The future is here. Or is it?
One of the curious things about the world of tech is the difference between the hype cycle and the actual implementation of life-changing advancements. If you were to read nothing but Wired or Hacker News in isolation you would swear the days of The Jetsons have already arrived. But implementing the things that have been invented is often the more time consuming, tangled and laborious part of creation.
Take drones, for instance. Seems we have been hearing about them for years, but you still can’t get your Triple-Venti Soy No Foam Latte delivered by one tomorrow. Does that mean drones were a bust? Hardly. The world of drone technology is actually progressing rapidly, but the space has always had to deal with a heavily regulated backdrop.
When brothers and tech veterans Tony and Paul Di Benedetto were looking for a dynamic tech sub-sector to enter they knew two things. First drones, with their myriad of possibilities and permutations, fit the bill. Second, they had better start by focusing on Ottawa and how the federal government was going to view the drone space, because that would ultimately play a big part in the business. Today, Drone Delivery Canada (CSE:FLT) is making the dream of drone delivery happen here and now. Cantech Letter sat down with CEO Tony Di Benedetto to talk about the challenges of founding the company and where it goes from here.
Tony, can you tell us how Drone Delivery Canada got started?
After we sold out last business back in 2013, Paul (my brother, CTO – Paul Di Benedetto) and I we were looking at where to focus our energies on. We have been tech entrepreneurs for some 20 years, and had always done well in the space – so, we wanted to find the next big tech niche and we looked at drones and their potential use for commercialization. We saw there was many applications for this tech, but what excited us the most was utilizing drones as a logistics application. We saw this as a disruptor to traditional logistics and if we could commercialize this application there would be a very large business opportunity for us.
How did you approach entering such a highly regulated space?
Before we did anything, we decided to spend a lot of time in Ottawa to really try and understand where and if there was a place from commercial drone operations in Canada. What we learned was our Canadian Federal Government was pro-technology and pro-innovation. Back in 2010, the Federal Government had created a drone UAV research program and had enlisted the smartest minds in Canada to help develop a drone strategy for Canada. The approach we took was to listen very carefully to what the regulators envisioned and we took these key inputs and commenced mapping out a platform to align our business strategy with what the regulators wanted to see and also where we saw this technology best being applied in Canada (Canada’s North).
It seems as though Drone Delivery Canada is embarking on a multi-phase rollout. What are the first steps and how do you see the company morphing over time?
Our strategy is to start in the back yard (Canada’s remote communities). We believe this is the right place where to start – big wide, open spaces, far and away from people. The backyard is our proving grounds and also a great place to commercialize. These remote communities lack infrastructure (roads) and with our technology, we can utilize drones to build a “railway in the sky” connecting these communities and providing a cost effective just in time access to goods and services. Overtime we will then commence bringing the technology closer to suburban and urban areas. The technology needs to start somewhere – and we believe Northern Canada is the right place for that. Its all about learning how to walk before we run.
Why is rolling out drone delivery in an urban environment so much more difficult?
There are simply more objects in the way. Over time the technology definitely has a place in urban environments, but as I mentioned earlier – the backyard is the right place to start.
Do you see a day in which cities will enjoy drone delivery?
Absolutely. We are working with a few municipalities and they are looking at how to integrate drone delivery as a logistics solution into their future urban planning initiatives.
Can you tell us about your pilot project with First Nations groups?
We are working with Pontiac Group. Pontiac Group is a socioeconomic development group which is very entrenched in the First Nations communities. They will be leading our pilot program with the First Nations. The goal is to start in the Thunderbay area – but that is not finalized as of yet.
Are there other usage cases for drones that could bring immediate improvement?
Drones have a variety of applications – photography, surveying, agriculture, etc. In general, done right – drone technology has a number of benefits to a wide variety of industries. We like the logistics vertical –there are a number of big barriers to enter this space, but once successfully achieved the value proposition is very large.
You have in the past mentioned that yours is a SaaS model. What do you mean by that?
We are a technology enabler for our clients. Our platform is really all about software – Software-as-a-Service (SaaS). Our platform is deployed at our clients sites and we provide complete oversight on the platform offering a managed service. Our technology allows our clients to expand their logistics network allowing drones to enter their fleet. Our platform is highly scalable and flexible. Our strategy is not to focus on hardware. We see hardware as a commodity and it is very difficult to make money manufacturing drones with global competition. Our key value is the software platform which allows drone deliveries to happen and essentially is the key to having a robust platform with a commercial license to operate.
What markets will you be tackling in the next 12-24 months and what size level are they?
We are focused on the Canadian market and look to get our license anticipated in Q4 2017 and look to roll out our model in 2018.
We look to first have commercial success in Canada, beginning in less populated areas and then move to more urbanized areas as the technology gets adopted. We also look to export the technology globally.
Do you expect there will be a “typical” order for you, or is everything different depending upon the customer?
Every customer has their own unique needs. Our platform is highly scalable and flexible and we are working with multiple clients (government, corporate, services, retail) to develop a customized solution for their immediate and future requirements.
What does your balance sheet look like?
We have approximately $10M in our treasury with no debt. We are adequately financed to commercialization.
What milestones should investors look for from Drone Delivery Canada over the next year?
These include receiving our operator flight certificate, sign new customers and completing certain and various software systems that enable the drones to operate commercially in the Canadian skies.
Disclosure: Drone Delivery Canada is an annual sponsor of Cantech Letter.