Skydio Raises $110M Series F at $4.4B Valuation | CEO Adam Bry

0:00There's no other company in the world that has the combination of true cutting edge sci-fi technology in a real business that's really working in life-saving critical missions. And so it's that combination of cutting edge AI and robotics meets hard industries with high stakes. That's like the crucible out of which Skydio is forged. How has AI transformed the business? From a product perspective, the course that we're charting is towards flying agentic AI that can have the intelligence and domain expertise. I think a default expectation in five years is if there's an emergency, you call 911, a drone shows up in a few seconds.

0:34And that's going to be everywhere in the U.S., hopefully everywhere in the world. What is your hottest take? I think we're at this magical moment where you can have...

0:54Adam, welcome to Sorcery. Great to be here. Although really, welcome to Skydio Factory. Thank you. I mean, we did a whole walking tour of your other facilities. And where are we now? So we're in what I believe is the biggest drone factory in the U.S. that's actually at scale production right now. So we're in Hayward, California, and this is where we manufacture all of our drone products and docks. Behind us, you can see a row of docks that are getting built. So demand for this product has really been insane. And we're doing everything we can to meet the demand. and scale these things. And then just on the other side of the parking lot, we're building the drones.

1:30The scale has reached a point where you need a little extra funding. So can you talk about your recent funding announcement? Yeah. So we're very excited to be announcing our Series F. This was$110 million fundraise,$4.4 billion post-money valuation led by insider investors. And I really think the most significant fact in this whole thing is how small it is. We're in the very rare and harder in position amongst robotics and AI companies of actually having rapidly declining capital needs. And it's a testament, I think, to the strength of the core business, the demand for these products, having a really elite team that's capable of operating extremely efficiently, that we actually don't need that money to keep scaling and even make more and more aggressive bets in building new products like R10, Indoor Grown, F10, Fixed Wing Grown, and all the surrounding software.

2:20The number one constraint we're facing right now is building more groans faster. The demand for these products has really just exploded over the last couple of years. We, a couple of weeks ago, announced a$50 million,$3 ,000-year-old order from the U.S. Army. That size of contract is actually not that much of an outlier for us these days. So it's a good problem to have, but we will be tripling production over the course of this year. We'll be accelerating the path to market for the new programs that we're working on. And then we're also using it to really make sure that we have category-defining end-to-end solutions for all of the industries that we serve.

2:56One of the frameworks that we have is our products and software should adapt themselves to the industry, not the other way around. And so for energy utilities, we want to be able to work with them in a way where their asset locations, their inspection frequencies, all the things that they care about just naturally interact with our system in an automated way, such that this just becomes a seamless way for them to capture the data that they care about. What is the scale of the business today and where do all the customers sit? I know you have thousands of customers. Yeah. So we're right around 4 ,000 customers.

3:26These are enterprise government agencies that are using the products. So this is every branch of the Department of War, number of allies around the world, 1 ,200 public safety agencies across the country, almost every state department of transportation, a number of companies that are doing physical site security for corporate campuses. So the customer base is the critical industries that our civilization depends on. But we're really still just scratching the surface. You know, our penetration in law enforcement is still, I think, less than 1 % against the opportunity to respond to every 911 call in the country.

4:01So there's still a ton of work to be done, but it's already, you know, thousands of drones a month, hundreds of millions of dollars a year in revenue. We're at a very exciting moment. So we started the company in 2014. this was really at the dawn of people thinking about drones, mostly in a consumer context. The big bet that we made was drones can be useful for a lot of people in a lot of different ways. And making them smart enough to fly themselves is just going to be a foundational layer. Like having an expert pilot there flying the drone is great if you have one, but it's just a fundamental limiter.

4:32And it's been a journey to get to where we are now. I think the drone industry has been through its own waves of kind of like hype and excitement and troughs of depillusionment. And there was kind of a first wave of companies when we started. where a bunch of capital was invested. And I think we're really the only surviving company that's building drone hardware from that era. But now we're at this magical moment where the products and technology have matured to the point where they're really working. The industries that we serve have evolved to the point where they see and feel acute need to deploy this kind of tech.

5:01We find ourselves in a position of really being the only company in the world, certainly the only company outside of China that's capable of delivering these things reliably at scale. So it's just a super exciting moment. And the thing that we've just been about since the very beginning is the substance of building technology that actually can make these visions come to life. What's the most difficult part? The constant theme is achieving high quality and high reliability at increasing levels of scale. It's very easy to make a demo, like getting a drone to take off and fly around manually is like 0.1 % of the way there.

5:37What's really hard is getting it to like have all the capability that you need to do an autonomous mission and then making it that work 90 % of the time, 99 % of the time, 99.9 % of the time, like chasing those nines of reliability. And I think you've seen this play out in other spaces as well, like self-driving cars. Google could demo a self-driving Waymo like 15 years ago, But it's taken them 15 years to make that reliable to the point where you can actually put a person in it and trust it to just do the job. And it's a very similar story with drones. And the compounding factor for us is that it's high stakes.

6:13People are depending on these in life or death situations. And so it's that combination of cutting edge AI and robotics meets hard industries with high stakes. That's like the crucible out of which Skydio is forged. sorcery is brought to you by brex the financial stack trusted by more than 30 000 companies including one in three venture-backed startups in the u.s nearly 40 percent of startups fail because they run out of cash brex is literally built to help founders avoid that unlike traditional banks that let your money sit idle shipping away at it with fees brex's designs help you spend smarter and move faster their all-in-one solution combines checking treasury and fdic protection into one powerful account.

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7:38Turing builds customizable AI systems designed to solve your mission-critical challenges, no matter your industry. From expert guidance to tailored projects, Turing helps top companies realize AI that's more capable, more adaptable, and more effective. With Turing, discover how AI can accelerate your business growth. To learn more, visit Turing.com slash sorcery. Spelt S-O-U-R-C-E-R-Y. That's Turing.com slash sorcery. I think there are certainly some misconceptions around drones and applications. So could you just share more about what you focus on at Skydio and how it differentiates between this boom in defense?

8:16So drones are like, it's a very general purpose technology. I mean, it's like computers, right? Computers show up all over the place for all different kinds of things. We are super focused on flying sensor platforms. And our biggest, fastest growing businesses are in the civilian sector. They're not in defense. We work with U.S. military. We're super proud of that work. Our products are doing amazing things there. And that business is great and growing. But the thing that I think is much less seen and appreciated is this kind of critical infrastructure You know, an energy utility just doing persistent inspection with drones and proactively finding issues where they can spot a defect in one of their like conductors and fix it before it blows up and causes an outage or in the worst case, causes a fire.

9:03The alternative is having a person climb that pole or flying a manned helicopter down there, which is very dangerous and expensive. And so it's awesome work to get to be a part of. And part of the fun for me is just getting in there and learning about these industries. And the people that do this work on a daily basis are special. The one that I think is going to get more and more visible is law enforcement and public safety. Having drones respond to 911 calls flying out of docks. That's happening. Skydia drones are in most major cities responding to 911 calls today at sort of small scale, like maybe part of the city, some fraction of the incidents that they're dealing with.

9:36I think a default expectation in five years is if there's an emergency, you call 911, a drone shows up in a few seconds. And that's going to be everywhere in the U.S., hopefully everywhere in the world. And that's going to change the way policing works. It's going to get better outcomes. You're going to have fewer officer involved shootings, faster response times. And I think you can also do that while protecting privacy and transparency. Like these things are essentially flying body cameras. So they document exactly what's happening. They document what the suspect is doing. They document what the officers are doing.

10:04And our police agencies that we work with are leaning into that as kind of another tool for transparency for the communities that they serve. Just recently in Santa Fe, I think this was like last week, there was an anonymous call for somebody that was in a crisis state in a park. That's all the information they had. They didn't have a precise location. This was a like giant multiple acre, probably multiple square mile park. They launched the drone. They got there in a few minutes. And from the air, they can just very quickly survey the whole thing. They found a tent. They guided the officers into the tent.

10:37And there was a person in there who had overdosed and they performed CPR and saved this guy's life. And the officer on the ground deserves all the credit. But that's an instance where the drone was fundamental in changing an outcome. There's also situations. There was one in San Francisco where there was a caller reported somebody was on a rooftop with a rifle. The drone got there first and saw it was a broomstick, not a rifle. Oh, my gosh. Which, you know, the chances of like a tragic accident go from non-trivial to zero. So this stuff is just happening all the time now. Have you seen it reduce crime?

11:09I mean, the stats are crazy. Like, San Francisco, I think, has seen a 42 % reduction in auto theft since they launched their drone program. I think the strongest product endorsement we've ever gotten was from a podcast from a guy that kind of came from a criminal background, basically saying that, like, crime in San Francisco is over because you're just going to get caught. Like, they don't stand a chance against the tech. Like the drone shows up, it follows you, it'll find you, and it's a massive deterrent. The other end of the spectrum is responding to calls and then never having to send an officer on the ground.

11:44So sort of double-ended. Like a lot of the impact is like the highest stakes, life and death scenarios. But the other end is like caller reported that somebody's parked where they shouldn't be. And it could be an hour of police officer's time to drive out there to see what's happening. You send the drone, you can see it in three minutes. And in many cases, you don't need to send an officer. And that lets the cops spend time on the really high impact stuff. I think across our customer base, when people are sending drones, they're getting to the calls roughly like 70, 80 percent of the time they get there first.

12:13So you're saving seconds where you're getting critical information. So we did the math on this. I think 16 million Americans now live within two miles of one of our docking stations for first response. About 5 percent of the country, which is great. But it's still small compared to what it will be in a few years. You have a partnership with Armada, and they're all about computing on the edge. So how do you work with Armada to save lives in these areas that are a little bit more remote? A lot of our customers operate in very austere environments. We work with departments of transportation that are dealing with construction sites that are kind of the definition of the middle of nowhere.

12:49And so one of the things that's been really cool, you know, seeing with our customers, we're doing this in partnership with Armada, is the creation of these basically completely off-grid setups where you can have a solar panel, a battery, a Starlink, and then edge compute sitting next to the dock. And it's crazy. You get all those things there. As long as you have an internet connection from anywhere in the world, you can get in there and fly a drone and see what's happening. So this is being used for storm response in Alaska with Alaska Department of Transportation. It's certainly relevant for the Department of War.

13:24in austere environments where connectivity is challenged. One of our best partnerships is in public safety with Axon. So Axon started life making casers, then they made body cameras, and now they have a really incredible array of public safety technology that solves all kinds of really important problems for law enforcement agencies. And we've got an awesome partnership with them where we sort of think of ourselves as building the ultimate drone spoke that plugs into to the hub that agencies are already using. And Axon is the hub that we see out there most often. So, you know, the drone can fly to the location of a body camera.

14:00So an officer can just push a button on their body camera. If they're in trouble, they'll summon a drone to get there. And then after it lands, it'll upload the footage to Axon's evidence.com product, which stores all the body camera footage. So the drone footage sits right alongside the body camera footage. There's complete chain of custody control. So it can be used in court. and it just makes their lives easier. Could you share how the product has expanded over time and their different use cases? So for the first 10 years of the company, we were basically solely focused. I'm trying to build a really good medium-sized quadcopter, which is the most versatile kind of workhorse drone.

14:35And then for the last six, seven years, focused on doing that in the context of a dock so it can fly remotely and autonomously. So we've been very narrow for most of the life of the company, But we're now at a point where that product is really working at scale, X10 and dock for X10. And the core technology that sits behind it has gotten very mature. All the hardware, the cameras, the compute, the sensors, all the low-level firmware to run these things, then the core autonomy system that has at this point been exposed and built on hundreds of thousands, millions of flights, and all the little learnings that go into that.

15:09So now we're in a position to use that core technology to apply it to different form factors and use cases. And that's where the indoor drone comes into place because a lot of dangerous work happens indoors. It's where the fixed wing drone that can cover much longer ranges comes into play. And it's a very exciting, fun time to basically like take these mature technology building blocks and be able to pretty quickly assemble them into a fundamentally new capability. And then we're also in the great position that our customers are asking us for these things. Like, you know, we have customers banging down the door asking us to build an indoor drone, asking us to build something that can fly faster and cover more range.

15:42And so we're very excited to be delivering. We call it like the family of flying robots, like these family of systems that all speak the same language. You can control them all through the same interfaces. They all nicely interoperate, but they all are optimized for specific tasks. Quick note before we keep going. I've been investing on Public for a while now, and it's a really solid platform that combines stocks, bonds, options and crypto with incredible AI tools that let you do things like build a completely custom investable index from a prompt. Right now, Public will give you an uncapped 1 % match when you transfer your portfolio.

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17:01So your teams ship product, not plumbing. Mistral, Dropbox, and Drada already trust Merge in production. Start building at Merge.dev. Your biggest competitor is China. So could you talk about how that's evolved with DJI and what is that like, honestly? Yeah. So we have the great joy, and we've had it for the last 12 years, of being the U.S. underdog against the best of Chinese industry, your least state-sponsored Chinese industry. It's great. You know, I think competition is generally great. It pushes us to be better. In the case of DJI, we have some interesting history. So we actually met them in 2014.

17:36So we were a seed stage company. We had just basically gotten started. And they found out about us and basically pretty quickly became interested in acquiring the company. and through that process, we met their leadership, we visited China, Shenzhen, ultimately decided not to do it. The main reason we decided not to do it was because we felt like they didn't really understand the importance of autonomy and how much that was going to change, who could use drones and how they could use them. We felt like it was really important, and we believed in our ability to execute against it. So our strategy has not been to try to copy what the Chinese drone companies are doing.

18:16I mean, DJI is incredibly impressive from a technology standpoint, especially on the hardware. But we've really focused on building these end-to-end solution solutions that use autonomy and flying robots to solve problems that customers couldn't get any other way. I mean, I think that's what's enabled us to survive and now really succeed in scale. And we don't necessarily have the best hardware spec in every single dimension, although we continue to get better and close gaps where we have them. But increasingly, we hear from our customers that we just have a better solution. Like if you want to respond to 911 calls and fight crime in your city, we can deliver an end-to-end thing that enables you to do that in a way that you can't get if you just buy a piece of hardware, even if the hardware is great coming from China.

19:00Now, the other thing that's happened is as drones have become more important for all these critical industries, it's become clear that depending on China is a pretty bad idea. and there's been a lot of policy and regulations at federal level and some state and local stuff that has restricted Chinese drones in some of these industries. Like obviously the U.S. military is not buying Chinese drones, but that has now trickled down. You know, I think part of the need and part of the opportunity and frankly a big part of the responsibility that we feel is to be the U.S. company that meets the need and exists in all these industries and reduces and ideally over the long term breaks our dependence on China.

19:34Have you had any supply chain risks? Originally, like if you roll back 12 years, basically all drones and all drone components were made in China. We made a very contrarian bet in 2014 when we started on U.S. manufacturing. Honestly, we did it at the time for practical reasons. Like these are aerospace devices. Manufacturing them ourselves in-house close to home was the way that we found we could build the best products the fastest. But it's become a critical strategic thing for us. Over the years, we did a lot of work to reduce our dependence on China as it became clear that these, you know, how high the national security stakes were.

20:05We were almost completely out, but not completely. A year and a half ago, we had the great honor of being sanctioned by the Chinese government. And it was a pretty aggressive action. They announced the sanctions and then they showed up at the suppliers that we still had in China, shut them down, stop them from doing business with us, really tried to kill us. So that was a fun adventure for our supply chain team. They've done incredible work and we've been able to maintain supply. And I think the good news piece of this is that we now have by far the most secure drone supply chain in the world, independent from China, that's operating at increasing levels of scale.

20:40And it's not easy. It's hard. You know, we're oftentimes dealing and working with companies that are less mature than their Chinese counterpart suppliers might be. But we're very happy to work with them. We're very happy to invest our own time and money in helping them be great and sometimes doing some of the stuff ourselves. I think it's a really important part of the mission at this point. And we're like all in on hardcore U.S. manufacturing. I think that my honest assessment is I think we're not yet at like in the West, we're leading in terms of drone manufacturing. I don't think we're as good at China as drone manufacturing yet, but I don't think there's any law of physics that says we can't get there.

21:17It's just a continual process of like turning the crank, incremental improvement, more and more investments in the infrastructure and automation and software that animate these things. And I think it's the right time to be doing it. America is stepping on the gas with reindustrialization and bringing manufacturing back to the country. How do you think this plays out? Like, what is a realistic timeline on this and the adoption? I mean, you know, you've set up facilities like TerraFab is coming now. And so how does this play out? I mean, it's it's not as fast as people might like. You know, you can't snap your fingers and just have a complete hardware ecosystem overnight or even in a year.

21:53But it's it's not an impossibility. It really just is a matter of like getting the flywheel spinning. And it's an ecosystem thing similar to like the software ecosystem that exists in Silicon Valley, where you've got great talent. You've got companies that kind of collaborate and work together. And you want the same thing from a hardware standpoint. I think actually the East Bay, where we are near the Bay Area, has great potential for this. Like there's some alternate universe where this looks like what Shenzhen looks like. And I don't think there's anything fundamentally that should stop us from getting there.

22:23And, you know, we're all in here. We see more and more companies doing pieces of manufacturing and hardware operations here. Drones can't do it all by themselves, but we're hoping to be one of like the driving forces that makes it happen. How have you found the talent? Well, the talent level is great. Every skill set you need in terms of like physical assembly, managing a line, manufacturing, engineering, all the different pieces. There's not as much of it as we might like, but the talent level is incredibly high. Tesla has generated some great alumni. And we have a lot of fantastic folks that have come from force in the fire of production hell on Model 3.

23:01and then we just focus on people that we think have enormous potential, whether or not they have sort of like the proven exact right experience. Like the thing that we really care about is the potential and the ceiling for what somebody's capable of. And that applies everywhere, whether it's manufacturing, software engineering, sales, marketing, everything. What do you look for in candidates? Well, it depends on the role. The fundamental things that I'm looking for when I talk to folks is that sort of spark of capability that not necessarily comes from experience, but does somebody have like the combination of the fire and passion to do hard things and then the horsepower to get it done?