Closing Bell - Manifest Space: Autonomous Drone Flight with Skydio CEO Adam Bry 09/27/24

Episode Date: September 27, 2024

The U.S. Commerce Department has unveiled a proposed a ban on Chinese software and hardware in connected vehicles on American roads—but it could expand to drones and other technology. Skydio co-founder & CEO Adam Bry joins Morgan Brennan on the heels of his company’s customer day. The largest maker of drones in the U.S., Bry and Brennan discuss the future of the technology, implications for public safety, & potential for package delivery by drones.

The U.S. Commerce Department is proposing a ban on Chinese software and hardware and connected vehicles driving on American roads. Citing national security and spying concerns, Commerce Secretary Gina Raimondo told me she thinks it's policy that could, possibly, extend to other connected devices, like drones. You know, we're looking at drones, drones that have Chinese and Russian equipment, chips and software in them. So I asked Adam Bry, the CEO and co-founder of Skydio, who joined me this week from the company's customer day.

We know to absolute certainty that in any modern conflict, our adversaries are going to be flying drones made in China. And so I think there's been this trend and it's just become clear that these are critical devices that matter for national security. You know, this is something as the largest U.S. drone company we take very seriously. We compete against the Chinese companies head to head in all these markets. And, you know, from our standpoint, we're really focused on our products and our customers and making the products as useful as they can be, making our customers successful on them.

And I think there's a real opportunity for the U.S. to win in this market. If the last 10 years have been about manually flying drones at required pilots, Bry believes the next 10 will be about AI and autonomy. It's the reason Skydio is unveiling a new product called Dock for X10. So the star of the show is the Dock for X10. So these are the products you actually see behind me. So this is the thing that really completes our vision of autonomy. It makes drones useful tools that can be deployed automatically anywhere around the world and

flown remotely over the internet. So it's incredibly powerful. It enables industries like public safety, energy utilities, defense to put drones where they're needed most to get the data they need to make better decisions and get better outcomes. On this episode, the future of drone flight, implications for public safety, and when package delivery by drone could actually become a widespread reality. I'm Morgan Brennan, and this is Manifest Space. Joining me now, Adam Bry, the CEO and co-founder of Skydio. It is great to speak with you, especially as you do host your customer event this week. I guess just walk me through some of the highlights and headlines from this event. Thanks for having me on. So the star of the show

is the dot for X10. So these are the products you actually see behind me. So this is the thing that really completes our vision of autonomy. It makes drones useful tools that can be deployed automatically anywhere around the world and flown remotely over the internet. So it's incredibly powerful. It enables industries like public safety, energy utilities, defense to put drones where they're needed most to get the data they need to make better decisions and get better outcomes. So this has been a big part of our vision for the last 10 years at Skydio with X10 and Doc for X10. We've got all the ingredients now to make this vision come to life with our customers. So as you're talking, I'm watching one of these products behind you. Basically, it basically like flipped open and a drone flew out. So I'm seeing this in real time. Who do you think the biggest customer is going to be for this? How does this change the game versus what you already have on the market? So we've got over 300 customers here with us today. We've got 20,000 joining us remotely. So we serve a range of industries. We have customers in 20 different industries. I would say one of the ones that I'm most excited about is public safety.

So drones have kind of been a building trend in public safety over the last five or so years. And they're transformative because they enable you to get better real-time aerial intelligence, know what's going on, and make better decisions. And this is better for officer safety. It's better for community safety. And with the dock, we're doing something called drone as first responder, where rather than having a drone live in the trunk of a patrol car, be launched by the officer out on patrol,

it can be on the roof of a fire station, and it can fly itself out autonomously in response to a call. So it means getting to a call in seconds rather than minutes. And we know from the work that our customers are already doing, that this just fundamentally changes outcomes. You know, there's evidence that suggests that you can reduce use of force by up to 50% when the drone gets there first, because officers know what they're headed into. They know if somebody's armed or not, they know what somebody's done with the evidence, and they can just make better decisions because of it. That's really fascinating. Does that mean that there is no human in the loop from when that call comes in to when the drone then responds? I guess how to think about how that plays out

and making sure that there's not a false call that's being responded to, for example. It's a really great question. And one of the things that we announced today is a suite of software called DFR Command, which is kind of the ultimate software suite to manage all these stocks and drones. So our belief is that human judgment

is still a really important piece of the equation. So there's a piece of the equation. There's a lot of automation here. We can ingest call data from agencies' call management systems. You can get the time and location. You can feed that in to DFR command so the drones can be dispatched automatically. We still recommend, and our customers are doing this, that you've got a human in the loop.

Somebody is still pressing go on the drone, and somebody is there watching that live feed because that person is the person who's going to exercise judgment and basically be the remote assistant to the officers who are responding on the ground. Sounds a bit around for a little bit. And I totally get the public safety applications of this. How far have drones penetrated the public safety market?

And if it's not that much, why has it taken so long? So there's two ways of looking at it. I think in one way, you can look at it of like, maybe it's fairly mature. There's a lot of public safety agencies. I would say most of the big ones at this point have some kind of drone program. In our view, it's still really early days because most of the operations that are out there are still operating in this kind of one-to-one manual world. And AI and automation give you the opportunity to dramatically scale up the impact. So as much drone use as we're seeing in public safety today, I think we're going to see 5 to 10x over the next 10 years.

And there's legitimate concerns about privacy and civil liberties. This is something that we're very proactive with our customers on. And our best customers lean into this and go to great lengths to provide transparency to their community on what they're doing with their drones, the impact that it has. And this is actually a feature that we've built into DFR command. So agencies that want to can publish the flights that they're doing. So anybody in their community can log on and see, you know, what the drones are doing. And it just removes this sort of element of mystery. And we've seen this over and over again. The more people that see and understand the impact the drones are having, the more comfortable they get with it. And you and I spoke recently because you have this partnership with Axon as well. So how are you thinking about this market, those opportunities, those partnerships, and how you bring your products to market? Partnerships are a really critical piece of the story. The way that I think about what we're doing at Skydio, we're basically trying to be the world's first great aerial robotics company.

And the mission is to be the best automated data capture platform. The whole point of the drone, the dock, all the software is to get the sensor exactly when and where you need it. In public safety, we sort of think of we're building this drone spoke that plugs into the hub that agencies are already operating. And Axon is the most popular public safety hub we see out there. Their software is used to manage evidence. It's used to manage live scenarios. So we're really excited about that partnership.

It's kind of the perfect pairing where you've got the drone spoke plugging into the Axon hub to deliver a complete solution for public safety. And you're also expanding on the defense side as well. You've been standing up operations and capabilities in Ukraine or tied to Ukraine and selling it to the DOD here as well. What does that trajectory look like? And I guess perhaps just as importantly, what are we learning about the role of drones in modern warfare? Yeah, so I think we're going through a major inflection point here. And Ukraine has just shown

beyond any doubt that drones are really in many ways the future of warfare. You know, the scale, scope, impact that drones are having in Ukraine is just staggering. And, you know, we've got products deployed there. They're being used on the front lines. We're working closely with Ukrainians. We're learning a bunch of lessons. We're doing everything we can to make our systems useful for them. You know, the mission there is just incredibly important. And the learnings that we're getting there are trickling back

to all of our other defense customers as well. So the USDOD has been forward leaning on this. You know, they recognized five or so years ago that this class of drone was going to be important.

And I think over the next five years, we're going to see an acceleration there as the rest of the sort of allied militaries recognizing and adapt to this new reality where, you know, it used to be you had one drone for 10,000 soldiers, then it was 1,000. I think the future

is going to be the opposite. You're going to have 1,000 drones for one soldier. Am I ever going to see my packages delivered by drone? I realize there's some like tests, Walmart's doing some of this in parts of the country, for example. But for over a decade now, we've been talking about it and it still hasn't really happened in a mainstream way. Yeah, it's fascinating. I mean, drone delivery gets talked about all the time. Meanwhile, there's all this like real world

incredible impact happening with sensor carrying drones. You know, I guess what I would say is that if you think about one of the flights that we do in public safety, for example, you know, one of these flights could literally be life-saving. You could be changing the nature of a response. It's hard to place economic value on that, but an alternative technology, a helicopter, which police agencies use, costs a couple thousand dollars per hour.

The value that a single flight of a drone in this context can deliver is pretty extreme. On the other end of the spectrum, if you're delivering a burrito, how much is that worth? It's a few dollars. It's a very challenging technology problem with very difficult economics. So I think we will eventually see scaled drone delivery. But the next five to 10 years, the scale and the impact, I think, is going to predominantly come from these sensor carrying drones. So as we're having this conversation, I mean, I sat down earlier with Commerce Secretary Gina Raimondo. Commerce Department just rolled out this proposed ban on software and hardware from Chinese makers as well as Russian makers into connected vehicles. And one of the

headlines for me that came out of that conversation is that that proposed policy, banning that technology within the U.S. auto supply chain, is a policy template that may very well now be applied to other connected devices, most notably drones. I just want to get your thoughts on that, since we are having these conversations about national security and public safety. So I'd say one of the trends that we've seen over the last 10 years in the industry is these things started off looking like consumer toys. You know, give it to your kid on Christmas, it was fun to fly around. And now we're seeing that these electric quadcopters that carry sensors are national security critical devices. They're being used on the battlefield. We know to absolute certainty that in any modern conflict, our adversaries are going to be flying

drones made in China. And so I think there's been this trend and it's just become clear that these are critical devices that matter for national security. You know, this is something as the largest US drone company we take very seriously. We compete against the Chinese companies head to head in all these markets. And, you know, from our standpoint, we're really focused on our products and our customers and making the products as useful as they can be, making our customers successful on them. And I think there's a real opportunity for the US to win in this market. You know, the last 10 years has predominantly been about manually flown drones that required expert pilots, where it's a little bit more about the hardware. I think the next 10 years are going to be about AI and autonomy.

We're going to see 10x the impact. And as we see the impact increase, I think it would be kind of insane to cede that ground to our geopolitical adversaries. Have we already seen Chinese drone makers flood the U.S. or global markets with their products? And if so, what does that mean countering that as the largest U.S. maker? Yeah, I mean, look, the dominant market share today still in the U.S. is Chinese drone makers. Now that has shifted and it's shifting quickly over the last couple of years. Skydio and some of our peers are making a lot of progress, and we're seeing more and more adoption. But there is definitely this element of drones that are out there deployed. And when we think about this issue, you know, I think it's important to, if the government's going to enact restrictions,

whatever actions they're going to take, it's important to think about long transition periods and funding to help ease the pain for customers that are kind of transitioning to the next generation of technology. But in my view, it's just something that we have to do as a country. And finally, as we do see more and more of these AI applications applied, what does that mean in terms of where you're headed with your products and what you'll be able to do, not only here with this new product that you're demonstrating, talking to me amid your customer day, but also just five years from now, 10 years from now, how does that evolve? When we started Skydio 10 years ago, we bet really big on computer vision-based AI. We basically believed that making the drone

smart enough to fly itself was going to be key to making it useful for all these different applications. We've been working on AI and to making it useful for all these different applications. We've been working on AI and machine learning and autonomy for the last 10 years. The fact that we made those early bets and we got it right is part of why we are here now as a company. You're exactly right. We're at another inflection point in the development of AI and autonomy. The way we think about it for our products, right now these are useful tools.

We want to make them automated. We want to make them easy to use. But I think similar to what you're seeing happen in just kind of the pure software world with ChatGPT, I think there's an opportunity for drones to really become like intelligent assistants where they have deep domain expertise. They know what they're looking at, and they can just provide more and more leverage to the people that are using them. Adam Bryves, thank you so much for taking the time. Appreciate it. Thanks for having me on. That does it for this episode of Manifest Space.

Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.