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

24:24and then the drone returns home and I presume just lands in the grass and you take a plug -a -pack it. That's roughly how platform one works. Yeah, it doesn't land in the grass. I mean, we actually use something that is kind of inspired by aircraft carriers. Oh, you catch it. Yeah, we actually catch it out of the air. Okay. It looks kind of crazy. Or it's like the thing in Batman, you know, where they're recovering the... What thing from Batman? You mean the Skyhook from Mission Impossible? Yeah, there's also Skyhook in Batman. For most people think Skyhook. You know, it basically like the vehicle is flying by at about 100 kilometers an hour and we can snatch it out.

24:52Oh, I've seen that. Yeah, yeah, yeah, yeah, yeah, yeah, big poles and yeah, you know, every time you see it Yeah, it really does look kind of Pertunence energy. Yeah, it does look weird and every time you see it you're kind of like Hollaly you know like it's amazing to that work, but now it works It's got away with it. Yeah, we got away with another one But the cool thing about you know autonomous systems is that like you know, we're we're using guidance navigation control algorithms that are hyper precise when you take the human out of it You can actually achieve levels, not that we want to take human pilots out.

25:23I know, I'm not like, I realize I'm sitting with a talented pilot. But robots are really good at flying vehicles. And so actually you can achieve levels of precision that seem like very counterintuitive. Like the aircraft has a one centimeter tailhook on the back of it. And we reliably catch that one centimeter tailhook every single time as a vehicle's coming by. coming by. When you say robots are better pilots, I take no offense with that. Have you heard the right stuff by Tumble? I haven't actually. I really enjoyed it. Tumble was fabulous. All this stuff, MoeDreck meant, and certainly the the right stuff maybe for listeners of this podcast is on the history of the Mercury space program.

26:04So before the Apollo program, the initial space program, but they describe how when they were making the spacecraft, They were an initial plan that was totally obvious to them, they would make them autonomous. And this is back in the 60s, but it was still kind of patently obvious to them that they would make them autonomous. And they faced rebellion from all the shithead, air force, fighter jocks that they had to do at the Asparts of the program. Well, they just didn't want to be passive passengers. We sent monkeys up to space and monkeys don't do anything. We're no better than monkeys just sitting there as...

26:37They're in hope, you survive. So they added manual controls for the spacecraft like afterwards design. Because the controls were connected to anything, but they could at least, like, it's like an elevator, right? You can like push the closed button. Exactly. Very funny. And so I know that I was back in the 60s. And so, yeah, totally. But a slightly more serious note on that, which is that like today, the majority, I think you probably well know, the majority of aircraft, you know, airplane crashes are caused directly by humans. Yeah. It's actually a bit sobering. I mean, but also I think it's just a sign that like the safety of these systems has progressed so dramatically that at this point the last unsafe thing in the cockpit is the human themselves.

27:20So I Quote some questions from the tech and safety and how you do things. How do you avoid birds? We don't Birds avoid us. Okay. Yeah, it turns out like birds have pretty pretty Birds have pretty good detection of void systems of their own and so they hear us coming. How fast you fly? About a hundred kilometers an hour so So that's about 70 miles. So we're not sucking birds into naysals in the same way that you jetwood. How do you avoid airplanes? So we avoid airplanes by basically it's like a multi -layered deconfliction strategy. First of all, we're flying below the commercial aviation floor.

27:50So in the US that's about 400 or 500 feet. So we're never conflicting with the kinds of normal airplanes that people were listening whatever be flying in. We are also then on ADSB. We're receiving ADSB. As long as something is swapping on ADSB, we know it's there and can avoid it. We also then have cameras on board, and then we also do things like no -tams, so old term, but notice to Airmen, basically telling people when we're operating in certain places. All of these layers together, combined to get us a safety profile that is super obvious that the FAA can improve. Super cool. Then, And what, can you tell if the battery's gone far?

28:32So the cool thing about the way the aircraft is designed is that there are 43 major sub -assemblies on the aircraft. Every one of those sub -assemblies is designed from scratch by Zipline. So it's super vertical integration. And we really take inspiration from the way that planes are designed. We'll look at the way of compute on a Boeing 787 is designed. And they're, of course, using multi -million dollar, like 20 -year -old components. We can talk about why that's so screwed up in a second you want. But the architecture is usually fundamentally sound. And what we'll usually do is just use cell phone components to build that architecture in a way that's about 1 ,000th of the cost, but just as safe.

29:09And so you're using a lot of those airspace paradigms of being able to fail over and building redundancy into every flight critical system. So the aircraft, we have redundant nodes of the battery. One node can fail. The vehicle can still fly itself home. We have redundant flight compute architecture. So you can have a flight compute fail, can fail over the second flight computer and fly home. You can actually reach into the aircraft while it's flying and cut any wire with scissors. The plane will still fly itself home. Because it's wired redundantly. Redundant canvas. So basically we're passing, yeah, redundant canvas on the aircraft means that you can lose any wire.

29:48We also have redundant control surfaces. We can be able to control our passes. We can be able to do bad mid -air things or like mid -air collisions, or because it just as a general redundancy strategy. General redundancy, I mean, like, you're not actually worried about someone reaching into the airplane, so it's very unusual. That would be a hard thing to pull off. But what you are worried about is like vibration and connectors shaking loose. That's like a poor failure mode for aircraft. So going back to the operations in, like we're talking about these platform one operations at the U .J. and Africa and the medical logistics use case, what we described sounds pretty simple, But as you say, demos are easy.

30:21Engineering is our production is hard. What was hard about getting from 90 % of reliability to 99 .9 % of reliability? Like concretely. What kind of stuff were you solving? I think that with hardware, everything that can go wrong does go wrong. At first, you have to get a design that works and makes sense. I would say - You could give earlier design iterations that were wrong. We did unbelievable or not subtle ways. Like in retrospect, we were like, wow, we're like complete idiots. Forward the silly, early design. Yeah, one really good example with Platform 1 was, you know, when the aircraft would land, we would swap the battery.

31:01The advantage of swapping the battery was we could then have the aircraft back on the launcher and like back in the air three minutes later. We put the GPS on the flight computer, which would like seem to make sense as a place for GPS. That's free acquired GPS every single time. So see, you're like smarter than we were basically. So the problem was that you have, you know, you get an order and it's like, wow, there's an emergency. Like a patient needs this, you know, blood transfusion and so every second counts. So immediately grab the aircraft, we put the battery in. You mean the GPS turns on and now the GPS is going to take 20 minutes to acquire all the satellites necessary for the vehicle to pass pre -flight and launch.

31:35And so we realized how stupid this was and immediately iterated and put the GPS on the battery itself. So this didn't make sense from a bomb cost perspective because now you need two GPS units for every aircraft that's flying because one is sitting on the battery charger. But it really makes up for it because you've just doubled your cycle time on the aircraft. So there are a million examples. I mean, another example, this stuff is so unfancy. It's almost like embarrassing to describe. But like when we initially launched, which platform won, the aircraft had 43 different kinds of fasteners on it.

32:03Turns out that is extraordinarily difficult to keep 43 fasteners in stock at all these different distribution centers where you're doing constant maintenance actions on them. So the next version of the aircraft had two total kinds of fasteners on the entire aircraft. So a lot of this is like, it's not fancy. But it's hard to learn without you just kind of like learn by doing. Is there a component that's been really annoying? Like if you could wave a magic wand and get a better version of some component, what would you ask for a better version of? I mean, every component. We have iterated on many, many times.

32:35I would say like today, probably more than anything is like servos. And in fact, Zipvine went and designed its own servo from scratch. We also ended up going and designing almost every component of the aircraft. It was just a matter of when it made sense to do it. But over time, almost every component of the aircraft, every major sub -assembly has been designed completely from scratch. Why do servos frustrate you? Servos for context are actuators, basically, things that turn electrical power into mechanical movement. I think servos are hard just because there was no industry. I think the way to think about, you know, people think about drones.

33:09And they're like, oh yeah, it's like a drone. But the reality is you have, you know, an $1 ,000 quadcopter that will like take pictures and fly for 20 minutes. And the reliability and safety of it really doesn't matter at all. And then you have a $50 million predator aircraft, which is actually surprisingly also very unreliable. Like, predator, you know, famously read this statistic, which is like 50 % of US military Territory drones have like crashed due to operator error. Oh my god. To read these stories, they're like, they didn't realize they were flying upside down. It was like crazier than you'd think.

33:41The DJI in built collision avoidances now much better. Not working, I don't know. The new ones will. Yeah, I think that the reality is those are two different sides of the spectrum and what Zipline really needed was like, we think a lot about automotive grade, which is actually, almost think of it like a sacred area of like cost and quality. because automotive grade is super. It's generally very low cost and very, very high quality and reliability. And that's really where servos are. Like you can get servos that are totally crappy that you'd like use in consumer, I don't know, like toys. And then you can get like extremely expensive servos designed in Germany and they cost $1 ,000 each and they're way over engineered.

34:24But what we needed was something that was like extremely cost effective and that would last for like a million cycles. And that doesn't exist in the world. Answering now, producing runs, everything. So we designed it completely from scratch, and now that's what we use and bought from too. That's fine. Will you end up just selling drones for other applications? Right now, you are a, did you know Boeing in the United G is the same company? Like it was full vertically integrated aviation. Yeah, wow, it was the air -free and the airline. Yeah, and then they were split up in that, like there was a big antitrust.

34:54Antitrust was emerging as the domain kind of at the time. And as part of that, they were forced to split it up. Anyway, you are the Boeing in United, right? You know, you provide the service and you produce the aircraft. You ever just sell the aircraft? I don't think so. For a number of reasons. I mean, I think the most important one is kind of what I was alluding to before, which is none of our customers care about drones. Like, if we were out there trying to sell drones, I mean, it just is not solving the problem that people actually care about. Like, Walmart, Cleveland Clinic, the government of Rwanda, none of these customers want to be like managing a fleet of autonomous aircraft.

35:26Oh, no, I don't think it's how the drones do your current customers. I think to be new customers where maybe I want to build a crop testing service and your drones would be the best for doing crop testing So I buy your drones and they have all the safety equipment and the high quality servos and things like that But you're not currently in the crop testing market Yeah, I mean the second reason I was gonna say is I just don't think selling hardware in that way is a very good business Okay, but I also think the third thing to consider is that like it's a bit like asking someone It's like oh, you know Jeff Bezos like the early days of the internet Are you also going to like build other internet businesses?

35:56You know, it's like The internet is just a technology platform, and the Amazon was building obviously, you know, a new kind of retail company. And I think that, you know, drones are a technology platform. Zipline is a logistics company. Like we are really focused on building automated logistics for Earth in a way that, you want to build the first logistics system that serves all people equally. Like we would happily use any different kinds of technology. Like if someone invents teleportation tomorrow, we'll switch to that, because that would be better. Your logistics platform, I just, the big unsolved space was, uh, was drones.

36:26Will you ever do a modality that is not drones? Very possibly. Huh. What would that be? We have lots of ideas. Have a few more sips. Yeah, exactly. I think that ultimately, if you really want to be a new kind of logistics provider, you probably have to be even more integrated. Certain things are not going to go via the air. Certain things are going to go via the ground. So there's definitely a world. Yeah, you should be multimodal. Yeah. UPS is multimodal. Perhaps the point should be multimodal. Killer is describing here how zipline got its start in Africa, but they're now open running with drone deliveries in the United States.

37:06And this is a technology pattern you see again and again. Drone delivery, mobile payments, WhatsApp, QR codes, these are all technologies that started in emerging markets first. And it's going to be the same with stablecoins. So here at Stripe we're all in on stablecoins. We recently acquired Bridge, the leading stablecoin orchestration platform, and privy, the best crypto wallet infrastructure. We're already seeing a ton of stablecoin adoption, especially with companies that want to build cross -border financial products. We're working with companies like Ramp to build a global stablecoin backed spend card, SpaceX for global treasury management, and Shopify to enable payments and Shopify stores from every country.

37:41And then breakout startups like Chipper Cash and Dollar App, they're offering dollar access to people in Africa and Latin America. But we don't think stablecoins are gonna stop there. Stablecoins are a programmable, low -cost, high -throughput financial system that will have applications everywhere. I know for my experience when I talk to CEOs, they're all interested in the applications of stablecoins. Stablecoins supply is up 50 % in the past year alone. They're definitely not a flashing pan. So if you're a company building with stablecoins or you're just thinking about your strategy there, come talk to Stripe.

38:12We have been describing Platform 1, which is like we said, fixed -wing, catapult -launched, Skyhulk recovered operating for the last decade in Rada. You now have just launched Platform 2, which is vertical take -off and landing looks more like a traditional multi -rotor drone that people might picture when they hear a drone. There's also a wing. Yeah, it's a hybrid. Okay, so it's a I forget what you call these but yeah, there's wing and there's vertical take off and landing so VTOL Yeah, VTOL fixed wing thingy and you are using this for deliveries in suburban America And Many questions on this first off.

38:55Why construct a whole new modality like it seems to me this what you were doing with the precision Air strikes of little packages under parishes and would also work for my burrito. So why not do Platform 1 with my Brito. I mean, in fact, it did. The crazy thing is that when we initially started building Zipline, we kind of thought, oh, we're going to have to build this very fancy, complex technology. You'll have to be a vertical takeoff and landing, fixed wing vehicle. We'll have to be able to deliver things very precisely and gently. And then when we were talking to all these early customers, we realized, and this is the power of just going and talking to customers directly, they only cared about cost and speed.

39:35Basically, they wanted to cover maximum range. They wanted to be fast and they wanted to be really cheap. And so we kind of ended up thinking like, hey, you know, perhaps we should design this very simple, fixed -wing system. It would be, you know, to a certain degree, very unfancy. Like when you see the way we're delivering there, you know, it's just like this, you know, cardboard box with a wax paper parachute. It is amazing to me that that system worked that well and scaled for 10 years to like 5 ,000 hospitals and health facilities and became the largest commercial autonomous system on Earth.

40:05You know, when we say 100 million commercial autonomous models, I don't think people will fully get. That's going to the moon and back 200 times. Yeah, and I always find comparisons of the moon and back, really not. Not that helpful. Here's another. No, no, no, no. I presume your average authority is order of 100 miles in Africa. And so you're basically talking a million flights. I think one can fly a million. Yeah, 1 .5 million flights. So I think that's a pretty good number. So anyway, not to digress. But it's kind of amazing to me that platform won scale as far as it did what this delivered experience was like super unfancy and ultimately As we works scaling that like crazy through 2020 and 2021 There were all these big customers in the US who all were kind of saying hey like we want teleportation We would use that here in the US.

40:56And so I think that this was kind of our realization that like It was time to expand basically and say okay if we were gonna build a product that can deliver directly to homes What does that need to look like? And the design considerations for that are pretty different. In our opinions, we need to integrate really well with existing buildings, building distribution centers like we did with Platform 1. We had to be able to basically plug into the side of any existing hospital or primary care facility or warehouse or even restaurant. And then from there, you need to be able to deliver two homes in a way that was fully automated, zero mission, 10 times as fast.

41:31And most importantly, we want it to be silent. Because we think that people, this is kind of an important thing. I think sometimes people think drone delivery, oh my God, it's going to be so annoying. You know, there's like non -stop buzzing of drones because that is how people experience drones today. But the reality is that it doesn't have to be that way. You can design systems that are actually way, way quieter than receiving a delivery via a car. When the crazy thing, sorry, that I forgot to mention my description of platform two, is that the drone does not come, the aircraft does not come anywhere near your house.

42:01it sits up at 300 feet above your house. And then long lines, the payloads down to you in little droid thingy and that drops it off. But as a result, the drone is hovering 300 feet above you. I presume it's just inaudible. Yeah, it's nearly inaudible. It looks crazy. I was talking to an investor the other day. It sounds crazy. Yeah, I know. And I was talking to an investor the other day. He wrote us this nice email and he said, like, hey, we really want to meet you because we think Ziplin has built like a fundamentally jaw -dropping consumer experience. I do think when people come and see it for the first time, it's pretty wild.

42:34Because you just never really experienced something like zipping down to you from a football field about your head. It's kind of science fiction. But the advantage is that, droid that you described, the little robot on the end, is actually controlling its position in X and Y axis. So this is really important, because it's often windy, it's going to be blowing, you have different environmental conditions you're trying to control for. And we want to be able to deliver with like dinner plate level accuracy to any home. And so this enables us, even when the wind is blowing really, really hard, this enables us to like very reliably, safely and precisely deliver something even in a very, very tight area.

43:10Okay, so the reason that you need to develop a platform to, for suburban to every single United States was one, the place you're delivering from, the Chipotle, you probably can't fit a catapult there, at least not in everyone. Yeah, I'm pretty sure you can. And there was some of them you could, but it's a parking lot. I'll see that. And but not reliably. And then for the targets, again, it might be accurate enough, but the new system is definitely accurate enough. Yeah. I mean, in fact, like the very first Walmart store that we ever integrated, we actually integrated with Platform One. And that was even more shocking to me.

43:43The customers loved like basically having like their stuff bum bar them, you know, like from 30 feet up. I mean, it's like honestly crazy. I think that was like the clearest signal to me of like, man, And if people were willing to put up with that delivery experience to get something delivered autonomously, like wait until they see platform 2. So the reason that we haven't had drone delivery in the United States for a long time is the FAA did not provide any real making on beyond visual -limicide operations. And they're your regulators, you probably can criticize them in public, I'll criticize them for you.

44:16I think the FAA was slow and the randomly criticized for being slow in not having any commercial drone frameworks. So the old part 1 .7 stuff for like hobby drone operators and line of sight is the test where it has to be a light drone less than 25 pounds And you have to be like they're controlling with your mobile control, which obviously is not viable for commercial drone operations So for the longest time they sat on commercial drone operations and didn't do anything Just now in the last month We've seen Sean Duffy the Secretary of Transportation and acting head of the FAA and announced new part 1 .8 beyond visual line of size, commercial drone rules, or at least the notice of proposal rulemaking.

44:57What do you think of the current FAA and the rules are proposing? Yeah, I mean, first of all, part one away is kind of like codifying something that has already been happening over the last three to four years, which is I think that about four years ago on an ad hoc basis and like via exemptions, which is that about four years ago, So Zipline started seeking regulatory approval in the US. We were able to go to the FAA and say, hey, we have 100 million commercial autonomous miles and zero safety incidents. We think at this point you have the data you need, and they agreed. And so very much to their credit, this is what really unlocked.

45:31Zipline started to scale aggressively in the US. We've done that via exemptions, there are things called like 4047, which is a different process rather than getting an aircraft type certified. If you really want to talk about something that's broken, we can talk about type certification. of terms or aircraft. Both. Yeah, I mean, so far. Do you see the mosaic stuff? Hi. I have not had that part in the last day. It's amazing. Day 6, part 23. That is really cool. But a certification by making part 22 much bigger. The type certification has been this interesting blocker, which is if you wanted to operate commercially in the U .S., you couldn't operate under 107.

46:05Or if you wanted to operate commercially down visualized site, you had to operate under part 135. I fear that we're getting like, you know, we're really in the weeds now, but like, you I guess the main point here is that you needed to get an aircraft type certified. This is the definition of a very painful regulatory process. It takes five to ten years to get an aircraft type certified. It's really based on this idea of a regulator is going to look at every component of the aircraft and independently verify that that component is meeting certain standards that were set by the regulator. that might, you know, I mean, imagine trying to do that in a world where like every year you have a radically new and better version of technology.

46:45You guys are doing like progressive hardware developments and like constantly figuring out that you know, two fasteners is better than 43 in other such innovations. You just have really, really fast iteration and so in a world where a tight certification takes five to ten years, you're dead on arrival. And that's kind of what we saw for like five or ten years, none of this innovation happened in the US. I think the good news is that in like 2020, the FAA kind of like woke up to this, they realized like, hey, this is going to become one of the most important industries in the world. The US needs to be a front runner here.

47:13We cannot be a laggard. And the FAA actually started to move super fast. I mean, the FAA has been, you know, I know you think maybe I'm just saying this. Well, like, the FAA has actually been a great partner. Like, there are so many people there who want to win and who want to see the US win. I think the FAA is full of awesome people trying really hard. I think the rule making has been slow. and I think exemptions and waivers are not a substitute for a good recognition framework. Well, there you go. I mean, one -o -way really is, I think, you know, there have been these exemptions made that luckily enabled Zipline like invest aggressively in the US over the last four years and experience pretty explosive, exponential growth, which we can talk about.

47:46But like, you know, one -o -way, it is cool to see that now be codified that that is just the beginning of a process, right? Because now the FAA has nine months to like actually operationalize and execute based on that rulemaking. and we'll see how that goes. But I think it's super important. I mean, I think you and I probably both have grown up reading about the SR71 program. Or a lot of these programs like to design airplanes. I mean, there was a world where the US was iterating incredibly fast in aviation and aerospace. And we've largely lost that. Like our grandparents got to grow up in a world where they could fly on supersonic jets.

48:22We can't. You know, I think people have this sense that like the world moves inexorably forward. it doesn't. Didn't you have a tweet about this maybe? Like, you know, I think about it all every day. Like, actually, no. Sometimes we literally move backwards. Yes. And in aviation, like, what plane did you learn to fly on? I learned to find a system 152. How old was that aircraft? Yeah, it was from the 1970s, I want to say. Yeah. What the hell? I was actually just ogling the carbon -cub UL, which uses a new ROTAC engine. So there's this awesome new engine technology out of Germany, this company, Rotex, that makes them there.

48:58And it hasn't been in the US certified market because it hasn't been worthwhile to go at the engine certified. And now they're selling it in the LSA regime because exactly it is possible there. And so I think we're just going to see this wave of interesting news because it's the kind of pent -up technologies that haven't been certified yet, such as Rotex engines, which are better in every way. Have we lost like 98 % of the audience now I don't care, I didn't want 35. I guess, but just to share. No, it's just one thing. Like to try and make it even more general interest. Like what really inspires me, you know, is you think about like skunk works, right?

49:35And like the teams that built a lot of the - It is the Lockheed Martin factory that made or kind of group, tiny group that made all the fun news about their graphic F1 or F4 into it. SR71, even more famously like the, the, the, yeah, exactly. And then make you F1 or F4, then the F1 or F1, sorry. Yeah, and I just to give like a specific example, a couple examples. One, like the first modern passenger aircraft that was ever built, the DC -3. I think I'm going to get everything right. Like DC -3 was built originally. The entire design cost for that aircraft was like $2 .5 or $3 million. So even when you convert into today's dollars, that's like $75 million to design a passenger airliner.

50:17The $787 cost $32 billion to develop. Well, yeah, DC -3 was like napkin sketch to finish aircraft, I think, in two years. The 787 took 20, 25 years, $32 billion. It's literally become 500 times as expensive to build an airplane as it was for our grandparents. And I think the crazy thing is you're going to be like, oh, well, the 787 is a much more complicated airplane. Yeah, the iPhone is also much more complicated than it was five years ago. So if you think about the causes, I think there's a great point to this. The 787 certification process is so much more torturous than the DC -3. If you think about why that is, I think there is a few obvious things you could point to.

50:56One is, and the one people would point all the time, is we have much less tolerance for unsafety than we use to. The second is, the certification approaches are much more prescriptive, and so they require that you do specific things to prove how you're going to meet various tests and stuff like that. And then maybe you could say that just the paper turnaround times have gotten slower and you know there's a lot of back and forth. If you couldn't wave a magic wand to fix aircraft certification either across drones or a manned aircraft Yeah, again, you're putting chart the FAA. What would you actually do?

51:30I think the answer is actually really obvious and and the good news is I think this is largely like already happening which is that We need to move away from like prescriptive regulatory requirements that are like like, okay, now show me the life support system for the pilot. Should we lose whatever atmosphere pressure in the cabin? It's like, it's a drone, there is no pilot. And then the FAA looks at you like, I don't know. Like, we can't move forward, you know? I think there are a lot of things or just you have all these prescriptive rules about how we're gonna - You need performance -based.

52:03You need performance -based. So basically, everything needs to transition to a world where the FAA is setting a statistical level of safety. and from there, like any company can, you know, basically self -certify against that level of safety. You can imagine different ways of like, what kind of data you might have to provide to prove that you're meeting that level of safety, but like there are a lot of different ways to build something that's safe. And what you want is like engineering innovation. You want people trying new things. If you try something new and it's an amazing innovation, it's suddenly like blowing it out of the water, or like with a prescriptive absolute regulatory framework, you lose all of that.

52:44Because it's basically like the FAs just looking to make sure every subsystem that's like the way we've been designing airplanes for a hundred years. The subsystem by subsystem suffers crazy rather than performance -based. It's really painful. So anyway, I know this might be like a little like in whatever, you know, shop talk or whatever, but I think that it's really important. Like, and I also think you can probably see similar versions of this battle playing out in many different parts of the US government. When you look at the way we build nuclear power plants, we created what is it called?

53:14Nuclear Regulatory Commission. Nuclear Regulatory Commission started in I think like 1978. The commission is started to ensure that power plants are safe. And since then, we've built zero power plants. I think, or is it like one? I think it's zero. Yeah, yeah, yeah. It's definitely the rate slowdown. The rate slowdown. The commission achieved its goal though. Because we built zero. And that's like painful, you know, as an American. It's like, ah, like that's. You're describing failure to engage with trade -off space in an intellectually honest way, where there's a trade -off between safety and cost and you just have to actually address those questions and you have the trade -off between speed and safety and these things.

53:52And the cool thing in aviation is that like, there's now 50 years of pent -up technology that has totally not been put to work at all. It's actually very similar. I think it's why SpaceX is like this, you know, and more of a success. Because they're like, oh yeah, we'll just actually use modern microcontrollers. Yes, yes, yes. Or modern semiconductors. Whereas, you know, ULA was building on a semiconductor architecture that I think was like 30 years old because they just didn't want to certify a new flight computer. And so you've launched in Texas now, just Texas? I think it makes it. Well, we launched originally in Bentonville and now we're expanding in Dallas.

54:28Okay, so you're expanding in Dallas and delivering for people like Walmart and Chipotle play and where else should people be ordering from in Dallas? I mean, you can just go to the zip line app. Okay. So, yeah, and we have all the different storefronts on there. You go to zip line. But those are the biggest ones. Yep, those are the biggest. And, I mean, to give a sense, right now, we're on an explosive growth stats. I mean, it's kind of crazy. It's really only the last three months, but we're now launching a Walmart Supercenter every week. You know, those stores are ramping extraordinarily fast.

54:56I mean, I don't know exactly how much I'm allowed to share. It's probably more for Walmart to share. It's a little more or magnitude. I mean, order of magnitude, you know, it is, the service is becoming quite large, relative to the way that people receive. That's a lot of money. How many drones do you fly in the dollars here? Yeah, so every, you know, right now, we are integrated with about 10 Walmart, so we're launching one a week and each aircraft, each Walmart will have somewhere between like eight and 20 zips flying from it. Okay, so you have hundreds of drones now delivering in the dollars here.

55:29serving, you know, and I mean, the crazy thing is how many sure can you hundreds of deliveries a day? Like I think we should yeah, high tens, we think about it. So you think capacity for a thousand dish, thousands of deliveries per day. And that's growing rapidly. We're actually expecting to get to 10 ,000 delivered a day in Dallas. Like that's actually the company's goal we're going here. We're moving as fast as we can toward that. Looking at the statistics, the service has been growing 25 to 30 % week over week for the last three months. And the interesting thing, the last couple of things, I mean, really, it's only the last three months that, like, because we only launched in Dallas on April 1st or April 4th, I think.

56:05So seeing it grow like that, the crazy thing is that about a month ago, we were starting to have all these capacity issues, because it's like we, you know, we can't do as many deliveries, it's growing really fast. So we decided to turn off all the marketing. We turned off the in -app notifications, we turned off the field service marketing, basically all the demand generation marketing we're not doing. And the service is just like, you know, I mean, we hit new records. Because it's just a much better product. Yeah, Saturday we hit a new record, like all -time daily delivery record, and then on like two days ago, and then yesterday we blew that record out of the water by 20%.

56:37It's crazy. So I think that a couple takeaways, like one is that is amazing how quickly science fiction becomes entitlement. You know? We see this with Weimo in separate discrepancies. It's exactly like Weimo where people get in and they're like, oh my god, it's one car insane. And then three minutes later they're like scrolling on Instagram, you know? And I mean, when you go to Dallas, and you just... What's the version of that in Dallas? I think the version in Dallas is that, you know, for the first day that we launch a new Walmart, you'll see people kind of like, like, on the hoods of their cars, just like watching the service already, you know, like people are kind of taking note.

57:09And then three days later, people are just totally going about their normal lives, do not care. You've got this like installation of autonomous aircraft, they're just coming and going non -stop at crazy volume. Yeah. You know, I think the other example is like, I mean, I visit a 78 -year -old grandma, who's ordered three hundred and forty times from Zipline over the last year. She's been like the count of... Oh, so you're saying in duest demands? She's... This is in duest demand. Where people are ordering more stuff. It's crazy. Like, she's been, I think, the county clerk for 40 years straight and, you know, she's just showing me.

57:39She's like, oh yeah, let's place an order right now. And she's like, just like, around on her iPhone, you know, putting everything into her basket. It's like, double click the side of the phone, Face ID, Apple Pay. She's like, it's on its way. It'll be here in eight minutes, you know? She's 78. She's 78. And she's like totally living in the future. And you know, you talked like moms who are like, oh yeah, this, you know, buys me back, like three or four hours a week. And you're just like, be with my kids, or like, take care of the family, rather than be like out in a car, trying to shop, or get something.

58:04So I think a lot of families we're seeing now ordering like three to four times a week on average, where they'll do like a big grocery run once a week. And then they can do three to four. Sometimes they talk about them as like top up visits. But it's like, you don't know what you're making for dinner, or you like something unexpected, or you have people over, you just get everything you need delivered autonomously. Why can we not have this in California? Why are you in Texas and not California? Because I would have thought from a regulatory point of view, this federal preemption of the aerospace, and so I would have thought all places are equal.

58:33Why is Texas a more hospitable environment for this than California? Could ask the same question about Rwanda. I mean, I think that, you know, Zipline has probably been... Well, one that had a different regulatory framework, like drones were banned in the U .S., or drones are banned in California. No. However, you know, a lot of what we do is still about a partnership with the community and the government. And so - You need to permit from the first of the days. So, you don't permit. You don't permit, you're billed, like, yep, exactly. We're still permitting the ground infrastructure, for example.

58:58It's a bit like, you know, Tesla building supercharger infrastructure in the US. So, who do I need to write a letter to? Is it by mayor? Is it by - We're working on it. We're working on it. We're working on it. Yeah, we're working on it. But to be honest, like, as someone who lives in the Bay Area, and so, like, 100 % feels your pain. It's like, why is this not like serving my house right now? Like, the vast majority of technology has first focused on serving like, you know, whatever. the elite cities on the coast of the United States. I actually think it's okay that for once, like technology is kind of going...

59:25Is this work better in a low density area? It's going the opposite. Well, actually, I mean, Dallas is very high density. Like, I mean, it's not Manhattan, but it's probably denser than San Francisco. I wouldn't say it's as much about density. It is a lot about like, we typically want to launch somewhere where people are freaking psyched to have us. And where there isn't, you know, I do think there's a little bit of a flavor. I mean, you had Kyle on here, right? and seeing what crews went through in San Francisco with the coning of the cars. Like, are war on electric scooters here in San Francisco?

59:54Hey, like, but we've a new mayor, I'm not judging. I know, he's doing awesome. He's doing great. I think that, look, I just think that sometimes cities might, you know, if they just assume that they're always going to have the best technology and like they don't have to, you know, do anything about it. Or, I don't know, I think that there are a lot of cities and states out there that like are 100 % aggressively courting, in infrastructure, new solutions, they want high paying jobs, and they're like unapologetically excited about new technology. So you're gonna go to the cities that want you first, and then you can get around to the cities that are more ambivalent.

1:00:30I think what's gonna happen is that at some point, again, there are certain cities that are just extremely forward leaning. Like an example, I brought one of our board members from San Francisco, you know, leads one of the biggest funds in the world here in San Francisco to Dallas. And he was like looking at what we're doing. And his, I mean, I could see the smoke coming out of his ears. He was like, oh my God, you guys are just doing things. You know, we went to a site where we were building charging infrastructure and we had literally broken ground three days previously. There was a huge hole in the ground.

1:01:06And he was like, so when is this gonna be online? And I was like, it's gonna be online in 15 days before the board meeting. we had a board meeting in 17 days. He was like, that's insane. It is not going to be ready for the board meeting. What are you talking about? And it was actually ready like five days before the board meeting. Basically, different kinds of cities have different requirements. And like, there are places in the US where you can get things done super, super fast. Yeah. We are here in South San Francisco just down the road from your aircraft manufacturing facility. Tell me about this.

1:01:31You know, how do you build them? How many are you building? How many will you build? You know, the most important thing is the speed of engineering iteration. I think you'll appreciate this. You know, that's something I think that's been very well understood concept in software companies. Not so well in hardware, way harder to do in hardware. And so the way to do that is full vertical integration and then having engineering practically on top of manufacturing. So that like as you're rolling hardware changes through onto the line, you have like the engineers who design those changes, work in manufacturing engineers, and then working with the people on the line itself to like figure out how to make that work and get it into production.

1:02:07And so even though it seems like a bit of a weird thing to say like yeah, we're producing all these aircraft here in South San Francisco, the value of us being fully integrated in that way, when it does for the speed at which the blind can iterate and evolve the product, is way more valuable than like, oh, it's more expensive to hire someone in South San Francisco than it is in Nevada or something like that. So it's an easy trade. So yeah, this facility, we just expanded to 160 ,000 square feet. It'll be capable of building around 50 ,000 aircraft a year at scale Which should get us to like near national scale in the United States?

1:02:4350 ,000 aircraft a year and how many aircraft will like a medium -sized city require to support? I think it's like around a thousand depends on the city like cities come in a lot of different shapes and sizes Yeah, okay. Yeah, so 50 ,000 years really a lot Compare you know again, it depends what you're comparing to if we're comparing to iPhones not really If you're comparing to like airplanes, then like yeah really a lot like compared to the Cessna. Yeah exactly. You learn to fly in. Yeah. Okay. And so you'll be able to in your current production facility inside San Francisco, produce 50 ,000 drugs a year.

1:03:14Three chefs, 24 seven operations. We already operate our test sites 24 seven. Huh. And what do you do with the test sites? What do you test? Yeah, I think, you know, when people come visit the test sites, I think that's one of the things about zip line that is most mind blowing to people. and I think it just, it doesn't really look like anything people have seen before. People often ask us, they're like, wow, 120 million commercial autonomous miles and zero safety incidents. Why don't other people do that? It turns out that designing something that's safe is hard. You have to think very... Very small rocket, that's a good idea.

1:03:48Yeah, exactly. It's like, yeah, everybody should just do it. It turns out that some of these things are hard to do. I think the way you do it is it's all just like, none of this is fancy. It's just practical problem solving. And so for us, it was like having three major layers of testing and validation. So the first layer is like software testing. We do a huge amount of testing at 10 or 100 times real -time speed to test all the different software systems that we are constantly iterating. And there's 10 times as much software as there is hardware. So it's like the airplane avoidance you were describing.

1:04:23Yeah. It's like you input a signal of like, oh, you're near an airplane and check that it avoids the airplane. Yeah, autonomy, computer vision, guidance navigation controls, communications architecture, all the backend cloud services, like these can all be, you can do a huge amount of software testing. Because I think the other major way to think about, what is the problem we're trying to solve? Do you know how long it takes Boeing to do a software update? I don't know. I'm trying to guess. I'm trying to guess. No, I'm trying to verify. Come on, guess, guess. Like from when to when? from when they realize, for example, from when they realize that their plans are falling out of the air and killing people to when they can then have the software update out and so the airplanes back in the air.

1:05:02I mean, that was the order of a year. Three years. Oh, I think that was that long. Yeah. Again, this is part of the problem of how the FAA regulates software with those kinds of aircraft. But, you know, Zipline right now is doing a full new version, like we're releasing new software versions to the entire global fleet every 30 days. And so validating that, you know, basically, So it might be 50 to 100 bug fixes, maybe 20 to 50 performance improvements, and then like five to 20 major feature additions or upgrades. And that gets validated through software testing layer and it gets validated through HIDL, which is hard run the loop testing.

1:05:42It's basically like all of the avionics of the aircraft assembled on shelves that are kind of like the brain of the aircraft connected to the matrix. They're all operating in simulation. We can detect like 95 % of what's gonna go wrong on an aircraft. We can detect in Hiddle. Before we then go to the final layer, which is the test sites. The test sites have hundreds of aircraft operating 24 -7. So they never stop. Even, you know, Saturday at like 3 a .m. You could go to the test site and you'll see like the aircraft are just there and they're humans overseeing them. You're describing your build, manufacture, testing, infrastructure in the United States.

1:06:17It's one of the top discussed topics right now is American dynamism, the reemergence of American manufacturing. When people talk in DC about the importance of American manufacturing and the criticality of the supply chain in the United States, the example they often point to as a supply chain that we have outsourced is obviously drones, where there is not a serious, as serious. I'm not even going to see any conductors. Oh, well, so even more scary. Same thing we've talked about a lot. Yeah, yeah, too, for sure. But, you know, there's headlines about Intel and everything. But we also talked a lot about drones and just how much more scaled up the Chinese drone industry is than the restaurant industry.

1:07:02People also talked about the fact that it's not competitive to manufacture in the United States anymore because I don't know, during the Apple and China book, do you think it's pretty good? I've heard of it. I haven't read it yet. It's great. It's like a good history of all the manufacturing in China. Yeah, and they described kind of the emergence of it. But in particular, you know, people sometimes thought of China as just low wage, whereas the book correctly describes just how much agility there was in adapting supply chains and being able to manufacture it there. And so you are a company manufacturing at scale in the United States.

1:07:34What do you think of this topic? Yeah, to put a finer point on it, you know, a week trying to make more drones than the U .S. makes in a year. That is a fine point. It's a little spooky. And obviously, you don't have to be like a deep student of global events to understand that like, wow, I mean, this technology is clearly kind of like remaking not just industries but remaking warfare. Yeah, people watch the world. You're creating a where it is now all -drones determined. Totally. 100%. Like, everything is a tritable and like, you wouldn't want humans on the battlefield at all. And I think that, I think this is like a good news bad news thing.

1:08:11So the bad news is like, yeah, it's true. China has massive manufacturing advantages and massive scale in this area that the US does not currently have. But that is mainly for plastic quadcopters that cost $1 ,000. It's definitely a different class of aircraft. When you look at where this is all going, the systems that are really going to matter, whether it's military or logistics, they aren't $1 ,000 quadcopters. They are more complicated technologies. they require really strong integration of software, AI solutions with the hardware itself. And again, the hardware is only like 10 % of the complexity of the overall solution.

1:08:50So in those areas, the US is actually leading. The US is leading both in terms of, I think, drone delivery and logistics, but also leading on the software side. That's right. So those areas being, I would say, like, more advanced hardware software integrations that are required for really good products for military and really good products for logistics. So when we're talking about the 50X, that's like because you have DJI in China or they're building tens of that with drone light shows, those kinds of things. That is not necessarily the battlefield that is gonna determine who really is the front runner in the industry that matters the most.

1:09:32And so I think that it's too early to say. I think China has obvious advantages and that they have massive manufacturing scale. You mentioned the Apple supply chain book. That is a huge reason. The fact that Apple outsourced so much of that manufacturing and so much of that knowledge and expertise is now in Shenzhen. Like now Shenzhen's ability to build phone adjacent products, which I think you could definitely describe drones, even cars, you could describe as phone adjacent now. As Tesla has looked at you. Yeah, or Tesla could attest. It's actually those supply chains that make it possible to then like branch out and build a lot of these other products way faster.

1:10:09So that's the advantage that China has. The advantage of the US has is like a lead in AI, a lead in more advanced hardware and software integrations. I don't know who's going to win. Yeah. The point the book makes is that Apple's direct investments in China is much larger even in inflation in terms than the Marshall Plan. That's insane. In your apport, it was to kind of a huge investment in manufacturing capability. I was thinking about that on the way here. How that's going to look with the benefit of hindsight. Corporations sometimes make the easy short -term decision to maximize profit instead of the more strategic decision of how do we set ourselves up for long -term success.

1:10:49It really does not seem like it would be that hard to achieve some of the company goals that a company like Apple wanted to achieve, but also ensure that you maintained manufacturing dominance and kept it at home, or at least ensure that you kept that as a strategic option. Like, the fact that we're now in a position where we don't have the ability to build our own smartphones, period, and where, you know, depending on what happens with Taiwan, we may not have the ability to even build modern computers. It's spooky. The last question, you're one of the success stories that people hold up in And a hard tech where you've built a product that is a successful business line.

1:11:35You've found a good way to start. That wasn't too capital -consumptive. You were able to get a real product out there in the field and refine it from there. And now you've brought up the people of several countries. What advice would you have for hard tech founders starting out today? It certainly seems to me like the whole American dynamism, what do you call it, paradigm that we kind of see. I think it's making things easier. When I moved to the Bay Area in 2013 with the goal of building Zipline, the most exciting company in the entire, in all of Silicon Valley, probably in the entire US, was a company doing file sharing.

1:12:12It was Dropbox. They had the best engineers, the best growth story, the most ambitious vision, and it was I think at that time a $5 billion company, which was more money than I could possibly imagine. And that was the pinnacle of what you could achieve in terms of building a startup in Silicon Valley. And so it's interesting to think that in just 12 years, the scope and scale of human ambition has radically increased. I mean, whether it's Tesla or SpaceX or Stripe or OpenAI or Brian Armstrong was on here, he's working on New Limit. They're trying to make humans immortal. And a lot of these ideas are like working and scaling.

1:12:55They're people building nuclear fusion power plants. I think that's like kind of probably underappreciated. Just how much change has happened in just 12 years. And I think that, you know, I guess to answer the question, my biggest advice is that I think especially when it comes to hard tech, like the whole challenge is just designing something like incredibly simple and getting it into the real world quickly and learning by doing. It's very easy to be in a bunker or an R &D lab building cool technology really hard to like force yourself into the real world and then learn by doing. I think that that like zipline, you know, we never thought we were the smartest team.

1:13:31We never thought we were certainly not the best funded team, but we always had this like deep conviction that we were the most practical team. And we had this mission that really inspired us, you know, exactly what we needed to do. It was like deliver those 21 hospitals. And we forced ourselves to launch something that to even our own eyes, We were quite embarrassed. It's like, oh my god. Is that going to, I mean, people are going to put up with that delivery experience? And it turned out that, like, even that very simple version of the product scaled very fast. And so I think that it sounds obvious when you say it.

1:14:01And yet, it's extremely rare, especially in hard -tied companies. Keller, thanks for coming by. Yeah, thanks John.