Welcome to our conversation with Eric Watson from Zipline.
You can’t help but be impressed with the inspiring and important work that Zipline has done with their partners in Africa – with medical and healthcare outcomes that are remarkable. So, you will really enjoy hearing about Zipline and their first platform in Africa – Eric gives an excellent overview.
We then transition to their work in the United States with their Platform 2. We discuss how their experiences in Africa helped and contributed to their US performance. We discuss what’s similar and what’s completely different between the two markets.
Eric is a pro at discussing the US certification process – and he takes it from ground up as if he were starting from scratch. What’s required, what has changed throughout the years, what’s working well, and what can be improved – and how the certification process is different than what they first anticipated upon launching in the US. He also discusses where there’s been tremendous progress in the last year.
In advanced air mobility, there’s always this struggle with product-market fit. Many of the players in the market have been accused of having a technical capability and are in-search for a market or a problem to solve. It is entirely refreshing to hear that Zipline started with a massive problem to solve in Africa – and from that impressive work, have demonstrated success and medical outcomes in Africa that are amazing.
What it really comes down to is how that success translates into the bigger, yet more complex and more competitive market in the US – where their unique platform two can deliver with precision “on a dinner plate” with almost no noise whatsoever. Listen from Eric on how they believe they can compete in this much different market.
Eric, thanks for joining us!
Welcome to our conversation with Eric Watson from Zipline.
You can’t help but be impressed with the inspiring and important work that Zipline has done with their partners in Africa – with medical and healthcare outcomes that are remarkable. So, you will really enjoy hearing about Zipline and their first platform in Africa – Eric gives an excellent overview.
We then transition to their work in the United States with their Platform 2. We discuss how their experiences in Africa helped and contributed to their US performance. We discuss what’s similar and what’s completely different between the two markets.
Eric is a pro at discussing the US certification process – and he takes it from ground up as if he were starting from scratch. What’s required, what has changed throughout the years, what’s working well, and what can be improved – and how the certification process is different than what they first anticipated upon launching in the US. He also discusses where there’s been tremendous progress in the last year.
In advanced air mobility, there’s always this struggle with product-market fit. Many of the players in the market have been accused of having a technical capability and are in-search for a market or a problem to solve. It is entirely refreshing to hear that Zipline started with a massive problem to solve in Africa – and from that impressive work, have demonstrated success and medical outcomes in Africa that are amazing.
What it really comes down to is how that success translates into the bigger, yet more complex and more competitive market in the US – where their unique platform two can deliver with precision “on a dinner plate” with almost no noise whatsoever. Listen from Eric on how they believe they can compete in this much different market.
Eric, thanks for joining us!
Zipline has always taken the approach of being very first principled when it comes to safety. The first question we ask ourselves when we're trying to go do something new, whether that's a new location, new airspace, new environment, new weather envelope, new aircraft, all these different things. The first thing we ask ourselves is, what is the level of safety that we need to achieve for these operations and how do we have the confidence that we have achieved that? And early on in the program, we'll say, what do we need to do in order to look back and what does success look like in the testing or analysis that we're going to conduct? Then the next question is, what's the regulatory pathway, what do we need to show compliance with? What are the regulator expectations? And so I think that's something that isn't fully unique to Zipline, but I think is a little bit unique where a number of aviation companies start off with a compliance mindset and Zipline was founded on more first principles than that.
Jim:Hey, welcome back to The Vertical Space and our conversation with Eric Watson from Zipline. Hey, listen, you can't help, but be impressed with the inspiring and important work that Zipline has done with their partners in Africa. With medical and healthcare outcomes that are remarkable. So you'll really enjoy hearing about Zipline and their first platform in Africa. Eric gives an excellent overview. We then transitioned to their work in the United States with our platform two. We discuss how their experiences in Africa helped and contributed to their U.S. performance. We discuss what's similar and what's completely different between the two markets. Listen, Eric is a pro at discussing the U.S. certification process. He takes it from ground up. As if we were starting from scratch, what's required, what has changed throughout the years what's working well and what can be improved and and how the certification process is different than what they first anticipated upon launching the United States. He also discusses where there's been tremendous progress in the last year. I really liked Eric's response to Peter's question of where Zipline sees the operational boundary line between missions they would fly with platform one with their airdrop method versus missions Zipline would fly with the hovering capability of platform two and that type of delivery method. Great response. Listen in advanced air mobility there's always this struggle with product market fit. Many of the players in the market had been accused of having a technical capability and are in search for a market or a problem to solve. It is entirely refreshing to hear that Zipline started with a massive problem to solve in Africa. And from that impressive work have demonstrated success in medical outcomes in Africa are really just amazing What it really comes down to is how that success translates into a bigger, yet more complex and more competitive market in the United States where their unique platform two can deliver with precision on a dinner plate with almost no noise whatsoever. Listen from Eric and how they believe they can compete in this much different market. I really enjoyed preparing for this podcast, their CEO Keller Rinaudo Cliffton is very impressive. And Eric also has a passion and eloquence in telling what they've done and where they're going as a company. But I also like about Eric and perhaps it's just a part of the culture of Zipline is that he positively talked about what is possible versus the hurdles that he faces for example, in certification, where oftentimes we only hear about the hurdles and the difficulties of working with regulatory bodies. Perhaps, it's just another reason why Zipline is having such success. Eric thanks for joining us and to our listeners we hope you'll enjoy our talk with Eric Watson as you innovate The Vertical Space. Eric Watson has been at Zipline since 2016, where he is currently the Head of Systems Engineering, Certification, and System Safety. Two of Eric's proudest moments at Zipline have been helping set up the first national scale drone delivery system in Rwanda and achieving the first beyond visual line of sight operations with an onboard detect and avoid system in the United States. Eric is passionate about moving the UAS and autonomous aviation industry towards safe and efficient airspace integration and including a participation in leadership roles in UAS Standards, Development efforts. Eric has a background in aerospace engineering. And before joining Zipline, he worked designing and launching small satellites and co-founded a start up.
Luka:Eric, welcome to The Vertical Space. It's such a pleasure to have you on the show.
Eric:Yeah, thank you so much for having me guys, really excited to be here.
Luka:Is there anything that few in the industry agree with you on?
Eric:Yeah, I'm not sure that it's so much, don't agree as much as maybe don't realize, but, I think that's, drone delivery is here. There's autonomous drones delivering products and dependent upon in different communities just really depends where you are in the world. so I think that's something that some people maybe don't realize or underappreciate and think that it might be some far off distant future, whereas there's other parts of the world that are, depending upon drone delivery services for healthcare, logistics, and other things that really make an impact in the community.
Luka:What do you think is the source of this skepticism? We've heard this, as well. There's always those folks who for a variety of reasons are quite convinced that this is not going to work. Obviously we do believe that this is a huge market opportunity, but in your words, what do you see as some of the most credible criticisms and how would you respond?
Eric:Yeah, I think, I'm not sure if it's, I'm sure there are some credible criticisms. I think most of the misconception just stems from a lack of it being tangible, right? Zipline's delivering, over 84 percent of the, health facilities in Rwanda and as an example, and we've started operations commercially in 2016. So. a number of years of experience doing this and I think for a lot of people in the world, that just feels distant, right? And there are areas in the United States that Zipline and others are, delivering to communities and providing access to different products and in a more efficient, safer, more green way. And I think that a lot of people hasn't been their backyard yet. Right. It hasn't come to them yet. And so it just feels like something that's less tangible and, and feels far off and distant. But in my opinion, being pretty close to the technology side and also having spent, years, working on unscaling this up and partnership with healthcare partners, regulators, different folks, it's really pretty obvious when you see it is my personal opinion, right? When you, if you might see either access that wasn't existent before, right? Didn't exist before and now exists. Or if you see someone order something or need something that's quite small, you need some children's Tylenol delivered quickly and a car shows up on your, in your street, throws the emergency flashers on and a person walks out and hands you a bottle of children's Tylenol that doesn't make a ton of sense compared to just being able to get something quickly and efficiently delivered with the right sized, autonomous, delivery system for the product that needs to be delivered in an efficient way. So I think once you see it and that the system's in action, I think it becomes pretty obvious, but there's just a lot of people in the world who haven't had the opportunity yet to be able to have that experience.
Luka:Some have when you look at the operations that WING is conducting and also Manna, in Ireland and starting in the U. S. People who are experiencing drone delivery are, really excited and open and passionate about it. But there seems to be obviously those who drone delivery hasn't touched yet that remain skeptical about things like noise and, how really convenient this will be. Will this be available every time that I need it? So I'm sure we'll get into a lot of different aspects of this in the conversation.
Jim:Very good point, Luka. Eric, I can't wait for you to tell the story of Zipline you know, how you started. The work you've done, providing access to important goods to those who have not had access, you know, it's a big part of who Zipline is. You've published, listen, meaningful outcomes in really well-respected journals with what you've accomplished in Africa. Is that what makes you different? Is that why you believe drone services are here to stay?
Eric:Yeah, it's a great point and it's a great point, Jim. I think that this is a big, this is a big part of it. And it's very intentional, I think that anytime that you're bringing a new product, a new service to the world that didn't previously exist, I think it's important to be very cognizant of what the approach is, And Zipline focusing on some of the biggest problems initially, it was a very intentional thing for us to do. And so it makes for, it, in our experience, it has made for a community that has welcomed us in pretty much every instance with open arms. And so just to make that a little bit more tangible, I was in Rwanda and in 2016, helping to make those initial operations. And, yeah, and going out and talking with doctors, talking with lab techs and, people who ran the pharmacies at some of these health facilities. And when we started operations, I remember very vividly, first of all, just showing up at some of these remote facilities in more rural parts of Rwanda and being received like a, like some sort of rockstar, which is fun. and just being so thankful and so appreciative of the service that we were able to offer to help them complete their mission, like their life mission. and all the cases in my experience has been to provide those local communities with better medical care, And so just us doing our small part to be able to allow them to better execute on that mission has been a great partnership. And, the first piece of feedback that was just every single place that we went to early days was, when are you going to expand from 12 hours a day to 24 hours a day? When we first started, we started 12 hours a day service at, seven days a week through 365, but it was only 12 hours a day. And so that I remember, we were like any startup you're looking for product market fit. and we. we're optimistic, but you never know until you get there and so when you provide a new service to the world, to a portion of the world, and the first bit of feedback that you get is we want more of your service, is a pretty good piece of feedback, So, yeah, I think that's really positive. It's very intentional to, to start in those areas and to focus on those kind of beachhead markets that are maybe most in need or most, flexible and willing to be willing partners to go through any of the road bumps that happened in the first couple of years of a brand new service that you're bringing into the world. But I do think that's a big part of it. And I also think that, that point of enabling access to healthcare products, and then, also we're expanding beyond healthcare products in certain places That's not just the past, I think that we're super excited to expand to, we're now operating in seven countries and three different continents today and expanding on that. So that's, healthcare first and every one of those markets we're expanding into the UK with a partnership with the national healthcare system, this year. We have many of our partners in the U S that we are currently serving and also going to be launching with our healthcare partners. So this is not something that's unique to, you know, only certain parts of the world and it's not something that is Zipline's origin story, we're going away from, right. This is a core part of who we are and we're really excited to continue that mission.
Peter:So Eric, what was that discussion like around the table back in 2016 to bet the company on going so far away from home and picking Rwanda? What were the risks or the objections around the table that came up and how did you guys work through to that decision?
Eric:Yeah, that's a great question. So I think there's a misconception out there that we picked Rwanda. It's more that Rwanda picked us, obviously it's a partnership. It's bidirectional, but, there are a few things that were clear to us back then, and that was that we need to get the service into the real world to get customer feedback and learn quickly. We weren't going to be successful by, staying inside the building, and perfecting a system that had never really experienced customer feedback. That's not how great products are developed. So we need to get outside the building, start serving customers, and that's where we're going to learn. So that was very clear to us. It also was very clear to us that we need to solve the biggest problem first, right? And so that focused in, in healthcare in some of these areas where they didn't have, there were parts of the world that didn't have the best access to healthcare. So that, that had us looking in those areas. But then really, what we did is we ran a bit of a horse race, We were looking with different partners that met those criteria. and then Rwanda took the bet on Zipline. We were a small startup. Especially back then, and for the national healthcare system of, an awesome country like Rwanda, to bet on Zipline was, I think, a really insightful, profound and, risky thing for them to do at the time. and so that was just, it, I think Zipline's culture, we have a bit of a chip on our shoulder, if you will, to prove that this technology, has a really positive impact that it can make in the world and is a big part of the future. And that was just a really big bet placed on us on that partnership from the country of Rwanda and leadership within the country that we felt a personal responsibility to deliver on. which is a big part of us making the decision and going forward. and honestly, it also, the way you asked, the question in some ways, it makes it sound like we had a lot of choices, When you're a small startup, you have to, we didn't have the luxury of having a big, a big treasure chest full of gold, on our side. going in and proving product market fit, proving that there was community acceptance, proving that there is, a real market here was something that we needed to do in order to just to exist for another few years to give it a chance to get to the next level, So we had to be scrappy and pragmatic to go grow, Zipline and improve those things.
Peter:Sure. I know what you mean. You built a system for that mission, an airplane, with long range with the, airdrop method of delivery, which clearly worked for that mission. As you went through that design process for, what you call platform one where did you assume that that same platform could be expanded to in terms of other missions and markets?
Eric:Speaking honestly, that delivery experience, that customer experience has gone farther than we thought it would. We thought that, Hey, flying by and dropping a package in a parachute, into the kind of grass field next to the lab, for example, is this something that's going to, is this a great customer experience? We had some doubts, but it's scaled more than we expected, we're delivering, every day in, in Arkansas, for example, and in partnership with Walmart. since 2021 delivering, both, products from the pharmacy of Walmart, as well as other things from that facility, food, et cetera, to communities in outside of Bentonville, Arkansas, and our customers love it. It's like that same delivery experience has scaled into kind of suburban backyards in the United States. and again, in select communities are really quite well. So that customer experience in that platform has gone beyond what we expected when we were initially designing the system for that, for that specific use.
Peter:So you have a lot of experience flying with that and operations using that platform. Where do you guys now see being the operational boundary line between missions you would fly with platform one and with this airdrop method versus missions you would fly with the hovering capability and that type of delivery method?
Eric:Yeah. So maybe a little bit of background here, just to catch him up who might not, might not know. So Zipline is developing, a platform two system as we call it, and and that system is focused on home delivery, as a vertical takeoff and landing electric aircraft, hovers to take off transitions to fly on the wing and then transitions back to a hover delivery site. Lowers what we call a droid. It's like a cute little robot hanging on a tether down from the aircraft that goes into the delivery area, identifies the right delivery site and leaves the package right where it's needed, whether that's your backyard table or somewhere else. so anyway, that's the, that's that next generation. Quick verbal description, pictures worth a thousand words. So feel free to look it up, but quick verbal description of the platform two system. and yeah, but great question. So we, the platform one system is really designed for long range missions, And so that is instrumental in, positively impacting, the healthcare system and, with our partners, which could be with national healthcare systems, or it could be, local, in the United States or other places, more like local networks, healthcare networks, and it's focused on more rural areas, the edge of suburban, some suburban areas, and then platform two is focused on urban and suburban, home delivery as, as well as moving products, Like lab samples between hospitals and more urban settings. and so that's the distinction is do we need long range and, and also have the ability for, dropping the package into a bit of a bigger area, or is this a shorter range, more dense area that really needs the high delivery accuracy and honestly magical delivery experience of the Platform 2 system?
Luka:Over the last year or year and a half, a lot of people in the industry, have been surprised by how much demand is and will be coming from home delivery, suburban delivery of high volume, low value goods like food, like coffee. When you look back to 2016, how did you prioritize these markets? what were your expectations in terms of, the growth opportunity for the healthcare B2B delivery versus Consumer B2C delivery.
Eric:We've been very focused on, on the healthcare space as supply and, upbringing that's core to who we are. with that said, and we think there's a real viable business model there that, that can scale. with that said, I remember, Amazon stated about 85 percent of products that they deliver are less than five pounds, So there's a clear need beyond healthcare for instant logistics and instant delivery of all the types of products and some of the ones that you just mentioned, retail, food, et cetera. And so we firmly believe that there's an opportunity for drone delivery and, Zipline being one of those providers to really make a positive change, not just inside healthcare, but be able to, make a positive impact for these other spaces as well, to deliver goods to homes, and other places, but, to homes that are in a more, in a safer, quieter, more efficient way than the current, mechanisms that are used for those deliveries.
Jim:Eric was your Africa experience, a net positive financial experience.
Eric:Yeah, I mean, there's no way that Zipline exists today without our experience in Africa. so
Jim:But was Africa profitable. Listen, what you did in Africa with providing access to goods. You know, to people who would not otherwise have had it. In an a timely basis. Listen to clearly saved a lot of lives as, and there's a reason why you have such market penetration in Rwanda, in different parts of Africa. But was that profitable for you?
Luka:You mean on per delivery basis, Jim?
Jim:Yes Luka. Yeah, there's a, you know, listen, there's a part of me that says, why not just do that everywhere, delivering service to more remote areas. You know, you don't have the same air traffic issues you don't have the same certification issues. Your outcomes are through the roof. And, an argument can be made, just keep doing what you do really, really well, where there's a clear use case. But if you're not making money doing it, then that would explain why you would want to get into a more crowded space.ableit potentially a large market. But a very, very different market with a very different vehicle. But was that profitable?
Eric:Yeah. So we're super excited that we're able to sustainably serve the communities that we're serving in Africa and everywhere that we operate. Zipline has, I think it just comes to the aspirations of the company, we're focused on enabling an instant logistic system that serves everyone equally in healthcare and beyond. And so while we are excited about the, both the mission and the business aspects of serving, communities that may have access challenges, there's more, There's, there's more that we believe that supply can do to positively impact the world than that. And so we're focused, not only on continuing to expand and scale those operations to, expand that positive impact, but also looking at, we feel like we're uniquely positioned to be able to make a positive impact in other areas and in other markets. And so that I think is the main reason for the expansion beyond those initial use cases is that, we're super excited to, to be able to do more. And it isn't a shift away from those core use cases. but it's more of an addition adding on.
Luka:Eric, can you give us a sense of the kind of utilization that you were able to achieve in Africa and, ballpark cost figures per delivery?
Eric:Yeah, super excited and a huge shout out to our operations teams in a lot of these markets that really blow me and a lot of the rest of the team away every day. we designed our, platform one system we thought initially that doing, if we could only do 150 deliveries in a day, that would be amazing. That'd be a huge impact. That'll be great for the business, great for the community, and we regularly do over 400 deliveries a day from a number of these facilities without really making many design changes, without doing much, just the operations team has found opportunities for improving efficiency, integrating, smoothing demand, integrating in a really creative ways with local healthcare systems. yeah, it's been really powerful to see the demand from the local communities just continue to increase, and that not just being within, the products we started with. We started in Rwanda, for example, we started with blood products. We expanded To medical products, medicines, vaccines, and, those are basically three of the core product categories that we serve in our, almost all of our communities that we serve, but also expanding into areas that we never really imagined, or at least didn't think would come this quickly. One example of those is animal husbandry, where we're delivering. different types of, artificial insemination products and, swine, semen and other things to improve livestock health and efficiency of those systems in these communities, which has a really big positive impact on the local economics, and different things within the community and health, within the community. So there's, it's one of those situations where providing, Logistic system and focusing on an initial use case that is really impactful, but then the creativity of our partners being able to identify other ways to use this logistic system to positive impact the community has increased volume and demand in ways that we didn't really think were on the horizon when we first started.
Luka:And Eric, the 400 deliveries per day, this is with how many drones?
Eric:Oof. yeah, sorry. I don't know the numbers off the top of my head, tens of drones at one of those sites.
Luka:And any ballpark figures that you can, talk to us about in terms of the cost per flight and how the economics work?
Eric:No, I mean, we're just focused on, that we have partnerships with, national healthcare systems and that we're really excited to be able to execute on those in a financially sustainable way that makes sense, not only makes, healthcare and outcomes sense, but also makes sense for the economics of our partners in these national healthcare systems.
Jim:And the hospital systems and the state. If I listened to and read properly, they're the ones who were paying for the Eric?.
Eric:Yeah, we have. absolutely, yes. but in the markets that we operate in, the, either the national level or the state level, depends on the countries and how their healthcare systems are set up. those are our key partners in the from a contract and economic standpoint, I also, would have to give a big shout out to a lot of the other partners that Zipline has, across, to name a couple, Gates Foundation, Gavi, a lot of different foundations that have supported Zipline's ability to get off the ground. in, in these markets and it can continue our operation. So one of the things that we've found is it's really important for success of the integration, into the logistic system to have, really deep buy in and support from the healthcare system that we're partnering with. but also Zipline's really excited whenever we can to bring additional funding into the mix, to, to support those operations. And, there's a lot of very generous organizations around the world that are excited to make a positive impact and see that their, dollars can make a pretty big impact when deployed in partnership with technology like Zipline's.
Luka:And Eric, how does the experience accumulated in Africa operations translate to your aspirations in the U. S. and specifically how the FAA looks at this experience and, gives for lack of a better word, credit, towards certification and towards operational approvals in the U S what we have heard is not just, relating to Zipline, but, you can extend this, to military operations and other internationally operated, companies that wish to come to the U S that, yes, there's definitely a nod to flight heritage, but at the same time, there's pushback in terms of the operations not really being conducted in the complexity of modern and busy airspace systems, such as the national airspace system in the U. S. and so in your conversations with the FAA, how difficult of a conversation has this been and how have you structured and conducted and analyzed operations in Africa to make sure that it will be. acceptable to the FAA.
Eric:Yeah, it's a good, it's a good one. So two different things here. First is the positive impact on Zipline, we've learned a ton across the operations that we've done to date. we've flown in total commercial operations, serving our partners 65 million miles, more than 65 million miles, which is over 2, 500 times around the globe. I did the math recently, blew my mind. and so that much flight experience brings back a lot of learnings, And so we have continued to improve our product, improve safety, improve operational efficiency, with these learnings, better understand and characterize the environment in which we're operating in, weather at low altitudes, all of these things. So that's one is just that experience, not the for credit side, if you will, but just the product improvement side is really cannot be overstated. And then the second part of the question around. how is that flight experience, leveraged or considered in, in conversations with FAA specifically, I think that there's been somewhat of a shift here over the last few years in my experience where, I think that we're at a place now that the FAA is much more, taking a much more first principled approach, and much more open to those conversations where, depends what we're talking about, If we're talking about trying to take credit for the, the aircraft's ability to fly through rain, then, rain in Ghana is the same as rain in Utah, So it's very similar. and it, it's dependent on different variables, of course, but there isn't anything fundamentally different. And so it really depends on what is the area in which we're attempting to take credit or asking to take credit. And as long as we're coming in with, rigorously evaluating how does this compare, how does this data compare to the claims that we're trying to make and the operations that we're trying to conduct, then we've seen, especially over the last year, a pretty big shift to the FAA being willing and, good partners and evaluating that, asking the right questions about how is this different and how does this compare, but then as long as we're for, as long as we're doing our job from the first principles standpoint of making sure that, this data does compare, that it is useful in demonstrating this safety claim and that we're achieving these high safety bars, then we have had success using some of that data for credit and working towards FAA approvals.
Peter:Are there any aspects of Platform 1 that would prevent it from flying at scale in the U. S.?
Eric:no, there's, yeah, no, there's nothing preventing platform one from flying at scale in the U. S.
Luka:All right, let's put a pin on Zipline for now. We'll come back to it, especially as we, talk about scaling operations in the U S but let's zoom out a little bit and Eric, when we talked prior to the podcast about, possible themes, you mentioned that you thought we didn't talk enough about the UAS certification paths. So let's spend some time on that. Perhaps start from the top and let's assume that we want to start a drone delivery operation in the U.S. What are the approvals? what are the certification paths for the aircraft, for the operation? Talk us through the current uh, certification path, and also contrast that to what the potential future processes might look like.
Eric:Yeah. So Zipline is a part 135 certified air carrier in the U. S. The, the reason that, that we are is because currently in order to conduct beyond visual line of sight, parcel delivery for compensation, those operations cannot be conducted under part 107 and the regulatory framework for conducting those operations is part 135. we're a proud part 135 air carrier. It comes with a lot of, a high safety bar, a lot of, safety based and operational processes. And the design approval side of that operational certificate that we leverage is, Section 44807 Exemption. And this acts as the design assurance side of what is the UAS, not just the drone, but the system that we're bringing in to conduct those operations under. And this is an area that has, when it comes to part 135 and also the design approval side there's been tremendous progress made over the last year. I think 2023 was a really big year in the U S and in partnership with FAA for not just applying, but I think for the industry as a whole in streamlining the processes towards demonstrating those high safety bars. For the high safety bar for those operations. And we're really excited about the progress that we've made over the last year, as well as we think this is just going to continue, all signs are pointing towards this, just further streamlining and becoming more efficient and I think an important thing that, the FAA in my opinion is really leaning into is, defining and maintaining a high safety bar, which is, all of our goal. but I think the FAA is moving in a direction that is more flexible in the standards and approaches for an applicant to demonstrate that they're achieving that high level of safety, Which I think allows more room for enabling innovation in the space. And I think, this could be in opposition to, or counter to really prescriptive set of requirements, So this is more, I think the FAA is moving towards evaluating what is the level of safety of the proposed operations and is that achieving the safety bar, that we've defined. So there's a shift towards being more into the future. There's an expected movement towards part 108, which is a new regulatory framework that, a draft should be coming out this summer from FAA is what we're hearing and we expect to be a continuation of what we're seeing in the part 135 and 44807 exemption, processes where there'll be further streamlining the approvals that, Zipline and others have worked to achieve under the current frameworks, we'll transition over into that part 108 world. and I think expect a very similar safety bar, but further opportunities for efficiency and demonstrating that level of safety. And I think that, the main change that I expect specifically is a movement towards more statements of compliance from industry to industry standards, consensus based standards. And so that means that there's, those industry standards are really important. And that's an area where Zipline, and others that, that we work closely with are really investing in over this year and into the next year is to make sure that we're set up for success, when the part 108 comes out and things are shifting every, every day they're shifting more towards, how is this approach how is this proposal demonstrating compliance with industry based standards, And so being able to ensure that we're working collaboratively as an industry to set up performance based and first principle safety based standards that then we can demonstrate compliance to is a key part of the future of UAS approvals, in my opinion.
Luka:What are the ways that operators obtain a 44807 exemption? Is it typically through the D&R process? Can you talk a little bit about that versus what has emerged as the more streamlined way through the flight standards, office of the FAA?
Eric:Yeah, so Zipline received our first 44807 exemption, through a process that was, different than the current process, I'll say it's an evolving landscape. and that initial approval is carried over into the current method, as far as being grandfathered in, if you will, into the current method. And the current method is a derivative, I would say, of the durability and reliability based approach that you're referencing, where it takes a lot of the, a lot of the components from that, a lot of those same concepts of really thinking about it at the system level, as opposed to, piece part component level, the certification, and design approval. So it's really thinking about the system and let's define the operating environment and the limitations and everything for the system. And let's go demonstrate that this overall system, this UAS can operate safely and repeatedly in that design domain, In that operational environment. And so it is a very similar approach to that durability and reliability approach. I think one of the main differences is that the more classically the durability and reliability approach was done really in partnership, step by step with, FAA and with a lot of FAA oversight, and a lot of FAA agreement on, every document and test plan and all of these things, a lot of witnessing of testing, et cetera. And the new processes are more focused on, being compliant to industry standards and having company statements of compliance to achieving those very similar requirements. but having that slightly different approach has led to an opportunity for, I think, moving change management and initial approvals much more efficiently through the process while still achieving that same high safety bar.
Luka:One of the interesting, moves in my opinion has been, the shift away from dealing with the design. part of the FAA and more with the operational, the flight standards folks, if that is true, if you agree and you see this as well, how are those conversations different?
Eric:Yeah, I think that there's more of a focus in the last year. Again, there's been a transition within the FAA and how they're handling UAS operations to have more of a focus on evaluating the safety of the proposed operation. And so there can be. that can be very, location specific, there can be different types of mitigations that can be put in place for different types of risk, but it's really thinking about what is the level of safety and is this achieving our collectively high safety bar, or is it not, And I think that is, is a different lens than looking at it from a very certification and compliance perspective. framework, right, of saying what are the specific regulations and is every part of the system in compliance with those regulations, is just a different lens to look through. and yeah, we've been pleasantly surprised with the shift and it's a movement more towards actually looking at the safety of the operations, which is more directly aligned with what I think we all care about at the end of the day. And so I think it's been a really positive shift.
Luka:And what's the latest in evaluating the safety of the associated elements? What was it, maybe two summers ago that the famous memo landed and the industry, was very surprised. What was your experience like in proving safety and, obtaining approvals for, things like C2 Ground Control Stations. and how is the FAA dealing with it now?
Eric:Yeah, I think that the. I think approach to associated elements that the FAA decided to take a couple years ago, is much more aligned and works much better with the more current approach of evaluating the safety of the proposed operation. I think it was a bit of a challenge to figure out how we then, handle different associated elements, different parts of the system with respect to showing compliance, to the set of regulations on the design side. But when, with a shift more towards saying, what are the proposed operations and what's the safety of these operations, then it becomes more, it's just more flexible, I think it's just a more flexible lens to be thinking through. And so we've seen, yeah, I think a fair amount of success of having the UA, the aircraft and the associated elements, all being considered as a part of the operation. and when it makes sense to treat them the same, we treat them the same. It wouldn't make sense to treat them a little bit differently. We treat them a little bit differently, and be able to have those categories to, to think through from a first principles safety perspective, dependent on what the proposed operation is something I think is working pretty well.
Luka:You talked about future Part 108 leveraging industry standards. Where are the missing pieces today? Parts of the operations or technology that the industry is yet to agree on?
Eric:Yeah. I think when it comes to industry standards, in my mind, there's two different categories of progress that we need to make. One of them is there are just gaps, If you try and piece together all of the standards to, to paint a full picture, to put the mural together, there are some places where there are just some gaps. So those gaps need to be filled. And then I think another opportunity for improvement is, some of the standards that do exist that are, the right standards in the right areas, in some places they're maybe overly prescriptive or refer back to older processes or older approaches to things. And so I do think there's an element of the industry needs to align on updating some of these standards to be more performance based, and more flexible to support innovation in the space. Again, with that eye towards what is the risk level or this level of safety of the proposed operation? And is that achieving the safety bar? that's what matters at the end of the day. So yeah, I'm excited to, to, partner with other folks in industry. I think that, like I mentioned earlier, Zipline's going to be investing here. I would encourage any members of the audience who are potentially interested to get involved in this space. I think there's a big opportunity to move not only, drone delivery, but other drone applications, as well as honestly setting, in a lot of places setting the framework, for autonomous aviation, in a number of places. So I think it's a big opportunity and having, especially there's room for more operators with experience, more manufacturers with experience to, to join some of these conversations to make sure we're moving these standards in the right direction for the industry.
Peter:So Eric, across those two categories, on industry standards, can you name some that are your highest priorities, whether gaps that need to be filled or standards that need to be revised?
Eric:Yeah, I'll put a plug in here there's a, operational risk assessment standard within ASTM that I'm, taking an active role in helping to update. this was a standard that came out in 2016 and we're planning on updating throughout the course of 2024. So this is something that is really an opportunity to look at, like I mentioned, what is that evaluating the safety of the proposed operation in a really smart way, and the industry, I believe, is lacking on the, an agreed upon process for conducting that type of analysis. And that includes, what are some of the equations that we use, what are some of the data sources that we use. And I think that the FAA has made a big step forward in better defining where the safety bar is. one of those, one example being FAA order 8040. 6A that came out late last year, which is, I think does a, is a big improvement to the previous guidance about where the safety bar is and I think industry has a step to take in order to agree upon what are the standard approaches, in order to qualitatively and quantitatively evaluate the level of safety of the operation. So this is an area where I'm actively involved. There's a number of areas, that we both need to fill in some gaps as well as make some improvements to, to some standards, especially some that are a bit old and maybe out of date.
Luka:Are any of these gaps or, missing standards, a direct obstacle for the industry to grow over the next one or two years,
Eric:I think the good news is that we're in a transitionary period, right? And so we're still, while part 108 is being developed and putting into practice, we're, we're still operating in this part 135 and section 44807 exemption world. And. That includes a combination, It's a combination of working directly with FAA in some areas and being able to take advantage of some of the standards that do exist in other areas. And no, I don't think that there's anything that is a direct blocker to industry right now. I think it's more of We need to do the work to set ourselves up to fully take advantage of the, process improvement opportunities that are, being, being placed in front of us. So I think that I don't see anything that's a blocker today, but I do see some opportunities to further accelerate, the industry in the future while again, still holding that high safety bar. Finding more efficient ways to demonstrate that level of safety with initial systems, new operations and new environments, design changes, et cetera.
Luka:Do you see that the challenges around Boeing are in any way impacting the FAA, either in terms of their bandwidth or their appetite to engage with the UAS industry.
Eric:No, not me personally. No, most of the folks that, that we work with at the FAA are, in the kind of emerging technologies side of things and the UAS offices. and yeah, we're, we're excited to have a number of partners on the FAA side who are focused on the UAS space, the companies like, Zipline and others to find the right ways to integrate UAS into their space in a safe and efficient manner. So no, I don't see anything at a day to day level, with the folks that we're working with.
Jim:Eric as Zipline came into the United States and you saw how you wanted to monetize your operations here and you saw certification clearly as a hurdle. how was it any different than you thought it would be when you started. Are you still able to execute on your plans as you thought you would given your current state of certification.
Eric:The landscape has been pretty quickly evolving over the last few years. And where we are today I think we're in a pretty good place. I think the industry is in a pretty good place from a, regulatory and technology and level of safety and all of these areas, compared to our expectations when we shifted some of the focus, when we added the focus of expanding into the United States, it's really in kind of 2019, 2020 type timeline. we didn't make as much progress as we hoped, so we got, I think we're at a place that we feel, we're excited about. We think that there's, we're really excited about the opportunities ahead of us. I think it took a little bit longer to get here than we expected to. but yeah, I think that we managed through and really excited about where we are. And I think the industry is in a really right place for innovation and also, scaling in the United States, and beyond over the next few years.
Jim:And if you said there were two or three things that you took from your Africa experience that helped you operate in the certification world more effectively, what would they be?
Eric:Yeah, I think it, I think the main thing, and this is a little bit, zoomed out, but Zipline has always taken the approach of being very first principled when it comes to safety. The first question we ask ourselves when we're trying to go do something new, whether that's a new location, new airspace, new environment, new weather envelope, new aircraft, all these different things. The first thing we ask ourselves is, what is the level of safety that we need to achieve for these operations and how do we have the confidence that we have achieved that? And early on in the program, we'll say, what do we need to do in order to look back and what does success look like in the testing or analysis that we're going to conduct? The next question, once we have that plan, we've identified that level of safety, we've identified the process to get there and convince ourselves. Then the next question is, what's the regulatory pathway, what do we need to show compliance with? What are the regulator expectations? And so I think that's something that isn't fully unique to Zipline, but I think is a little bit unique where a number of aviation companies start off with a compliance mindset. And I think that Zipline was founded on more first principles than that. Starting off with first principles, safety, and then also demonstrating compliance is a key part of it. But making sure that we're setting our own objectives, our own safety bar and ensuring that our operations are achieving that. I think that's something that, is in our DNA, That started back at the beginning of the company and I'm excited to, to see that kind of progress and mature over time, certainly, but I do think it's a key part of ZipLine.
Luka:Eric you gave us a high level overview of the P2 platform that's in development. What can you share additionally about the state of the development of that platform?
Eric:I'd love to rewind the clock a little bit. I'm happy to get there, but in order to get there, I feel like showing a little bit of a origin story, I think might be important to set the stage for how we got to where we are. and so the Platform one system we've talked about a fair amount. Platform 2, we talked about being focused on home delivery in urban and suburban areas. And, this became really obvious to me as a need and the right next step for ZipLine in 2019. When, I was just reflecting recently on when this was exactly. In 2019, I was spending a lot of time in Ghana. working on expanding our operations there in the more kind of remote parts of Ghana and partnership with our, our healthcare partners, operations team, regulators, everyone involved, different airspace operators. And, there was a friend of Zipline, Joe, shout out if you're listening, who kept, he was a doctor, well connected doctor in Ghana and kept reminding me or telling me that, hey, it's great what you guys are doing in the remote parts, but we really need you in the capital city. We need you in Accra. We need you in Kumasi. We need you in these urban areas as well. and I wasn't so sure. I wasn't convinced. and. one thing that Joe did is he said, can I have a day of your time? And I said, yeah, of course. And so he took me around to some of the main hospitals in Accra and walked me into the emergency rooms and some of the places and introduced me and asked the doctors, the folks that, who ran some of those facilities, heads of the emergency room, when is the last time that you didn't have the medical products that you needed in order to, properly care for someone, and even, lost a life of someone that potentially could have been saved if he had the right products. and every one of those hospitals that, that I went to, that, that, kind of Joe brought me to, the doctor had a story within the last 24 hours of when that occurred.
Jim:What was the most common answer that they said Was it blood?
Eric:Most common, yeah, most common would be, yeah, rare blood types, right? Someone in the middle of the night, rare blood type, and just couldn't get it, couldn't find a donor, couldn't find access to the blood bank, in time. yeah, that, that was the most common theme. and so that, that became pretty clear to me that, wow, right, this, we've really been focusing on some of these more remote areas, but there are challenges, not just in Ghana, then we did our homework, we did our homework, looking at other places around the world, and concluded that, hey, this is a, this is also a real challenge. That was, again, for me personally, that was when the light bulb moment happened where I was like, okay, in order for us to accomplish this mission of enabling access to healthcare to everybody in the world, we, we need another solution, right? There's a lot of people who live in urban and suburban areas and we're not serving them properly. And so that was a big movement in that direction. and then, fast forwarding through time, we're, we. Then I've, have been working over the last few years to develop our Platform 2 system. That's focused on solving this problem, Enabling home delivery and operations in urban and suburban areas, with, I think a pretty cool customer experience and delivery experience really focused on, everything you need in order to do that in safety as a top objective, quiet, really. precise and inviting and fun delivery experience. So that's what we've been focusing on. we have a really strong demand, which is amazing to see. We have lots of partners in the healthcare space and the retail space and the restaurant space, a lot of partners, and some of the main feedback that we received from those partners is just, when are you going to launch with us? When can we expand to these customers? and so that's, that's great feedback to have, demand signal from the market. So that demand's great. We've been able to make a lot of regulatory progress. as I mentioned, initial Beyond Visual Line of Sight operations and in the United States late last year, really being something that, that was a big unlock for Zipline. and that was, with our onboard detect and avoid system, being able to allow us to operate in different types of airspace with limited infrastructure on the ground, to unlock those new areas inside and outside of mode C, veil areas. So in, in areas near big airports where there's more requirements for transponding as well as, in areas that are not near big airports where, there's less cooperative airspace. we've now conducted beyond visual line of sight operations in the United States and, both different types of airspace inside and outside Mode C veil, which is huge. There's about a little bit more than half of the United States population lives inside Mode C veil areas. but that also means that a little bit less than half lives outside. and so being able to bring, access and instant delivery to everyone in the world really means we need something that can hit all these different areas. Right. And that, that demand is huge. the regulatory progress we've been able to make, which is, we, we see as a lot of these things being cross platform, it's not an approval for just this specific aircraft in this specific instance, but it's really paving the way, If we have this level of performance of a system, then we agree and we've gotten agreement from the FAA that we can safely operate in these environments. and so now we go design also the next generation aircraft to have, the same or even better level of performance, then, it'll follow that we will to get very similar approvals within the same, part 135 air carrier certificate to operate and add that new aircraft into our operations. And, and yeah, and then as far as where we are in the program, it's just, continuing to develop, bring up the supply chain, manufacturing, flight testing, all of the things that are required in order to set up and have the capacity and capability of the next generation system to be able to meet that demand signal.
Jim:So Eric, you mentioned your conversation with Joe and, you know, I love that story about listen, even in a city, there's a requirement for instant access for certain goods. But how much of your valuation, is a function of your ability to deliver goods to areas that otherwise wouldn't get those goods. You know, whether it be an Africa or whether it be in the United States. Or how much of it is your ability to deliver same day services to the home, for example, where you're now competing in a much more, it's much more of a red sea. Will you always get a better part of your valuation because of your ability to deliver goods that are not easily access to more remote areas.
Eric:It's absolutely both. it's absolutely both. I think that there's some really high value use cases that Zipline has been able to serve and, really humbled by the partnerships that we have in order to make those positive impacts in the world so far, and really looking forward to expanding that. I think there's unique value that we can bring into those spaces. with that said, there's also, there are other use cases, And, I, again, it's speaking for myself here. I, pretty recent, I have two little kids at home and pretty recently. I went to the medicine cabinet in the middle of the night in search for some Tylenol to help with a fever. And sure enough, we happened to use the last of the Tylenol the last time that we needed it and had forgotten to get more. and really wished that I could get a drone delivery on my back porch in 10 minutes, in that time. so there, there's those types of use cases
Jim:in that situation, Eric. Great example. What's your competitive advantage? You know, there are a lot of big players now who want to be able to deliver that Tylenol in the middle of the night. Uh, I love how you talk about your ability to quote unquote, you know, deliver on a dinner plate. You're so exact and what you, you can land and because of your droid. But what's your competitive advantage and being able to provide that, is there a cost advantage? I know noise is significant and it's a very quiet aircraft. I know that you can land it on a dime or, you know, on a dinner plate, but why would you be better than somebody else who was also able to deliver that Tylenol in the middle of the night?
Eric:yeah, I think there's a number of, I think there's a number of different factors. yeah, my speaking from that experience specifically, right. It's, the way that we're developing Zipline would be a far superior experience to what I experienced that night. just being able to quickly open up an app type in what I'm looking for and have it show up in 10 minutes. It exactly where I want it. Where I, can still just be wearing my pajamas and have my slippers on in the middle of the night. Like that was not my experience, right? The experience was, I was lucky enough to be able to have product delivered, As opposed to having to get in the car and, and go find a 24 hour, pharmacy or whatever it may be. but it. It takes time, So someone's got to be awake looking for that. and then it shows up in a 3000 pound combustion engine vehicle to hand you a, an eight ounce bottle of Tylenol, at your door in the middle of the night. that's just, so some of the things that we're focused on doing are enabling faster, more efficient, more kind of user friendly experiences, as well as being able to deliver on safer, quieter, more environmentally friendly alternatives, right sized for the mission, solutions. And I think that that has a number of different. benefits over the current status quo.
Peter:So, Eric, do you see Platform 2 flying first in the U. S. market, or do you see it flying first in Ghana, against the use case, that you mentioned?
Eric:Yeah, I think that, we're keeping our options open, just to be transparent. we're looking at both, We're looking at both expanding, Platform 2. 0 service in some of the international markets that we currently have, quite a bit of experience in, as well as looking at, bringing the system first to the U S we have strong demand signal in, in multiple geographies and there's uncertainty, there's regulatory uncertainty, there's different types of uncertainty. And so it's just really important for us that we're able to, as fast as we can, deliver on our side of the, bargain with our partners. And so we are keeping our options open and whether or not we go to the US or international first, but I will say that there's been a lot of improvement and a lot of progress made in the US from a regulatory standpoint and also a community acceptance standpoint that we, we've had really positive success with FAA recently, as well as our operations and that we've had in North Carolina, Utah and Arkansas, serving customers and delivering products as have been really well received by the local communities. And that puts the U S on the top of the list, Like that, that, that puts it in the conversation, which is something that in 2016, it wasn't the case, right? In 2016, it really wasn't an option to come to the US first with a new system like this. So we're really excited to see the progress that has been made such that we think that it is a viable option to take a new service like this and bring it to the United States first.
Peter:I see. Can you share a story with the audience, sort of talking about the design philosophy that has evolved at Zipline, on the basis of starting in 2016? and building Platform 1, taking a very verticalized approach to building it because at that point in time, that was a necessity. And now as you come to design Platform 2, can you tell a story about how that philosophy influenced the design of Platform 2 and perhaps what you guys have learned since you've unveiled it, in terms of development and and testing that's undergone since then?
Eric:Yeah, I think, this comes back to, I think, this is just a good principle for launching new products and starting new companies is Zipline since the beginning has been focused on providing a service and solving a problem. Not developing technology as the top priority. And so when we started on this mission, we were focused on, enabling access to healthcare and providing an instant logistic system that, that serves everyone equally. And we thought, probably naively that we would be able to go out and buy some drones and buy some, it was the first thought buy some drones and start operating them to, to help, solve these problems quickly realized after buying and testing some drones that wasn't going to work. and so then we thought, okay, we'll be the system integrators. We can go buy, a number of components, avionics, flight control systems, autopilots, assemble them all together, and then we'll have our drones that we can go start solving these problems with and serving these customers. and what we've found over and over again over the years is that, it's really tough to do, It's in order to achieve the levels of safety and reliability that are needed, as well as the kind of efficiency and economics that are needed in order to serve these spaces, we've really struggled in most cases to find off the shelf components that can achieve both of those things, They can achieve the high level of reliability in the really adverse, environmental conditions that we operate in, as well as can achieve the economic efficiency that we need in order to deliver the product that we need in the service that we need to deliver. so that has led to more and more vertical integration and more and more, pulling more components and hardware components, software components, et cetera, in house over time. and I think that's just, we're just doing more of that on the platform two system, as opposed to the platform one system where there are some components on platform one system, even today that we, that we would really like to be able to bring in house. and so we learned on that and kicked off projects to purpose design some of those components for both platform one and platform two. and the, and some of those components are going into platform two first, and then we'll be rolled back into platform one, when we do a design update after they've been proven on the platform two system. Yeah, really excited about some of the opportunities there, and I think that this is a, I think that there's a kind of a, competitive advantages, a bit of a moat here of being able to be a vertically integrated company in this space allows us to achieve the levels of performance, the levels of, safety, these different things that really enable the business and enable the customer experience. I think one more thing I'd add is that answer. The answer I just gave is not just applicable to drones, right? the drone is. a portion, it's an important portion, but it's only a, really a subset, a small subset of the total. Of everything that Zipline needs to do in order to provide our service, right. And if we provide logistic service with our partners, there's also, just to name a few off the top of my head, right. There's the software that's used to manage the fleet of aircraft to dispatch the right aircraft with the right level of battery charge to the right order at the right time. the software that the controllers use, our remote pilots and command use for monitoring the fleet. There's a fulfillment systems that we use to manage inventory. there's integrations with our partners. There's the ordering apps that we build. There's all of the. manufacturing and quality systems. There's, all of the ground systems that we use, the communication systems, all of the things, And Zipline is definitely not a drone company. We're absolutely, a company that provides, logistics services for our partners, and we're really excited about that. and that leads to a lot of vertical integration across the space.
Jim:Eric, what external companies do you use for any parts that you just mentioned, you know, from UTM to fulfillment and how much of it is home grown and how much are you using partners?
Eric:Yeah, it's a combination of both. Absolutely. I say that we're quite vertically integrated, but also there are some really important partners that we have that have enabled zipline to make the progress that we have and that we're also excited about continuing to expand with in the future. Happy to name one or maybe a couple, but, I think one that comes to mind first is NVIDIA. Right. we're more and more increasingly, getting higher autonomy on board the aircraft and that requires compute. And so having the latest, state of the art compute on board that can achieve the cost efficiency, mass efficiency, and, compute capabilities that are needed in order to have the, the flying computer that, that a lot of modern drones are has, it's been a great partnership with Nvidia to be able to achieve that and set us up for scaling.
Jim:What about on the UTM side? Is this something that you're doing yourself? Are you using a USS, how does that work?
Eric:Yeah. So on, on the UTM side, so UAS traffic management, we are a part of the Keysight initiative in Dallas and partnership with a number of folks in industry, as well as the FAA and NASA. and we also have, have experience in UTM and in our international markets as well. and Zipline develops our own USS capabilities and, another example of being quite vertically integrated in the space is, developing, building those capabilities to, to interface with other companies and UTM service providers in an efficient way that enables our business.
Luka:Eric, quite a number of people that we talked to privately, are expressing skepticism about the P2 design, pointing to the complexity and associated cost of it and wondering whether Zipline can really be profitable in the delivery of low value goods with this kind of platform. What is it that they're missing? How do you respond to something like that?
Eric:Yeah. it's, it's not an easy problem to solve, right? it is a complex, highly integrated system. and we have focused on providing, we focus on that home delivery use case from the beginning of the design and everything that is needed in order to achieve that, the high level of safety and reliability, the, the delivery experience, including really designing for noise, being able to integrate. So we want to be able to integrate really efficiently into our partner facilities to be able to create that. we, the terms we use, create a magical portal in the wall that allows our partners to ship products to where it needs to go really efficiently. So these are some of the aspects that we've been focusing on the design. As far as, some of the potential skepticism, You really need to understand the system that you're designing and what are, what the main levers are, So designing for, autonomy, designing for longevity of the system and, cycles on the airframe, designing for operational efficiency and high utilization. all of these factors, designing for maintenance, right? All, all of these factors are really key and being able to. to bring to life a highly integrated, complex system to be able to serve our partners and achieve the use cases that we're focused on achieving.
Luka:What are some of the gates either in terms of, utilization or the level of automation or human involvement or, the cost of the overall system, or any other gates that you need to achieve in order to, be able to profitably deliver a cup of coffee with the P2.
Eric:Yeah, from the beginning, we've designed the system for scale. that means, manufacturing scale, that means operational scale, all of these things. With scale comes economic benefits. and so we're really excited to have, a lot of the partners that we have, across, healthcare space internationally in the U. S. I mentioned, national healthcare system. We're expanding with this later this year and the UK, the Cleveland Clinic in the U. S., and the retail space, Walmart and the restaurant space, Sweetgreen and others. really excited about our partners and how are partners in general are really looking to scale, They're really looking to not just do a demo, do a pilot, see how it's received, but be able to achieve levels of scale. And that's when the economics start to work out, right. Is when you're, is when you're achieving scale with some of these partners and some of these systems, that's when, yeah, the, it can really make a positive impact in the community. And also that's when everything starts to pan out.
Luka:And when you say scale, what do you assume in terms of utilization of drone, let's say in the unit of hour, is that, 3, 4 deliveries, 5, 6, 7?
Eric:Yeah. I mean, it, depends, right. I'm happy to give some, some rough numbers, but it depends. It depends on how far away you're flying. It depends on the weather conditions. It depends on a lot of factors. But, if we're, we're doing a couple to a few deliveries in an hour, that's a good, that's a good hour for an aircraft. And that includes, getting loaded, flying out to the delivery site, delivering, going back to, get charged and get loaded again. So yeah, being able to do, two, two or three deliveries over the course of an hour is a productive, utilization of the asset.
Luka:You mentioned NVIDIA and autonomy earlier. It's interesting. We recently saw an interview with ValorEquity, one of your investors. It was a much broader conversation around AI and LLMs, but Zipline came up as an example of the vertical AI investments that this firm is making and how Zipline has an AI advantage. What do you think about this?
Eric:Yeah, I think that our flight experience has allowed us to continually improve our system, understand the environment we're operating in, and continually improve the, reliability, robustness and performance of our systems. and I think that includes. In the autonomy space, That includes in the ability to automate these systems, make them more and more capable and safe and powerful as time goes on. And yeah, I do think that, Zipline does use, artificial intelligence techniques, machine learning, et cetera, in order to. better understand our environment and ensure that we're continually improving the safety and efficiency of our operations.
Luka:How much of AI is used, currently or importantly, how much of it has been used in Africa?
Eric:Like I mentioned, we're continually using the flight experience that we have in order to improve the system. And so, yeah, they're, from weather prediction to flight controls, to autonomy and perception. There's artificial intelligence that we've deployed in different aspects of the business where it makes sense. Again, coming back to the basics where. we're not a company that's focused on developing technology because for the sake of developing the technology, right, we're focused on providing a service, and really scaling our operations and the value we're able to provide. And so I do think that we have taken a pretty pragmatic approach to leveraging. artificial intelligence and advances in those spaces in order to further the mission and continually improve safety operations.
Luka:Got it. Eric, as you think about, scaling the operations in the U. S., what do you consider as some of the top strategic decisions, whether this is, where to go, what geographies or, the depth of, of the experience and the capacity, or, the partnerships that you need to create. What's top of your mind from a strategic perspective?
Eric:Yeah, I spend a lot of time thinking about this. I think one of the things that is really important to me and to us, as we're thinking about expanding more in the United States, specifically, is Identifying the markets and the partners and the airspaces and, the weather conditions and all these areas where we can provide an excellent customer experience. And an excellent partner experience. And, and the good news is that there's quite a few of those. it's not everywhere in the world, But there's quite a few of those where we have conviction that, that this year we're able to expand into a lot of these areas and so being able to just being really thoughtful about how do we expand the business in the right communities with the right use cases in order to set up that kind of, magical first experiences with the community and with our partners to be able to have those positive first impressions and then be able to layer on and expand and scale from there.
Luka:What about, relationships with, the likes of, the aggregators like DoorDash? Do you see competing with them or perhaps, partnering with them like, Manna has been rumored to have done in the U. S.?
Eric:Yeah, I mean, we see a ton of demand, for people just want faster deliveries, straight to their doorstep with a great customer experience. There's tons of demand in the space and I think there's different ways to integrate into, that last mile logistics spaces. A lot of our partners, like I mentioned, are in the healthcare world, for both deliveries to, pharmaceuticals to homes, for example, but also for Inter facility transfers of, samples and different things to improve healthcare efficiency, which we're really excited about, but also in the, in the retail and in the restaurant space, there's, like I said, there's different ways that we, that we could integrate in, that a drone delivery system can integrate in. Currently our partnerships are with the, the service providers directly. So we're working with Walmart, we're working with Sweetgreens, we're working with these different, retail and restaurant companies directly to provide, delivery services directly to their customers. So that, that's where we fit into the space, but, yeah, we're just excited to, to make the biggest impact we can to enable, drone delivery and positively impact the environment and these communities. And so we're, we're open minded to figure out the best way to do that.
Peter:So, Eric, when you work with these partners and when you think about the rate at which you expand the service offering. What do you see as the rate limiters to the expansion of drone delivery? Certainly in contrast, DoorDash itself was able to expand very rapidly, just because of the nature of the service. But with drone delivery and with the people and infrastructure that you need to put in place, what are the expectations, for what that's going to look like, the rate, and also will it be concentrated on a geographic basis, city by city, or will it be initially more spread out and then filling in with capacity over time?
Eric:That's a good question. I think that, I think it's going to be somewhere in between, right, on both of those. So I don't expect that drone delivery will expand like micro mobility did where they're seemingly we woke up one day and there were scooters all over the sidewalks in some places. I think that drone delivery will be very thoughtfully expanded in partnership with, the federal government, with FAA and other partners, as well as with, the local community, but I also think that there's an opportunity to scale pretty quickly, So I think thoughtfully and, metro by metro or neighborhood by neighborhood, but I do think that there's an opportunity to grow pretty quickly. And as far as the, Go wide and fill in or go deep type question. I think the most likely answer is somewhere in between where, there's two, I think there's two different pulling factors. I'm not sure what the ideal answer is or the optimal solution is, but one factor is that as you build a pretty deep network in one Metro, there's benefits of that network, right? There's benefits of being able to provide quite a bit of service. different infrastructure, charging, logistics, all of these things that you really can provide more and more service more and more efficiently in those communities as you go deeper, which might lead you to, go deep in a place before going wide into multiple. But at the same time, we're super excited about the partners that we've, been working with recently and we'll be working with over the next couple of years, and a lot of those partners are regional, especially on the healthcare side, they're operating in certain areas. And so there's a pull from our partners to be able to grow and scale and launch quickly. And so I think there's going to be a bit of both where we'll go into one metro area, work on going reasonably deep, and then, jump in the next, jump in the next.
Jim:Eric, what is the next five to 10 years look like in our industry? And how is it different than what most people are talking about today?
Eric:Yeah. I think it comes back to the kind of opening of the conversation where I think one of the main misconceptions is that drone delivery is, and, scaling UAS is somewhere off on the horizon. And there's a number of obstacles that are in the way. and I think that, really it just depends where you live, There are places in the world where drone delivery is here today and is dependent upon. And my expectation of what the next five years, 10 years looks like is, I'm really excited for being able to bring that to more and more communities, So I think that there's different types of aircraft that are, executing drone deliveries in different markets, different niches, that are all, working efficiently together in order to help everyone live a better, more efficient life for the environment, for, safety, for all of these things. So I'm really excited about the, and optimistic about what the future holds in this space and how it can integrate into the next five to 10 years of our life as we grow.
Jim:So you've been part of a very successful company for many years. You know, it started in 13 or 14. What advice would you give to our innovators? Our entrepreneurs that are listening. That may be unique.
Eric:I think the main piece of advice is to an entrepreneur getting started today would be to tackle a real problem, I think that, it's all too often that an entrepreneur comes about with a technology or with a solution, and then they spend their time looking for a problem to solve. As opposed to coming in and identifying, whether that's through their own personal experience and pain points, or, through insight they may have into the market, being able to identify a real challenge and a real opportunity. and I would just recommend entrepreneurs to, to make sure that you're identifying that challenge, identifying the opportunity and staying focused on burning down the risk to making that successful, As efficiently as you possibly can. and sometimes that includes technology development. Sometimes it may not. but just making sure that we're, efficiently focusing on solving the problem we set out to solve.
Jim:Well, you certainly did that in Africa. Listen, I've heard a Keller, your CEO and he delivers a really inspirational message. And their problem you guys targeted and how you solve that problem. I wanted to ask given the time you've spent in Africa, Eric, what message would you give to Americans
Eric:That's a good one. There's just so much, it's so interesting and you have to go experience it yourself, I guess would be my main message. there's so much that's different, but there's so much that's the same, and so it's hard to explain the, that, that spread of where at some, in some ways it's the same problems in the same world and in other ways, it's just so different. I think you can say that about, probably any two, two countries and different communities and, cultures and whatnot. But, but yeah, it's just been such a pleasure to, work with, the partners that we have and the communities that we've been fortunate enough to be able to make an impact in those spaces and in our own way. So yeah, it's just been a really positive. part of my life and my career so far. And, wouldn't trade it for anything.
Luka:What a great way to end the podcast, Eric. Thank you very much. This was a really fascinating conversation. Thanks for making the time.
Eric:Yeah. Thank you guys for having me. It's my pleasure.