'good enough' so everything was invented.
Oh, and did I mention we also cycled through recruiters like candy?
> entire enterprise cloud stack written in only the newest of the new JS frameworks and containers
I'm of the opinion that the JS ecosystem is one of the few spaces where a healthy dose of NIH can save you a lot of time and money in the long run. And it seems like the only place where they didn't go for a custom solution.
Takes 3 weeks to debug.
I'm absolutely going to add "not inough humility" to the list from now on, it works just too well :)
Disclosure, I originally was the product manager for 3DR's flagship software product, Site Scan, which drove our transition from a hardware business to a software business, and I am currently VP of Marketing and Business Development here. Each mine that deploys our software saves, on average, 6 figures per year (after the product cost). This is on man-hour costs alone - the value is greater if you look at the increased safety of taking individuals out of active mines and increasing topography capture that enables analysts to identify issues before they turn into safety hazards on site.
That's just for one industry we serve - cost savings/time savings/improvements in project pursuit are all high for construction and engineering as well.
I think it's likely you saw some presentations from companies that had not done enough customer discovery or they were perhaps just very early in the process of identifying real problems and building the right solutions, but it's not representative of the industry.
Where do the savings come from?
(disclosure: I work for OTTO Motors, which has customers in this space)
Take you standard Amazon warehouse for small articles as an example. Maximizing untilisation, meaning the ratio between space used und spa e available, in that case you end up with a never ending mixture of differwnt small articles in the same location. Without RFID chips on every article, which is as of now prohibitively expensive, the only feasible way to count the inventory is using people.
For other warehouses and articles, like white goods or other large stuff that easily identified with out touching it whether a drone, a ground vehicle or something running on rails is better suited depends on a couple of factors. If you might run into situations that require a chenged warehouse layout, which occurs much more often than you think, fixed installations add a lot to the fix costs and rwduce flexibility.
Using ground based solutions runs into issues with high warehouses, storing up to 15 meters in height is not uncommon. Again, density is the main reason for this, getting more inventory at the se number of square meters. In that case a drone is both more flexible and can cover the heights as well.
But thats theory, not sure what came out of the Fraunhofer trials covering white goods.
Simply being able to fly a high resolution camera with a bright light up underneath a bridge probably saves an enormous amount of time.
On my soapbox, the big missing piece in drones is a real platform for managing the concept of time series map data for a layperson. There is a lot of dimensions in the data that drones generate (lat, long, alt, color, time, camera stuff, angle of image, etc). Tons of data, and nobody has convincingly showed anything that goes into trend analysis. I’m not sure that any company is really delivering on the concept that this data needs to be controlled and analyzed. Especially in farms, the time series part is important, but it is mostly snapshots and intuition right now.
Lossmaking companies launching in-house VC funds while continuing to raise money is a huge red flag. It suggests operators who prefer to be fund managers, two very different roles.
I know of at least two really prominent cryptocurrency ICOs that are in this boat.
(As a side note, I wonder how often the opposite situation - an investor who gets so excited that they found a company - occurs, and whether that's a strong positive sign. I can think of at least 2 such big successes - Jeff Bezos with Amazon and Jim Clark with Netscape - and a bunch of more minor ones, like FriendFeed or TripleByte.)
Which two are you talking about?
I ask because you're clearly not a crypto shill and it's hard to find unbiased opinions on cryptocurrencies these days.
Fixing the transaction delays & scalability problems of Bitcoin (Nano, Iota).
Fixing web advertising (Brave/BAT).
Decentralized prediction markets (Augur).
Tokenizing real estate (lots of startups).
Decentralized stablecoins (DAI).
DApp platforms (Ethereum, EOS, bunch of others now) and infrastructure built to solve problems with those platforms (Loom Network, Cardstack).
It remains to be seen how much of this will be profitable or even get any significant user adoption.
I'm thinking back to the dot-com boom, though. The WWW started, fundamentally, as a communication technology, and it had its biggest impact as a communication technology. But in between, there was a 5-year period (1995-2000) when everybody was trying to get rich off dot-coms, usually by applying them to existing profitable markets that it was completely unsuited to. And then there was a further 2 year period (2001-2003) where nobody was getting rich off anything, companies were going bankrupt left and right, but people were figuring out what the web was actually good for. Once they did, the resulting companies changed the world far more than Tim Berners-Lee could've imagined.
Cryptocurrencies are fundamentally financial products, and I bet that their ultimate use will end up replacing much of the financial industry. We just had 4 years of hobbyist development (2009-2013) followed by 5 years of everybody trying to get rich off them (2013-2018) by either building platforms or applying them to existing industries, much of which they're ill-suited for. A lot of people have recently lost their shirt. I don't know whether this means we're in the "let's figure out what they're actually good for" phase, or whether they'll be a further, even bigger bubble. It's likely that cryptocurrencies will take longer to penetrate the mass market than the WWW did, because communications (by its nature) spreads virally, while finance is the underpinning for the entire rest of the economy. But I don't think cryptocurrencies are a fad that'll die out, at this point...there are too many people experimenting with them and too many people desperate for an alternative to the mainstream financial system.
I see cryptocurrencies as an offshoot of people misunderstanding what a blockchain can/can't do, and those seeking to profit from this misunderstanding.
I see the blockchain as a new way to structure data, e.g. a new type of database. It can be used to create a ledger/method of exchange within a financial system, but to me the underlying technology is not financial in nature, it's just a new way to structure and store data.
The way the blockchain is implemented in Bitcoin is ideal for a decentralized financial system, but to me it is much less efficient than a system relying on a trusted 3rd party for accounting/balancing ledgers. This is the fundamental tradeoff - efficiency/trust.
Among myself/my friends, I don't see anyone desperate for an alternative to the mainstream system, I actually see good progress in fintech companies such as Venmo/TransferWise/Monzo etc. that are getting bought up by the bigger banks/payments providers. But if I was trying to move more money across stricter borders, I could see the desire for new financial products/systems (legality aside).
I'll check back in with you in a year to see what's up ;)
It could be suggestive of that, but I'm not sure it is in this case.
Looking at the press around the CDF, they made a couple of co-investments (can't find anything where they led a round or were the first through the door), and it wasn't "in-house" as much as Airware branded: they had LPs and I think it's likely Airwave's involvement was simply being the technical due diligence on a deal and then somebody else doing the paperwork, legals, etc.
It seems like it was a beauty parade for talent, ideas, and future acquisitions.
There's a whole other argument around whether or not that's a sensible idea, but I think it's a big leap to suggest that a market leader in a nascent market setting up an investment vehicle specifically for that market is indicative that they 'prefer' to be investing not operating.
Unless literally no one is looking at the bank balance?
Did someone log in this morning, see the balance at a negative, and shut down the company?
Said another way: given the number of liabilities at a company that has taken hundreds of millions in funding and is flying low over the ground, a lease is probably not you biggest concern.
Ouch. Sadly, not an uncommon failure mode. Raise more than you can easily be bought out for (> $50M) and spend it faster than you can grow into product fit.
That said, I am a bit surprised that there isn't more demand for a domestically developed drone operating system. Given the issues the Army has with DJI stuff it seems like it would be a natural support a local company that could provide a similar capability.
I presume that is why the Army has been doing things with the DJI drones (I'm sure they do stuff with Boeing drones or equivalents as well but I am also sure they aren't $1500 off the shelf at WalMart).
It just seems like having a vibrant domestic drone market would be a strategically useful thing.
They get whatever's left based on their liquidation preference and preferred stockholder preference, leaving nothing for common stock holders including the founders themselves.
Whats a typical drawdown look like?
Patents are usually sold to patent trolls or companies seeking a defensive portfolio. An attempt is usually made to sell tangible assets as a lot, but if there are no buyers, individual assets are auctioned. Silicon Valley Disposition is frequently selected to manage asset disposition auctions.
whats the drawdown look like? how much money do VCs lose, percentage wise given their liquidity preference?
there is no scatterplot or case study or statistics at all? maybe an obscure SSRN article? Publication from a VC itself?
Common shares go to zero (as they should).
But it’s true most of the money went to employees.
2) hardware in it of it itself is defensible/a moat because apparently software first companies may not know how to do it well
3) software for hardware is particularly dangerous because its you can get pushed off of someones hardware platform in favor of a homegrown, good enough, alternative
Why, if they had all that funding, and assuming that they had good reasons for a custom OS, would they fail to hire an experienced team to build one -- it seems that the time saved by experience would be well worth it?
Bottom line, is there any software of value that some other drone company might want to purchase?
(edit: add last line)
A few customers listed here: Delta Drone, Drone America.
Sounds like the market didn't want or need a $2500/yr/drone software package for automating flights/data retrieval/storage. And there's simply no competing at the hardware level with DJI, even with $118M in funding.
"Across all prices in North America, DJI represented 50 percent of the market, Snow says. The price range where DJI is not dominant is drones under $500, which are mostly toys, and where there are hundreds of companies competing." 
There's money to be made in industrial (non-warfare) drones - but not as much as everyone thinks, and competition is really tough.
If DJI represents the future of Chinese corporations, many people on the other side of the ocean should be very wary.
 edited from "products". In fact what's so impressive with DJI is not just the products themselves, but also the design, marketing and branding, which is kind of an Apple/GoPro hybrid. They are not just creating immense value - they are packaging it the right way.
This is what always struck me as so short-sighted about Western corporations offshoring their manufacturing. Japan and the Asian Tigers proved that it's possible for nations to successfully climb the value chain, starting off by doing low-skilled work and then using the experience gained from that to gradually take over more and more of the overall product development process. China is just taking that approach and applying it at a larger scale than anyone has ever done before.
When a company like Apple contracts out its manufacturing to a Chinese firm, it's betting that Apple will always be able to produce better design and marketing than that Chinese firm can. But based on history, that doesn't strike me as a very good bet. Eventually the Chinese firm will climb high enough on the value chain where they don't need Apple's designers and marketers to make objects that sell anymore. The Western companies are training their own replacements.
While the western corporations think they're taking advantage of cheap Chinese labor, the Chinese are actually taking advantage of our weakness for short-term profits over long-term investment and getting us to sellout IP in the bargain. For western corporations & governments, one of the most historically stupid geostrategic moves ever.
China (Netflix) takes what the United States(Hollywood) doesn't want to do/finds little value in. Once China (Netflix) has a foundation of manufacturing know-how (media catalog)they move up the chain to more complex technical (media) products.
If anyone is interested look up "robomasters" for a DJI recruitment competition running with teams from >100 Chinese Universities.
People should be excited.
If Chinese companies all behave like DJI, that's a blessing to everyone.
But it can't do end hardware.
And the stuff it has been successful at is designing consumer hardware but outsourcing the manufacturing to another country.
Arduino is Italian. Samsung is South Korean. TSMC is Thai. ARM and RPi is British. Shenzhen is the hardware place to be now. It didn't even steal that crown from SV. It stole it from Akihabara.
There is a great history of end hardware in SV. It has moved off shore chasing lower costs and fewer regulations. Great video tour of the Mac factory in Fremont:
Hi buddy, if you are seeing this :)
So from their perspective, fundraising is spectacle and excitement, and losing investments are part of the loss model.
Side note, a return model heuristic for LPs: 1 in 10 yields 10x, 1 in 100 yields 1000x
From the perspective of the VC, if they have a bunch of losers in their portfolio it means that they're not going to be able to raise another fund in 10 years, they won't have any carried interest (which is where VCs make the bulk of their compensation - it's their 20% of the total profits), and they'll have to content themselves with the salary they drew from the fund management fees.
BTW, most LPs are things like pension funds and university endowments, along with hedge funds that pensions & universities invest in. So if you're ever wondering why your parents' retirement has suddenly vanished or your kids can't afford to go to college, this is why.