20VC The Future Business Model For Drones & Why Enterprise Drones Need To Be As Boring As Possible with Jonathan Downey, Founder & CEO @ Airware

In an engaging episode of "20 minutes VC," host Harry Stebbings interviews Jonathan Downey, the founder and CEO of Airware, a company specializing in aerial data analysis via drones. Downey shares his journey from being a commercial pilot and flight control engineer at Boeing to establishing Airware, which has secured over $65 million in VC funding from prominent investors like Andreessen Horowitz and Google Ventures. He discusses the evolution of drone technology from military to commercial applications, emphasizing the enterprise software's role in making drone data actionable for industries like insurance, agriculture, and construction. Downey also touches on the challenges and future of drone technology, including regulatory hurdles and the potential for machine learning to unlock new applications. The conversation reveals the transformative impact of drones on traditional industries and the importance of strategic partnerships and customer-focused solutions in driving the adoption of this innovative technology.

• Jonathan Downey is the founder and CEO of Airware, a startup focused on delivering better-informed decisions through aerial data captured by drones.
• Airware has raised over $65 million in venture capital funding from notable firms including Andreessen Horowitz, Kleiner Perkins, and Google Ventures.
• Jonathan is also a general partner at the Commercial Drone Fund, which invests in early-stage companies in the commercial drone space.
• His background includes being a commercial pilot and a flight control engineer at Boeing.

"I'm thrilled to welcome Jonathan Downey, founder and CEO at Airware, the startup that allows you to make better informed decisions with aerial data captured by drones."

This quote introduces Jonathan Downey and his company Airware, highlighting the company's focus on utilizing drone technology for data analysis and decision-making.

• Jonathan attended MIT for a degree in electrical engineering and computer science, seeking practical experience beyond the theoretical.
• His passion for aviation stems from his family, as both parents and other relatives are pilots.
• Jonathan started flying in high school, obtained his first license after college, and has multiple flight ratings including instrument rating and commercial multi-engine rating.
• He started a student group at college to build drones for an intercollegiate competition and was recruited by Boeing to work on a large drone project post-graduation.
• Jonathan's experiences led him to recognize the potential for commercial applications of drone technology, which was not being fully exploited by existing companies.

"I went to school at MIT to get a degree in electrical engineering and computer science... I've been very fortunate that the company I've been working on for the last six years, airware, is such a combination of my two passions, aviation and engineering."

Jonathan's quote explains his educational background and how his career has combined his interests in aviation and engineering, leading to the creation of Airware.

• Jonathan observed a lack of commercial application of drone technology while working as a commercial airline pilot and attending trade shows.
• He identified an opportunity to develop a software stack that could convert drone-collected data into actionable business intelligence for large enterprises.
• Jonathan noted the interest from various industries, including utilities, insurance, oil and gas, and agriculture, in using drone technology despite regulatory and practical challenges.

"I saw a big opportunity to develop a software stack that could take the data collected by drones and actually make it actionable business intelligence for large enterprises."

This quote highlights Jonathan's realization of the market gap in drone technology applications for businesses and his vision for Airware to fill that gap.

• Four years prior, the commercial landscape for drones was dominated by consumer use and hobbyist applications.
• Jonathan pitched the commercial potential of drones to Andreessen Horowitz, highlighting the overlooked market for commercial solutions.
• The industry has since evolved, with a growing belief in the potential for drones in commercial applications.

"But there is going to be this entire market for commercial solutions, and that's really the market."

Jonathan's quote from his pitch reflects his foresight in predicting the growth of commercial drone applications, a belief that has become more widely accepted in recent years.## Digitization and Drone Technology

• Companies are adopting digitization strategies to transition from manual, dangerous, analog tasks to digital processes.
• Drones offer a new capability for businesses to understand the physical aspects of their operations and customers.
• The technology aids in providing accurate information quickly, leading to better decision-making.
• In the insurance industry, drones facilitate quicker, more precise claim payouts.
• In industries like mining, coring, and construction, drones improve site understanding for safety compliance and productivity.

"But drones represent a totally new capability to take the physical aspects of their business that either their employees are working on in the field, or to better understand the physical aspects of their customers and bring that as well into the back office and how they're making decisions, and get them more accurate information with a faster turnaround time, enabling that better decision making."

This quote highlights the transformative impact of drone technology in various industries by enhancing data collection and analysis, leading to more informed business decisions.

• Technological innovation in drones has largely stemmed from the consumer market.
• Consumer drones have evolved into sophisticated systems with advanced cameras and autonomy.
• Software APIs allow for industry-specific drone control and data collection.
• Commercial companies can utilize these advancements for tailored business solutions.

"I think we've seen a ton of innovation actually come from the consumer space, which is proving to be an incredible enabler for the commercial market."

Jonathan Downey points out that the consumer drone market has driven innovation, which has subsequently benefited the commercial drone industry.

• A few years ago, the commercial drone market was nascent, and companies were involved in various aspects of drone technology.
• Now, the market has matured, with companies specializing in specific business models.
• DJI dominates drone manufacturing, focusing on operational excellence and rapid product iteration.
• Companies like Airware concentrate on enterprise software for easy drone operation and data management.
• Service providers operate drones for clients, eliminating the need for in-house drone expertise and technology upkeep.

"Now the market is really at a state where companies are focusing on a couple of business models that are kind of penciling out to make a lot of sense."

Jonathan Downey describes the current commercial drone market as more mature, with companies focusing on distinct and viable business models.

• Consumer drone software is designed for entertainment and photography, emphasizing ease of use and fun.
• Enterprise drone software aims to be reliable and integrate seamlessly with business operations.
• The enterprise software must automate data collection and deliver it in a usable format, such as PDF reports or system integrations.
• The goal is to make enterprise drone operations as straightforward and routine as possible.

"This needs to be as boring as it possibly can be. You want your team member to be able to show up with a drone, do as little as possible, have that drone just fly the pattern that's required to collect the aerial data and then transform that data and deliver it in either the form of a report and like a PDF report in the insurance industry, or an integration with a claims management system, or in some cases even an integration with your ERP system for asset tracking and management of financials."

Jonathan Downey emphasizes that enterprise drone software should simplify the process to the point where it becomes a mundane part of the business workflow.

• Traditional enterprise pricing models, such as seat-based or usage-based, are being applied to drone technology.
• Despite the innovative nature of drones, the underlying business strategies and pricing models remain consistent with established enterprise practices.

"My board members tell me all the time that they're just shocked with what an incredibly new and differentiated technology drones are, just how much the decisions we're making, the pricing models, the business model, the strategies we're pursuing at the end of the day are enterprise, kind of a typical enterprise playbook, if you will."

Jonathan Downey reflects on the observation that drone technology, while innovative, still adheres to conventional enterprise business models and strategies.## Airware's Business Model and Customer Focus

• Airware provides technology in a licensed format along with professional services, consultative sales, expertise, and enterprise support.
• The goal is to drive business outcomes for customers and ensure they achieve the results they're looking for.

"And so what we're really focused on is driving that business outcome for the customer and doing kind of whatever that takes, which is both providing the technology in a licensed format, but also the professional services, the consultative sales, the expertise, and the enterprise support that goes along with it."

This quote emphasizes Airware's comprehensive approach to customer service, ensuring that they not only provide the technology but also the necessary support and services to guarantee successful business outcomes for their clients.

• Initially, there were existential risks including regulatory concerns and enterprise adoption.
• Now, with regulations in place and enterprises making decisions at the CIO level, challenges are more about normal enterprise technology adoption issues.
• Key challenges include training employees, integrating data to avoid silos, ensuring ROI, and maintaining data accuracy for business decisions.

"But today we're seeing that the regulations have been in place now since last summer in the US. They're really enabling commercial drone use at a broad scale large enterprises are making kind of enterprise wide decisions in the CIO's office about adopting, evaluating and implementing this technology, just as they would a lot of other enterprise it."

Jonathan Downey highlights the shift from regulatory and adoption challenges to more typical enterprise IT adoption challenges, such as training, data integration, ROI, and data accuracy, reflecting a maturing market for commercial drone use.

• Machine learning is heavily utilized to analyze data sets for various applications like detecting rust, corrosion, and water intrusion, and assessing the rate of wear on rooftops.
• Algorithms developed for one industry (insurance) are found to be applicable to another (mining and quarrying).
• Technologies like better obstacle avoidance and beyond visual line of sight operations are key to expanding drone applications.

"So we're seeing a lot of benefits from addressing kind of multiple industries and applications with that technology."

Jonathan Downey explains how machine learning and other technologies are not only enhancing current drone applications but also enabling the expansion into new market segments by being applicable across different industries.

• The market may see both consolidation and aggressive adoption by new players.
• There's value in having companies serve various vertical markets with a common platform approach.
• Large incumbent companies must decide whether drone technology is core or context to their business, with many opting to partner rather than develop in-house.

"I would say most companies, while they may begin thinking this is core to their business in terms of developing some of the drone technology, really realize this is context for them, and it's best for them to partner with a company who really brings that aerial data expertise."

Jonathan Downey discusses the strategic decisions faced by incumbent companies in traditionally heavy industries, suggesting that many find more value in partnering with specialized firms like Airware rather than trying to develop drone technologies themselves.

• Jonathan Downey finds the biography of Elon Musk by Ashley Vance incredibly encouraging and inspiring for an entrepreneur.
• When interviewing, he believes in tailoring questions to the individual's background and learning from each interview to go deeper.

"And whenever I think I'm having a hard day, I think about some of the incredible things that Elon has had to go through, not just with one company, but with multiple companies, and sometimes at the same time."

This quote reflects Jonathan Downey's admiration for Elon Musk's resilience and perseverance in the face of challenges, which serves as inspiration for his own entrepreneurial journey.

"You really need to tailor questions to that person's background and take maybe what you learned in the first interview and then really come up with tailored questions for the second interview."

Jonathan Downey shares his approach to interviewing, emphasizing the importance of customizing questions to the interviewee's experiences to gain deeper insights, especially when dealing with seasoned professionals.## Interviewing Approach

• Harry Stebbings discusses the importance of digging deep in interviews to ensure candidates have relevant experience.
• He likes to ask open-ended questions to understand the candidate's type of leadership and career journey.

"And if you don't dig deep enough, you're going to think it's a great interview. And when you do dig deep enough, maybe you find that the person didn't do some of the things themselves, or maybe not in the way that's relevant for your business."

This quote highlights the potential pitfall of not thoroughly vetting a candidate's background and the importance of relevance to the hiring business.

"I say, look, there's lots of different types of marketing leaders... What kind of marketing leader are you, and how did you get to that place in your career?"

Harry emphasizes the value of understanding a candidate's specific expertise and the path they took to develop it.

• Jonathan Downey shares insights from being mentored by John Chambers, the ex-CEO of Cisco.
• Chambers's exceptional people skills and his approach to building long-term, win-win customer partnerships are highlighted.

"John is probably the most incredible person I've ever met at working with people."

Jonathan expresses his admiration for Chambers's interpersonal skills.

"John's an incredibly unique person in what a natural, charismatic, just genuinely nice person he is, but he's also an astute kind of study of people."

The quote underscores Chambers's dual strengths as a naturally charismatic leader and a deliberate student of human behavior.

• Jonathan Downey expresses his fondness for Chris Dixon's blog, citing Dixon's broad technological insights and writing ability.

"I really love Chris Dixon's blog."

Jonathan identifies Chris Dixon's blog as a valuable source of technology insights.

• Downey explains the decision-making process behind the acquisition of Redbird, focusing on entering a new market, the importance of people, and customer relationships.

"People were probably the most important aspect."

This quote emphasizes the significance of the team and cultural fit in the acquisition process.

• Downey envisions significant industry changes due to commercial drone technology and aerial perspectives.
• He anticipates that Airware will be at the forefront of integrating drone technology into business processes and driving transformation.

"I think in five years, companies are going to look back on the way things are being done today as part of their business and think about how archaic it is."

Jonathan predicts a paradigm shift in business operations due to drone technology.

• Harry Stebbings thanks Jonathan Downey for his participation and insights.
• Stebbings also thanks Didier at Culture Amp for the introduction to Jonathan Downey.

"Jonathan, it's been such a pleasure to have you on the show."

Harry expresses his appreciation for Jonathan's contribution to the podcast.

"And again, I want to say huge thank you to Jonathan for revealing the incredible trajectory of airware."

Harry acknowledges Jonathan's sharing of Airware's journey and progress.

• Stebbings talks about the Eight Smart Mattress, emphasizing its sleep tracking technology and personalized sleep report.
• He also mentions Full Contact, a contact management solution that helps organize and engage with contacts efficiently.

"Eight is a sleep innovation company with their latest product, the eight smart mattress."

Harry introduces Eight as a company that innovates in the sleep technology space.

"With full contact they provide the ability to organize your contacts, gain rich insights into them, and therefore build deep relationships."

This quote describes the benefits of using Full Contact for managing and engaging with personal and professional contacts.