Pathfounders Live: The Coming Drone Revolution

0:00Welcome to Path Founders Live podcast recorded here in Berlin in the heat. And I don't know why I'm wearing a leather jacket, but I'm afraid old habits die.

0:14We are in an interesting period right now. We are kind of in a strange world where we have Russia doing all of its horrible work in Ukraine. and we also have the new climate crisis going on. We're all very aware of the weather and everyone here, I'm sure, likes electricity. But when we talk about things like drones, the conversation often jumps straight to warfare, surveillance or consumer gadgets. But one of the most important uses may be less dramatic and far more economically significant, inspecting the critical infrastructure that keeps modern life running. Now, that might not sound super interesting to begin with, but what's going to happen is you're going to start to unrealise what is about to happen in this world.

1:09Energy grids, gas pipelines, pylons, remote assets still often rely on helicopters and manual inspection, which is expensive, slow, and can be dangerous. But Beagle, a start-up based in Hamburg, is trying to change that. So I'm joined now by Beagle co-founder Oliver Lichtenstein, everyone.

1:32Oliver, right. You actually came up with this idea because you were also on the drone advisory board at the German Ministry of Transport, weren't you? So were you sitting at your desk one day and going, hold on a minute, I've got an idea? Kind of. That wasn't really a desk. I was in Shanghai at the New York University there and attending a talk about controlling drones over the mobile network. So that was in 2016, I believe. So also a long time before we actually found it. Later joined all the boring things that have anything to do with drones. So Federal Association of Unmanned Systems, the Drone advisory board in the Ministry of Transport, the drone expert group in the European Commission, essentially anything that makes the whole topic of drones sound really boring.

2:29But all those boards that actually make it possible to fly, which then again gets more exciting. So we originally had the idea when you go back to, let's say, the 60s or 70s, nobody could have imagined that the entirety of the world's knowledge could be accessible at a click, at a press of a button, like you can now with Google, now with LLMs, where anything that anybody has ever recorded, put in a book, all the human knowledge is now readily accessible for just about anyone. but the physical world so anything that's out there still isn't and with the regulatory framework of this becoming possible now we saw that the next revolution like Google or Wikipedia were for information that had already been collected would now be drones for information that wasn't collected yet so that you could actually access the physical world in the same way Right, I want to unpack that a little bit more later but let's just go through what's what's beagle is actually doing because um in the old world you've got helicopters you've got small aircraft even flying over these electricity power lines flying over gas pipelines um and that's obviously very expensive and you know cumbersome and and quite an old-fashioned model and i suppose in this era you might go yeah sure let's fly some drones over this but um it's a lot more complicated than that isn't it because your drones are very unusual in terms of their range, right?

4:11Do you want to expand on that? Sure. So I think anyone will understand that flying a big, sometimes dual turbine helicopter just to look out the window or take some photos is not really a 2020s thing anymore. But when you look at a typical drone that you can buy at an electronics store, you have a range of physically like 10 kilometers but you're limited to line of sight so in practice that's like one and a half kilometers and then you're looking at 595 ,000 kilometers of gas pipelines in Germany and you see that that doesn't really work out and the helicopter actually works much better. So we had to develop drones that can actually cover longer distances and we can now fly up to 200 kilometers in flight.

5:03We do five to eight flights per day. So there you actually get in the range of actual helicopters. And they also have an unusual way of taking off, don't they? Yeah. So one of the advantages of helicopters is that they can land in a lot of places. When you look at fixed-wing drones, so the typical military drones also that you see or Predator or whatever, they require a runway. So that obviously doesn't work out. if you want to fly five or eight times a day all over Germany in that case. So our drones can take off and land vertically like a helicopter and then shift over in a forward flight like an airplane.

5:44Right, but you were actually, they're housed in a kind of a special housing, right? Which means they don't have to have somebody going and switching them on and taking them off. They go down into their kind of like, you know, James Bond layer. Exactly. So when we started operating, we quickly found out that, yeah, drone flying is really cheap, but our first customer was in Rheinland-Pfalz, so like 650 kilometers away from our office, and sending somebody in a van to drive a drone down 650 kilometers, then do like two flights and drive back up to Hamburg wasn't that cheap or operationally viable.

6:26So we developed a charging station that can be operated remotely so that we don't actually need personnel on site. Our drones sit in these charging stations. They're sheltered from whoever. They have AC. We don't in our office. So in many ways, they have it better than us in this heat. And yeah, we can operate completely remotely without personnel on site. And that really brings the cost down. And I was reading that you can also cover about 80 % of the EU. Is that correct? Yes. So right now we can cover any place with our operational permits that is less than 300 inhabitants per square kilometer.

7:02So that's about 80 % of the EU landmass. And starting summer next year, we can cover just about 98%. So the other 20 % is like a city or something? Densely populated, yes. Right. But in other words, you can cover everything. What sort of competition have you got, though? Because I think there are other companies trying to do similar things, right? Right now when we are actually bidding on contracts, most of the competition are actually helicopter operators. There are now slowly other drone operators coming up into the market. Some of them using unmanned airships like KELU or Highlight. Some of them using drones.

7:43For example, Fairfleet in Germany is using a decentralized network of small drone operators. So essentially like an Uber concept where everybody brings their own drone. But in this long-range, regular or ad hoc flight segment, there isn't really much happening yet. And how do customers pay for it? Do they pay by what? By distance or what? Yeah, so it's a monthly charge for our clients that is a product of a price per kilometer, depending on the product. They order times the kilometers of infrastructure that they have. Usually it's every four weeks that we fly, so then it's just that. Sometimes it's every two weeks, so then it's obviously two flights.

8:31But if you have 1 ,000 kilometers and your product is 10 euros, then that's your 10 ,000 kilometer per month charge. What sort of size of market is this? Give us a figure for what kind of market this is. In Germany, realistically attainable, we're at like 100 million ARR. And in Europe, that's already a good unicorn case, I would say. So what, like a billion or more in terms of revenue? Yeah, so a billion, I think, is easily or easily attainable. No problem at all. Yes, you can attain a billion. It also depends on whether you look at the market where it is right now with let's inspect and try to find people who are accidentally digging a hole into our lines versus where the market we believe will be in five years when you're actually looking at hybrid attacks, sabotage, so much more frequent flights.

9:28And with that, obviously, the market size also grows. Right. So this is actually slightly where the rubber starts to hit the road a bit more, isn't it? because what we're saying here is that in the old-fashioned way, you might see a helicopter fly past, and it was looking at some great power lines. But in the future, there'll be drones whizzing past, or at least certainly in the countryside, whizzing up and down these grid lines, either electricity or any kind of infrastructure pipeline that's long and big. And they'll be doing it several times a day. they'll be doing it and they'll be doing it not just to sort of check to make sure that the wires are still hanging around but also to check for saboteurs Yes, so in many ways drones are the physical arm of the AI revolution where yes you can collect tremendous amounts of data we can collect a terabyte of data every hour with our drones but until now you couldn't really do much with that data because you had humans looking over it or you had very basic machine learning models only detecting very specific things so yeah you can detect an excavator you can detect construction material etc but now when you combine the ability to collect that much data on a daily or multiple times per day basis and then also the ability to analyze that for just about anything so for random anomalies whatever it is that doesn't sit right or for example prompting the data so we have a an in-house vlm so visual model that we can prompt so if you as a grid operator have a suspicious person near your lines and they are driving a blue pickup truck you can just prompt the data and say show me any blue pickup truck near our lines from the last five months and then you'll have all the georeferenced data from the last five months that you can go after so you can go back in time and now these these two revolutions of now you can actually fly drones at scale collect the data at scale but now we can also process the data at scale come together and really create this market opportunity right yeah because thanks for reminding us because it's obviously it's impossible for humans to process all of that data and And I was reading that the accuracy of your cameras is something like 75 % more accurate than satellite images.

12:0075 times more. Sorry? 75 times more resolution than a satellite. 75 times higher resolution than a satellite image. Than the best satellites, yeah. Than the best ones, right. So very, very high resolution imagery. Tons of it. Impossible for a human to look through the whole thing. and it's also, presumably it can also fly up and down these lines and tell you there was a blue pickup truck without you knowing that there was. So that's going to be very interesting because it means that... But is everyone fully aware of how many drones there are going to be in the sky in the near future? What's your view?

12:45Yeah, public perception of 100 ,000 drones over Germany is also a thing to consider. But in the drone community, yes, everybody is very well aware. In the general public, seeing last September where we had a bunch of drone sightings, like 30 or 40 drones over Germany in places where they shouldn't be, that was already a huge problem. So public perception is also something that we're working on together with UAVDAH, so the European Drone Association, because obviously as soon as there's a general drone panic, that doesn't help the cause. Can you use drones to find other drones? I mean, I think you can, right?

13:27Yes. Because one of the big problems is that drones don't appear on radar, do they? Generally, anything appears on radar, but the way traditionally radar systems are built or programmed is to filter out anything that is bird-sized. So, yes, you can find drones on radar, but then you'll also find birds, which means, yes, you can detect it. So how can you tell the difference? AI, in the end. So right now, traditionally you cannot, so you will just see there's a bird or drone-sized object. But with AI and also when you have sensor fusion, so when you combine radar with other sensors, like acoustic sensors or visual ones, then you can actually tell the difference.

14:17And is that possible right now, or is that being developed? That is possible right now. It's not at large scale yet. Should we not worry too much? Because often these drones are very high, aren't they? And you can't see them, you can't hear them. How much do you think, you talked about public perception, how much do you think people will be able to perceive drones in the same way? It depends what these drones are doing. So, for example, we have two different classes of drone. So we have these big multicopters that fly really low and detect gas leaks. So you have a 3-meter, a bit more than 3-meter wingspan drone that is fairly loud, has a gas sensor, so flies up to 40 meters over your house.

15:06You will very well be able to... You're going to see that one. For the drones that we use for long range, they fly more than twice as high. They're very quiet because they're fixed-wing drones. so those you don't hear or see a lot and even if you do, people typically don't fret too much because they look like a sailplane or any other manned aircraft. Is the infrastructure set up for this yet? Because there's no air traffic control for drones, is there? And other providers want to move into things like food delivery, for instance, over populous areas. or delivery of important drugs for hospitals, for instance.

15:51That's happening in London. There's now a drone that flies between point to point between two hospitals in London, and it has permission because it's doing some blood transfer or something like that. But it's one drone company is able to do that, I think. That's a topic that I could spend more than this entire evening talking about. To put it as briefly as possible, There is no transparency in the lower airspace yet There are multiple undertakings by EASA but also by UAV-DAH to implement For example ADSL as a transponder standard for all drones for all aircraft So that the same way you can look at flight radar and see any commercial aircraft flying Then you could be doing the same thing for drones and the small Cessnas of this world but that's not happening yet.

16:44What EASA is trying to implement also very quickly, so within the next one or two years, is what they call U-Space Level 1, so that would be anything that flies below 400 feet, so that's 120 meters, has to be equipped with transponders, has to be conspicuous, that's what you call it in aviation, so that on one hand if you see a drone you can check whether it's legal or whether it's unregistered. Also very good for the police to know which ones to shoot down and which ones not. But also for us drone operators and for general aviation, so small aircraft, to be aware of anything that's flying around them.

17:23So, yeah, a lot of people are working hard to solve that problem, but right now it's not solved yet. Also, this whole thing does start to think about, it makes you think about infrastructure and it makes you think about surveillance, But also, if you have, say, Chinese components in your drone, what happens to China's ability to see what's going on via civilian drones that have Chinese-made components inside them, and Chinese software, for instance? I spoke at the European Parliament about this recently, and it's a big issue. At least last year, I think 95 % of all the drones used by first responders in the European Union were made by a single Chinese manufacturer.

18:10So not just chips or components, but actually the whole thing. And first of all, yeah, all the data you can expect to end up in China because that's legally required for Chinese companies to hand out any data to the Chinese government if the government asks for it. so for critical infrastructure and first responders you can bet on that happening but also it's just a lot of market concentration for first responders because right now if today there's a kill switch and all the police and fire department drones in all of Europe are grounded it's not too big of a deal because they're not really relying on it yet.

18:50They have all the old processes but when you look 5 or 10 years into the future, then a lot of the processes of all these first responders will be very, very reliant on drones. And when that happens then, that's going to become a problem. So for that, I'm also part of the expert group for the European Trusted Drone Label. So the European Commission is working on a label that certifies that your drone doesn't leak data that fulfills certain IT standards and there will hopefully also be an ultimate ownership criterion in there and that will then become a requirement for public tenders and solve at least partially the problem of data leaking to China.

19:41Do you think Europe will ever be able to make its own drones and be completely independent in that sense? I mean that's what we're doing Sure, we have some Chinese components. You can swap to Taiwan for basically anything. You can argue whether it's China or not. But anything that's a smart component, yes, we can do in Europe. The problem is that public procurement right now doesn't value it. So if there is a Chinese drone that costs 300 euros, and then there is, for example, Parrot as a French company building the same drone for 900 euros, then right now the public procurement doesn't favor the European solution for the additional security and the resilience of it So in that case all the business goes to China once we implement either a trusted own label or generally think about procurement as a strategic measure rather than just going for the lowest price yes, we can absolutely produce drones in Europe and also at a high mass.

20:49What do you think Europe's infrastructure looks like eventually when you have all of this surveillance, both at, say, police drones, first responder drones, surveillance drones over infrastructure? Is the sky going to be sort of black with drones and just absolutely filled? and the birds are going to be in trouble because they're going to be having to kind of dodge drones. I think it's going to take a very long time until we have more drones than birds. Even if we go to the 100 ,000 drones over Germany that I see at a lot of conferences, that's still a lot less than birds. And a lot of them are going to be flying very high or in rural areas.

21:36So yes, I think if you're looking at densely populated areas that then get delivery, like in Dublin, for example, with Mana, yes, you'll see drones frequently. But all of the areas where that has actually been happening showed that public perception of drones very rapidly gets better once people see that there's actually an advantage to having those. for us when we're talking to people living near a pipeline, for example, when it's about, well, are we allowed to fly a drone there? Right now we don't need to ask them anymore, but before when we asked, they were like, oh, I'm not sure if I want a drone over my property.

22:24They're like, all right, they can also keep flying the helicopter. Like, do you want that? They're like, oh, no, okay, yeah, it's a better one from us. You'd rather have the drone than the helicopter. Exactly, exactly. So once you talk to people and once people experience it, typically it's not that big of a deal. You said something earlier, which I found interesting, was that our physical world is becoming Google-able in the same way as we could Google information on the Internet. You said that, for instance, in 10 minutes you'd be able to hit a drone and go, right, what's happening over there?

23:00And 10 minutes later, you know. and that becomes available not just to public infrastructure but to private private companies as well I see where you're going yes generally any data that you either have a right to get or that's from public spaces and under GDPR etc yes you can also buy as a private company there are limits to that and we have great legal advice for that part because it's very essential but generally yes even private companies and you're seeing this with satellite imagery which is essentially the same thing so especially in the states you see a lot of companies buying satellite data about how many cars are in the parking lot of our competitor for example so yes there's also a private component to it I think the the first part of this market revolution will be in sure critical infrastructure and knowing exactly what's happening because you have a huge asset and you cannot just monitor it with a security service but also When you're looking at insurance for example, right you you want to know there was a big storm flood whatever Immediately get a full picture if you're looking at the Deutsche Bahn And you want to have it more punctual then getting Real-time information about all of the infrastructure is a huge game changer When you're looking at agriculture, where should I spray, where do I have heat damage to my plants, etc.

24:28So there are a lot of cases that we cannot even imagine now, the same way that we couldn't have imagined in the 60s or 70s what the Internet would bring us, and what kind of economy will evolve once there is access to this level of info. And as you said, there's billions to be unlocked from this information and this data. You're just scratching the surface by looking at power lines, for instance, but there's even more to come from that. Yes, we're not a power line inspection company. We're a data company. Right. That's a good answer. And last question. Do you think there's going to be a market for a new kind of umbrella that I can carry to make sure that I'm not photographed by a drone in the future?

25:21So first of all, there's an app that will identify any drone around you and that you can carry in your pocket. You can probably set an alert so that whenever a drone comes near, it will alert you. But maybe you should have the opposite of an umbrella, something that you can turn around so a drone can drop you a cold drink when it's hot outside, right? Or a pizza when you're hungry. So obviously privacy is a thing that, especially here in Germany, we talk a lot about. But nobody ever thought about, well, now everybody has a camera on their phone or what if that private airplane that's flying above has a huge camera attached to it.

26:05So I think we'll just have to deal with that part in the same way that we have with all technology before this Fair comment fair comment. Well certainly I'm getting into the umbrella market myself But that's been fascinating. Thank you for giving us a Overview of where this where this is going ladies and gentlemen Beagle co-founder Oliver Liechtenstein Thank you so much. Would anyone like to ask any questions or make any points? Go ahead We're going to get a microphone for you. Thank you. So that everyone can listen to you later.

26:37Oliver Lichtenstein:First point has to do with security indeed. Probably I missed the point about what happens when a drone has a defect, falls down, does it parachute? Or like, I mean, it's going to, because obviously it could fall on a person. And the second point is about charging. Do you think there will be like charging stations everywhere where they will just like calm all the drones to be charged like a little house? Or how is this infrastructure going to function? Yeah. So for the first question, the security standards for drones when you're flying them above people or above inhabited areas are actually much higher than for manned aircraft.

27:16So if you get an ultralight aircraft, you can fly just about anywhere. But with a drone, you need to go through a very rigorous certification process. So I'll try not to make it too boring. but the way the European drone regulation is set up is that you have whatever operation you want to do, you describe it, or you go through a raster, and it will put you in a ground risk category and an air risk category. So how much risk does your operation pose to people on the ground or property on the ground and to other airspace users? And that then gives you a sale level, so an overall risk level, and depending on which level you land in, You have to fulfill safety objectives.

27:59So your drone has to have certain redundancies or parachute You as an operator have to essentially become an airline like like a Lufthansa would be audited and structured in a way that Human error cannot really cause a lot of damage So you have to fulfill a ton of criteria and I cannot begin to tell you how many hundreds of pages of documentation and trainings and certified personnel we have in order to be able to operate at the level we do right now. And any time you increase a sale level, so a risk level, that's 10x. Are you aware of any major drone accidents in the recent past? There has been a little fire in a field in Germany by, I think, JetZ drone last year, where the operator was located in Croatia, the drone was flying in Germany, and they hit a power line, I believe, when doing an emergency landing.

28:59Other than that, there have been zero drone deaths in Europe historically, all time. I didn't make friends at the commission when I told them that if we were to regulate road traffic in the way we regulate drones, as in we have to make it so safe that nobody ever dies or gets hurt, then we would not have any road traffic. but so far we've been overly conservative and also regulation has been but we are very happy to be safe in this way and for the second question, yes we're actually already building a charting station network other operators have started building drone-in-the-box solutions those are mostly for stationary drones serving a certain area the way we're building it and we've also had our first station-to-station flight last week, actually, commercially with a customer.

29:54That means we don't have a drone tied to a certain station where it only flies around this, but we can actually jump from station-to-station to bring a drone to a customer and do flights more than 200 kilometers in range. Any other questions? Oh, good. Any more? Okay. Oh, just one more. Thanks.

30:17Oliver Lichtenstein:Very, very interesting talk, Nico here. Do you also communicate using your drones with Chinese telecommunication chips or is it somehow kind of you have an objective to build European hardware because you touched this saying how much of the market is currently being built in China? Maybe you can share more. So right now we're using hardware provided to us by Deutsche Telekom because we are following stricter rules than you would have for typical cell phone communications because we're not on the ground. So normal SIM cards and normal modems you're oftentimes not allowed to use there. I still believe that Telekom is selling and everyone is using essentially Chinese chipsets or Taiwanese ones.

31:16we have an encrypted connection that I think even when you get access to the chips themselves or if you could monitor the connection, you still wouldn't be able to do much about it without really FBI-level decryption technology. But, yeah, we're using the open public network and communicating in an encrypted way. Thank you. Any more questions? If not, then I have one. Okay. There was one more? All right, let me go to you first. Ellie.

31:55Thank you so much. What are you doing about the public perception? Like, you as a startup company, are you developing any kind of content around that, how to change the public perception around drones? Oh, okay, we had the same one. Great. I was literally going to ask a very similar question. Just one example of the... So I'm obviously pro-Beagle. We invested in Beagle at PT1. But one of the saddest stories I ever heard from Syria was that children were now scared of sunny days because these are the days when the drone bombs might drop. And, of course, any technology can be used for good or evil.

32:31But as Elisheva was saying from early bird BC right here... Obviously, that's a very different scenario to civilian use. But when civilians see drones, they don't know. They don't know, are we doing some critical infrastructure monitoring or maintenance, or is it a bomb? And so what are you doing for public perception, for PR narrative? What's the overall plan for the drone society or organizations to help people get used to this era? Yeah, so we, with our limited reach, obviously, are actively communicating all the good things that we're doing. so when we are detecting methane leaks for example, when we are finding issues with pipelines, with power lines, when we are protecting storks because they are building their nests on high voltage power lines for example, yes we are communicating that, so within the reach that we have we are showing that there is good to using drones, but on a much bigger scale I'm vice chairman of UAV DACH, so Europe's largest drone association and with them we are working, first of all we have more reach for public perception and for showing good but we're also working with the European Commission in setting up essentially a PR campaign like you have for vaccines, probably in a smaller way but in order to show all the positive developments that are happening with drones because yes, especially since last September, there's a lot of negative headlines about drones, so we also need a lot of positive ones.