# The Drone Startup That's Outcompeting China | Adam Bry, Skydio Markdown copy of https://realalpha.app/v/nb7EinVtdok/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy. Adam Bry says Skydio can outcompete DJI by building autonomous drone systems and controlling its products and supply chain. - Show: Relentless - Hosts: [Ti Morse](https://realalpha.app/people/ti-morse/) - Guest: [Adam Bry](https://realalpha.app/builders/adam-bry/) is cofounder and CEO of Skydio. - Published: Nov 8, 2026 - Length: 1 h ## The best minutes - [7:04](https://realalpha.app/v/nb7EinVtdok/?t=424) [China's sanctions forced Skydio to rebuild its supply chain](https://realalpha.app/s/chinas-sanctions-forced-skydio-to-rebuild-its-supply-chain/) (5 min) - [42:34](https://realalpha.app/v/nb7EinVtdok/?t=2554) [Skydio made irreversible bets before the technology was proven](https://realalpha.app/s/skydio-made-irreversible-bets-before-the-technology-was/) (3 min) - [56:01](https://realalpha.app/v/nb7EinVtdok/?t=3361) [Lean teams can grow output without growing headcount](https://realalpha.app/s/lean-teams-can-grow-output-without-growing-headcount/) (4 min) ## Also worth watching - [11:40](https://realalpha.app/v/nb7EinVtdok/?t=700) [Battery-swapping docks must earn their added complexity](https://realalpha.app/s/battery-swapping-docks-must-earn-their-added-complexity/) (3 min) - [49:05](https://realalpha.app/v/nb7EinVtdok/?t=2945) [Hardware firms can control quality in-house or through suppliers](https://realalpha.app/s/hardware-firms-can-control-quality-in-house-or-through/) (3 min) - [14:12](https://realalpha.app/v/nb7EinVtdok/?t=852) [A wingtip gimbal keeps the camera clear of the drone's wing](https://realalpha.app/s/a-wingtip-gimbal-keeps-the-camera-clear-of-the-drones-wing/) (2 min) - [30:56](https://realalpha.app/v/nb7EinVtdok/?t=1856) [New products need a different development process than successors](https://realalpha.app/s/new-products-need-a-different-development-process-than/) (3 min) - [36:41](https://realalpha.app/v/nb7EinVtdok/?t=2201) [Leaders review customer failures to keep product work grounded](https://realalpha.app/s/leaders-review-customer-failures-to-keep-product-work/) (3 min) Skip customer-versus-competitor focus, government sales and privacy, CEO priorities, and the closing discussion of wartime operations and competition. ## Full analysis: Adam Bry says Skydio expects to outsell DJI in U.S. civilian sales - Bry expects U.S. civilian sales above DJI this year, while Skydio customers average about two million annual flights. - The comparison pairs Skydio’s own numbers with public DJI data and different customer mixes. - Watch whether autonomous docks, supplier capacity and lean teams can sustain that position. Its 7 sections, what it means for you and what to watch are on [the page](https://realalpha.app/v/nb7EinVtdok/#analysis), free with an account: - [0:53](https://realalpha.app/v/nb7EinVtdok/?t=53) Bry’s sales lead rests on a narrow comparison - [1:45](https://realalpha.app/v/nb7EinVtdok/?t=105) Autonomous docks anchor Skydio’s competition - [22:30](https://realalpha.app/v/nb7EinVtdok/?t=1350) The dock bet began before customers and budgets - [12:12](https://realalpha.app/v/nb7EinVtdok/?t=732) Usage data filters features, while conviction expands them - [8:15](https://realalpha.app/v/nb7EinVtdok/?t=495) Sanctions made supply resilience a factory constraint - [32:26](https://realalpha.app/v/nb7EinVtdok/?t=1946) Skydio varies reliability work by product maturity - [57:28](https://realalpha.app/v/nb7EinVtdok/?t=3448) Lean staffing limits what Skydio can pursue ## Summary Adam Bry is Skydio’s cofounder and CEO; the YouTube description identifies Skydio as the largest drone startup in the U.S. Bry says the company began in 2014, built its first consumer drone in-house, and later focused on enterprise and government customers. Adam Bry says Skydio expects to sell more drones to U.S. civilian customers than DJI this year, as competition shifts from manually flown drones to autonomous, dock-based systems. He says Skydio’s in-house manufacturing and efforts to rebuild its China-dependent supply chain have helped it develop products and reduce exposure, though sourcing remains challenging. Bry argues that product decisions should combine customer-use data with engineering judgment, and that public-safety uses require privacy safeguards and community accountability. He credits capable, lean teams, operational discipline, and a willingness to make existential bets with helping Skydio grow while continuing to invent. ### Minute by minute - [0:00](https://realalpha.app/v/nb7EinVtdok/?t=0) **Autonomous drones shift the competition.** Bry says Skydio expects to sell more drones to U.S. civilian customers than DJI this year, based on the best public data Skydio can find. He says Skydio serves professional users, while competition is shifting from manually flown drones toward remotely operated, dock-based autonomous systems. - [4:25](https://realalpha.app/v/nb7EinVtdok/?t=265) **Skydio took years to find its market.** Bry says Skydio took four years to ship its first consumer drone, which impressed people technically but sold poorly. After focusing on enterprise and government customers in 2020, the company spent three to four years getting its product offering right. He says online customers now average about 2 million flights per year, a figure that is doubling year over year, and expects factory output to triple this year. - [6:55](https://realalpha.app/v/nb7EinVtdok/?t=415) **China sanctions forced a supply-chain rebuild.** Bry says Skydio manufactured in-house from the start, then worked to move its supply chain out of China as it took on government customers. After the Chinese government sanctioned the company and shut down a battery supplier, Skydio had to rebuild major parts of its supply chain and rationed shipments to one battery per drone. Bry says the company plans to spend about $1 billion with U.S. suppliers over five years, though the supply base remains fragile. - [11:29](https://realalpha.app/v/nb7EinVtdok/?t=689) **Customer data guides product tradeoffs.** Bry says Skydio uses flight and mission data to weigh product improvements against their cost and reliability risks; he says battery swapping may add value but is not free or perfectly reliable. He also describes the F10, a fixed-wing drone launched and caught by a robot, with two hours of endurance and a top speed of 100 miles per hour. In a rural emergency, he says it can provide situational awareness in 10 minutes when a sheriff’s office might take an hour to arrive. - [16:42](https://realalpha.app/v/nb7EinVtdok/?t=1002) **Companies should maximize team capability.** Bry describes a good organization as one that brings out the best of its people, and says he pushes teams to understand problems deeply. He favors trying things when the cost of being wrong is low, but says large hardware programs need more thought up front because correcting direction after 18 months can be more expensive. - [20:07](https://realalpha.app/v/nb7EinVtdok/?t=1207) **Dock systems were an existential bet.** Bry says Skydio tracks investment and expected payback, with some projects carrying a five-year-plus horizon; he says the R10 became a profitable program in a relatively short time. He describes the dock investment, begun in 2021, as a major bet made when there were no customers or budgets for dock products. Skydio was burning cash, but he says the team believed docks were where the market was heading. - [23:56](https://realalpha.app/v/nb7EinVtdok/?t=1436) **Government sales require public accountability.** Bry says government purchases use taxpayer money, so political processes should shape how those products are deployed. For public-safety sales, he says the community is the ultimate customer and that agencies should use Skydio’s products transparently and in ways that protect privacy. He says elected officials may reject the technology, and that this pressure helps hold the company accountable. - [28:44](https://realalpha.app/v/nb7EinVtdok/?t=1724) **Leaders focus on talent and frontiers.** Bry says he focuses on building an exceptional team, maintaining operational excellence, and exploring uncertain frontiers such as new technologies, products, and markets. He also spends time with customers to see how they use Skydio’s products and what is or is not working. - [33:36](https://realalpha.app/v/nb7EinVtdok/?t=2016) **Reliability depends on close feedback.** Bry says supplier changes to materials or processes can cause unexpected problems downstream, so manufacturers need deeper supply-chain analysis and control. He says public-safety drones have been thrown, hit with bats, and shot; he sees that damage as preferable to a person facing violence. Skydio leaders also review videos of product issues from the prior two weeks to understand customer problems. - [39:20](https://realalpha.app/v/nb7EinVtdok/?t=2360) **Robotics hype still needs execution.** Bry says AI and robotics are attracting capital, but some newer companies underestimate what it takes to deliver reliable end-to-end products at scale. He expects some pain from bubble-and-crash dynamics, while saying technology can still advance during those periods. He frames Skydio’s goal as building products that are useful to people and that the company can do better than others. - [42:34](https://realalpha.app/v/nb7EinVtdok/?t=2554) **Existential bets need conviction.** Bry says Skydio made several bets that could have ended the company if they failed, including computer-vision-based autonomy when experts were skeptical and putting rolling-shutter cameras in Skydio 2 before the algorithms were solved. He also cites the dock investment and the decision to focus on public safety and emergency response as a path to scale. - [49:05](https://realalpha.app/v/nb7EinVtdok/?t=2945) **Supplier control can replace vertical integration.** Bry says hardware companies need control over what goes into their products, which they can gain either by making components themselves or by building close supplier partnerships. Skydio has become more integrated in cameras, but partners for lenses and does not yet make its own silicon. He says the company fills gaps itself when no supplier is building what it needs. - [51:43](https://realalpha.app/v/nb7EinVtdok/?t=3103) **Competition focuses the team.** Bry says he enjoys working on existential challenges and that enterprise competition pushes Skydio to improve its value to customers. He says the company needs to operate differently across teams, balancing efficiency and scale in mature areas with invention and experimentation elsewhere. He estimates Skydio’s existing products have reached about 1% penetration in the use cases they can serve. - [56:01](https://realalpha.app/v/nb7EinVtdok/?t=3361) **Lean teams shape the company’s bets.** Bry says Skydio was scrappy early on, overhired when capital was readily available, then had to regain its lean operating habits when fundraising became harder. He says headcount stayed flat or slightly down over multiple years while output grew exponentially. Skydio will grow only as quickly as it can maintain exceptional, efficient teams, which means prioritizing among opportunities. ## Transcript Relentless, hosted by Ti Morse, with Adam Bry. Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there. [0:00](https://realalpha.app/v/nb7EinVtdok/?t=0) Today, I'm sitting down with Adam Brie, the founder and CEO of Skydio. Skydio is the largest drone manufacturer in the U.S. Yesterday, in one of the meetings that we were in, you talked about DJI and wanting to directly compete with DJI. And because they can't sell into the U.S., you actually probably want to expand internationally faster than you would have otherwise so that you can have your teams basically competing on the product is just genuinely better. How does that work? Yeah. So a couple of things there. So DJI actually can still sell into the U.S. This is not broadly understood. the the largest restriction in place is they can introduce new models that came into effect earlier this year but they can still sell everything they've developed up until January of this year in the US they are selling it so we actually compete head-to-head with them in the US all the time and this is not broadly understood but on a total sales basis by the best available public data we can find on them and we know our numbers we will do more sales in the US to civilian customers than DJI this year, which is a pretty staggering fact. [1:03](https://realalpha.app/v/nb7EinVtdok/?t=63) When we started the company in 2014 and certainly 2016, 2017, 2018, people thought there were just going to be no US drone industry, that US companies couldn't compete. And the fact that we're going to do more sales than them in the US this year, honestly, is surprising even to me. There's a lot that goes into that. We're not selling to consumers now. We're selling to professional users, public safety, energy utilities, construction companies. Most of DJI's revenue, as we understand it, is consumers. So we have basically zero there, but we're much bigger than them with professional users in the U.S. [1:36](https://realalpha.app/v/nb7EinVtdok/?t=96) We certainly benefit from an overwhelming preference for our customers there to buy from a U.S. company, which we are immensely grateful for. But I think the real story is the shift in the market from manually flown drones, which DJI is very good at, towards dock-based autonomous solutions where you have the drone live in a network-connected charging base station. It can be operated remotely. It's an entirely software-defined device. That's a huge bet that we made when we started the company, and that has really revolutionized the market in the last few years, and that's the basis of competition now that we are winning and succeeding on. [2:12](https://realalpha.app/v/nb7EinVtdok/?t=132) So, you know, I'm a competitive guy. I generally love competition. I think it's great to have competitors out there of all different sizes, stripes, shapes. And there's a couple of U.S. companies that we compete with as well. But I certainly view DJI and the Chinese companies as our most formidable competition. And whether or not they're allowed to sell in the U.S., I think that we want to be competing against the best. We want to be winning against the best. And so they're the ones that we pay the most attention to. I remember there was a talk that Jeff Bezos did a long time ago where he said that he wants to be informed by competitors, but he wants to be like customer obsessed. [2:51](https://realalpha.app/v/nb7EinVtdok/?t=171) So how does that kind of equation work in your mind? So I think it's all context dependent, right? And I think in the best sense, competition pushes you to just be the best version that you can be of yourself. In enterprise markets, it's very kind of head to head. you know, there's a specific number, you know, in public safety, there are, you know, a given number of agencies out there, and they're generally going to make a decision one way or the other on what drone solution provider they're going to use. And so, you know, it's a very like head-to-head kind of competition. Like you can look at the scorecard, you can win or lose them. You know, we have a very strong internal view on where this technology is going, what needs to be developed to unlock the most value for customers. [3:38](https://realalpha.app/v/nb7EinVtdok/?t=218) And that's where most of our focus is. You know, the grounds that we want to win on is just being the best partner for our customers, having the best overall solution. It's also natural and I think healthy that competitors are learning things from each other. Like DJI over the years has copied a huge number of the things that we do. Like if you look at our drones, they have fisheye cameras that see everything in every direction. We really introduced... This idea of a computer vision-centric drone and DJI products, lo and behold, kind of look similar today. That's something that really started with Skydio. [4:08](https://realalpha.app/v/nb7EinVtdok/?t=248) We publicly demonstrated a dock before DJI announced a product. They are now, I think, borrowing a lot of the things that we've done from kind of a software vertical integration standpoint. And look, that's just the way it goes. You know, competitors are going to learn something from each other, and ultimately, it's to the better of the customers that we're working to serve. There's kind of this interesting dynamic in most hardware companies where it takes a very long time like with Elon's companies It's typically like a 10-year baking period where you don't really ship the first car until you know You're eight or nine same thing with like the first three rockets blow up and then the fourth one goes up And that's about seven years in and I think it's the same thing with boring company Neuralink Yeah With this sort of thing the business is like starting to inflect But it's been like I don't know over a decade um in the baking process so what is it kind of like going in those first few years uh to suddenly flipping the switch and saying okay now we scale and now we're actually going to like really start manufacturing yeah well i would say overall it's a lot more fun you know it's fun to be like in this [5:11](https://realalpha.app/v/nb7EinVtdok/?t=311) mode now where we've got uh we've got just this expanding uh incredible suite of products and we've got customers using them at massive scale so you know our just our online customers so not including our military customers, they're averaging about 2 million flights per year now. It's about 40,000 flights per week. And that number's doubling year over year. And it's just awesome to see that happening with our customers. And every one of those flights has a story behind it, right? Like in public safety, these are finding a missing person, deescalating a dangerous situation in energy utilities. It's critical inspection work that helps them operate more safely and efficiently. So I think it's just super motivating to get to be a part of that. It's fun to have a factory like we're in today that's running at substantial scale and we'll, over the course of this year, we'll triple the output from our factory. [5:59](https://realalpha.app/v/nb7EinVtdok/?t=359) So there's a lot of challenges that go along with it, but it's a super fun moment for us. But as you say, it's a journey to get here. Like we started almost 13 years ago. It took us four years to ship our first product, which was a consumer-oriented drone, the Skydo R1, which was, I kind of describe it as like technology marvel, but commercial failure. Like everybody that saw that thing and what it could do thought it was incredible, but nobody bought it. And so it was like, it had great autonomy capabilities and everything else about it kind of sucked. And it took us another couple of years of iteration to get to kind of like a more complete product. And then we decided to focus on the enterprise and government customers in 2020. [6:41](https://realalpha.app/v/nb7EinVtdok/?t=401) And I'd say it took us probably three to four years to really get all the product ingredients right there. And then it's the last couple of years that things have really kind of gone exponential. And I still think we're very near the beginning, like even in our most mature markets, I estimate we're around like 1% penetration with our existing products in terms of the use cases they can serve and the impact they can have. So we still got a lot of work in front of us. If you take a factory like this one, and you're suddenly going to be like doubling, I don't know, production in the course of a year, what are the biggest like challenges and pain points that come along with that? So the single biggest, I think it's different for different companies in different situations. The single biggest challenge that we face is in our supply chain. So, you know, we started talking about competition with TGI. There's a huge geopolitical backdrop to this industry. When we started the company, we started manufacturing our drones in house from day one, which was very counter trend at the time, like conventional wisdom in Silicon Valley at the time was like, one, don't touch hardware. And two, if you're going to touch [7:40](https://realalpha.app/v/nb7EinVtdok/?t=460) hardware at all, make sure you outsource all of it to China and do as little yourself. And that's just not the path that we chose. You know, we felt like having manufacturing close to R&D was how we were going to get the best products the fastest, maybe not the most cost effectively, but definitely the best and the fastest was what we were focused on. So we've always manufactured our drones in-house. like everybody else, we were getting components from China with our first generation of drones in the 2010s. As we expanded to serve government customers and as geopolitical tensions with China rose, it became clear that that was not a sustainable future for us. And so we made a lot of investments to get our supply chain out of China. But two years ago, we were sanctioned by the Chinese government. I was sanctioned personally, the company was sanctioned. The [8:24](https://realalpha.app/v/nb7EinVtdok/?t=504) **Adam Bry:** The day that they announced the sanctions, they showed up at our battery factory in China and shut it down and it was a supplier that we were working with. [8:32](https://realalpha.app/v/nb7EinVtdok/?t=512) They seized all their equipment, said they couldn't keep doing business with us. So it was a very aggressive targeted action to try to kill the company, basically. So over the last two years, we've had to basically rebuild huge swaths of the supply chain to get down to zero China dependence, which is still a kind of fragile endeavor because for a lot of what we do, the historical component supply has all been in China. And we're in the position now of being a big enough company that we can be a great anchor customer for a new battery vendor or a motor vendor or a camera vendor to help them get started serving this industry, which we are happy to do. [9:08](https://realalpha.app/v/nb7EinVtdok/?t=548) We're actually going to spend about a billion dollars with US suppliers over the next five years, specifically aimed at building up the supply base here, but it's still fragile. And so when you talk about doubling production, the biggest risk and the biggest challenge for us is upstream with our suppliers and putting ourselves and them in a position to do that and deliver that. And so we're getting more and more deeply integrated with all the companies that we partner with to help them get to the scale that we need. I've noticed a number of my friends are getting sanctioned like earlier and earlier and blacklisted. [9:39](https://realalpha.app/v/nb7EinVtdok/?t=579) You must have some interesting friends. Yeah. Well, if they haven't even gone to China to set up their supply chains, it's a little bit easier. Yeah. But if you're like 12 years into the company and suddenly your entire supply chain gets fucked, what does that feel like just in that moment? You know, I kind of like the fight and there's different ways companies can react to this. There are certainly different perspectives within Skydio. You know, there's one school of thought of like, let's see if we can work with the US government to get some relief here and maybe broker some kind of deal. My perspective is the other side of it. [10:11](https://realalpha.app/v/nb7EinVtdok/?t=611) I think this is the right direction. I think. So it's like game on, you know, like let's this is this is a forcing function for us to do what we knew to be right anyways. And so let's accelerate it. You know, there's nothing like burning the boats to motivate you to like to solve some hard, important problems. And and that's basically like the approach that that we've taken. And I think it's worked out well for us. I mean, it has not been pain free. Like at that moment, we basically had to go into a mode where we were rationing batteries. We had, fortunately, a healthy chunk on the shelf, but we had to cut down to shipping one battery per drone, which was painful for us, super painful for our customers. [10:51](https://realalpha.app/v/nb7EinVtdok/?t=651) We're lucky that they came along with us on that journey, and our internal teams did an incredible job of standing up new cells and new pack manufacturing in just a truly insane time frame to close the gap. Were you flying around and meeting with a bunch of suppliers to just build relationships with the Earth? Yeah, well, scouring the free world, you know, the U.S. and our allies around the world to find all the ingredients that it takes to build a battery that performs at the level that we need for these systems. And look, we came out of it the other side with better performance, which was surprising even to me. [11:26](https://realalpha.app/v/nb7EinVtdok/?t=686) Like we picked up a couple of minutes in flight time going with a different cell and a different pack. There's this interesting idea of like trade-offs. And one of the things that we talked about yesterday was there's a number of companies, I think DJI included, that are trying to do like battery swapping docks. And so a drone will just land, have its battery swapped out and immediately start flying again. But you basically said if you like surveyed your customers or their use cases, it's very, very small or you'd increase the like flight time or something by like 5% with a battery swapping dock. [11:58](https://realalpha.app/v/nb7EinVtdok/?t=718) So how do you think about... making product trade-offs just informed by actual customer experience versus what sounds like a good idea but may not, in fact, be actually useful. So we're increasingly in the position now of having really deep insight into how our products are being used, what adds the most value for our customers. And so product development is always a blend of a lot of different inputs. You never want to only look at the data of what people are doing today because you're going to miss the possibilities of what might exist. But when we're developing drones today, we're steeped in the data of existing usage and flight patterns, flight speeds, different mission profiles that people are flying, time between flights, all these things. And that informs the investments that [12:45](https://realalpha.app/v/nb7EinVtdok/?t=765) **Adam Bry:** we're going to make. So something like battery swapping, if it's free and it's perfectly reliable, add some value, but it's not free. And because it's a more complex mechanism, it's also going [12:56](https://realalpha.app/v/nb7EinVtdok/?t=776) to cost you something in reliability. And so it's a question of like, what are the trade-offs against other things that you could put your time and resources into and what's best for the customer? One example of an incredible series of inventions that's resulting in an incredible product that wouldn't fall directly out of the data is F10, which is a fixed-wing drone that's robotically launched and caught. So it basically lives in a drone vending machine. There's a robot arm that picks it up, releases it into the air. That thing has two hours of endurance. It's got 100 miles an hour top speed, which is just a total paradigm shift in what you can do with autonomous stock drones in terms of the area that you can cover. So this is like first response for sheriff's office that cover thousands of square miles. Like somebody calls 911 in a rural area, it might literally take sheriffs an hour to get there on the ground. And this thing can be there in 10 minutes providing real-time situational awareness. It can be like a lost hiker, potential fire starting, things like that. So that's a product that came out of a lot of conversations with customers and also our conviction and some core technology blocks that we could apply [14:00](https://realalpha.app/v/nb7EinVtdok/?t=840) to bring these things together. So it's always a mix of different sources. It's never just one thing that's going to drive the development of a product. It's blending a lot of different inputs and then brokering the right set of optimizations and trade-offs to solve the things that matter most for the people that we're serving. when i was looking at the fixed tween yesterday rob told me that basically you guys started the design process by just looking at the camera and what you wanted the camera to do and then you design the rest of the vehicle around that how do you actually go through the design process on a new product like that so this is the f-ton f-10 light runner drone so the the really unique thing there is the the camera gimbal sits on the wing tip so if you look at basically every fixed wing camera carrying drone that has ever existed for the history of the industry, the payload is always in the center because that's where the mass is, that's where the drag is. And so from an aerodynamic standpoint, not putting in the center seems kind of crazy. But the problem with putting the camera [14:59](https://realalpha.app/v/nb7EinVtdok/?t=899) **Adam Bry:** in the center is that when the airplane is banked and turning and orbiting, once per revolution, that wing is going to block the field of view of the camera. And there's just no way around that. [15:11](https://realalpha.app/v/nb7EinVtdok/?t=911) It's just like the most basic physics and visibility analysis out there. And that's a really terrible experience for the person that's operating the drone. Like the ideal experience is you just have this magic camera floating in the sky that can look and see whatever it wants. And so when we think about the design of F10, that's basically what we're trying to deliver is how can you deliver this experience of you basically just have this magic camera that goes wherever you want it to go, can look in any direction you want it to look. And delivering that with a fixed wing is incredibly challenging because you've got fixed wing dynamics. I mean, the thing needs to keep flying forward in order to maintain lift, it needs to turn, it needs to maneuver. And so it's an integration of hardware and software, like the motion planning algorithms, putting the wingtip out of the gimbal to accomplish it. And, you know, I say this is, that stuff's just like the most fun things in the world to me. And we have incredible teams, like we're a full-stack company, so we can for all the hardware, for all the software, we do all the manufacturing. So there's basically no rules except for physics for like what we can accomplish when we get, you know, like the world [16:09](https://realalpha.app/v/nb7EinVtdok/?t=969) class engineering team sitting together and jointly optimizing. One of our core values as a company, you say, how do we think about product design? I say, I'd love the problem, get to the essence. We're very big believers in getting down to the essence of the problem. Like what's the fundamental thing that we're trying to deliver for customers? And what's like, what are the fundamental physics that govern what we can design and build and then using that kind of like that core understanding of the essence to build back up to the right solution that was one of the things that you did i think quite a bit in the meetings yesterday you'd be talking with someone and they'd be explaining something and then you would just like stop them and ask them like why and keep on drilling down into the why until you either understood it or like push back and said this like doesn't make sense for these reasons, how much do you want to genuinely understand on, you know, some level of new product versus just trusting great people to know what's best? [17:02](https://realalpha.app/v/nb7EinVtdok/?t=1022) Like what the way that I think about companies, like a good organization is kind of a maximization function. It's going to get like whatever the maximum capabilities and skills and knowledge that exists with individuals inside an organization, you want the company to be the expression of the best of that. Like, we all have strengths and weaknesses. I've got strengths and weaknesses. Everybody on our team has strengths and weaknesses. And so the way that I think about, you know, the company and what we're doing at sort of a broad organizational level and in any individual conversation or meeting or project that we're working on is, like, how can we get, like, the absolute best out of, like, what we have to offer as a team? [17:40](https://realalpha.app/v/nb7EinVtdok/?t=1060) You know, and some of the stuff that you saw yesterday, like, we were pretty deep in the architecture discussions around some, like, some new technologies we're working on. And so I'm, you know, I'm always like pushing and prodding to like understand this stuff well myself. So like to build up my own understanding of what we're doing and how it all fits together. And then to also try to like, to, to get the team thinking at like the deepest level possible about what we're solving. And, you know, some of the stuff you saw yesterday, we have world experts in, in robotics and applying deep learning to computer vision and the kinds of problems that we're working on. [18:13](https://realalpha.app/v/nb7EinVtdok/?t=1093) And so I think it's, it's just fun to be in the room where we're like poking around the frontiers and understanding what's possible and what we think the best way to go after it is. How long does it typically take between spending time just talking through a problem and like, okay, we're going in this line and this is the direction? I'm a big believer that business is very, very contextual. And so I think sometimes one of the things I push myself on, I push our leadership team on and really everybody at the company is like thinking, treat every problem as like its own little thing. Every program we're working on, every new feature, every product. And sometimes, you know, the cost of getting something wrong or just trying and seeing what happens is very low. And so sometimes, you know, it's not worth that much debate. It's like, let's just try it and see if it works. And sometimes it's the opposite of that. You know, if we're going to chunk down like 50 million bucks on a new hardware program, like we want to be pretty fucking thoughtful about like where we're aiming. [19:12](https://realalpha.app/v/nb7EinVtdok/?t=1152) So some of the things we were talking about yesterday are initiating new lines of really research. Like, you know, we're on the frontiers of AI and autonomy for flying systems. And so I sort of think about that as like an iterative aiming process of like we know that we know that we don't know all the answers out front. And we're setting out to do experiments and try some things and see how it works. And so what I'm trying to do in that context is basically like iteratively aim what we're working on of like, you know, take a step, see what we learned, use what we learned to like take another step. [19:47](https://realalpha.app/v/nb7EinVtdok/?t=1187) And one of the things I've like, I've gotten more deliberate about as the company's gotten bigger is investing a lot of time upfront and things like that. Because I think the aiming exercise, like, you know, if a line of work has been going for 18 months. you don't like where it ends up, fixing it then is much more expensive than spending like a lot of time up front being really thoughtful about what we're doing. I haven't heard very many people talk about profitability and profitability of a specific product. And one of the things that I saw was you guys kind of measuring, you know, here's how long the development process was on a new product. You know, we've had it for like eight months or something at this point. And here's where we are on i think it was like a couple tens of millions or something in revenue and like now we've basically broke even on the development costs plus you know the the product costs themselves so like when you think of building a new product how are you kind of deciding how much are we going to invest and then what is our payback period on that uh well i mean you touched on a lot of pieces of it i think we're um we're getting more and more uh sophisticated and just kind of measuring what [20:54](https://realalpha.app/v/nb7EinVtdok/?t=1254) we're doing in a granular way and again you don't want to like this is kind of a cliche like boeing has come under a lot of fire this of like the you know the accountant started running the company and they stopped caring about making great products like everything we do is really oriented towards great building great products but the efficiency with which we can build this stuff matters a huge amount and uh again i think this is not like broadly understood eventually it it will be but we really have i think one of the best robotics businesses in the world we're at hundreds of millions of revenue. We're growing extremely quickly. We have very strong unit economics. And I think we've, I don't think I know, we've gotten here by being really like one, having super capable lean team. So with a very small number of people, we can do incredible things and also being very thoughtful about the kind of investments that we're making. [21:42](https://realalpha.app/v/nb7EinVtdok/?t=1302) And so, you know, in my mind, I kind of have a map of, you know, how much are we spending in different areas. What's my kind of expected payback timescale for these things? And sometimes it's short, sometimes it's very long. You know, we'll work on things that we think might be five year plus payback, but it's certainly satisfying to like, to be able to add up, here's all, you know, here's everything we spent developing R10. Here's how many of them we sold so far. And in a pretty short period of time, this is already like a profitable program for us. You mentioned that basically building the dock that allows drones to autonomously, you know fly up um go do a mission and then come back and like charge was a major unlock when you were working on that or starting the development of that how how are you thinking about it yeah it's a great question and and i say this was one of those more this was just kind of one of those like existential gut bets for the company um where there was no so when we started really investing heavily in docs in like 2021 there was no market for doc products um there were no customers that were saying you know like we want to buy these things at scale there were no budgets set aside [22:48](https://realalpha.app/v/nb7EinVtdok/?t=1368) for this um and we were burning a shitload of money to develop it and it was you know we were arguing about it of like the only the only the only thing we're making money on now is selling standalone drones were wildly at the time wildly unprofitable as a company uh and you know investor sentiment towards drones and the kinds of things we we've done has gone up and down and so at low moments there where you're like burning a ton of money investors aren't really excited about it and there's no customers there's no customers there's no market it's like what what the fuck are we doing you know um and that was one where we just had like we had very deep conviction that like this was the way the market was going to go uh and you know i could have drawn up a spreadsheet that show you know if i had drawn up a spreadsheet in 2022 that is showing what's now happening with the business i think people just wouldn't have believed it you know it'd be like sure if that comes true it's going to make sense but like it won't there's like no data to suggest that's how the world's going to work um and look i think sometimes that's the stuff that like great products and great companies are born out of is like making bets like that and being right about [23:52](https://realalpha.app/v/nb7EinVtdok/?t=1432) them uh and then putting yourself in a position to like really capture a new frontier and like government sales I'll see you next time. You make the thing, you get the contract, and then some political change makes it so you literally can't deploy the thing. How do you think about making these contracts when you're in that sort of environment? We sell to a variety of customers. We have a very big what we call commercial business, which is selling to private enterprise. So this is selling to energy utilities, construction companies, so on. We also sell to a lot of government customers. We sell to government customers at the federal level, the military, and then state and local level for public safety and departments of transportation. [24:28](https://realalpha.app/v/nb7EinVtdok/?t=1468) My overall outlook on this is like when we are selling to government customers, our products are being bought with taxpayer dollars and it is healthy and right that like we are going to be subject to political processes. You know, these things are messy and noisy and imperfect, but over time, it's basically like people expressing what they care about, what they value and electing political leaders that reflect that and then political leaders making decisions on their behalf. and those things have real consequences for us, you know, we don't necessarily always agree with it. But I think it's like, it's healthy and good. And one of the things that I've really come to appreciate with our state and local government business is just the like the degree of community engagement and feedback and accountability that that comes with it. Like when we sell to a law enforcement agency, our ultimate customer there is the community that's being served. We're obviously working with the agency and contracting with the agency. But both us and the agency have pretty strong alignment that like, we're only going to do this if it makes sense for the community. And the vast majority of the time that works out well for us because our products, [25:33](https://realalpha.app/v/nb7EinVtdok/?t=1533) I think at this point are pretty well proven to like, in this instance, really improve public safety, like just get fundamentally better outcomes, keep officers safer, keep communities safer, and do so in a way that protects people's privacy and in a very transparent way that the community can understand what's going on. And so I think overall, that's been very good for us. sometimes elected officials or leaders have less emphasis on public safety or don't like the idea of deploying a particular kind of technology of public safety. And that's fine too. Like we may not agree with it, but I think it's, it puts the right kind of pressure on us to make sure that we're, we're doing right by the communities that we serve. I assume that you have thought a lot about like the privacy situation and the way that you guys are operating, you'll have you know if there's like some incident and a police or like someone calls 9-1-1 and they say hey there's a situation you'll have a drone just like take off that was you know state you know static uh fly out to that thing take a video of it um and then kind of return back is there any products that you decided not to make because they were going to be like too invasive or not [26:37](https://realalpha.app/v/nb7EinVtdok/?t=1597) really fit that mission set uh well we look we are like we're drone people right like i've you I've been doing my own stuff my whole life. The company is really based on building world-leading flying robots. So anything that's not like a flying robot or using that as the foundation, like we do a lot of software and work a little stuff on top, is probably not a good fit for us. The first filter for us in building a product is, do we think that we can do it uniquely better than anybody else out there in the world? Because I think those are the most exciting things to work on, And those are the ways that we feel like we can add the most value to civilization, which is ultimately what this is all about. [27:19](https://realalpha.app/v/nb7EinVtdok/?t=1639) The nature of flying robots in public safety is much more kind of like narrow targeted response than it is kind of like blanket always on surveillance. And so within the domain of flying robots, you know, we want to do everything we can with our products to make it easy for agencies to be transparent with their communities and what they're doing to make sure that they're flying in a way that protects privacy and civil liberties. And we do a bunch of product work on this. We also do a bunch of policy work. Like we have model policies that we work with agencies on that we kind of can give them a framework for, you know, if you're going to roll out a drone program, here's like some policies that we think is like healthy for you to operate by ultimately. [28:00](https://realalpha.app/v/nb7EinVtdok/?t=1680) they make the final decision, but we have a lot of influence and impact in that process. And look, I don't want to live in a blanket surveillance world where each of us has a drone that's spying on us 24-7. I don't want to live in that world. I don't want to help build that world. But I've just seen every day now the impact that these products can have. And so So the mandate for us and I think the agencies that we work with is continuing to develop and deploy the technology in a way that is just overwhelmingly positive for civilization. And ultimately, that's not judged by us. It's judged by voters and citizens, which I think is exactly the right kind of like feedback and accountability mechanism. [28:48](https://realalpha.app/v/nb7EinVtdok/?t=1728) I love this story from, I think, the 2018 Model 3 production ramp, where Elon was basically in the Fremont factory all day, every day, and he would just walk to the red, wherever the biggest bottleneck was for the production line. He would just walk over there and basically stay there until it was unfucked. For you, when you're trying to think about what is the highest leverage activity that you could possibly be doing at any given moment, how do you decide where to spend your time and what to focus on? I basically think about two, well, maybe say three things. The foundation for everything, I have a very talent-centric view of business. [29:21](https://realalpha.app/v/nb7EinVtdok/?t=1761) The foundation for everything is having an incredible team. And every good thing we've ever done at Skydio traces directly back to awesome people. Like when I look at these products, I mean, I can just, looking at these parts, the components, the capabilities, what's happening in this factory, all of it is downstream from people who I know who are exceptional at what they do. So that's a constant. And I'm always spending a lot of time on that of, you know, what are the needs on the team today? do we have the right people for for what we're going after ultimately I think the way that you like you become the place of the best people in the world want to work is good by having an exciting awesome business building interesting products so I spent a lot of time focused on that the other thing is is just operational excellence across the business like are we are we running the right motions you know I think about sort of like the targets that we're going after do we have the teams in place to go after them do we have the right operating rhythms so I spent a lot of time thinking about that and then the most fun where I also spend a lot of time is on the frontiers like where are we doing something new where we don't yet have we don't know really know what [30:23](https://realalpha.app/v/nb7EinVtdok/?t=1823) we're doing either it's a new technology a new product a new market and how should we think about going after that and setting ourselves up for success and the frontiers are always changing I mean it could be a new product thing it could be a new market thing I love spending time out there with customers I travel an outrageous amount really to like go and meet with people and see how they're using our products and seeing what's working and seeing what's not because there's just it's just every time you visit you're going to learn something new that feeds back into what we're doing but the specific mix of those things can change a lot like you know the kinds of customers i'm visiting changes a lot over time depending on what's happening in the business and where sort of the frontiers and the most ambiguity is if you're going to make like a thousand of these drones you may be happy to have a less refined design process because you don't want to set up You know, if you're making a million Cybertrucks, maybe you have like one stamping press that costs a fuck ton of money and you install that. [31:19](https://realalpha.app/v/nb7EinVtdok/?t=1879) But if you're doing a thousand drones, you might be willing to have, you know, this piece, you know, this part could be one part, but you're going to make it two parts because it's just more efficient to do that on a thousand pieces. When you think about designing a product that can scale, what is the process of going from, this is the first iteration and like shippable, but then here's how we're going to basically like systematically like eliminate complexity so it's just simpler and simpler. This is why I think it's really important to, context is so important and I force myself to this. I encourage everybody at the company to really think specifically about what problem we're trying to solve here. [31:52](https://realalpha.app/v/nb7EinVtdok/?t=1912) So, for example, R10 that you're holding there was a brand new product for us, brand new product line. We never had like a specific option. Indoor drone for public safety and for confined space inspection. We also know, just based on the dynamics in that market today, we're not going to be building 10,000 of these things a month. That market is just not at that place. I think eventually, it'll probably get there because we don't have any history here. We're also not going to want to come out of the gate by shipping too many and getting ahead of our skis in terms of the actual maturity and delivering the results that our customers expect. [32:26](https://realalpha.app/v/nb7EinVtdok/?t=1946) So the set of trade-offs that we make when we're developing R10 is very different from what we do when we're developing the successor to X10. [32:34](https://realalpha.app/v/nb7EinVtdok/?t=1954) **Adam Bry:** The successor to X10, our current flagship drone, needs to come out of the gate with better reliability than this thing, which is already a hard and mature platform. [32:43](https://realalpha.app/v/nb7EinVtdok/?t=1963) It needs to come out of the gate with more manufacturability and higher scale than this thing. And so the development process that we run for the successor to X10 is necessarily like way more rigorous in manufacturing and reliability than what we do for like a new program that's targeting lower volumes. And this is kind of an Elonism, but I think that there's just no substitute. The only way to learn like the really hard lessons in manufacturing and reliability is to have done it with prior products. Like there's just no shortcut on that stuff. So when we're developing the successor here, we're just deep in the data of what's happening on our manufacturing line, what quality issues have there been in the field, what have we learned from that, how can we shortcut all those things in the design process, where are we spending the most money in our supply chain in the factory that can be optimized out, and I'm very excited about what we'll be able to do here, but it's a very different process from a brand new product that's going to start at lower volumes. [33:40](https://realalpha.app/v/nb7EinVtdok/?t=2020) When you think of manufacturing and just coming up to speed and knowing what you shopped nice for and what you shouldn't, what have been the biggest things that you didn't expect and just absolutely smacked you in the face? A lot of manufacturing and actually a lot of product development comes down to trying to reduce entropy, right? The natural state of the world is the atoms are all going in their own little direction. Brownian motion takes over. And so trying to squeeze down to the exact right configuration of like bits and atoms that will deliver the capability you want repeatably over and over is extremely difficult. [34:16](https://realalpha.app/v/nb7EinVtdok/?t=2056) The most challenging, when things are in our own factory, we can solve any problem. We've got great teams and it may not always be pretty, but like we can roll up our sleeves. We can deploy a lot of like brain power and manpower to come in here and basically do anything that we need to do. The really tricky ones are the things that happen outside of our direct control that happen upstream in the supply chain where supplier, out of the goodness of their heart, just decides to like slightly change one of their processes or slightly change one of their materials in a way that to them seems innocuous, but couples to something either that happens in our factory or in the worst case, couples to something that happens like downstream with customers. [34:54](https://realalpha.app/v/nb7EinVtdok/?t=2094) And so I would say those are the ones that are the trickiest to solve, where you haven't changed anything about your process, but something about the product is behaving differently from you expect. And the answer to it, the only answer really is you've just got to go deeper and deeper in your supply chain and get get more and more detailed in the level of like analysis and and like control that you exert over all the components that are going into your drone, which is kind of there's no there's no shortcuts to that. Like it just takes a lot of like thought and ultimately like manpower upstream. [35:30](https://realalpha.app/v/nb7EinVtdok/?t=2130) You know, we were watching this video yesterday of I think like a SWAT team breaking down someone's door and then they launch a drone and instead of someone walking into an apartment, they just have a drone fly around in the apartment and like not risk someone getting shot at. This is like a very chaotic environment. So has there been any really great examples of some situation where you did not plan for like you did not expect and things went horribly wrong? Well, so this is an example of R-10 flying. like an indoor tactical situation uh yeah i mean look the these the r10 gets the shit beaten out of it i'm like you know we've had bad guys like grab it by the gimbal head and throw it out the window uh and break its neck so to speak uh we've had people go after it with baseball bats we've had drones get shot to me that's like all great news right like the alternative there is uh a police officer or citizen is is getting the the you know the violence aimed at them so i actually love it when our drones are victims of violence because it it means that the like chances of a person being a victim of violence are are much lower like that's kind of the whole point like these things we're building thousands a month here you know who cares at the end of the day [36:39](https://realalpha.app/v/nb7EinVtdok/?t=2199) and our terms and conditions with our customers actually take this into account like you know if a drone gets injured or killed in the line of duty we're happy to replace it how often are you trying to refocus the entire team towards here's what the customer is actually experiencing totally that's a huge, huge part of what we do. And it's actually interesting. So like when we started working with public safety, public, so we work with a lot of different kinds of customers, public safety is, is typically the most controversial. And we started working with public safety in the summer of 2020, right after George Floyd, which was like maybe one of the most polarizing moments in the company's, in the country's history, right? In terms of attitude towards law enforcement. And just the thought of like a Silicon Valley company selling technology to public safety was total anathema. We got all kinds of articles written about how could you guys do this and how evil it is. And I would say prevailing attitudes amongst tech people in Silicon Valley at the time were somewhere between mixed and negative, that this was a worthwhile thing to be doing. And internally at Skydio, it was polarizing. And I think there's a lot of [37:42](https://realalpha.app/v/nb7EinVtdok/?t=2262) reasonable concerns to be had. What has happened over time, and I've seen it over and over again, And it's pretty deterministic, like even people who are generally concerned or skeptical of public safety, the more that they're here and the more that they actually see what what it means to work with public safety and the missions that those customers have and how they use our products, I would say people not not go from being like sort of skeptical to OK with it, but skeptical to like immensely champions of it, proud of it. And so it's a very and then so that's part of it. But I think the other, like for me, and I think many of us at Skydio, it's hugely motivating to see how our products are being used. [38:22](https://realalpha.app/v/nb7EinVtdok/?t=2302) And then it also just, I think, is key to developing good products. And so we do a lot to have as many people at Skydio as immersed as possible in the reality that our customers are living. I mean, in good and bad ways, like, you know, another example of this, my weekly staff meeting, so all the senior leaders of the company, we get together once a week, once every two weeks. we start that meeting by looking at all of the product issues that we've had in customers hands [38:49](https://realalpha.app/v/nb7EinVtdok/?t=2329) **Adam Bry:** over the last two weeks and it's very painful we literally spend like half an hour looking through videos of things going wrong uh and we do that to like for a few reasons one to like immerse [38:58](https://realalpha.app/v/nb7EinVtdok/?t=2338) ourselves in the pain that our customers are feeling and two to make sure that we're like we're doing the right things we're not going to solve everything in that meeting um but we can make sure that we're at least organized and have lines of work that are aimed at at solving all these things. So I think, yeah, we do a lot to try to just continually immerse ourselves in the reality of our customers, both good and bad. You've been at this for like 13 or 14 years. You took, I don't know, a set of, let's say your peers and other CEOs that are operating these types of companies. What do you do fundamentally differently that you think they should be doing or they don't? It's an interesting question. I mean, look, I'm not inside of these companies. [39:38](https://realalpha.app/v/nb7EinVtdok/?t=2378) My whole life has been about Skydio for the last 13 years, so I know a lot about what we're doing in our business and what I think it takes to be successful. I mean, if I was to talk generally about things that I see happening outside of Skydio with other companies, AI is super hot, robotics is super hot, which is interesting. Like, you know, I've seen for a long time, people thought robotics was terrible, hardware was terrible. Right now it's super hot, which I think is generally great because it means a lot of capital is being invested. A lot of attention is in it. A lot of interesting experiments are being tried. [40:12](https://realalpha.app/v/nb7EinVtdok/?t=2412) A lot of the newer companies that are sort of coming up in the hype cycle era, I think are just dramatically underestimating and under-investing in what it takes to actually deliver reliable end-to-end solutions that people are going to buy and deploy at scale. And I think there's going to be a fair amount of like pain associated with that in the capital cycle, like, you know, bubbles and crashes kind of dynamics, which is fine. You know, that's just that's like that's part of how the world works. And ultimately, like technology does get advanced in the bubble times and, you know, just takes there's sort of the slope of enlightenment on the other side when these things actually get deployed. [40:52](https://realalpha.app/v/nb7EinVtdok/?t=2452) So, you know, I'm hesitant to, I just don't know enough about what's happening in these other companies to like, to say what they could or should be doing differently. Do you think that you do anything that you've never read in an operating book on how to be CEO? I'm sure I do. I mean, you know, I said everything is kind of contextual and specific. Like, I think of my job as I need to do whatever it takes, everything in my power, every drop of energy and capability that I have to set the company up to be successful and deliver the positive impact that we seek to create in the world. The thing that I would say over time I've gotten more and more focused on, and I think and hope I can bring more and more clarity to the organization on, is really, it sounds trite, but really trying to provide value to civilization. [41:42](https://realalpha.app/v/nb7EinVtdok/?t=2502) I'm kind of an optimist capitalist. Like I think that like the most business value is created by just doing useful things for other humans and companies and government agencies like these things are really kind of abstractions. They're just they're abstractions to like help people have a mental model for what they're supposed to do on a daily basis. But the end goal is to to like create technologies and provide services that are really useful and impactful to other humans. And so I spend, you know, I find I spend more and more of my time when I'm thinking about like long-term strategy and investments and talking with the teams about what we should build of like, how can we be most useful to other humans? [42:21](https://realalpha.app/v/nb7EinVtdok/?t=2541) You know, like what can, and I was saying before, what can we, what products can we build better than anybody else in the world is a different framing of that same thing. Like that's a statement of like, what can we do that's going to be really, really useful to other people that they're not going to be able to get from anybody else. And let's go and do those things. I had a conversation with Chris Power probably three weeks ago from Hadrian. And I was talking about like one-way and two-way doors, where a two-way door, you know, you can make a decision and walk forward and then walk back if it's not the right one. [42:52](https://realalpha.app/v/nb7EinVtdok/?t=2572) And one-way doors, you walk in and you can't walk backwards. And he had this interesting idea where he said, yes, there are one-way and two-way doors, but in a lot of cases, especially with hardware companies, you have to effectively just walk in the one-way door and like roll a hard six where you have to bet the company and then just be right um what have been situations you know like the doc example where there was a lot of you know there's a lot of quote-unquote mixed feelings about making those bets but you knew that they were the right ones and just bet the company on it uh yeah i i generally agree with that and i think that may be true for non-hardware companies as well i just think for hardware companies, it's a little bit more visceral and clear. I mean, there's been a whole series of key decisions where if it didn't work, we really had no, like the company just wasn't going to work. You can go all the way back to the beginning. I mean, the big, big bet that we made when we started the company was that you could build a reliable, capable, autonomous drone based on computer vision which uh in 2014 was very unclear like even experts in computer vision research labs and robotics were skeptical of that claim because [44:05](https://realalpha.app/v/nb7EinVtdok/?t=2645) the stuff barely worked in the lab. And that was, you know, if that turned out to be wrong, there was going to be no Skydio. A subtle one, but a critical one, when we developed Skydio 2, which was our second generation drone, we knew we needed to simultaneously get like better three-dimensional sensing of the world around us in a lower cost way in order for our economics and products to make sense. And so we shifted from using what are called global shutter cameras, where basically the whole frame is exposed at the same instant, which is what historically basically all had been used for computer vision, to rolling shutter cameras, which is what go into our phones and basically everything, where every line is exposed one row at a time. And so if the camera's moving, like if you take a video with your cell phone where it's moving, you'll see this skew across the image because it's a rolling shutter sensor. So at the time when we started working on this in 2018, there was almost no computer vision done on [45:00](https://realalpha.app/v/nb7EinVtdok/?t=2700) **Adam Bry:** rolling shutter cameras because the math just kind of gets explosive. And we built the rolling shutter cameras into the drone before we had solved the algorithms. And there was no turning back from [45:10](https://realalpha.app/v/nb7EinVtdok/?t=2710) that, right? Like we had to make that decision to bake it in and just say like, you know, we think we're going to be able to solve this. And we did. And we got, not only did we get to like parity from the old capability, we took a huge step up. So that was a really big one. I think the focus on dock was a really big one that's worked out for us. And then I think that we correctly recognized that public safety and emergency response was going to be the first kind of dock infrastructure use case to reach substantial scale and that it would be a great beachhead and kind of lighthouse to other applications. And we went all in on that a couple of years ago, which has also worked out super well for us. [45:53](https://realalpha.app/v/nb7EinVtdok/?t=2753) you've been in this for a very long time and you said like in 2021 or 2022 when you're making these this decision to move to enterprise and start working on dock but a bit sooner than that yeah you're basically like burning a huge amount of cash and you're mostly focused on consumer how do you in your mind when you're just looking down the barrel of like a shotgun make a massive bet and say okay i know that this is you know how things look today but here's how we're gonna basically steer through this tunnel yeah i mean to some extent you just do it i think um in order to do anything as a company as a ceo of company you've got to convince other people it's a good idea uh and i find it much easier to convince other people for good it's a good idea if i actually believe it's a good idea and so if if crazy yeah and so well it sounds simple but it's true so like you know if if i find myself in a position where i'm trying to like explain to an investor or a potential employee why we're doing a particular thing. And I find that I don't have the conviction that I believe it to my bones. That's a clue that we need to do something different. And so with the doc example, I just couldn't explain to anybody why we wouldn't [47:12](https://realalpha.app/v/nb7EinVtdok/?t=2832) be massively investing in it. Like, you know, I couldn't, I couldn't explain why, like I couldn't simultaneously explain to somebody why Skydio is going to be a super valuable company and we're not investing in Doc. Like to me, those two things just did not fit together logically. So the only path forward is like, we're going to, we're going to do the thing. And I think when you have that, you're not going to be able to convince everybody when you have that level of conviction, it makes it easier to convince other people and get them on board, or at least get them curious enough to like come along for the journey and see what happens over the course of the last uh 13 years has there ever been a moment where it felt like everything was failing and employees or morale or whatever was just out the window and you had to pull it back from the brink yeah there's there's certainly been a lot of hairy moments i think um i think one We launched our one, our first product, and we didn't sell very many of them. [48:03](https://realalpha.app/v/nb7EinVtdok/?t=2883) That was like, that was a painful kind of moment for the company. And on that one, I think we basically got through it on like shared conviction in the overall technology direction that we were heading. You ever have a mutiny? Well, one of the great features of capitalism as we practice it here is people just can vote with their feet, right? Which I actually think is great. it's like if people don't believe in what you're doing they can they can go and find something that they do believe in which is just kind of healthy all around um so because of that you know the mutinies are expressed in like in people leaving or or joining you know probably like most recently the the most challenging moments have been like before we launched doc for x10 before it was really scaling where you know the the if you just look at the company on the financials it's very uncompelling. And so, you know, that makes it difficult to raise money. And, you know, ultimately, we probably had to roll a few hard sixes to get through that and get to the other side. You know, you get axed from China a couple of years ago, and you have to bring a lot in-house, and then you have to decide, like, which things are we going to vertically integrate versus which [49:18](https://realalpha.app/v/nb7EinVtdok/?t=2958) things are we just going to partner with suppliers on? How do you kind of make the trade-off on, you know, we might not make the camera or the battery, but we're going to make these other things. So I think that this is a, this idea of like vertical integration, I think is a little bit misunderstood. Like vertical integration is all relative. Um, and you know, nobody's running their own mind. Like even the companies that are like considered very vertically integrated, like Tesla. Yeah. I mean, in a few instances, but they're not doing it for everything, right? Like Tesla is considered highly vertically integrated. Tesla works with a ton of great suppliers. And if you, you know, they have a supply chain team and, and if you like dive into that, like a lot of what goes into a car and a lot of Tesla's success can be attributed to having [49:56](https://realalpha.app/v/nb7EinVtdok/?t=2996) **Adam Bry:** a great supply chain. The thing that I think is universally true is if you want to be building like world-leading hardware capability reliably at scale, you need to have a lot of control over everything that's going into your product. And you can either do that by doing it yourself and [50:12](https://realalpha.app/v/nb7EinVtdok/?t=3012) having it be done inside your company, or you can do it by forging deeper and deeper relationships and partnerships with companies that are building key components. And every company that's successful at scale with hardware building great products does some mix of those two things and we're no different if you look at it through that lens it's really a question of like where is there where are there gaps in what we want to exist that are stopping us from being able to build the best products that that we think uh should exist and and if nobody if no other company is building that thing then we're going to go uh after it ourselves um and you know we're in a fortunate position where like, you know, we are extremely demanding when it comes to cameras and we've gotten more vertically integrated with cameras over time. We have a world-class camera team in hardware and software and supply chain, but we're not grinding glass ourselves to make lenses, right? Because there's companies that are world-class that wake up every day thinking about how to better grind glass. We're just like partnering with them. We're not making our own silicon yet because the things that we want out of our compute are extremely well aligned with [51:21](https://realalpha.app/v/nb7EinVtdok/?t=3081) with the chips that go into, like, other kinds of robots, AR devices, VR, and so on. I think a lot of the mechanical stuff, there's, like, there's more nuance there where we've had to go deeper and do more things ourselves. But, you know, we're still in a position where we can benefit enormously from tens of billions of dollars that are being spent in supply ecosystems that are much broader than just drones. When you think about your just general most enjoyment In life like you said that you're a very competitive person is your favorite time kind of wartime mode when there's actually a competitor that is trying to kill you Yeah, for sure. My happy place is when there's something really challenging, existentially challenging to solve. [52:05](https://realalpha.app/v/nb7EinVtdok/?t=3125) I mean, I like the mode of like operating with our back against the wall, either like we're going to run out of money or we're facing a key threat or we're deployed with a customer and things aren't working as well as they need to. And we just need to like to get in there and figure out a way to solve it. I mean, I've probably just been doing it for too long. Like that's I'm just used to that. I love that. That's like the normal way of operating. And it's not everything all the time. I mean, it's different parts of the business are in different states of challenge at any moment in time. But, you know, I love the – and actually, I didn't really discover this aspect of it until we started working with enterprise and government customers. [52:43](https://realalpha.app/v/nb7EinVtdok/?t=3163) Like when you're selling to consumers, there's not the same kind of competitive element to it because you don't see – you know, you're not like looking into the eyes of your competitors. Like when you're selling to an enterprise organization that's going to go one way or the other, like you're – it's like a – it's a cage match or something. And, but I, you know, I love that element of it. Like I love, you know, I know what our competitors are, you know, are trying to do. And, and, uh, you know, I love thinking about like, what do we need to do to, to win by being better partners and, and, and providing more value to our customers. [53:13](https://realalpha.app/v/nb7EinVtdok/?t=3193) I saw this interview with Michael Dell, like a year and a half ago, where he said that he loves having a competitor and he thinks that it's like an incredibly good forcing function for focus. And so when he didn't have a competitor or like the company didn't have a competitor that he was really set on he would just create one out of thin air and then he would like redirect the team like he'd basically put the team and company in situations where they like had to fight yeah um as a forcing function for focus yeah i i agree with that i think i mean to pick an example outside of skydio um and i don't want to pick on them too hard but like i think google is an organization that had a very strong like search monopoly it was a money fountain um they didn't have a real competitor in that space you know they have like maybe competition around the edges uh and i think the rise of anthropic and open ai has been great for google because it's like it it helps you kind of get rid of a lot of the bullshit and get everybody focused on like we've got a job to do here and if we don't do it well like we're you know this company's not going to look the way we want it to look and so yeah i think there's something in human nature where [54:18](https://realalpha.app/v/nb7EinVtdok/?t=3258) it's just like you don't want to like you know where it goes south you don't want to just be like copying your competitors right like that that's not helpful for anybody uh but as a motivation to like to bring your best and do your best uh it's i think there's something in human nature where it's like it's it's a uh it's a powerful force you've been kind of in this grind mode of r&d for the past you know decade plus and now you're starting to really scale up how is the company going to evolve to kind of meet that well i think it i thought i used a similar theme over and over again. We need to be able to operate in a very heterogeneous way where there's some teams and some products where it's really all about scale and efficiency and optimization. And I think those sets of problems are very fun and interesting. And there's some parts of the company where it's still really very much about invention and experimentation and resolving ambiguity and figuring out what we need to do. Because my belief, and I think this is pretty well informed by the data that we see and what we know to be possible is we're still like 1% penetrated, right? [55:22](https://realalpha.app/v/nb7EinVtdok/?t=3322) So we're still, it's not like a mature market with cell phones, right? Where it's like, it's a zero sum game and you're like battling against somebody to like take, you know, like really we're trying to invent new products that create new workflows that unlock new value in the world, create new efficiency, make things safer than they could have otherwise been. And so we absolutely have to maintain the ability to like invent new things as a company. And I think that's actually the single most important thing. And we need to do that in the context of having like a core business and large scale customers that are counting on us. [55:55](https://realalpha.app/v/nb7EinVtdok/?t=3355) And the way that you do that is by having awesome people that are looking. After and have responsibility for these different things and can wake up every day really focused on whatever their particular mission is. When you think about building a company and the lifeblood is venture capital and you have to survive because you don't have cash flow, I think it's a slightly different operating philosophy than when you have some sort of cash engine because some product is working in a huge way. How do the bets change as that switch happens like are you willing to take more bets at the same time it's an interesting question so the for a long so we've been through different cycles as a company like when we started scrappy early stage company my co-founders and i didn't come you know this wasn't our second or third company where we could just like snap our fingers and raise 100 million bucks or whatever and also you know the silicon valley environment at the time was very different so by necessity in the early days we were very scrappy with very small teams uh where prioritization was kind of everything and we started to expand enterprise and government customers in 2020 um money sort of became free you could raise a ton of money i think like a lot [57:06](https://realalpha.app/v/nb7EinVtdok/?t=3426) of companies we got ahead of ourselves there and kind of overhired and lost that kind of like lean scrappy muscle and then you know it took us longer for that business to really work it took a long time for doc to really mature uh and then we'd like you know we had very limited ability to raise money and we had our backs against the wall. And by necessity, we had to get lean. And we basically [57:28](https://realalpha.app/v/nb7EinVtdok/?t=3448) **Adam Bry:** had headcount flat or slightly down over a multi-year period. But the output within the company grew exponentially over that time as we just got that lean muscle back. So now, [57:41](https://realalpha.app/v/nb7EinVtdok/?t=3461) we're not constrained by capital, but that lean muscle, I think, is really core to identity as a company. And if you look at the size of our team and the revenue scale that we're at, it's remarkable. I mean, if you can look at like comps that I look at on the public markets that build hardware software products, we're literally like a half to a quarter of the headcount with products that I think are like an order of magnitude more complex in their technical sophistication. So even though we could like, you know, raise as much money as we needed, grow the team as much as we wanted to, we're just not going to do it. Like the, the constraint that we will not shy away from is like truly exceptional teams operating in an efficient, like high velocity way. And I've learned the hard way you, you can't, you can't like keep doubling year over year in terms of the size of the company and maintain that. And so like, you know, you can go on like LinkedIn and look at companies where they've like doubled year over year over year. And I just, and especially the ones that are building hardware like i i just know with like a hundred percent certainty that there's like no way there it's just it's like not how the world works that they're operating like [58:46](https://realalpha.app/v/nb7EinVtdok/?t=3526) efficiently and effectively internally um and having been on the wrong side of that like we we won't do that uh ourselves and so that's really the constraint is like having exceptional teams with awesome people that are uh aligned and and doing great work uh and and we'll scale that as quickly as we can but but no faster and that affords us the capacity to do a certain set of things which is way less than the opportunity we're exposed to and so then it's just the prioritization game and I think that that's healthy like there's there's a bunch of things where it's like very obvious if we built a product to do this we would unlock a bunch of value and we're not doing those things because we don't have the capacity to do it so we have to be really thoughtful about what we do and I think that's actually like having been on all sides of it I I think that's like the right healthy place to be.