Zipline CEO Keller Cliffton on air-dropping blood to Rwandan hospitals and getting to 50,000 aircraft per year

Keller Cliffton joins John Collison to talk about Zipline’s journey to 115 million miles flown, the lost art of American airplanes, building 50k drones a year in California, getting to 99.9% reliability, and US vs. Chinese manufacturing. Books referenced: The Right Stuff by Tom Wolfe https://bookshop.org/p/books/the-right-stuff-tom-wolfe/bf1ca617f9dab8ad?ean=9781429961325&next=t&next=tSkunk Works by Ben Rich https://bookshop.org/p/books/skunk-works-a-personal-memoir-of-my-years-of-lockheed-ben-r-rich/67057eb959b36a08?ean=9780316743006&next=tApple in China by Patrick McGee https://bookshop.org/p/books/apple-in-china-the-capture-of-the-world-s-greatest-company-patrick-mcgee/496b96d06a984e01?ean=9781668053379&next=t Timestamps (00:00) Intro (00:45) 115 million miles flown (04:10) Why drone delivery took so long (07:38) Getting started in Rwanda (13:31) 51% reduction in maternal mortality (15:33) Access vs. waste (21:45) Scaling globally (24:05) Zipline’s Platform 1 (25:50) The Right Stuff (27:22) Drone design and safety (30:12) Getting to 99.9% reliability (34:39) Multimodal logistics (38:15) Zipline’s Platform 2 (44:03) US drone regs and the FAA (48:02) Progress and stagnation in US aviation (51:30) If Keller ran the FAA (54:24) 30% WoW growth in Texas (58:25) Why Texas and not California? (01:00:28) Building 50k drones in California (01:06:18) US vs. Chinese manufacturing (01:11:30) Advice for hardtech founders

• 0:00Speaker 00

  In how many countries today do you run your medical logistics network?

• 0:03Speaker 01

  Eight.

• 0:05Speaker 00

  Why is that not eighty?

• 0:06Speaker 01

  You sound like our board, John. You're really putting the pressure on. And then we walk out the back of the warehouse and it's just a field of boxes as far as the eye can see. And I was like, what is this? And they're like, that's all the medicine that expired last year.

• 0:21Speaker 01

  What is Guinness?

• 0:23Speaker 00

  Guinness is stout. Irish people would not call it beer. Do they know what the difference between stout and beer is? Keller Cliffton is the co-founder and CEO of ZipLine, the drone delivery company. They started out with medical deliveries in Rwanda, but they're now expanding in many countries, including the United States, and have completed more than a million autonomous flights. Cheers.

• 0:41Speaker 01

  Cool.

• 0:42Speaker 00

  Cheers.

• 0:45Speaker 00

  Okay, I'm very excited to talk about ZipLine. So you, previously, you were a professional rock climber. You studied biochemistry and computer science in Harvard. You had a previous robotics startup, but then in 2014, you started ZipLine. Most people who do know ZipLine probably know you for the medical deliveries in Rwanda and broader in Africa. You now also have operations. You just announced Chipotle and burrito deliveries in the United States. And you have, delivery takes place every minute and you have 100 million miles flown. Is that a good?

• 1:15Speaker 01

  I think like 110 or 120 now, yeah.

• 1:17Speaker 00

  Okay, yeah. So is that the good potted ZipLine summary? What would you add?

• 1:20Speaker 01

  What would I add? I mean, you know, when we were starting to build ZipLine in 2013, 2014, our backgrounds were in robotics and automation and software. And it really seemed to us like it should be possible to build an automated logistics system for Earth. Like, when it comes to robotics, you really want boring and repetitive. Like, that's ideal, you know, like constrained problems, boring and repetitive. And logistics is about as boring and repetitive as it gets. But like, it's this underlying infrastructure that affects everything in the world. It affects how people get access to healthcare. It affects like how people even choose where they live.

• 2:00Speaker 01

  It affects how much time people get with their families versus having to spend time driving around and, you know, buying things. And so... Yeah, it was, you know, the idea was simple. The execution has turned out to be a bit more complicated than we were expecting.

• 2:14Speaker 00

  Yes, and you've made the point that like, what does a UPS truck weigh? Like, you know, five tons?

• 2:19Speaker 01

  Five, six thousand pounds.

• 2:19Speaker 00

  Yeah, yeah, yeah. It's like we've taken for granted that we just have these like massive vehicles trundling around our suburban streets as the best answer for delivering things. And it's not obvious it couldn't be improved from there.

• 2:29Speaker 01

  I think the best way to think about that is that when you're batch processing things and delivering things over the course of a day, that works pretty well. You can load tons of packages into a car and then the car, you know, the truck over time can deliver things slowly to lots of homes. But obviously, the thing we've seen over the last five or seven years is the rise of instant delivery. There are now five and a half billion instant deliveries happening every year, just in the US. And this is where we're using a 4,000 pound gas combustion vehicle driven by a human sitting in the front, moving the steering wheel back and forth to deliver something to your home that weighs on average five pounds.

• 3:04Speaker 00

  Yes.

• 3:04Speaker 01

  So actually, you do not have to be a physicist to realize this is a really weird way.

• 3:09Speaker 00

  A bit over engineered, yeah.

• 3:10Speaker 01

  Or under engineered, depending on how you think about it. But like, this is, you know, this is, it creates traffic in our neighborhoods, it creates pollution in our neighborhoods, it creates safety issues in our neighborhoods. It's phenomenally expensive, actually, and it's pretty slow.

• 3:26Speaker 00

  And obviously, competing vision is the sidewalk robots that some people are pursuing, but I presume you think for many of these applications, they're just too slow and you actually can't fit that many of them before they start clogging up sidewalks. Is that basically the argument you'd make?

• 3:38Speaker 01

  My personal opinion is that we should be giving space back to humans, not taking space away from humans. So, you know, we have already, I mean, I grew up, maybe you grew up, you know, we've played in the streets, like we played street hockey. I wouldn't really let my kids like go play street hockey today. So something has mentally changed where that doesn't seem like as safe a space anymore.

• 3:56Speaker 00

  Yes.

• 3:56Speaker 01

  Sidewalks maybe are like the last place that are meant to be for humans.

• 4:01Speaker 00

  Yeah.

• 4:01Speaker 01

  The idea that, okay, now the robots are going to take those over too and like humans are going to have to jump out of the way as these sidewalk robots go back and forth, doesn't make a lot of sense to me.

• 4:10Speaker 00

  Why has the drone delivery vision?

• 4:14Speaker 00

  Taken so long, where you know, people were talking about Taco Copter on Hacker News in 2012. The big Amazon announcement was what year?

• 4:22Speaker 01

  2013.

• 4:22Speaker 00

  2013. And so everyone has felt like it's just around the corner for well longer than a decade now. Is it, you know, the FAA Beyond Visual Line of Sight rules? Is it like the tech was surprisingly hard? Just why is this happening now? You guys just announced Chipotle, Brieza deliveries. Why is that happening in 2025 and not 2015?

• 4:44Speaker 01

  I think, you know, it's similar to the question of why do we not have autonomous cars? When, you know, certain leaders were saying, oh, it's right around the corner in 2015 or 2016. I think that with any advanced technology, there's always, what do they call it? Like the, you know, the trough of disillusionment curve. It's kind of like you have like the early hype. People realize something should be possible. It's really exciting. And then it goes completely craters because people realize it's really hard. And then everybody basically is like, well, that was a stupid idea. It's never going to work. And when people say it's a stupid idea, it's never going to work. That's when the actual hard work begins. And then there's like a decade of building all of the fundamental underlying infrastructure and technology that's required to actually make something work in the real world.

• 5:28Speaker 01

  And, you know, work in the real world is kind of like an easy way of putting it. But the reality is whether you're talking about autonomous cars or autonomous aircraft, you have to figure out not just safety and reliability. You have to figure out regulatory, you have to figure out manufacturing and maintenance and supply chain. All of the software systems that are required to run behind the hardware to really make it reliable. And then you also need a good customer experience on top of all that. And then ideally, you also have to make the unit economics work.

• 5:54Speaker 00

  So it's the classic thing of producing convincing demo in hardware is relatively easy. But then getting something actually useful operationally is where the, you know, the last 10% of the work is another, you know, two X or three X from there.

• 6:08Speaker 01

  I think, I mean, Elon, I remember watching him for 10 years say again and again, because people would always say like, oh, Ford's going to do what you do. You know, GM is just going to do it and like crush you. And he just kept saying like prototypes are easy, production is hard. Prototypes are easy, production is hard. I think it's deeply true in hardware. It's very easy for people to, and we've seen it again and again and again, right? Like in specifically with drone delivery, someone will buy a quadcopter off the shelf, duct tape a Snickers bar to the bottom of it, manually pilot it like when the weather is good, two miles, land it. It's like, we just did drone delivery and then get a journalist to cover that. But the reality is that what customers really want is teleportation.

• 6:50Speaker 00

  Right.

• 6:50Speaker 01

  And they don't care at all about drones.

• 6:53Speaker 00

  Yes.

• 6:53Speaker 01

  This is kind of a counterintuitive thing that we've learned. It's like when we're working with all these ministries of health, or these governments, or big companies like Walmart, or big hospital systems in the US like Cleveland Clinic or many others. They all want to be able to just teleport things directly to patients, or directly to a customer's home, in a way that either saves a life, or transforms a customer experience. We could be using whatever, they're not interested in drones, they don't care about drones, they don't want to deal with any of that complexity. All they want to know is something goes from point A to point B fast enough to solve a real problem. And so I think that a lot of the technology kind of sits behind a curtain in order to enable a customer experience that is just jaw-dropping, and changes the way people live their lives.

• 7:38Speaker 00

  So demos are easy, production is hard. You got started in production and really ramped up in Rwanda. How did that come about? Where, you know, people, I can understand, maybe you might want to go outside the US for a more favorable regulatory environment, but most people would go to Mexico, or Canada. How did you get to Rwanda? And maybe you can tell the story of scaling up operations there.

• 8:00Speaker 01

  Yeah, hard to frame. I mean, I think that when we were starting to build ZipLine in 2013, we spent about two years building the initial version of the technology. And everybody told us this was a stupid idea. Everybody told us there was no way it was going to work.

• 8:15Speaker 00

  Was it hard to get funding, sir?

• 8:16Speaker 01

  Oh, incredibly difficult. Like, I remember, we were begging people to invest $250,000 in the company.

• 8:23Speaker 00

  Who did, what was the first big break in terms of who invested?

• 8:27Speaker 01

  Sequoia led our Series A and took this bet on us. This was actually before we started building ZipLine, though.

• 8:34Speaker 00

  Oh, wow.

• 8:35Speaker 01

  Yeah.

• 8:35Speaker 00

  This is your previous startup?

• 8:36Speaker 01

  Yeah, well, same company, actually.

• 8:38Speaker 00

  Oh, but it pivoted, I didn't know that.

• 8:40Speaker 01

  Yeah, most people don't. And then, as we were starting to build ZipLine, I just think there was so much skepticism. I mean, it's such a crazy idea. Like, what do you know about aviation? Nothing. What do you know about healthcare? Nothing. What do you know about operating in Africa? Nothing. Okay, well, like, let's stay in touch.

• 8:56Speaker 00

  Operating in Africa, exactly.

• 8:58Speaker 01

  Yeah, let's stay in touch, you know?

• 8:59Speaker 00

  Smile and nod.

• 9:00Speaker 01

  Yeah, exactly. I think that... You know, our intuition was like we needed a country that was as desperate as we were desperate as a startup. And maybe that sounds bad.

• 9:10Speaker 00

  Which is like a threshold question. Why didn't you start up in the United States?

• 9:13Speaker 01

  There just wasn't a regulatory pathway to do so.

• 9:16Speaker 00

  Okay, just the ban on drones, yeah.

• 9:17Speaker 01

  Totally impossible to do it in the US. And also, we really wanted to find, you know, we had this instinct that to convince a country to do this at scale, we needed to focus on life-saving use cases. And so we really wanted to find a national healthcare system.

• 9:31Speaker 00

  Yep.

• 9:32Speaker 01

  Rather than like a fragmented private one like you have in the US.

• 9:34Speaker 00

  Right.

• 9:35Speaker 01

  So we were looking for a national healthcare system, healthcare challenges that were, that we felt we could really clearly solve, and a country that would be entrepreneurial and fast-moving alongside us. And so that to us, you know, had us looking at countries in East Africa. We were also talking to countries in Latin America. And, you know, interestingly, I remember this meeting with the Minister of Health of Rwanda, you know, I mean, we were beyond clueless. Like, it's just like, you know, 24-year-old like showing up in East Africa, like we build robots, we think that this could work. And I remember this meeting with her, where I was saying, hey, we'll deliver, you know, blood and vaccines and cancer products and all these different things. We could do it all instantly in a way that would be transformative and reduce waste and save lives. And I remember she

• 10:20Speaker 01

  looked at me and just said, Keller, shut up. Just do blood. And as she was explaining to me, you know, 50% of blood transfusions are going toward moms with postpartum hemorrhaging. 30% are going toward kids under the age of five. And it is a super hard problem from a logistics perspective, because you have packed red blood cells, platelets, plasma, cryoprecipitates, all these different types of each, A, B, A, B, and O. They have all different storage requirements and shelf lives. Platelets only last six days, for example, when you get them out of a donor into a patient. So they gave us 21 hospitals, and they said, just do blood. And that's what we did for the entire first year. And it was a disaster, by the way.

• 10:59Speaker 00

  Why?

• 10:59Speaker 01

  Because we had no idea what we were doing. You know, I think apropos of the flag behind us, we didn't know how to integrate with a national healthcare system. We didn't know how to integrate with a civil aviation authority. And we definitely didn't know how to build like an aerospace-grade product that was reliable yet. So we launched and we were pulling constant all-nighters. We're flying back and forth between the US and Africa. You know, we had the entire Afri- the entire Rwanda team hired. And the system only served one hospital for the first nine months reliably. And we're just trying everything we could do to make the system work reliably for that one hospital.

• 11:35Speaker 00

  Why Rwanda out of all the Sub-Saharan African countries you could pick?

• 11:41Speaker 01

  You know, we can answer that question now because we have a much better understanding. The reality is then we weren't smart enough. We just got lucky. The answer now is like Rwanda really is kind of like the Singapore of Africa. It has like a very technocratic leader with a very technocratic leadership team, where they're taking really smart bets on technology and moving quickly. And it's a very, very entrepreneurial country.

• 12:01Speaker 00

  It's got a much stronger civil service, yeah.

• 12:03Speaker 01

  Super strong civil service. Like, I can't even describe to you. I mean, many times I would be on calls with like a minister or a chief of staff at like nine o'clock on a Saturday, 11:00 PM on a Saturday. I mean, moving lightning fast. That's kind of what I mean. You know, there are many countries that are moving very fast because they know that the only way they're going to get ahead is by being

• 12:25Speaker 00

  Yes.

• 12:25Speaker 01

  aggressive and entrepreneurial and making bets.

• 12:28Speaker 00

  So it was messy at first. When did you crack operations in Rwanda and you felt like, wow, this is really working?

• 12:34Speaker 01

  So after nine months of like all-nighters, total desperation, everything that could break did break. It started working reliably for that one hospital, which was called Kupgi Hospital. By the way, that hospital was only like five miles away. So it was like, we were doing the easiest possible thing and failing at it. It didn't feel great for nine months.

• 12:52Speaker 00

  But like, when did Zipline get to the point where Rwanda would definitely not let you rip it out? Because they're like, oh, we rely on this, you know?

• 12:58Speaker 01

  So after nine months, started working well for that hospital. And then we rapidly added the other 20. So we were actually serving all 21 hospitals in the contract by the end of the first year. And then they asked us to expand to 50 hospitals and then 200 and then 500. Then we went from delivering blood to vaccines, cancer products, infusions, transfusions. Today, we're like the sole distributor of 500-plus health products in the public healthcare supply chain. And then we started expanding outside Rwanda. Today, we serve 5,000 hospitals and health facilities. It's become, yeah, like the largest commercial autonomous system on earth.

• 13:31Speaker 00

  If this model makes total sense, which I think what you're saying makes sense. There are various healthcare products where you may need them anywhere. You can't predict where you're going to need them and you need to get them in a time critical fashion. Why haven't other countries followed? I mean, you're starting to do this in other countries, but why as of 2020 was every country not beating down the path to your door saying, "Oh yeah, we'll take 10 zipline systems for our health service." It's kind of interesting, given that all countries' healthcare needs are kind of the same. With a lot of national healthcare systems, you would think more people would want to replicate the system.

• 14:05Speaker 01

  Yeah, I mean, I would say they kind of were because it's starting in 2020. So it took us like, you know, three years to stabilize and grow it in Rwanda. And then it was also very helpful. We had a number of big academic institutions come in and want to do studies. So like University of Pennsylvania came in and did this big study across all the hospitals we serve and showed a 51% reduction in maternal mortality. This is like, you know, a pretty profound thing. Very causal. I mean, they, you know, they have their control group and their non-control group. There are like interesting different reasons for it. It's a lot of it is around blood availability, but also part of it is just that like increased trust in the health system. More moms give birth in hospitals when they know that the hospital is going to have access to the products they need. By the way, you know, when we were starting to build zipline, we were told this was such a stupid idea.

• 14:49Speaker 01

  But if we had known we were going to get a 5% reduction in maternal mortality, we would have told you, hell yeah.

• 14:55Speaker 00

  Yeah, yeah, yeah.

• 14:56Speaker 01

  This is like completely worth doing.

• 14:57Speaker 00

  Victory condition.

• 14:58Speaker 01

  Victory condition.

• 14:59Speaker 00

  Yeah.

• 14:59Speaker 01

  So like the idea of a 51% reduction is, you know, it's something, um, don't listen to the experts. I guess is like a good takeaway. And, and so, you know, from there, I mean, we also got like these additional studies showing, you know, 70% reduction in vaccine waste, 32 percentage point decrease in zero dose children. So these are kids who never get vaccinated. And so we actually did see, you know, zipline then launched in Nigeria and Cote d'Ivoire and Ghana and Kenya. Started launching a lot of different countries, um, in around 2020, the system started to scale very fast.

• 15:33Speaker 00

  Have you seen any induced demand when healthcare, uh, uh, systems have zipline available to them? So, you know, you can imagine we can fulfill existing needs better. We need blood for a surgical procedure and we don't have it. And now with zipline, we have it. But have you seen healthcare systems start to do things that they weren't previously doing because they have this cool logistics system available to them?

• 15:56Speaker 01

  For sure. I mean, that's like the main thing that we are observing happening. I think. There's a lot going on that's all that's all pretty interesting and maybe we didn't anticipate all of it. I would say one big thing to realize is like with the health system, you're typically balancing access against waste. So if you want to make access really high, you send a ton of medicine out to the last mile and then access gets better, but now you start throwing tons of stuff out because all this stuff has shelf lives and a lot of it is like very expensive and cold chain dependent. If you want to reduce waste, you keep more stuff centralized, but now you have more people dying when they can't get access to the thing that they need. So one of the really crazy things with ZipLine was, you know, we were able to show that by keeping things centralized and turning the entire logistics system over to a just-in-time system, you can

• 16:41Speaker 01

  actually move both up simultaneously. That's a big idea. Another idea is what you're saying, which is like the induced demand. You know, you make it possible to vaccinate kids, for example, in a different layer of the healthcare system. In Rwanda, we now serve, I think it's like 400 or 500 health posts in the country. And so these are like the layer below primary care facilities. It means that kids can get vaccinated way close to where they live. More kids get vaccinated because it's just more convenient. The last interesting thing that we see is, and this is kind of on the opposite side of induced demand, is actually when you had a logistics system that wasn't very reliable, you actually had a lot of systems that started to exhibit hoarding behavior. It's kind of weird. But basically what would happen is that there was

• 17:26Speaker 01

  never enough blood to go around and these health systems would have to place their order for blood every quarter.

• 17:31Speaker 00

  So they'd over-order.

• 17:32Speaker 01

  They over-order because they know they're going to be cut back. And so they would order twice what they needed on the assumption that the government's going to send them half of what they actually asked for. And then that's just like a brinksmanship kind of thing. The numbers get bigger and bigger and you lose like all signal in the system. And so the really cool thing that we've seen is actually a lot of the demands have gone down because they're actually confident that they're going to get exactly what they're asking for.

• 17:54Speaker 00

  Yeah, it's a just-in-time framework, but for healthcare system.

• 17:58Speaker 01

  Yep.

• 17:59Speaker 00

  And what is the business of what you're doing in Africa? Are you paid by the healthcare system? Is this NGO-funded? How does the business side of things work?

• 18:08Speaker 01

  10 years of, you know, building the infrastructure in Africa, we always felt really strongly that, you know, we wanted this to be sustainable and we wanted to be led by the countries. There's a lot of work that gets done in Africa by NGOs, you know, they're funded by the US or by the international organizations and...

• 18:24Speaker 01

  I think what's kind of most amazing about ZipLine is it's been entirely country-led and entirely country, almost entirely, country-funded. So we sign contracts directly with the ministries of health, the governments themselves, and then we help those governments save lives and save money.

• 18:38Speaker 00

  Yep.

• 18:38Speaker 01

  So typically, we can, for any given ministry of health or health system, we can save millions of dollars, plus you can show extraordinary, like, healthcare impact. And that makes it a pretty easy decision for any country.

• 18:51Speaker 00

  Yeah, it's one of these amazing, better, faster, cheaper tech use cases or tech value props where you go to a health ministry and you say, "We'll give you a better logistics system that delivers stuff faster and is cheaper than how you're currently moving things around." And I presume that's kind of hard to pass up. Running a healthcare system is expensive.

• 19:08Speaker 01

  Yeah, running healthcare, but yeah, exactly. Like, these products are super expensive. You know, whether it's vaccine or cancer products, they're all culture-independent, short shelf life, very expensive, and there is phenomenal waste. It's mind-blowing.

• 19:22Speaker 00

  Yep.

• 19:22Speaker 01

  Like, I remember, and one of the things that actually kind of inspired us, like, on one of my first visits ever, and I won't name the country, it wasn't Rwanda, we went to this USAID-funded medical product warehouse, distribution warehouse. And we were kind of going inside, and you can tell, it's like, whoa, these systems are like, not good. By the way, like, all, you know, donor-funded, and it's just there's a separation from the customer, I think is the way to think about it. But we were, like, in the warehouse, it's like, kind of a disaster, it doesn't look like things are going well. And then we walk out the back of the warehouse, and it's just a field of boxes, as far as the eye can see. And, by the way, it all says, you know, "From the American people" on it. And I was like, "What is this?" And they're like, "Oh, don't worry about that, don't worry about that."

• 20:06Speaker 01

  It's like, "No, really, like, what the heck?" It was like, vast scale.

• 20:10Speaker 00

  Yeah.

• 20:10Speaker 01

  And they're like, "That's all the medicine that expired last year." And so I think we had this kind of like, aha moment, it's like, whoa, you know? And the crazy thing is, that was happening in a country that was having massive shortages and, like, healthcare outcomes where people couldn't get access to these products. It's just very, you could kind of like, see the two points

• 20:26Speaker 00

  Yes.

• 20:26Speaker 01

  to just connect with a line.

• 20:28Speaker 00

  So what's the lesson, the generalized lesson here? Is it that existing aid supply chains are pretty inefficient right now? And is a lot of improvement possible?

• 20:38Speaker 01

  I think maybe one big generalized takeaway is that logistics is so boring and so in the background, we never think about it. If you're living in, I don't know, you know, Bay Area, you're ordering stuff on Amazon, you have it delivered to you 30 minutes later, or an hour later, whatever it is, like, it's kind of like running water. You don't really appreciate it until you don't have it.

• 20:57Speaker 00

  Yes.

• 20:58Speaker 01

  And there are parts of the world that have crappy access to logistics.

• 21:01Speaker 00

  Yeah.

• 21:02Speaker 01

  And then there is about like five or six billion people on Earth who have no access to logistics. And I think that is maybe like the big realization, is that like, maybe we think of it as something that's just ubiquitous, or like something you don't worry about, but like, the reality is that if you don't have like that strong layer of logistics, everything else is phenomenally difficult and expensive to do.

• 21:22Speaker 00

  Yeah.

• 21:23Speaker 01

  So you mentioned like, the public healthcare institutions, like, they're all building verticalized supply chains.

• 21:29Speaker 00

  Right.

• 21:30Speaker 01

  In these countries, and it's many different supply chains. It'll be a different supply chain for AIDS drugs, different supply chain for, you know, maternal mortality, different supply chain for kids, or, you know, neglected tropical diseases, and those systems don't run very efficiently.

• 21:45Speaker 00

  In how many countries today do you run your medical logistics network?

• 21:48Speaker 01

  Eight.

• 21:49Speaker 00

  Why is that not 80, again? It just, it feels like something every, every healthcare system should want, and it's pretty proven at this stage, where it's been working well in Rwanda and other places for several years.

• 22:00Speaker 01

  You're, you're, you sound like our board, John. You're really putting the pressure on.

• 22:03Speaker 00

  Exactly.

• 22:04Speaker 01

  What are our revenue growth numbers, and why are we not growing faster?

• 22:07Speaker 00

  Exactly.

• 22:08Speaker 01

  You know, I think that there, there are a few things. I mean, one is that, like, we've always been pretty clear that it's one thing to save the lives of the people you're delivering to, but it's really important that we be safe for the people who are flying over.

• 22:22Speaker 00

  Mm-hmm.

• 22:23Speaker 01

  Now, ZipLine now has about 120 million commercial autonomous miles and zero safety incidents. And that's definitely hard to do. That has come from, I think, the company being very just focused and like... Step by step, doing things in the right way, testing, validating, and making sure never to get over our skis.

• 22:39Speaker 00

  But the laws of aerodynamics are not different in Rwanda versus Algeria versus the UK.

• 22:44Speaker 01

  So that's part of it, but then also it's kind of like, you know, I don't know. Sometimes we talk about it internally as like a pig traveling through a snake. You know, it's kind of all about bottlenecks. Scaling up hardware, I mean, we were really only ready for a lot of scale. I would say 2020 was when we started expanding into new countries. We then went from one to eight countries. Went from like 100 health facilities to 5,000 today. So the system has been scaling very, very fast. The other thing that did happen is that like 2022,

• 23:15Speaker 01

  when you see interest rates spike in the US, it's like, oh, man, that's really inconvenient and annoying to us in the US. In Africa, it creates like economic Armageddon.

• 23:23Speaker 00

  And it just, it feels like if you're running a medical system, what you're describing about having, like, I view you as not being in the drone business, but in this line of business, you are in the medical inventory management business, and you just have a much better inventory management solution because you're able to do this just-in-time stuff, and there are a few medical systems that don't want that.

• 23:43Speaker 01

  I just think it's becoming more and more clear that like this is the infrastructure of the future. This is like a smart thing for countries to be investing in. And so, you know, there is a lot that's going on even just this year that is leading to like massive growth, both in terms of like within countries, us adding new distribution centers and us adding new medical products, and then also adding new countries to the list.

• 24:02Speaker 00

  This medical logistics system we're describing is based on your Platform One aircraft. And the way the system works, as I understand it, is you have a fixed-wing battery-powered drone that is launched off a catapult. You shoomf it off the catapult, and then it flies from a distribution center, flies to the hospital, it drops the payload with a parachute attached, and they go grab it. And then the drone returns home, and I presume just lands in the grass, and you take it and plug it back in. That's roughly how Platform One works.

• 24:31Speaker 01

  Yeah, doesn't land in the grass. I mean, we actually use something that is kind of inspired by aircraft carriers.

• 24:36Speaker 00

  Oh, you catch it?

• 24:36Speaker 01

  Yeah, we actually catch it out of the air.

• 24:38Speaker 00

  Okay.

• 24:38Speaker 01

  Looks kind of crazy.

• 24:39Speaker 00

  Or it's like the thing in Batman, you know, where they're recovering the...

• 24:41Speaker 01

  What thing from Batman? You mean the skyhook from Mission Impossible?

• 24:45Speaker 00

  Yeah, there's also a skyhook in Batman.

• 24:46Speaker 01

  Sometimes people think skyhook. You know, it basically like the vehicle is flying by at about 100 kilometers an hour and we can snatch it out.

• 24:52Speaker 00

  Oh, I've seen that. Yeah, yeah, yeah.

• 24:54Speaker 01

  Called the snap catch.

• 24:55Speaker 00

  Big pole. Yeah, yeah.

• 24:55Speaker 01

  Big poles. And yeah.

• 24:58Speaker 00

  It's like something out of a cartoon.

• 24:58Speaker 01

  Every time you see it, yeah, it really does look kind of cartoonish.

• 25:01Speaker 00

  Real cartoon coded energy, yeah.

• 25:02Speaker 01

  It does look weird and every time you see it, you're kind of like, hallelujah, you know, like it's amazing that that worked, but now it works a thousand times a day. Yeah, we got away with another one. But the cool thing about, you know, autonomous systems is that like, you know, we're using guidance, navigation, control algorithms that are hyper-precise. When you take the human out of it, you can actually achieve levels, not that we want to take human pilots out. You know, I know, I realize I'm sitting with a talented pilot.

• 25:27Speaker 00

  None taken.

• 25:29Speaker 01

  But robots are really good at flying vehicles.

• 25:31Speaker 00

  Yes.

• 25:31Speaker 01

  And so actually you can achieve levels of precision that seem like very counterintuitive. Like, the aircraft has a one-centimeter tailhook on the back of it. And we reliably catch that one-centimeter tailhook every single time as a vehicle is coming by.

• 25:45Speaker 00

  When you say robots are better pilots, I take no offense to that. Have you read The Right Stuff by Tom Wolfe?

• 25:50Speaker 01

  I haven't actually.

• 25:51Speaker 00

  I really enjoyed it. Tom Wolfe, fabulous writer. All his stuff I would recommend. And certainly The Right Stuff, maybe for listeners of this podcast, is on the history of the Mercury Space Program, so before the Apollo Program. The initial space program. But they describe how when they were making the spacecraft, their initial plan that was like totally obvious to them was they would make them autonomous. And this is back in the 60s, but it was still kind of patently obvious to them that they would make them autonomous. And they faced rebellion from all the shit-hot Air Force fighter jocks.

• 26:27Speaker 01

  We can do it better.

• 26:28Speaker 00

  Astronauts in the program. Well, they just didn't want to be passive passengers, you know. We send monkeys up to space and monkeys don't do anything. We're no better than monkeys, just like sitting there.

• 26:36Speaker 01

  Sit there and hope you survive.

• 26:38Speaker 00

  So they added manual controls for the spacecraft like afterwards to design.

• 26:43Speaker 01

  Right.

• 26:45Speaker 01

  The controls weren't connected to anything, but they could at least like, it's like in an elevator, right? You can like push the close button.

• 26:50Speaker 00

  Exactly. Funny, and so, I know, that was back in the, in the sixties, and so, yeah, totally.

• 26:56Speaker 01

  But a slightly more serious, you know, note on that, which is that like today, the majority, I think you probably well know, the majority of aircraft, you know, airplane crashes are caused directly by humans.

• 27:07Speaker 00

  Yeah.

• 27:07Speaker 01

  It's actually a bit sobering. I mean, but also, I think it's just a sign that like the safety of these systems has progressed so dramatically that at this point, the last unsafe thing in the cockpit is the human themselves.

• 27:19Speaker 00

  So I got some questions from the tech and safety and how you do things. How do you avoid birds?

• 27:24Speaker 01

  We don't. Birds avoid us.

• 27:25Speaker 00

  Okay.

• 27:26Speaker 01

  Yeah. Turns out like birds have pretty, birds have pretty good detect and avoid systems of their own, and so they hear us coming.

• 27:33Speaker 00

  How fast are you flying?

• 27:33Speaker 01

  About a hundred kilometers an hour.

• 27:35Speaker 00

  So you're much smaller than airplanes.

• 27:37Speaker 01

  We're not like sucking birds into nasals in the same way that a jet would.

• 27:41Speaker 00

  How do you avoid airplanes?

• 27:42Speaker 01

  So we avoid airplanes by, basically, it's like a multi-layer deconfliction strategy. First of all, we're flying below the commercial aviation floor. So below, you know, in the US, that's about 400 or 500 feet. So we're never conflicting with like the kinds of normal airplanes that, you know, people who are listening would ever be flying in. We are also then on ADS-B, so we're receiving ADS-B, so as long as something is squawking on ADS-B, we know it's there and can avoid it. We also then have cameras onboard, and then we also do things like NOTAM, so, you know, old term, but notice to airmen, basically telling people when we're operating in certain places. So, like, all of these layers together combine to get us a safety profile that is super obvious that the FAA can approve.

• 28:26Speaker 00

  Super cool. And then, what, can you tell if a battery's gone on fire?

• 28:32Speaker 01

  So the cool thing about the way the aircraft is designed is that like, you know, there are 43 major sub-assemblies on the aircraft. Every one of those sub-assemblies is designed from scratch by zip lines, so it's super, you know, vertical integration. And We really take inspiration from the way that planes are designed. Like, we'll look at the way a flight compute on a Boeing 787 is designed. And they're, of course, using like multimillion-dollar, like, 20-year-old components. We can talk about why that's so screwed up in a sec if you want. But like, the architecture is usually fundamentally sound. And then what we'll usually do is like, just use cellphone components

• 29:04Speaker 00

  Yes.

• 29:05Speaker 01

  to build that architecture in a way that's about 1,000th of the cost.

• 29:08Speaker 00

  Yes.

• 29:08Speaker 01

  But just as safe.

• 29:09Speaker 00

  Yeah.

• 29:09Speaker 01

  And so you're kind of using a lot of those airspace paradigms of like, being able to fail over and building redundancy into every flight-critical system. So, you know, the aircraft, we have redundant nodes of the battery. One node can fail, the vehicle can still fly itself home. We have redundant flight compute architecture. So you can have a flight compute fail, you can fail over to the second flight computer and fly home. You can actually reach into the aircraft while it's flying and cut any wire with scissors. The plane will still fly itself home.

• 29:37Speaker 00

  Because it's wired redundantly.

• 29:39Speaker 01

  Redundant CAN bus. So basically, we're passing, yeah, redundant CAN bus on the aircraft means that we're not, you know, you can lose any wire. We also have redundant control services.

• 29:49Speaker 00

  Did you think that because you're paranoid about midair things? Or like midair collisions? Or because, just as a general redundancy strategy?

• 29:55Speaker 01

  General redundancy. I mean, like, you're not actually worried about someone reaching into the airplane with scissors, usually. That would be a hard thing to pull off. But what you are worried about is like vibration and connectors shaking loose. That's like a core failure mode for aircraft.

• 30:09Speaker 00

  So going back to the operations in, like, we're talking about these Platform 1 operations that you're doing in Africa in the medical logistics use case. What we described sounds pretty simple, but as you say, demos are easy, engineering is, or production is hard. What was hard about getting, you know, from 90% reliability to 99.9% reliability? Like, concretely?

• 30:32Speaker 01

  Yeah, very concretely.

• 30:33Speaker 00

  What kind of stuff were you solving?

• 30:36Speaker 01

  I think that with hardware, like, everything that can go wrong does go wrong. You know, like, at first you have to get like a design that works and makes sense.

• 30:46Speaker 00

  So you have earlier design iterations that were wrong in subtle ways?

• 30:49Speaker 01

  Unbelievable, or not subtle ways, like in retrospect, you look back, you're like, wow, we're like, complete idiots.

• 30:53Speaker 00

  Forward the silly early design.

• 30:55Speaker 01

  Yeah, one really good example with Platform 1 was, you know, when the aircraft would land, we would swap the battery. The advantage of swapping the battery was we could then have the aircraft back on the launcher and like back in the air three minutes later. We put the GPS on the flight computer, which would like seem to make sense as a place for GPS.

• 31:11Speaker 00

  Reacquire GPS every single time.

• 31:12Speaker 01

  So see, you're like smarter than we were, basically. So the problem was that you have, you know, you get an order and it's like, wow, there's an emergency. Like, a patient needs this, you know, blood transfusion. And so every second counts. So we immediately grabbed the aircraft, we put the battery in.

• 31:27Speaker 00

  Give me a minute.

• 31:28Speaker 01

  Plugs in, the GPS turns on, and now the GPS is going to take 20 minutes to acquire all the satellites necessary for the vehicle to pass pre-flight and launch. And so we realized how stupid this was and immediately iterated and put the GPS on the battery itself. So this didn't make sense from a bomb cost perspective, because now you need two GPS units for every aircraft that's flying, because one is sitting on the battery charger. But it really makes up for it because you've just like doubled your cycle time on the aircraft. So there are a million examples. I mean, another example, this stuff is so unfancy, it's almost like embarrassing to describe. But like when we initially launched Platform 1, the aircraft had 43 different kinds of fasteners on it. Turns out that is extraordinarily difficult to keep 43 fasteners in stock at all these different distribution centers where you're doing constant maintenance actions on them.

• 32:12Speaker 01

  So the next version of the aircraft had two total kinds of fasteners on the entire aircraft. So a lot of this is like, it's not fancy.

• 32:19Speaker 00

  Yeah.

• 32:20Speaker 01

  But it's hard to learn without, you just kind of like learn by doing.

• 32:24Speaker 00

  Is there, is there a component that's been really annoying? Like, if you could wave a magic wand and get a better version of some component, what would you ask for a better version of?

• 32:32Speaker 01

  I mean, every component. We have iterated on many, many times. I would say like today, probably more than anything is like servos. And in fact, ZipLine went and designed its own servo from scratch. You know, we also ended up going and designing, um, you know, I mean, almost every component of the aircraft. It was just kind of a matter of like when it made sense to do it. But over time, almost every component of the aircraft, every major subassembly has been designed completely from scratch.

• 32:56Speaker 00

  Why do servos frustrate you? Servos, for context, are actuators, basically things that turn electrical power into mechanical movement.

• 33:03Speaker 01

  I think servos are hard just because like there was no industry. I think the way to think about, you know, people think about drones. And they're like, oh yeah, it's like a drone. But the reality is you have, you know, an $1,000 quadcopter that will like take pictures and fly for 20 minutes. And the reliability and safety of it really doesn't matter at all. And then you have a $50 million Predator aircraft, which is actually surprisingly also very unreliable. Like Predator, you know, famously I read this statistic, which is like 50% of US military drones have like crashed due to operator error.

• 33:37Speaker 00

  Oh my gosh.

• 33:37Speaker 01

  You read these stories, they're like, they didn't realize they were flying upside down. I mean, it's like crazier than you think.

• 33:42Speaker 00

  The DJI inbuilt collision avoidance is now much better.

• 33:45Speaker 01

  Not working. I don't know.

• 33:46Speaker 00

  The new ones will.

• 33:47Speaker 01

  Yeah. I think that the reality is those are two different sides of the spectrum. And what ZipLine really needed was like, we think a lot about automotive grade, which is actually, I almost think of it like a sacred area of like, um, cost and quality. Because automotive grade is super, is generally very low cost and very, very high quality and reliability. And that's really where servos are. Like you can get servos that are totally crappy, that you'd like use in consumer, I don't know, like toys. And then you can get like extremely expensive servos designed in Germany. And they cost a thousand dollars each and they're way over engineered. But what we needed was something that was like extremely cost effective and that would last for like a million cycles. And that doesn't exist in the world.

• 34:30Speaker 00

  And so you're now producing your own servos?

• 34:32Speaker 01

  And so we designed it completely from scratch and now that's what we use in platform two.

• 34:35Speaker 00

  That's fun. Will you end up just selling drones for? Other applica-- like, right now you are a-- you know, did you know Boeing and United used to be the same company? Like, it was full vertically-integrated aviation, where--

• 34:47Speaker 01

  They're not at that.

• 34:48Speaker 00

  Yeah.

• 34:49Speaker 01

  Wow, I feel like I'm embarrassed.

• 34:50Speaker 00

  The airframer and the airline, yeah. And then they were split up in that. Like, it was a big antitrust-- antitrust was emerging in the domain kind of at the time, and as part of that, they were forced to split it up. Anyway, you are the Boeing and United, right?

• 35:01Speaker 01

  Yep.

• 35:02Speaker 00

  You know, you provide the service and you produce the aircraft. Might you ever just sell the aircraft?

• 35:05Speaker 01

  I don't think so. For like, a number of reasons. I mean, I think the most important one is kind of what I was alluding to before, which is none of our customers care about drones. Like, if we were out there trying to sell drones, I mean, it just is not solving the problem that people actually care about.

• 35:18Speaker 00

  Yes, yes.

• 35:19Speaker 01

  Like, Walmart, Cleveland Clinic, the government of Rwanda, none of these customers want to be like, managing a fleet of autonomous aircraft.

• 35:25Speaker 00

  Oh, no, I don't think you sell the drones to your current customers. I think to be new customers, where maybe I want to build a crop dusting service, and your drones would be the best for doing crop dusting, so I buy your drones, and they have all the safety equipment and the high-quality servos and things like that, but you're not currently in the crop dusting market.

• 35:40Speaker 01

  Yeah, I mean, the second reason I was gonna say is, I just don't think selling hardware in that way is a very good business.

• 35:45Speaker 00

  Ah, okay.

• 35:46Speaker 01

  But I also think the third thing to consider is that like, it's a bit like asking someone, it's like, oh, you know, Jeff Bezos, like, early days of the internet. Are you also going to like, build other internet businesses? You know, it's like, the internet is just a technology platform. And Amazon was building, obviously, you know, a new kind of retail company. And I think that, you know, drones are a technology platform. Zipline is a logistics company. Like, we are really focused on building automated logistics for Earth in a way that you want to build the first logistics system that serves all people equally. Like, we would happily use any different kinds of techn-- like, if someone invents teleportation tomorrow, we'll switch to that, because that would be better.

• 36:22Speaker 00

  Your logistics platform adjusts the big unsolved space with drones. Will you ever do a modality that is not drones?

• 36:29Speaker 01

  Very possibly.

• 36:30Speaker 00

  Huh. What would that be?

• 36:33Speaker 01

  We have lots of ideas. Have a few more sips. Yeah, exactly.

• 36:39Speaker 01

  I think that ultimately, if you really want to be a new kind of logistics provider, you probably have to be even more integrated. Like, certain things are not going to go via the air, certain things are going to go via the ground. Okay, so you can get into multimodal. Yeah, you should be multimodal. Yep. You know, UPS is multimodal, perhaps ZipLine should be multimodal.

• 37:00Speaker 00

  Kelly is describing here how ZipLine got its start in Africa, but they're now up and running with drone deliveries in the United States. And this is a technology pattern you see again and again. Drone delivery, mobile payments, WhatsApp, QR codes, these are all technologies that started in emerging markets first. And it's going to be the same with stablecoins. So here at Stripe, we're all in on stablecoins. We recently acquired Bridge, the leading stablecoin orchestration platform, and Privy, the best crypto wallet infrastructure. We're already seeing a ton of stablecoin adoption, especially with companies that want to build cross-border financial products. We're working with companies like Ramp to build a global stablecoin-backed spend card, SpaceX for global treasury management, and Shopify to enable payments on Shopify stores from every country. And then breakout startups like Chipper Cash and Dollar App, they're offering dollar

• 37:45Speaker 00

  access to people in Africa and Latin America. But we don't think stablecoins are going to stop there. Stablecoins are a programmable, low-cost, high-throughput financial system that have applications everywhere. I know from my experience, when I talk to CEOs, they're all interested in the applications of stablecoins. Stablecoin's supply is up 50% in the past year alone. They're definitely not a flash in the pan. So if you're a company building with stablecoins, or you're just thinking about your strategy there, come talk to Stripe.

• 38:12Speaker 00

  We have been describing Platform 1, which is, like we said, fixed wing, catapult-launched, skyhook-recovered, operating for the last decade in Rwanda. You now have just launched Platform 2, which is vertical takeoff and landing, looks more like a traditional multi-rotor drone that people might picture when they hear drone. Though there's also a wing?

• 38:38Speaker 01

  Yeah, it's a hybrid.

• 38:39Speaker 00

  Okay, so it's a, I forget what you call these, but yeah, there's a wing and there's...

• 38:43Speaker 01

  Vertical takeoff and landing, so VTOL.

• 38:45Speaker 00

  Yeah, VTOL, fixed-wing thingy. And you are using this for deliveries in suburban America.

• 38:53Speaker 00

  Many questions on this. First off, why construct a whole new modality? Like, it seems to me that what you were doing with the precision airstrikes of little packages under parachutes would also work for my burrito. So why not do Platform One with my burrito?

• 39:12Speaker 01

  I mean, in fact, it did. The crazy thing is that when we, you know, when we initially started building ZipLine, we kind of thought, oh, we're going to have to build this like very fancy, complex technology. It'll have to be a vertical takeoff and landing fixed wing vehicle. We'll have to be able to deliver things very precisely and gently. And then when we were talking to all these early customers, it kind of, you know, we realized, and this is the power of just going and talking to customers directly, they only cared about cost and speed. Basically, they wanted to cover like maximum range, they wanted to be fast, and they wanted to be really cheap. And so we kind of ended up thinking like, hey, you know, perhaps we should just design this very simple fixed wing system that would be, you know, to a certain degree, very unfancy. Like, when you see the way we're delivering there, you know, it's just like this, you know, cardboard box with a wax paper parachute.

• 39:56Speaker 01

  It is amazing to me that that system worked that well and scaled for 10 years to like 5,000 hospitals and health facilities and became the largest commercial autonomous system on earth. You know, when we say 100 million commercial autonomous miles, I don't think people fully get, like, that's going to the moon and back 200 times.

• 40:11Speaker 00

  Yeah, and I presume, I don't know, I always find comparisons of to the moon and back really not...

• 40:17Speaker 01

  Not that helpful?

• 40:17Speaker 00

  Not that helpful. No one knows how far away the moon is. I presume your average journey is order of 100 miles in Africa, and so you're basically talking a million flights?

• 40:26Speaker 01

  Yeah, it's like 1.5 million.

• 40:27Speaker 00

  Yeah, 1.5 million flights. So I think that's a pretty good number, but...

• 40:32Speaker 01

  So, anyway, like, not to, you know, digress, but it's kind of amazing to me that Platform One scaled as far as it did, what this delivery experience was like super unfancy. And ultimately, as we were scaling that like crazy through 2020 and 2021, there were all these big customers in the US who all were kind of saying, hey, like, we want teleportation. We would use that here in the US. And so I think that this was kind of our realization that like, it was time to expand, basically, and say, okay, if we were going to build a product that can deliver directly to homes, what does that need to look like? And the design considerations for that are pretty different. You know, in our opinions, we need to integrate really well with like existing buildings, kind of build distribution centers like we did with Platform One.

• 41:17Speaker 01

  We had to be able to basically plug into the side of any existing hospital or primary care facility or warehouse or even restaurant. And then from there, you needed to be able to deliver two homes in a way that was fully automated, zero mission, 10 times as fast. And most importantly, we want it to be silent. Because we think that people, this is kind of an important thing. Sometimes people think drone delivery, oh my god, it's going to be so annoying. You know, this like nonstop buzzing of drones because that is how people experience drones today. But the reality is that it doesn't have to be that way. You can design systems that are actually way, way quieter than receiving a delivery via a car.

• 41:51Speaker 00

  And the crazy thing, sorry, that I forgot to mention in my description of Platform 2 is that the drone does not come, the aircraft does not come anywhere near your house. It sits up at 300 feet above your house and then longlines the payloads down to you in a little droid thingy and that drops it off. But as a result, the drone is hovering 300 feet above you, where I presume it's just inaudible.

• 42:17Speaker 01

  Yeah, it's nearly inaudible. It looks crazy. I was talking to an investor the other day.

• 42:22Speaker 00

  It sounds crazy.

• 42:23Speaker 01

  Yeah, I know. And I was talking to an investor the other day. He wrote us this nice email and he said like, hey, we really want to meet you because we think ZipLine has built like a fundamentally jaw-dropping consumer experience. I do think when people come and see it for the first time, it's pretty wild. Because you just never really experienced something like zipping down to you from like a football field above your head.

• 42:41Speaker 00

  It's like science fiction.

• 42:42Speaker 01

  It's kind of science fiction. But the advantage is that droid that you described, the little robot on the end, is actually controlling its position in X and Y axis. So this is really important because like it's often windy, it's going to be blowing, you have different environmental conditions you're trying to control for. And we want to be able to deliver with like dinner plate level accuracy to any home. And so this enables us, even when the wind is blowing really, really hard, this enables us to like very reliably, safely and precisely deliver something even in a very, very tight area.

• 43:10Speaker 00

  Okay, so the reason that you needed to develop a platform two for suburban deliveries in the United States was, one, the place you're delivering from, the Chipotle, you probably can't fit a catapult there, at least not in everyone.

• 43:22Speaker 01

  I'm pretty sure you can't.

• 43:23Speaker 00

  And, well, some of them you could, but it's a parking lot, you know, and, but not reliably. And then for the target, again, it might be accurate enough, but the new system is definitely accurate enough.

• 43:35Speaker 01

  Yeah. I mean, in fact, like, the very first Walmart store that we ever integrated, we actually integrated with Platform One. And that was even more shocking to me. The customers loved, like, basically having, like, their stuff bombard them, you know, like, from thirty feet up. I mean, it's like, honestly crazy. I think that was, like, the clearest signal to me of, like, man, if people were willing to put up with that delivery experience to get something delivered autonomously, like, wait until they see Platform Two.

• 44:00Speaker 00

  So the reason that we haven't had drone delivery in the United States for a long time is the FAA did not provide any rulemaking on beyond visual line of sight operations. And, you know, they're your regulators, so you probably can't criticize them in public. I'll criticize them for you. I think, you know, the FAA was slow and roundly criticized for being slow in not having any commercial drone frameworks. So the old Part 107 stuff for, like, hobby drone operators and line of sight is the test where it has to be a light drone, less than fifty-five pounds, and you have to be, like, there controlling with your remote control, which obviously is not viable for commercial drone operations. So for the longest time, they sat on commercial drone operations and didn't do anything. Just

• 44:42Speaker 00

  now, in the last month, we've seen Sean Duffy, the Secretary of Transportation and Acting Head of the FAA, announce new Part 108, Beyond Visual Line of Sight, Commercial Drone Rules, or at least the Notice of Proposed Rulemaking. What do you think of the current FAA and the rules they're proposing?

• 45:01Speaker 01

  Yeah, I mean, first of all, you know, Part 108 is kind of like... Codifying something that has already been happening over the last three to four years, which is I think that about four years ago.

• 45:12Speaker 00

  On an ad hoc basis.

• 45:13Speaker 01

  On an ad hoc basis and like via exemptions. Which is that about four years ago, zip lines started seeking regulatory approval in the US. We were able to go to the FAA and say, hey, we have 100 million commercial autonomous miles and zero safety incidents. We think at this point you have the data you need and they agreed. And so very much to their credit, like, you know, this is what really unlocked like zip lines starting to scale aggressively in the US. And we've done that via exemptions or things called like 4407, which is a different process rather than getting an aircraft type certified. If you really want to talk about, you know, something that's broken, we could talk about type certification.

• 45:45Speaker 00

  Of drones or aircraft?

• 45:47Speaker 01

  Both.

• 45:48Speaker 00

  Okay.

• 45:49Speaker 01

  Yeah, I mean, so far.

• 45:50Speaker 00

  Do you see the mosaic stuff?

• 45:51Speaker 01

  I have.

• 45:52Speaker 00

  It's amazing. They fixed part 23.

• 45:55Speaker 01

  That is really cool.

• 45:56Speaker 00

  The certification by making part 22 much bigger.

• 45:58Speaker 01

  But type certification has been, you know, this interesting like blocker, which is if you wanted to operate commercially in the US, you couldn't operate under 107. Or if you wanted to operate commercially on a visualized site, you had to operate under part 135. And I fear that we're getting like, you know, we're really in the weeds now, but like, you know, I guess the main point here is that like you needed to get an aircraft type certified. And this is kind of the definition of a very painful regulatory process. It takes, you know, five to 10 years to get aircraft type certified. And it's really based on this idea of like, a regulator is going to look at every component of the aircraft and like independently verify that that component is meeting certain standards that were set by the regulator. That might, you know, I mean, imagine trying to do that in a world where like every year

• 46:43Speaker 01

  you have a radically new and better version of the technology.

• 46:45Speaker 00

  Yeah, you guys are doing like progressive hardware development and like constantly figuring out that, you know, two fasteners is better than 43 and other such innovations.

• 46:53Speaker 01

  You just have really, really fast iteration. And so in a world where type certification takes five to 10 years, you're dead on arrival. And that's kind of what we saw for like five or 10 years, none of this innovation happened in the US. I think the good news is that in like 2020, the FAA kind of like woke up to this. They realized like, hey, this is going to become one of the most important industries in the world. The US needs to be a frontrunner here. We cannot be a laggard. And the FAA actually started to move super fast. I mean, the FAA has been. I know you think maybe I'm just saying this, but like the FAA has actually been a great partner. Like there are so many people there who want to win and who want to see the US win.

• 47:26Speaker 00

  I think the FAA is full of awesome people trying really hard. I think the rulemaking has been slow and I think exemptions and waivers are not a substitute for a good regulatory framework.

• 47:34Speaker 01

  Yeah, well, there you go. I mean, 108 really is like, I think, you know, there have been these exemptions made that luckily enabled Zipline to like invest aggressively in the US over the last four years and experience pretty explosive exponential growth, which we can talk about. But like, you know, 108, it is cool to see that now be codified. That is just the beginning of a process, right? Because now the FAA has nine months to like actually operationalize and execute based on that rulemaking. And we'll see how that goes. But I think it's like, it's super important. I mean, I think you and I probably both have grown up reading about like the SR71 program. Or a lot of these programs like to design airplanes. I mean, there was a world where like the US was iterating incredibly fast in aviation and aerospace. And we've largely lost that.

• 48:17Speaker 01

  Like our grandparents got to grow up in a world where they could fly on supersonic jets. We can't.

• 48:23Speaker 00

  Yep.

• 48:24Speaker 01

  You know, I think people have this sense that like the world moves inexorably forward. It doesn't. I think weren't, didn't you have a tweet about this maybe like, you know, I think about it every day. Like actually no, sometimes we literally move backwards.

• 48:36Speaker 00

  Yes, yes.

• 48:36Speaker 01

  And in aviation, like what plane did you learn to fly on?

• 48:39Speaker 00

  Ah, I learned to fly an assessing 152.

• 48:41Speaker 01

  And how old was that aircraft?

• 48:42Speaker 00

  Yeah, it was from the 1970s, I want to say, yeah.

• 48:45Speaker 01

  What the hell?

• 48:46Speaker 00

  No, I was, I was actually just ogling the carbon cub UL, which uses a new Rotax engine. So there's this awesome new engine technology out of Germany, this company Rotax that makes them there. And it hasn't been in the US certified market because it hasn't been worthwhile to go get the engine certified. And now they're selling it in the LSA regime.

• 49:10Speaker 01

  Light sport aircraft.

• 49:12Speaker 00

  Exactly, it is possible there. And so I think we're just going to see this wave of interesting new, because it's the kind of pent up technologies that haven't been certified yet, such as Rotax engines, which are better in every way.

• 49:21Speaker 01

  Have we lost like 98% of the audience now by talking about 108 and 135? I guess, but just to just to share, to share one thing, like to try to make it even more general interest. Like what really inspires me? You know, is you think about like Skunk Works, right? And like the teams that built a lot of the-

• 49:38Speaker 00

  It was the Lockheed Martin-

• 49:39Speaker 01

  Yeah.

• 49:39Speaker 00

  Uh, factory that made or kind of group, tiny group that made all the fun news stealth aircraft, F-104 and stuff like that.

• 49:46Speaker 01

  SR-71, even more famously like the, the-

• 49:50Speaker 00

  The U-2.

• 49:50Speaker 01

  Yeah, exactly.

• 49:51Speaker 00

  And they didn't make the F-111, they made the F-111, sorry.

• 49:53Speaker 01

  Yeah, and I just to give like a specific example, a couple of examples. One, like the first modern passenger aircraft that was ever built, the DC-3. I'm gonna get everything right. Like DC-3 was built originally, the entire design cost for that aircraft was like two and a half or three million dollars. So even when you convert into today's dollars, that's like 75 million to design a passenger airliner. The 787 cost 32 billion dollars to develop. Oh yeah, DC-3 was like napkin sketch to finish aircraft, I think in two years.

• 50:24Speaker 00

  Yep.

• 50:25Speaker 01

  You know, the 787 took 20, 25 years, 32 billion dollars. It's literally become 500 times as expensive to build an airplane as it was for our grandparents. And I think the crazy thing is you're gonna be like, oh, well, it's like the 787 is a much more complicated airplane.

• 50:39Speaker 00

  Yes.

• 50:39Speaker 01

  Yeah, the iPhone is also much more complicated than it was five years ago.

• 50:42Speaker 00

  So if you think about the causes, I think there's a great point to this. You know, the 787 certification process is so much more tortuous than the DC-3. If you think about why that is, I think there is a few obvious things you could point to. One is, and the one people would point all the time is, we have much less tolerance for unsafety than we used to. The second is, the certification approaches are much more prescriptive. And so they require that you do specific things to prove how you're going to meet various tests and, and stuff like that. And then maybe you could say that just the paper turnaround times have gotten slower and, you know, there's a lot of back and forth. If you could wave a magic wand to fix aircraft certification, either across drones or manned aircraft-

• 51:27Speaker 00

  Again, you're put in charge at the FAA. What would you actually do?

• 51:30Speaker 01

  I think the answer is actually really obvious. And the good news is, I think this is largely already happening, which is that we need to move away from prescriptive regulatory requirements that are like, "Okay, now show me the life support system for the pilot. Should we lose whatever atmospheric pressure in the cabin?" It's like, it's a drone. There is no pilot. And then the FAA looks at you like, "I don't know." Like, we can't move forward, you know? I think there are a lot of things that are just... You have all these prescriptive rules about like...

• 52:01Speaker 00

  You need performance-based...

• 52:03Speaker 01

  You need performance-based. So basically, everything needs to transition to a world where the FAA is setting a statistical level of safety. And from there, any company can basically self-certify against that level of safety. You can imagine different ways of like, what kind of data you might have to provide to prove that you're meeting that level of safety. But there are a lot of different ways to build something that's safe. And what you want is engineering innovation. You want people trying new things. If you try something new and it's an amazing innovation, and suddenly like, blowing it out of the water, like, with a prescriptive, absolute regulatory framework, you lose all of that. Because it's basically like, the FAA is just looking to make sure every subsystem

• 52:48Speaker 01

  that's like the way we've been designing airplanes for 100 years...

• 52:50Speaker 00

  The subsystem-by-subsystem stuff is crazy, rather than performance-based.

• 52:53Speaker 01

  It's really painful. So anyway, I know this might be like a little, like, in whatever, you know, shop talk or whatever, but I think that it's really important. And I also think you can probably see similar versions of this battle playing out in many different parts of the US government. When you look at the way we build nuclear power plants. We created, what is it called? The Nuclear Regulatory Commission. Nuclear Regulatory Commission, started in, I think, like, 1978. The commission is started to ensure that power plants are safe. And since then, we've built zero power plants, I think. Or is it like one? I think it's zero.

• 53:27Speaker 00

  Yeah, it's definitely the rate slowed down.

• 53:30Speaker 01

  The commission achieved its goal, though. Because we built zero. And that's like painful, you know, as an American, it's like, ah, like, that's.

• 53:39Speaker 00

  You're describing failure to engage with trade-off space.

• 53:43Speaker 01

  Yeah.

• 53:44Speaker 00

  In an intellectually honest way, where there's a trade-off between safety and cost. And you just have to actually address those questions. And you have the trade-off between speed and safety, these things.

• 53:52Speaker 01

  And the cool thing in aviation is that, like, there's now 50 years of pent-up technology that has totally not been put to work at all. It's actually very similar. I think it's why SpaceX is like this, you know, enormous success. Like, because they're like, oh, yeah, we'll just actually use modern microcontrollers.

• 54:09Speaker 00

  Yes, yes, yes.

• 54:09Speaker 01

  Or modern semiconductors. Whereas, like, you know, ULA was building on a semiconductor, you know, architecture that I think was like 30 years old. Because they just didn't want to certify a new flight computer.

• 54:21Speaker 00

  And so you've launched in Texas now, just Texas?

• 54:25Speaker 01

  Well, we launched originally in Bentonville, and now we're expanding in Dallas.

• 54:28Speaker 00

  Okay, so you're expanding in Dallas and delivering for people like Walmart and Chipotle. And where else should people be ordering from in Dallas?

• 54:36Speaker 01

  I mean, you can just go to the ZipLine app.

• 54:38Speaker 00

  Okay.

• 54:38Speaker 01

  So, yeah, and we have all the different storefronts on there. You go to ZipLine.

• 54:41Speaker 00

  But those are some of the biggest ones.

• 54:42Speaker 01

  Yep, those are the biggest. And, I mean, you know, to give a sense, right now we're launching.

• 54:45Speaker 00

  Give me your explosive growth stats.

• 54:47Speaker 01

  I mean, it's kind of crazy. It's really only the last three months, but we're now launching a Walmart Supercenter every week. You know, those stores are ramping extraordinarily fast. I mean, I don't know exactly how much I'm allowed to share. It's probably more for Walmart to share. I mean, order of magnitude, you know, it is, the service is becoming quite large relative to the way that people receive.

• 55:11Speaker 00

  Like, how many drones do you're flying in the Dallas area?

• 55:13Speaker 01

  Yeah, so every, you know, right now, we are integrated with about 10 Walmarts, and we're launching one a week. And each aircraft, each Walmart will have somewhere between, like, eight and 20 Zips flying from it.

• 55:26Speaker 00

  Okay, so you have hundreds of drones now delivering in the Dallas area?

• 55:29Speaker 01

  Serving, you know, and. I mean, the crazy thing is the service-

• 55:32Speaker 00

  Any truck can do hundreds of deliveries a day?

• 55:35Speaker 01

  Um, like, I think, I think each, yeah, high tens is what I think about it.

• 55:39Speaker 00

  So you have the capacity for a thousand-ish, thousands of deliveries per day?

• 55:42Speaker 01

  Yeah, that's the way to think about it. And that, and that's growing rapidly. We're actually expecting to get to 10,000 deliveries a day in Dallas. Like, that's actually the company's goal. We're going, we're moving as fast as we can toward that. Looking at the statistics, the service has been growing 25 to 30% week over week for the last three months. And the interesting thing, the last couple of things, I mean, really, it's only the last three months that like, because we only launched in Dallas on April 1st, or April 4th, I think.

• 56:04Speaker 00

  Yeah.

• 56:05Speaker 01

  So seeing it grow like that, the crazy thing is that about a month ago, we were starting to have all these capacity issues. Because it's like, we, you know, we can't do as many deliveries. It's growing really fast. So we decided to turn off all the marketing. We turned off the in-app notifications. We turned off the field service marketing. Basically, all the demand generation marketing we're not doing. And the service just like, you know, I mean, we hit new records.

• 56:27Speaker 00

  Because it's just a much better product.

• 56:28Speaker 01

  Yeah. Saturday, we hit a new record, like all-time daily delivery record. And then on, like, two days ago. And then yesterday, we blew that record out of the water by 20%. It's crazy. So I think that, you know, a couple of takeaways, like, one is that it's amazing how quickly science fiction becomes entitlement.

• 56:47Speaker 00

  Yeah.

• 56:47Speaker 01

  Like, you know?

• 56:48Speaker 00

  We've seen this with Waymo in San Francisco.

• 56:49Speaker 01

  It's exactly like Waymo, where people get in and they're like, oh, my God, I'm on this car, insane. And then three minutes later, they're like scrolling on Instagram, you know? And I mean, when you go to Dallas and you just-

• 56:58Speaker 00

  What's the version of that in Dallas?

• 56:59Speaker 01

  I think the version in Dallas is that, like, you know, for the first day that we launch a new Walmart, you'll see people kind of like, like on the hoods of their cars, just like watching the service. Already, you know, like, people are kind of taking note. And then three days later, people are just totally going about their normal lives.

• 57:12Speaker 00

  Yeah.

• 57:12Speaker 01

  Do not care. You've got this, like, installation of autonomous aircraft. They're just coming and going non-stop at crazy volume.

• 57:19Speaker 00

  Yeah.

• 57:21Speaker 01

  You know, I think the other example is like, I mean, I visited a 78-year-old grandma who's ordered 340 times from ZipLine over the last year. She's been like the county-

• 57:29Speaker 00

  I was going to ask, are you saying induced demand? That sounds like, yeah, where people are ordering more stuff.

• 57:34Speaker 01

  It's crazy. Like, she's been, I think, the county clerk for 40 years straight. And, you know, she's just showing me, she's like, oh, yeah, like, let's place an order right now. And she's like- Like around on her iPhone, you know, putting everything into a basket. It's like double click the side of the phone, Face ID, Apple Pay. She's like, it's on its way. It'll be here in eight minutes, you know?

• 57:49Speaker 00

  She's 78.

• 57:49Speaker 01

  She's 78 and she's like totally living in the future and you know, or you you talk to like moms who are like, oh yeah, this you know, buys me back like three or four hours a week. And just like be with my kids or like, take care of the family rather than be like out in a car trying to shop or get something. I think a lot of families we're seeing now ordering like three to four times a week on average, where they'll do like a big grocery run once a week. And then they can do three to four, sometimes they talk about them as like top up visits. But it's like, you don't know what you're making for dinner or are you like something unexpected or you have people over? You just get everything you need delivered autonomously.

• 58:22Speaker 00

  Why can we not have this in California? Why are you in Texas and not California? Cause like, I would have thought from a regulatory point of view, this federal preemption of the airspace and so, I would have thought all places are equal. Why is Texas a more hospitable environment for this than California?

• 58:36Speaker 01

  Could ask the same question about Rwanda. I mean, I think that you know, Zipline has probably been-

• 58:40Speaker 00

  Rwanda had a different regulatory framework, like drones are banned in the US, where drones aren't banned in California.

• 58:44Speaker 01

  No, however, you know, a lot of what we do is still about a partnership with like the community and the government.

• 58:52Speaker 00

  I see. You need a permit from for the base or whatever.

• 58:54Speaker 01

  To build like, yep, exactly. We're still permitting the ground infrastructure, for example. It's a bit like, you know, Tesla building supercharger infrastructure in the US.

• 59:01Speaker 00

  So who do I need to write a letter to? Is it my mayor? Is it my-

• 59:04Speaker 01

  We're working on it. We're working on it.

• 59:05Speaker 00

  Local representative?

• 59:06Speaker 01

  Yeah, we're working on it. But to be honest, like as someone who lives in the Bay Area and so like 100% feels your pain. It's like, why is this not like serving my house right now? Like the vast majority of technology has first focused on serving like, you know, whatever, the elite cities on the coast of the United States. I actually think it's okay that for once, like technology is kind of going-

• 59:25Speaker 00

  This works better in a low density area?

• 59:26Speaker 01

  It's going the opposite. Well, it's actually, I mean, Dallas is very high density. Like, I mean, it's not Manhattan, but it's probably denser than San Francisco. I wouldn't say it's as much about density. It is a lot about like, you know, we typically want to launch somewhere where people are freaking psyched to have us. And where there isn't, you know, I do think there's a little bit of a flavor. I mean, you had Kyle on here, right? And like seeing what Cruz went through in San Francisco with the coning of the cars, like.

• 59:51Speaker 00

  Yeah, our war on electric scooters here in San Francisco.

• 59:54Speaker 01

  Hey, like-

• 59:55Speaker 00

  But we have a new mayor, Daniel Durie.

• 59:56Speaker 01

  I know, he's doing awesome.

• 59:58Speaker 00

  He's doing great.

• 59:59Speaker 01

  I think that, um, look, I just think that sometimes cities might, you know, if they just assume that they're always going to have the best technology and like they don't have to, you know, do anything about it or- I don't know, I think that there are a lot of cities and states out there that are 100% aggressively courting, you know, infrastructure, new solutions, they want high-paying jobs, and they're like unapologetically excited about new technology.

• 1:00:25Speaker 00

  So you're gonna go to the cities that want you first, and then you can get around to the cities that are more ambivalent?

• 1:00:31Speaker 01

  I think what's gonna happen is that, at some point, you know, again, there are like certain cities that are just extremely forward-leaning. Like, an example, I brought one of our board members from San Francisco, you know, leads one of the biggest funds in the world here in San Francisco, to Dallas. And he was like, looking at what we were doing, and his, I mean, I could see the smoke coming out of his ears. He was like, "Oh my god, you guys are just doing things." You know, we went to a site where we were building charging infrastructure, and we had literally broken ground three days previously. There was a huge hole in the ground. And he was like, "So when is this gonna be online?" And I was like, "It's gonna be online in 15 days before the board meeting." We had a board meeting in 17 days. He was like, "That's insane. It is not gonna be ready for the board meeting. What are you talking about?"

• 1:01:16Speaker 01

  And it was actually ready like five days before the board meeting. Basically, different kinds of cities have different requirements, and like, there are places in the US where you can get things done super, super fast.

• 1:01:25Speaker 00

  Yeah. We are here in South San Francisco, just down the road from your aircraft manufacturing facility. Tell me about that. You know, how do you build them? How many are you building? How many will you build?

• 1:01:35Speaker 01

  The most important thing is the speed of engineering iteration. I think you'll appreciate this. You know, that's something I think that's been a very well-understood concept in software companies, not so well in hardware. Way harder to do in hardware. And so, the way to do that is full vertical integration, and then having engineering practically on top of manufacturing. So that like, as you're rolling hardware changes through onto the line, you have like the engineers who design those changes, working with manufacturing engineers, and then working with the people on the line itself, to like, figure out how to make that work and get it into production. And so, even though it seems like a bit of a weird thing to say like, "Yeah, we're producing all these aircraft here in South San Francisco", the value of us being fully integrated in that way, what it does for the speed at which the blind can iterate and evolve the product...

• 1:02:21Speaker 01

  is way more valuable than like, oh, it's more expensive to hire someone in South San Francisco than it is in Nevada or something like that. So it's an easy trade. So yeah, this facility, we just expanded to 160,000 square feet. It'll be capable of building around 50,000 aircraft a year at scale. Which should get us to like near national scale in the United States.

• 1:02:43Speaker 00

  50,000 aircraft a year. And how many aircraft will like a medium sized city require to support it?

• 1:02:49Speaker 01

  I think it's like around 1,000. Depends on the city. Like cities come in a lot of different shapes and sizes.

• 1:02:55Speaker 00

  Yeah. Okay. Yeah. Well, so 50,000 a year is really a lot.

• 1:02:58Speaker 01

  Uh, compare, you know, again, it depends what you're comparing to. If you're comparing to iPhones, not really. But if you're comparing to like airplanes, then like, yeah, really a lot. Like compared to the Cessna.

• 1:03:06Speaker 00

  Yeah, exactly.

• 1:03:06Speaker 01

  That you learn to fly in.

• 1:03:07Speaker 00

  Yeah. Um, okay. And so you'll be able to, in your current production facility in South San Francisco, produce 50,000 drones a year?

• 1:03:14Speaker 01

  Three shifts, 24 seven operations. We already operate our test sites 24 seven.

• 1:03:18Speaker 00

  Huh. And what do you do at the test site? What do you test?

• 1:03:22Speaker 01

  Uh, yeah, I think, you know, when people come visit the test sites, I think that's one of the things about ZipLine that is most mind blowing to people. And I think it's just, it doesn't really look like anything people have seen before. You know, people often ask us, they're like, wow, 120 million commercial autonomous miles and zero safety incidents. Why don't other people do that? I mean, it turns out that, you know, designing something that's safe is hard. You have to think very-

• 1:03:46Speaker 00

  A reusable rocket, that's a good idea.

• 1:03:48Speaker 01

  Yeah, exactly. It's like, yeah, everybody, everybody should just do it. It turns out some of these things are hard to do. And I think the way you do it is it's all just like, you know, none of this is fancy. It's just practical problem solving. And so for us, it was like having three major layers of, you know, testing and validation. So the first layer is like software testing. We do a huge amount of testing, um, you know, at 10 or 100 times real time speed to like test all the different software systems that we are constantly iterating. And there's, you know, 10 times as much software as there is hardware.

• 1:04:20Speaker 00

  This is like the airplane avoidance you were describing.

• 1:04:23Speaker 01

  Yep.

• 1:04:23Speaker 00

  It's like you input a signal of like, oh, you're near an airplane and check that it avoids the airplane.

• 1:04:27Speaker 01

  Yeah. Autonomy, computer vision, you know, um, guidance, navigation, controls, communications, architecture. All the backend cloud services, like these can all be, you know, you can do a huge amount of software testing. Um, when, because- I think the other major way to think about what is the problem we're trying to solve? Do you know how long it takes Boeing to do a software update?

• 1:04:48Speaker 00

  A long time, I'm guessing.

• 1:04:49Speaker 01

  Trying to guess?

• 1:04:49Speaker 00

  No.

• 1:04:50Speaker 01

  You don't want to guess?

• 1:04:51Speaker 00

  I'm too horrified.

• 1:04:51Speaker 01

  Come on, guess, guess.

• 1:04:52Speaker 00

  Like, from when to when?

• 1:04:54Speaker 01

  From when they realize, for example, from when they realize that their planes are falling out of the air and killing people. To when they can then have the software update out and so the airplane's back in the air.

• 1:05:02Speaker 00

  I mean, that was order of a year?

• 1:05:04Speaker 01

  Three years.

• 1:05:05Speaker 00

  Oh, that was that long?

• 1:05:05Speaker 01

  Yeah. Again, this is part of the problem of like how the FAA regulates software with those kinds of aircraft. But, you know, Zipline right now is doing a full new version, like we're releasing new software versions to the entire global fleet every 30 days. And so validating that, you know, basically it might be, you know, 50 to 100 bug fixes, maybe, you know, 20 to 50 performance improvements, and then like 5 to 20 major feature additions or upgrades. And that gets validated through the software testing layer, then it gets validated through Hiddle, which is hardware in the loop testing. It's basically like all of the avionics of the aircraft assembled on shelves that are kind of like the brain of the aircraft connected to the matrix.

• 1:05:49Speaker 01

  They're all operating in simulation. We can detect like 95% of what's going to go wrong on an aircraft, we can detect in Hiddle, before we then go to the final layer, which is the test sites. The test sites have hundreds of aircraft operating 24/7, so they never stop. Even, you know, Saturday at like 3 a.m., you could go to the test site and you'll see like the aircraft are just there, and there are humans overseeing them.

• 1:06:11Speaker 00

  You're describing your build, manufacture, testing, infrastructure in the United States. One of the top discussed topics right now is American dynamism, the reemergence of American manufacturing. And when people talk in DC about the importance of American manufacturing and the criticality of the supply chain in the United States. You know, the example they often point to as a supply chain that we have outsourced is obviously drones, where there is not kind of a serious, as serious.

• 1:06:47Speaker 01

  And they're gonna say semiconductors.

• 1:06:48Speaker 00

  Oh, well.

• 1:06:49Speaker 01

  Semiconductors is like even more scary.

• 1:06:51Speaker 00

  Semiconductors get talked about a lot, yeah, yeah, true, for sure. But you know, there's the headlines about Intel and everything. But we also talk a lot about drones and just how much more scaled up the Chinese drone industry is than the US drone industry. People also talk about the fact that it's not competitive to manufacture in the United States anymore because supply chain, I don't know, did you read the Apple in China book? It's like a pretty good.

• 1:07:11Speaker 01

  I've heard of it, I haven't read it yet.

• 1:07:12Speaker 00

  It's great. And it's like a good history of.

• 1:07:14Speaker 01

  Why did this happen?

• 1:07:15Speaker 00

  Apple's manufacturing in China, yeah, and they described kind of the emergence of it. But in particular, you know, people sometimes thought of China as just low wage, whereas the book correctly describes just how much agility there was in adapting supply chains and being able to manufacture there. And so you are a company manufacturing at scale in the United States. What do you think of this, this topic?

• 1:07:36Speaker 01

  Yeah, to put a finer point on it, in a week, China makes more drones than the US makes in a year.

• 1:07:42Speaker 00

  That is a finer, finer point.

• 1:07:44Speaker 01

  You know, it's a little spooky and obviously, you know, you don't have to be like a deep student of global events to understand that like, wow, I mean, this technology is clearly kind of like remaking, not just industries, but remaking warfare.

• 1:07:58Speaker 00

  Yeah, and people watch the war in Ukraine where it is now all drone determined.

• 1:08:02Speaker 01

  Totally, 100%, like everything is attributable and like you wouldn't want humans on the battlefield at all. And I think that, I think this is like a good news, bad news thing. So the bad news is like, yeah, it's true, you know, China has like massive manufacturing advantages and massive scale in this area that the US does not currently have. But that is mainly for like, you know, plastic quadcopters that cost a thousand dollars. Like it's definitely a different class of aircraft. When you look at like where this is all going, the systems that are really going to matter, whether it's like military or logistics, they aren't like thousand dollar quadcopters. They are more complicated technologies. They require really strong integration of like, you know, software, AI solutions with the hardware itself.

• 1:08:46Speaker 01

  And again, the hardware is only like 10% of the complexity of the overall solution. So in those areas, the US is actually leading. You know, the US is leading both in terms of I think drone delivery and logistics, but also, you know, leading on the software side.

• 1:09:00Speaker 00

  That's right, those areas being.

• 1:09:02Speaker 01

  I would say like. More advanced hardware, software integrations that are required for like really good products for military and really good products for logistics.

• 1:09:13Speaker 00

  Okay.

• 1:09:13Speaker 01

  So when we're talking about the 50x, that's like because you have DJI in China or like that, you know, they're building

• 1:09:18Speaker 00

  So you think China is a leader in low end growth?

• 1:09:20Speaker 01

  Tens of thousands for like drone light shows, those kinds of things. That is not necessarily the battlefield that is going to determine, you know, who really like is the front runner in the industry that matters the most. And so I think that it's too early to say. I think, you know, China has obvious advantages and that like they have massive manufacturing scale. You mentioned the Apple supply chain book. That is a huge reason. The fact that Apple outsourced so much of that manufacturing and so much of that knowledge and expertise is now in Shenzhen. Like now Shenzhen's ability to build phone adjacent products, which I think you could definitely describe drones, even cars, you could describe as phone adjacent now.

• 1:09:57Speaker 00

  As, yeah.

• 1:09:58Speaker 01

  As Tesla has, Xiaomi, yeah, or Tesla could attest. You know, it's actually those supply chains that make it possible to then like branch out and build a lot of these other products way faster. So that's the advantage that China has. The advantage the US has is like a lead in AI, a lead in more advanced hardware and software integrations.

• 1:10:17Speaker 01

  I don't know who's going to win.

• 1:10:18Speaker 00

  Yeah. The, the point the book makes is that Apple's direct investment in China is much larger, even in inflation adjusted terms than the Marshall Plan. In, in your report, just a kind of a huge investment in manufacturing capability.

• 1:10:33Speaker 01

  I was thinking about that on the way here, how that's going to look, you know, with the benefit of hindsight. Corporations sometimes make like the easy short-term decision to maximize profit instead of like the more strategic decision of like, how do we set ourselves up for long-term success? And it really does not seem like it would be that hard to, you know, ensure, like to achieve some of the company goals that a company like Apple wanted to achieve, but also ensure that you, you know, maintained like manufacturing dominance and kept it at home. Or at least ensure that you kept that as a strategic option. Like the fact that we're now in a position where we don't have the ability to build our own smartphones, period.

• 1:11:13Speaker 01

  And where, you know, depending on what happens with Taiwan, we may not have the ability to even build modern computers. It's spooky.

• 1:11:22Speaker 00

  Last question, you're one of the

• 1:11:26Speaker 00

  Success stories that people hold up in hard tech, where you've built a product that is a successful business line. You've found a good way to start that wasn't too capital consumptive. You were able to get like a real product out there in the field and refine it from there. And now you have a product that people love in several countries. What advice would you have for hard tech founders starting out today?

• 1:11:49Speaker 01

  It certainly seems to me like the whole American dynamism, what do you call it, paradigm that we kind of see. I think it's making things easier. When I moved to the Bay Area in 2013 with the goal of kind of building Zipline, the most exciting company in the entire, in all of Silicon Valley, probably in the entire US, was a company doing file sharing. It was Dropbox. They had like the best engineers, the best growth story, the most ambitious vision. And it was, I think at that time, like a $5 billion company, which is like more money than I could possibly imagine, right? And that was like the pinnacle of what you could achieve in terms of building a startup in Silicon Valley. And so it's interesting to think that in just 12 years,

• 1:12:34Speaker 01

  like the scope and scale of human ambition has radically increased. I mean, whether it's Tesla or SpaceX or Stripe or OpenAI or Brian Armstrong was on here, right? He's like working on New Limit. They're trying to make humans immortal. And a lot of these ideas are like working and scaling. There are people building nuclear fusion power plants. I think that's like kind of probably underappreciated just how much change has happened in just 12 years. And I think that, I guess to answer the question, my biggest advice is that, I think especially when it comes to hard tech, like the whole challenge is just designing something like incredibly simple and getting it into the real world quickly and learning by doing.

• 1:13:19Speaker 01

  It's very easy to be in a bunker or an R and D lab building cool technology. Really hard to like force yourself into the real world and then learn by doing. I think that that like zip line, you know, we never thought we were the smartest team. We never thought we were certainly not the best funded team. But we always had this like deep conviction that we were the most practical team. And we had this mission that really inspired us. We knew exactly what we needed to do. It was like deliver to those 21 hospitals. And we forced ourselves to launch something that to even our own eyes, we were quite embarrassed. It's like, oh my God, like, is that gonna, I mean, are people gonna put up with that delivery experience? And it turned out that like even that very simple version of the product scaled very fast. And so I think that it sounds obvious when you say it, and yet it's extremely rare, especially in hard tech companies.

• 1:14:04Speaker 00

  Keller, thanks for coming by.

• 1:14:06Speaker 01

  Yeah, thanks, John.