Zipline Raises $600M+ at $7.6B Valuation | CEO Keller Rinaudo Cliffton

0:00It is a crazy time to be building this technology. You know, Zipline has now crossed 140 million commercial autonomous miles, which makes it the largest commercial autonomous system on Earth, ground or air. We just closed over$625 million, which is going to accelerate our expansion, both in the United States and outside the US. We are now saving about 17 ,000 lives a year. We're going to go from serving about 5 ,000 hospitals and health facilities to over 20 ,000 hospitals and health facilities in the next 18 months. Of all of the deliveries that we've done in the United States, more than half of them were done in the last 30 days.

0:30Now that I understand the history of Tesla, the Roadster, the idea was, oh, yeah, we're going to use an off-the-shelf battery pack, and we're going to put it in a Lotus Elise chassis, and we're going to have a good car. It turned out Roadster wasn't a very good product. It was enough, though, to demonstrate what could be done. We started building these prototypes using all these off-the-shelf parts. It was expensive and unreliable. Once you automate these kinds of services and make them less expensive and safe, people will be consuming them multiple times a day. That 10x increase in the size of the market is the difference between companies that are being built that are worth hundreds of billions of dollars versus companies that are built that are worth trillions of dollars.

1:11Keller, welcome to Sorcery. Thanks. Thanks for having me in your really cold, huge, enormous drone factory. Yeah, we probably should have given you a warning to maybe bring a jacket, but there is like, there's no central heating in here. so. It's okay, I actually did get a warning because we were supposed to go to the cattle ranch too, so it's like I think that it was like 60 degrees or 40 degrees. It was 40. Yeah, the factory is warmer than the test site, so this is, this is, yeah, this is Zipline light. I'm a little upset though because I really want to see the cows. I mean, Zipline is probably one of the few startups in the Bay Area that would give you access to cows, so I think you're missing out.

1:46I heard you've advance the strength of these drones so much that you can now pick up a cow? I'm not sure who you heard that from. So you just deliver to them? We do, yeah. I mean, so when we were originally building the company, we wanted engineering, manufacturing, and flight tests to all be in the same place. And so we ended up renting a huge amount of land, which was like an active cattle ranch. and we ended up building our original offices there. We did all the initial design for these aircraft. We actually manufactured the aircraft in a little double-wide trailer that we installed there, and then we would fly.

2:29And so it was the case. It was always basically competing with cows. They would often break into our test site and eat stuff. Cows will eat anything. They'll eat string. They'll eat metal. It's kind of crazy. So yeah, we're no strangers to competing against cows. And they like the deliveries. They don't, they honestly, they don't really notice. It's pretty funny because yeah, exactly. A lot of the original delivery sites we would do, we'd just be delivering next to these cows. They would just be eating and yeah, we didn't startle them. Wonderful. Okay. So we have some really big news today that we need to address.

3:05Can you share this latest funding announcement? Yeah. Yeah, I mean, you know, Zipline just closed over$625 million, which is going to accelerate our expansion both in the United States and outside the US. The big thing that happened last year is that the international part of Zipline's business, particularly the life-saving work that we do in Africa, grew incredibly fast. I mean, we are now saving about 17 ,000 lives a year. We're going to go from serving about 5 ,000 hospitals and health facilities to over 20 ,000 hospitals and health facilities in the next 18 months. We had almost no operations in the U.S.

3:42at the beginning of last year and we have now expanded to the point where ZipLine actually does more deliveries in the U.S. than it does in the rest of the world combined. So that grew really fast and we're expecting that business to grow by more than 10x this year again. And so really the fundraising is designed to position ZipLine so that we are ready from a capex, from a manufacturing, from an operations perspective to add a lot more metros over the coming four quarters. And what was the process like? You have some pretty notable investors. We've interviewed Alfred. He had some good words about Zipline.

4:16I think it's interesting. You know, Zipline spent a decade working on something that everybody thought was stupid and nobody was interested. You know, it really took a highly contrarian investor like Alfred or like A16Z or like Google Ventures, some of the early funds that bet on Zipline, to believe in us at all because we were never part of like the hype cycle. There was never, you know, in very much in the same way that like Tesla or SpaceX, it was never like there was a investing, you know, hype cycle where the hypothesis was like cars or rockets. That wasn't a thing while those companies are being built.

4:48Zipline has also never been like in the hype cycle or in the limelight in that way. We've just had this really clear conviction that automated logistics is inevitable and that someone's going to build one of the biggest companies on earth focusing on making logistics universally accessible to everyone. And we spent 10 years really building in parts of the world that people weren't even looking at. People weren't even really clear if Zipline was a real business. It sort of looked more like a nonprofit since we were focused on healthcare logistics. And it's really only in the last year that I think suddenly a lot of these big public investors and crossover investors are looking at this industry realizing like, whoa, wait a minute, Like this is an inevitable transformation that we're going to go from using humans driving cars that weigh 4 ,000 pounds and burn gas to a world where we're going to be using vehicles that weigh 50 pounds and are electric and autonomous.

5:42And yeah, I think that transformation is going to result in a lot of disruption, but it's also going to be incredibly good for people not just in the U.S., but outside the U.S. who maybe don't have access to reliable logistics today. So who are the investors you raised from? The largest investors in this round were Fidelity Capital Group, Bailey Gifford, Valor, and Tiger. It's a good group. Yeah, I mean, we're definitely, you know, we're honored. I mean, we still have a lot more work to do. And the reality is actually, you know, Zipline normally doesn't even really talk about our financing runs because interestingly, like, it's kind of one of the, it's like the least interesting thing that Zipline does.

6:25Maybe for some companies, that's like the most exciting thing in any given year. But for Zipline, you know, we're focused on saving lives. We're launching new metros. We're building all this infrastructure. We're adding all these new use cases. Yeah, so generally from a fundraising perspective, It's more like, you know, business as usual. The$625 million round, I would assume you've raised a boatload of money in the history of Zipline. So if this is at any point in the life cycle, I hope that it is a level of achievement and, you know, a milestone that you can look on and be like, oh, my gosh, like now we're at a critical point.

7:05We're almost at two million deliveries. Like you just entered the U.S. Now you're experiencing rapid growth. It's pretty amazing. I mean, it is a crazy time to be building this technology. Zipline has now crossed 140 million commercial autonomous miles, which makes it the largest commercial autonomous system on Earth, ground or air. We are now serving 5 ,000 hospitals and health facilities globally. The company saves about 17 ,000 lives a year, and the majority of those are moms and kids. You know, when you look at the statistics, we've been able to reduce maternal mortality by 51 % or more in a lot of the countries that we operate by making a lot of products just instantly available at every single hospital and health facility.

7:50So, yeah, I think that the other really crazy thing to realize is that of all of the deliveries that we've done in the United States, more than half of them were done in the last 30 days. Wow. So it's like, you know, the system is we're fully in the vertical part of the curve. You know, we set a goal in terms of number of flights per day at the end of last year. We ended up beating that goal by more than 60%. I mean, the system is scaling faster than we ourselves expected. And I think that that is a sign that after 10 years of kind of working in obscurity, it's suddenly sort of the world just shifts.

8:27And it's like, oh, wait, this is now inevitable. and everybody thinks this is the future and everybody wants to be at the forefront of it. I can't help but go back to Alfred's point. So he was talking about all the different kinds of investments he's made and things that he's learned and the principles. And he noted Zipline for the capital P pivot versus the lowercase p pivot. So could you just talk about that shift, like that dramatic shift and how you had to reorient and now you're building out vertical integration and doing all this crazy stuff? Yeah, I mean, I think, you know, when we started building this company, I mean, I was 23 years old.

9:05We were totally clueless. We had no idea what we were doing. Alfred ended up being our first, like, institutional investor, investing in the company. And I kind of went to him at that time. I mean, we were building all kinds of different solutions, but none of them were really working. We knew that we were really interested in robotics. And the more I learned, the more I kind of concluded that we should really go focus on logistics. The problem was, you know, we wanted to build an autonomous logistics system that could deliver 10 times as fast, half the cost. It was very obvious we should build something that could fly and that could deliver from any, you know, store or restaurant or hospital or primary care facility directly to homes.

9:42That was illegal. And so I think that was probably the nature of my disagreement with Alfred. I was like, Alfred, I have a good idea. Let's go do something that's illegal. And he's like, I don't know if it's a good idea to go do something that's illegal. Cali, like, can we, you know, pick a business model that is legal? And of course, the whole crazy conversation around that was like, okay, well then we're going to go to somewhere where it is legal. And I think that this naivete that I probably had when I was 24 to be like, oh, well, if it's illegal in the US, we can just go to some developing country where we can work more closely with the government and we can rewrite the rules and we'll demonstrate it there first.

10:16I think that probably sounded insane to Zipline's investors at the time. but luckily you know alford was willing to sort of like sit down and just observe the process play out and in retrospect that was the right way to do it because zipline by virtue of going and partnering with a couple other governments that were like highly highly motivated to solve problems with us we were able to set new regulatory precedents and then after you know achieving over 100 million commercial autonomous miles with zero safety incidents we were able to bring that data to the FAA and get unprecedented regulatory approvals in the U.S.

10:51that I just don't think we would have been able to get if we operated in an ivory tower in the U.S. like waiting for a regulator to just give us permission. Because you have such a unique perspective on global health care, what is the current state? Like what should people know that they might not know about it? And how How does that reflect on society in America today? I think the biggest observation we've made over the last 10 years is that people are really confused about what is actually going to solve these problems 100%. And it's not actually that dissimilar from the fact, you know, you can look at like, how do we solve homelessness in California?

11:29And I think there's a lot of people who are like, it must need more money. We should put more money into it. But then you look at the data and you're like, oh, wow, you know, San Francisco is spending $100 ,000 per year going into NGOs that are supposed to be addressing homelessness. Sorry,$100 ,000 per homeless person per year. Wow. $100 ,000. Yeah, I think the budget is almost a billion dollars. It's almost a billion dollars for around 10 ,000 total homeless people. And every year we are, yeah, it's exactly, it's like a starting salary. We're spending$100 ,000 per person per year and we aren't achieving the results we want because homelessness isn't going down.

12:06Very good analog to global public health care. You know, the U.S. has been spending, USAID was spending$41 billion a year. And we've been spending that kind of money since 1970 when USAID was created. And yet, you know, people who are paying attention would probably ask the question, okay, we do all this aid in all these countries, why do they all vote against us in the U.N.? That's a totally legitimate question to ask. It's like, yeah, why are they? It doesn't seem like it's really working in terms of building alliances or kind of like more closely connecting these countries. The reason is that we aren't listening to these countries.

12:39These countries have been telling us for a decade that they want trade, not aid. They're sick of low-quality services provided by NGOs for free. Those services engender dependence, and frankly, they prevent economic growth in these countries. What they want instead is technology, entrepreneurship, and high-paying jobs. If they want to be leapfrogging their economies into the future, they want to be growing. and in general achieving sustainable independence. And that's exactly what the US could offer. That is exactly the opposite of what we've been doing from a global public healthcare perspective over the last 20 years.

13:17We've been building exquisite systems built through cost plus contracting with NGOs and government contractors. And yeah, the results speak for themselves. Like we've made some progress on some metrics, but we're decades away from actually achieving the goals that we want to achieve. Zipline has always had this attitude that the only way that we're really going to solve global problems, like whether it's childhood malnutrition or maternal mortality or access to commodity medicine, the only way you're really going to do that at scale is through capitalism, is through companies that are actually focused on improving the efficiency of those systems over time.

14:02And that means you've got to get away from cost-plus contracting and you've got to go toward competitive markets that are actually going to provide these services. Why is there not a FedEx or a UPS that can handle a lot of this logistics? Why do we rely on these bespoke healthcare logistics supply chains that are built by NGOs. It doesn't make sense. And so I think that there's a huge transformation happening, which is that countries are starting to be in control of their own budgets. That's a big change that the State Department has made over the last year. It's putting the countries in control.

14:35It's saying, what do you want to spend money on? And those countries increasingly are going to want to buy advanced technology. They want to buy AI. They want to buy robotics. And that's going to be an amazing outcome for the U.S. Because making sure that as all these developing economies are building and accelerating, If they're doing that in partnership with U.S. AI and robotics technology, that's going to make the world safer. It's going to make those countries richer. And it's going to secure U.S. technology and manufacturing leadership for the decade to come. 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.

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15:56Start today at brex.com slash sorcery. That's B-R-E-X dot com slash sorcery. Sounds like your expansion into America is going pretty well. I've heard that you're doing so well that you're going viral on TikTok all the time. You had to cut your marketing budget. You have no marketing budget now. Yeah, it's true that we had to basically shut off all marketing. That happened in June or July. Basically, it's a tricky thing trying to build this capacity and keep up with customer demand. And we thought we had an idea of how often customers would order because we can look at the normal delivery platforms and we have a sense for how often customers order via those platforms.

16:37The crazy thing that we are observing is that if you make delivery 10 times as fast, less expensive, way better product experience because it's safer, quieter, et cetera, et cetera. And on top of all of that, you remove the guilt of like someone driving a 4 ,000 pound gas combustion vehicle that's creating tons of pollution for your neighborhood. If you make all of those improvements, people consume the service a lot more. And so we have, I visited a grandma in Dallas a couple of weeks ago who's ordered from Zipline 350 times. Oh my gosh. Yeah. This woman, I think is like 79, 80 years old. She's living in the future.

17:13I mean, she was emphasizing it's like every single day, it's like, oh, what does she want to make for dinner tonight? Okay, like here are the eight or 10 ingredients she needs. Boom, she can have them delivered in five minutes. Or she has a grandson coming over and he wants certain things. She could just go to her app, click, get everything she needs for the next two days. She was kind of emphasizing that she still grocery shops once every one or two weeks, but then all of the fill-ins can just be done via this automated system that like saves her hours and hours of time that she just gets to spend with her loved ones instead of worrying about getting into a car and like fighting for a parking spot and driving in you know walking into a retail store and trying to buy everything so uh yeah and that's not just one person like on average we are seeing customers ordering um with way higher frequency than the normal delivery apps And I think that this is sort of like, it's an insane observation, just that like we need to prepare for actually 10 times the size of the total instant delivery market today.

18:18We actually think that the total size of that market is 10 times what we're observing today. It's just that the market today is highly inconvenient. It's incredibly expensive. It makes people feel guilty. In many cases, it's unsafe. When you solve those problems, people are going to make this part of their daily lives. For people that don't know, like what are the typical products that they can order? And do you have any partnerships with people? Yeah, Zipline works with amazing global brands like Walmart, Chipotle, Sweetgreen, Mendocino Farms, Wendy's, Buffalo Wild Wings, many, many others. We all also this year are launching our health care business in the U.S.

18:55We're partnered with folks like Cleveland Clinic and Ohio Health and Michigan Medicine and many others. all of this is really just enabling teleportation from their stores restaurants or health facilities directly to homes so we actually got a you know a text the other day from someone who was like oh you know it was late at night my two-year-old was feeling terrible i had a terrible fever i was freaking out trying to figure out like am i going to really get this kid into the car and like buckle them in and drive to the local pharmacy and wait in line tried to and then she thought oh wait never mind, Zipline, and they deliver pharmacy now from Walmart.

19:30She got on, ordered exactly what she needed. It was delivered less than 10 minutes later. Gave it to the kid. Kid felt better. Went to sleep. She got sleep that night. She wrote us this long email the next morning being like, you have no idea how game-changing it is to have access to this kind of a service that just feels like a different thing. And these kinds of services, today with most of our partners, we're operating something like 16, 17 hours a day. Outside the US, we operate 24-7. We expect to soon be operating 24-7 in the US. these kinds of systems are going to feel more like the internet than like UPS.

20:02We're very used to like logistics. Oh yeah, it works like in these hours and it's kind of like hard to schedule. And it's more like you always inconvenience yourself to be home to receive the thing rather than it coming when you want. These new kinds of services, it's like fully on demand. It works around your schedule. You tell us where you want it delivered. You tell us the 60 second window. We will always deliver it in that 60 second window and it'll operate 24 seven. them. I have two thoughts on this. One, I'm a huge fan of FedEx because I love their Print and Go services. You should start Print and Go.

20:34Remind me what Print and Go is. It's just you send a file to the printer and because I like to print out paper. Got it. And so I go to FedEx all the time and I just print out, I get printout paper. Yeah. So it'd be so cool if Zipline handed me my print outs. I think it's, you know, there are a lot of new kinds of technology where people probably We haven't even, for example, 3D printing, a really cool example where, and in fact, I think a lot of like UPS, I think UPS and FedEx both now operate these like 3D printing hubs where they can then overnight things like mechanical engineers or startups that may need parts, but they don't necessarily want to buy the whole 3D printer.

21:10That's another area where instant logistics is going to, that's like the print and go of the future. You're just like, oh, you know what? I want this object or I want this part. And I think the very clear implication here is it's like, cool, so you just like instantly send the file. 10 minutes later, it's delivered to your doorstep. What's the craziest thing someone's ordered? I mean, it's funny. We now deliver almost 100 ,000 SKUs for a Walmart super center of, I think, the 110 ,000 to 120 ,000 total SKUs in that store. So we deliver almost everything. People order Legos. People order rotisserie chickens.

21:42People order birthday cakes. We deliver everything. So, yeah, I think it's all, a lot of times people are ordering like eggs, you know, like a dozen eggs. You almost think like, oh, they're trying to test us to see if we can deliver that. It's everything. That's what blows my mind, including prescriptions. You know, we deliver prescriptions for them. And in fact, like the vast majority of people signing up and receiving those prescriptions had never placed a prescription with that pharmacy before. So that's like another really cool thing that we're observing, which is that like all these partners who are working with Zipline, these kinds of systems create demand, especially with the next generation.

22:21Because increasingly, the next generation probably doesn't, they may not own cars, they don't drive nearly as much, they definitely don't want to like inconvenience themselves and drive to a parking lot and go into a store. They're like living on the apps. And so to a certain degree, autonomous logistics is, it's just an inevitable extension of that. It's that like, yeah, you should just be able to pull out your phone, whatever you need, put it in your basket, click order, Face ID, Apple Pay. It's going to be delivered in 10 minutes. High demand for GLP-1s. Yeah, I'm sure we do deliver GLP-1s.

22:52So we're in the height of this new hardware renaissance. You know quite a thing or two about it. What are your biggest learnings of vertically integrating and manufacturing yourself versus China? know? You know, Zipline, when we got started, we thought that we were going to buy all these different components from different, you know, off-the-shelf providers. And we kind of thought, oh yeah, we can just be like the final integrator. Interestingly, now that I understand like the history of Tesla, exactly how Tesla started, you know, the Roadster, like the idea was, oh yeah, we're going to use an off-the-shelf battery pack and we're going to put it in a Lotus Elise chassis and we're going to have a good car.

23:31Turned out Roadster wasn't a very good product, right? They It was enough, though, to demonstrate what could be done. And Zipline, very similar. We started building these prototypes using all these off-the-shelf parts, and it was expensive and unreliable. We started to understand, okay, the only way we can design flight computers, electric motors, motor controllers, GPS modules, all of these things had to be rebuilt with this specific application in mind. One of the hard things about drone delivery is that people think, oh, the drone industry, it's like already a big industry. There are, you know, tens of millions of like two to three pound quadcopters being manufactured in China, which is something that flies 20 to 30 minutes and hovers and then takes pictures and then lands.

24:23And there are predator drones being built by military contractors and those cost 50 to 100 million dollars a piece there is absolutely nothing in the middle when you kind of think more automotive grade like what if you needed something that was that would last you know tens of thousands hundreds of thousands of cycles being able to operate in all different weather conditions and be hardened to those conditions but also had to be super cost effective because it's competing against cars so there's this kind of like middle ground of like automotive quality and cost that is completely unexplored and unbuilt in this market of drones.

24:58And that's really, Zipline had to go and one by one rip out component after component after component. I mean, as we walk the factory floor, you'll get to see so many of these sub-assemblies, so many of these core systems. We were at first outsourcing, we have now insourced. We now design it from scratch ourselves, and we even, in many cases, manufacture that component here instead of somewhere else so yeah i think this level of vertical integration um it was inevitable both because the overall industry zipline was operating in was just so non-existent but it's also kind of inevitable because of the pace of development like we are you know right now we are launching new generations of aircraft every nine to 12 months we're gonna you're you'll get to see in the line behind us is building an aircraft that we just started building three weeks ago.