Inside Zipline's Autonomous System: 140M Miles, Zero Incidents

17:05Eric Watson:You don't fly anywhere at 49 degrees. We do. You do? We wouldn't test at 49 if we're not worried about it. Where are you flying at 49? I think Phoenix during the summer.

17:13Keller Rinaudo Cliffton:Phoenix during the summer, yeah. And then where's minus 25? It's in northern parts of the United States. Actually, can I ask you guys how you think about that? I could imagine a different version of the world where you guys are like, hey, look, if it's too hot, we're just not going to fly. Totally. And if it's too cold, we're just not going to fly. And if it's raining too hard, we're just not going to fly. Yeah. And like there are tradeoffs to be made, you know, and obviously your customers would prefer that you fly at all times. But how do you think about those tradeoffs?

17:40Eric Watson:The easiest way to think about the tradeoff was because of the use cases that Zipline started with. That's right. That makes sense. Which is basically like saving lives. Yeah. You can count on us with your life and the lives of your loved ones as long as the sun is shining. Yeah. It's not super compelling, you know. You develop the capability because you had to for the initial use case. ZipLine would fly. And in fact, I mean, for the first couple years, we took a lot of risk. I mean, we would basically fly. We were like, look, if it's a lifesaving delivery happening and there's someone whose life is on the line, we're going to go for it.

18:14Eric Watson:And we had a civilization authority that was generally a great partner with us on that front. We took a lot of risk. We learned a lot. And almost always it worked out in favor of like we saved the person's life. And the worst thing that could happen was we had a Paraland, which is the kind of like zip line safety mechanism of last resort, is we can pull a parachute on the aircraft and bring it gently to the ground. But we learned a lot. It happened very often in the first few years. Yeah. Very, very rare today. I mean, to put it into perspective, our original goal was to be 10 times safer than cars.

18:45Eric Watson:Actually, Alfred was the one pushing in our last board meeting. He's like, that's a BS goal. We need to be two times safer than Waymo. And so Eric literally went and reset the goal. And now, like, the Zipline's target for the end of this year is to be two times safer than Waymo. He's like, cars, that's like archaic technology. Waymo, I think, is about 10x, right? 10x cars. So our goal is to be 2x safer than Waymo. Yeah. It's not the right comparison. You're flying. You have to be safe in the air, not safe on the ground. I think it depends. We're substituting something that's typically going in cars, so it's, like, debatable.

19:16Eric Watson:But, you know, suffice it to say, I mean, we now have 140 million commercial autonomous miles and zero safety incidents. If you were to drive 140 million miles, you would have 600 accidents, 100 injuries, and somewhere between two and six fatalities, depending on what country you're talking about. And this is why we really pride ourselves on picking the right use cases. It's life-saving, and it really makes a lot of sense to go do it. And also, by God, we're going to be as safe as humanly possible from an engineering and testing and validation perspective. We really take that. that's a deep part of the DNA of the company.

19:49Eric Watson:One last point, what is the outcome of all of that testing that Eric is talking about? The outcome of all that testing is we have individual aircraft in the commercial fleet that have flown more than a million commercial autonomous miles. And so I think people, that's just from an intuition perspective, a lot of people look at this and they're like, wow, it kind of seems maybe exquisite or fragile, probably very sensitive to like extreme conditions or weather. I mean, you know, raise your hand if you have a car that has a million miles on it.

20:18Keller Rinaudo Cliffton:It's pretty impressive.

20:19Eric Watson:These systems are already like way more rugged and durable and robust than people necessarily think.

20:25Keller Rinaudo Cliffton:Can I ask you about the precision? Like one of the things that blew my mind when I saw some of the, I haven't had a chance to experience in person, you know, a delivery. Gotta come, Pat. I know, I gotta go experience it. But just in watching the videos, the drone's a hundred feet up and it drops the package. It lowers the package to a, I don't know, a circle that's got a 18 inch radius or whatever it is, right? Like, how do you guys achieve such precision even when it's windy, even when it's raining? Yeah. How do you pull that off? First of all, the aircraft's about 100 meters up. 100 meters up.

20:57Keller Rinaudo Cliffton:Yeah. Yeah. There you go. It makes it harder. And, you know, the multiple layers, there's the delivery pod that comes down, right? So the delivery pod comes down. That's really the delivery and pickup, like precision part of it, right? So the the drone is hovering above it. You know, it knows where the target is. Maybe let's say it's it's this coffee table, for example. There wasn't a roof above us. This is this coffee table. And so the aircraft is going to hover above, but it actually needs to consider what the wind conditions are. Yeah. Right. So if the wind's blowing in one direction, then the aircraft's going to kind of be shifted upwind.

21:30Keller Rinaudo Cliffton:Right. It's going to shift in the direction to help with that with those wind conditions. And it's going to lower that delivery pod down. as Keller mentioned, we do take advantage of GNSS. So real-time connection GNSS, that gives you centimeter level confidence of where you are. But the thing is, we don't know the GPS coordinates of this table, right? It's not like someone came and surveyed the middle of the table and sent us the coordinates, right? No one wants to do that. So what we have to do is we kind of, that we use that to kind of get close, right? We're like, okay, here's the backyard.

22:02Keller Rinaudo Cliffton:Here's where we kind of know things that things roughly are. And then the job of this delivery pod is to be lowered down, you know, fight the wind conditions, fight these different things, and be able to use its onboard perception autonomy systems to identify where's the best place for me to leave the package, right? Like if there's a little table and there's a whole bunch of drinks, probably I shouldn't, you know, try and drop down on top of these drinks and make a mess. Maybe I should go to the ground right next to the table, right? And so it has these autonomous, you know, onboard real-time compute to be able to identify what am I looking at?

22:33Keller Rinaudo Cliffton:What am I seeing? And how can I find the best place to leave the package? And then come down, touch the ground, opens its doors, gets retracted back up. And there you go. The package is left on the ground and the delivery pod comes back up, stows and the aircraft flies back home.

22:46Eric Watson:A couple of big advantages. I mean, just to be specific. So that pod, it not only has its own NVIDIA GPU running its own AI autonomy stack. So it's own survey and like know exactly where it's delivering even at night. But it's also controlling its own position in the X and Y axis. So it can not just know, but then move. And the advantage of that architecture, which you can probably guess, but there are two huge advantages of doing it in this way. One is it's quiet. People have this perception of, I mean, first of all, most drones are really freaking annoying. Like the sound is just, it's basically the most grating annoying sound that could possibly subject a human to.

23:25Eric Watson:And so, you know, like we, ZipLine has a big team of aerodynamics, aeroacoustics, and controls experts. Every part of the vehicle is designed with sound in mind for the vehicle to be as quiet as humanly possible. We want it to be no louder than the sound of like gentle leaves moving in trees. And when the pod is delivering, we're keeping the main aircraft a hundred meters in the air. So it's like the thing that is creating noise is really far away. That's also a huge benefit from a safety perspective because the only thing that is coming anywhere close to you, your family, your pets, your kids, is something that is super cute and safe.

24:03Eric Watson:And it's really like a styrofoam, kind of like a cute anthropomorphic styrofoam... Tub? Tub. Yeah. How long was the technology tested outside the United States before you came to the United States? and what's the path to getting into the U.S. now that you're flying in Dallas and delivering packages there? We spent eight years, I think, right? About eight years. I mean, depending how you measure it, maybe like six to eight years. And then it was, I mean, we launched in Rwanda in 2016, our commercial service. And we really launched this kind of next generation home delivery service, the thing that's now like in sort of insane hyperscaling mode.

24:41Eric Watson:That only launched January of last year. So depending on how you measured it, you could even say it was like almost nine years. And then when you got to the US, was it just smooth sailing? What was the sort of regulatory path that you had to go through?

24:53Keller Rinaudo Cliffton:Yeah, I mean, we really started, I would say, you know, like meaningfully engaging with US, you know, FAA and other regulators in the US around 2020 or so. So it doesn't mean we didn't show up in 2025 and everything was smooth sailing. It was really a partnership of working through, as you mentioned in 2016, all of this stuff was, there was no pathways, kind of illegal as we joked earlier. And so, yeah, so it really was a partnership to identify, hey, we have shared goals, right? Our shared goals are safe and efficient airspace integration. And so while we have experience doing that successfully in different countries, we can bring some of that experience in.

25:34Keller Rinaudo Cliffton:We have opinions on how this should work. The regulators had opinions on maybe how they thought it should work. And so it was a partnership over the course of a couple of years to identify what those paths looked like and how we could kind of converge and align before we were able to execute on that.

25:46Eric Watson:And you had to show your ability to manage all these aircrafts that are flying. So you wrote systems, you built systems.

25:52Keller Rinaudo Cliffton:Yeah, I think it's a huge part of, you know, Keller's mentioning that the drone is only a part of the, you know, of the overall system, the overall complexity. What we're really building is an infrastructure layer, right? We're building an infrastructure layer that can enable instant access to products and you don't do that with one aircraft flying from one place to another place you do that with a network of charging locations hundreds of aircraft spread across an area that with the autonomous systems in the in the cloud that can understand where am i having demand where where do i have supply where do i have aircraft what's coming up is about to be the dinner rush what's the weather at these different locations how can i kind of self-balance these things, as well as how do I efficiently pull in people when needed, right?

26:37Keller Rinaudo Cliffton:So these aircraft are autonomous. They're operating. They don't require human intervention through these flights. But there are times in which it makes sense to alert a person that, hey, maybe there's an issue here, or the weather is a little bit, the wind is climbing in this area, right? So there are humans, trained aviation professionals that are monitoring our network, I would call it. They're fleet commanders. Fleet commanders. That's right.

26:59Eric Watson:We used to call them pilots, because when we originally launched in the US, the first regulatory permission we got was to fly one-to-one. So that meant that we had one pilot sitting in an office. Remote pilot in command. Remote pilot in command, who was sitting in an office basically just observing an aircraft do its thing. And again, it's exceedingly rare that a human should ever have to issue any kind of a command to a vehicle, but we would have one human watching one aircraft. Not great for unit economics. mechanics. But as Zipline proved out these systems, we went from one to one, to one to three, one to six, one to 20, one to 40.

27:34Eric Watson:We're now operating one to 100 and have plans to go well beyond that. One pilot manager, well, one fleet commander now. One fleet commander now. So yeah, we technically changed the name because I think pilot's confusing. So we're inspired by Ender's game. We now call this group of, this team of people at Zipline, we call them fleet commanders. And it actually says that in the FAA documentation. We say, fleet commanders shall do the following. And yeah, they are overseeing a group of 100 aircraft. And to me, this is like the exciting, cool thing about technology, because people think about like, well, you know, what about, you know, how humans used to solve this problem?

28:07Eric Watson:It's like, it's not, you know, the, it's cool how robots enable humans to like up level, right? Like the human is still getting to like strategically manage the system. It's just the human is now maintaining and commanding robots rather than like doing the actual work herself.

28:22Keller Rinaudo Cliffton:Now that you guys are kind of in hyper scale mode, you've solved so many problems in the last 10 or 15 years. What new problems are you running into? Yeah. I mean, what I would say like thematically, I mentioned earlier that, you know, getting to two and a half million deliveries, the, you know, the, oh, it only happens every couple of years. It's like kind of a one in a million chances. Yeah. These things start to matter, right? We're, we're on the path towards a million deliveries every day. And if you have a one in a million situation, it's going to happen every single day. Yeah.

28:49Eric Watson:Can I just, just, just to really make that clear. So it took Zipline from 2014, when we started building the original version of the technology to 2024 to do our first million deliveries. Was it the end of 2024? Maybe it was even early 2025, actually that we did. We had done a million deliveries in the cumulative history of the company. So it was almost a decade, maybe say about a decade to do a million deliveries. Zipline is now in the very near future going to be doing a million deliveries a day. And so that is definitely humbling. It's like, wow, okay, everything about the way we've been solving the problem is going to break.

29:29Eric Watson:The bar goes way, way up. And I mean, one specific example, maintenance becomes really hard. Like, you know, the scale of the problems, the number of vehicles that you're managing in the fleet, the cost of a screw-up or if a certain process is operating in very inefficient ways becomes extremely high. And so there's just high degree of criticality for all these systems. One interesting point, though, there are a lot of ways that these systems operate that I think people don't yet appreciate the advantages of autonomy. One good example is that the system wants to operate 24-7, and it does operate 24-7.

30:04Eric Watson:So I think people are used to logistics as generally being like, well, here are the hours when humans are driving trucks. That's not how these systems operate. They want to operate 24-7. They can be fully utilized. They can be as happily delivering at 2 a.m. and 3 a.m., delivering something so it's ready for you on your doorstep or in your backyard when you wake up at 6 a.m. before you go to work, as they are delivering at 2 p.m. They can deliver in five minutes. They are available 100 % of the time. We are soon going to be flying vehicles straight out of our factory in South San Francisco into commercial operation.

30:35Eric Watson:If you've seen Tesla Model 3s and Model Ys delivering themselves to customers, Zipline aircraft will fly straight from the factory into operation. It's a huge advantage from a maintenance perspective that as soon as a vehicle needs to go through some kind of proactive maintenance, it will fly itself to the maintenance depot. So the human can then quickly do whatever process necessary, and then the vehicle flies itself back into operations. We can also dynamically assign capacity in a metro based on what the system is seeing. There's no set home for a vehicle. It can go to wherever it's needed.

31:06Keller Rinaudo Cliffton:Yeah, I think to your question about, you know, getting to a million a day and what are the new challenges, I think, you know, Keller hit on some of them to the previous thought about the drone is only 15 % of the problem. Really, it's the way that we currently manufacture aircraft, maintain aircraft, support all these things, you know, troubleshoot problems. Like, the way that we do it today isn't going to work when we're at a million deliveries a day. And so there's like, okay, we need better tools, we need better software systems, we need better processes, we need better, you know, all these things.

31:34Keller Rinaudo Cliffton:So like, you know, Elon talks about designing the machine that builds the machine. And so, you know, this is really one of the things that I see Zipline tackling over the coming couple of years is we are going to be investing much more in the machines that build and run the machines.

31:52Eric Watson:I mean, from a scale perspective, I think the largest airline in the U.S. is doing about 5000 flights a day. Yeah. Zipline is going to surpass that in the next month. and when we get to a million deliveries a day, Zipline will be doing like somewhere between, I don't know, 40 and 80 times as many flights in the US in commercial airspace as all other airlines combined. And so it's obviously a different class, it's a completely different class of aircraft. It's a totally different kind of problem. But the reality is when you look at air traffic control, they don't make a distinction. And so there's also, when you talk about all the auxiliary systems that have to be built, there is a huge transformation that's going to have to happen in air traffic control as we start to realize that people are really excited about electrification of vehicles.

32:37Eric Watson:People are excited about autonomous vehicles. Reality is, as those transformations occur, there are going to be 10 times as many autonomous vehicles in the air as there are using these teeny, archaic, constrained things that we call roads. And so the sky is a big place. It makes sense to utilize it. You can give Earth back to humans. You can make neighborhoods quieter, safer, less pollution, less traffic. You can make huge improvements to Earth if we can more effectively utilize the sky. This is going to require huge transformation of how we think about air traffic control in the U.S. And it means that we need to design it with AI and autonomy in mind rather than the way it was designed, which was in 1950 using pencils and paper and note cards and like a human looking out trying to watch the airplane.

33:23Eric Watson:Are you helping the FAA design that?

33:26Keller Rinaudo Cliffton:It's really, yeah, I mean, what needs to happen is like collaborative innovation is one way to put it, right? It's like that one company solving this problem for themselves is not going to solve the problem for the industry. And so we are heavily involved in, I mean, first of all, a key part of the solution we believe is aircraft should be talking to each other. They should be telling each other where they are. They should be automatically detecting that, hey, there's a conflict on the horizon here. And so therefore we're going to, you know, you go up, I go down, right? These kinds of things. And our aircraft do that.

33:58Keller Rinaudo Cliffton:And we're working with other kind of, you know, other new entrants into the airspace with autonomous aircraft and autonomous drones to do the same thing, to make sure that our systems can talk to their systems and we can all collaborate to make sure it's efficient and safe usage of the airspace. Yeah. We're also, to your point, Alfred, working with regulators, working with standards bodies to take some of these best practice and innovations that we and others have developed and try and make them, you know, broadly accepted and utilized so that we can all collaborate and we can all, you know, safely and efficiently use the airspace.

34:28Keller Rinaudo Cliffton:Because you guys have developed a really sophisticated detective -

34:32Eric Watson:Yeah, because when we were launching in all these other countries, we had to build something from scratch. And so we built the thing from scratch. We provided all this software to the Civil Aviation Authority so that they could use it to monitor this entirely new class of autonomous vehicles in the airspace. Interestingly, there are multiple public companies in the United States that build air traffic control software that are worth more than$10 billion, right? So it's like, I often look at that. I mean, I think there are many companies inside ZipLine that are likely, it's like, oh, that's like a public company inside Zipline.

35:00Eric Watson:It's just having to get built from scratch. We're building it because every part of the ecosystem we sort of had to build from scratch to enable the overall technology to flourish. You know, air traffic control is an interesting, like the more you learn, the more disturbing it is. I mean, we're starting to see the impact. You know, you read about like, you know, a plane crashing into a helicopter in DC a few months ago. You read about two planes colliding on, I think, on a taxiway in an airport. I don't remember where that was a month ago. You're like, wow, why are all these accidents happening?

35:30Eric Watson:Turns out 50 % of air traffic controllers are over the age of 45. 20 % are about to retire. And nobody is going into air traffic control as a career path right now in the US. And so there's actually a huge labor crisis around these kinds of jobs. And so you have pressure coming from different angles for transformation is required. We cannot use a system that was designed for airspace in the 1950s. The labor isn't available to do it even if we wanted to. And also there is this giant influx of new technology, AI, and autonomous vehicles that are going to require us to transform how these systems work.

36:08Eric Watson:So you're a hardware company and a software company. You design your own operations, manufacturing. You design your own parts. You build your own aircraft. You write your own software. You do your own operations. This is a pretty vertically integrated company. Talk about the benefits of complete vertical integration versus buying component parts or buying component software and putting it all together.

36:33Keller Rinaudo Cliffton:And how you get people who come from such different disciplines and domains to see eye to eye and work together collaboratively. Yeah.

36:41Eric Watson:I mean, I think that interestingly, doing it is such an incredible pain in the butt that you would never do it. I have this flag over my desk that says we do this not because it is easy, but because we thought that it would be easy. And this is definitely like the definition of Zipline, you know, and it's such a pain in the butt, actually, that it's almost if you look at the history of all these hardware companies, they all try to not do it first. You can look at the Roadster, right? They're like, we're going to use a Lotus Elise chassis. We're going to buy the battery pack from a secondary supplier.

37:13Eric Watson:And we're just going to put the two together and it's going to be awesome. You know, kind of Roadster lost a lot of money and wasn't very reliable. Right. But like it was an important part of getting to the Model S. zipline when we started you know eric knows well we were like buying everything from suppliers we were like you know paying people to design different parts of the system for us or trying to buy off-the-shelf stuff and we crashed airplanes i mean at test sites and we just crashed and we crashed we realized wow this stuff is like super expensive and it's also totally unreliable and so you know part by part you're like all right well like rip that out we'll design the motor controller from scratch okay rip that out we're gonna have to describe you know design the GPS module from scratch, navigation system.

37:54Eric Watson:So, you know, part by part, you sort of like rip it out. And I think there's a fundamental realization, probably similar to the realization that happened that made the Model S possible is like, hey, if we want to build a really great specific product in this totally new area of technology, we're going to have to design every single one of these components from scratch to meet the specific requirements of this new area. You know, you might think, oh, like drones. I mean, there are already lots of drones because DJI makes plastic quadcopters and they make millions of them, and the US buys$20 million Predator aircraft that can fly 100 miles.

38:25Eric Watson:The reality is actually both of these systems are very unreliable and nothing is in a level of reliability and safety at unit economics that would work for this new industry that Zipline was trying to pioneer. And so we realized we had to go build an automotive grade solution. It has to be super reliable and it has to be extremely cost effective because you're competing against cars and motorcycles, which are actually really cost effective. And we've had a hundred years to make them reliable and cheap. So you never do it, I think intentionally, maybe just like slowly freak out and through desperation realize like, wow, we got to tear all this shit out and we got to build it all from scratch.

39:05Eric Watson:The advantage of doing it from scratch is speed and integration. And so our offices, you guys know because you've been, but when you visit Zipline's offices, we are all absolutely packed into sardines, into this small building where you have firmware engineers sitting next to, mechanical engineers sitting next to, autonomy engineers sitting next to, cloud infra sitting next to, aero, aero acoustics, guidance navigation controls, systems engineering, manufacturing, everything, everything in one place. And then our factory is a three-minute drive away. And so our team is like on the factory floor working, seeing parts get integrated into the overall system.

39:48Eric Watson:And then we have our test sites, which are just a short drive away. So you can go to the test sites, watch the vehicles flying, observe how the system is performing. Combining all these things together means that stuff is always breaking. Stuff's always going wrong, as Erica described. The advantage is when the thing goes wrong, we can basically go straight to the person's desk and be like, you and I are pulling an all-nighter tonight. Whereas if you're Boeing and something's going wrong with the battery on the 787, you're like going and suing a supplier and taking two years to try to figure out whose fault it is.

40:22Eric Watson:And it's three layers deep in the rat's nest cluster of how these procurement deals and supply chains work for aerospace is why it's so broken.

40:32Keller Rinaudo Cliffton:Yeah, I think Pat, to your kind of question there about getting these different discipline folks to work together. Yeah. I honestly think it's quite easy. It's easy when you have set up the way that Keller just mentioned, right? Like, first of all, everyone's rowing in the same direction. We all have the same goals. And when you can ground it in reality and it's tangible, then we're all just here to solve the same problems, right? So we actually, with the vertical integration, with having a very diverse team, we actually cut through a lot of the stuff, right? A lot of the things that happen were, oh, you know, that engineer won't tell me what the actual source code does because they said it's IP.

41:05Keller Rinaudo Cliffton:And so we don't actually know what the fault detection looks like. And you don't have any of that. You just like literally go walk over, sit next to the person's desk and be like, hey, we failed that test. Tell me about how this part of the system works. Oh, cool. Pull up the code. Great. Let's look through it. Oh, interesting. You're making that assumption. That's not how I designed it. Right. Cool. Let's get to the bottom of it. Right. And so this idea of just rapid collaboration where you're just, you know, the manufacturing team, the operations team, the engineering team are all just like really together is the way to solve these problems.

41:33Keller Rinaudo Cliffton:And I have found that it's actually not that hard, right? When you have those ingredients, it actually makes it, you know, makes it pretty fast and efficient.

41:40Eric Watson:And, you know, too, I mean, Eric saying that, it really makes you realize when you build these like complex, you know, AI and robotic systems that combine hardware and software, you really appreciate like the deep religious truth of how dumb requirements usually are. Question every requirement, which is, you know, the number one part of like Elon's algorithm they talk about at SpaceX. Like question every requirement is like this is like so profoundly and deeply true. You must have every team question every requirement. The requirement is always stupid. And you're like, well, you go to this team, that team, often you have to dig like two levels deep to realize.

42:19Eric Watson:But questioning every requirement is a fundamental part of getting through this. And then the other thing is delete the part. The most reliable part on an aircraft is the part that is not on the aircraft at all because you deleted it in the last design. That part will never fail. And you take a lot of inspiration from looking at like the Raptor 1, Raptor 2, Raptor 3, I'm sure you've seen those engines next to each other. And actually a lot of people who come to the factory now and get to see like the EV3 aircraft, you can see the EV2 aircraft, the EV1 aircraft, plus like the 10 different hardware versions that we built on the first version of Zipline's technology, you would just delete, delete, delete.

42:56Eric Watson:Like, you know, there's a huge amount of, it's really hard to delete things. It's an act of courage. No one wants to delete the thing. You look like an idiot if you delete the thing And then the system can't perform or doesn't work because you deleted the thing. But true confidence in the physics and the performance of the system enables you to start deleting things. It's a big advantage of having full stack integrated control of all of these systems. It makes it possible to question every requirement. It makes it possible to delete parts.

43:27Keller Rinaudo Cliffton:Yeah, I think first principles thinking is a huge part of that. I remember the platform one aircraft early days, it had a deployable tail hook is how it landed. So it had this big hooks like a meter long that would come down from the aircraft. And we had a line that would catch that and slow the airplane down as this kind of complicated contraption. And we had this idea that we should be able to move that complexity to the ground systems and have the recovery system, the landing system, more like an aircraft carrier, like crab the airplane. Right. We can put the actuation on basically a robot that goes up and grabs the airplane.

43:59Keller Rinaudo Cliffton:And we're like, man, that's going to make the aircraft so much simpler, so much lighter, so much more reliable. We didn't have it working yet. And it was time to build that next generation of the aircraft. And we're like, so we're building these next week. Do we build them with the meter long tail hook? Or do we delete the tail hook and put the two centimeter long tail hook on the back and bet that we can get this thing working? We got in a room, we're like, delete it, right? Like, let's do this thing. And so we're like, from first principles, it should work. We can make it work. We haven't done it yet, but we can do it.

44:27Keller Rinaudo Cliffton:And the next couple of weeks looked like myself included, a lot of people pulling a lot of a lot of late nights, getting that thing working. And sure enough, those first aircraft came and we caught them and landed them. So it's a lot of courage. But that like really being grounded in first principles thinking with a tight, integrated team is how you do that. Is there a version of the future in which instead of delivering life saving medicine and cheeseburgers, you're delivering human beings?

44:53Eric Watson:Hey, I'm the board member that has to control their costs.

44:58Keller Rinaudo Cliffton:I mean, you know, safe, reliable, battle tested. I don't know. Seems like if we're going to liberate ourselves from the tyranny of streets, it's a pretty decent solution.

45:09Eric Watson:Gosh, I think I agree with you. I think that, you know. He's going to come to you and ask for another billion dollars. I think, you know, a couple of thoughts. One is that I think Alfred knows I'm measured in the way I answer that question because, to be clear, building a new infrastructure layer for the planet that can deliver packages as efficiently as the internet moves information is going to be one of the biggest companies on earth. It's a huge opportunity, and we definitely want to stay humble and paranoid about how super hard that's going to be, the level of execution for us to scale the way we want to scale over the next couple of years.

45:48Eric Watson:And to put into perspective, I described this goal of getting to a million deliveries a day in the very near future. We now have many partners who are each asking to buy a million deliveries a day of capacity from Zipline in the last few months. And so our operating plan has now become our unit of sale. That's a pretty crazy realization. And it's leading us, we had originally built, we had sized the entire factory to build 20 ,000 aircraft a year. that was about what was required for a million deliveries a day. All of this is kind of being thrown... We're realizing the market is way bigger. And one thing, when you look at this totally hyperbolic curve that I think I showed you only a few months ago of what our total daily flight volumes have done over the last 16 months, the level of complexity of all the different systems that are required to basically stay on that track is quite high.

46:46Eric Watson:Yeah. But there are five and a half billion instant deliveries being done by humans in the United States every year. And we're using a 4 ,000-pound gas combustion vehicle. It's not really instant. It's like half an hour to an hour. Exactly. It's good marketing that it's called instant. But yeah, exactly. And 30 minutes, 45 minutes, an hour. a significant percentage of the driver's report eating some of the food that they've delivered in the last month, like more than 50%. There are significant safety concerns associated with these kinds of delivery. But 5.5 billion instant deliveries, what we're realizing when you look, Zipline is now at massive scale in Dallas, and we're now launching four more metros in the next four months.

47:30Eric Watson:When you just look at Dallas, if you were to extend the buying behavior that we're observing from Zipline customers in Dallas to the rest of the United States, there would be 55 billion instant deliveries happening, not five. 55 billion. Yeah. There's a huge market expansion. I think it's similar to how people looked at Uber when they were launching in San Francisco. And they're like, oh, even if Uber gets to be 33 % of the taxi market in San Francisco, it's only going to be a$15 billion company. And obviously what they missed is like, Uber's now 10 times the size of the taxi market. You know, like if you make something more convenient and less expensive and a better product experience, people are going to consume a lot more of it.

48:09Eric Watson:We are clearly seeing customer behavior where customers order every day rather than a couple of times a month. I mean, I met a grandma the other day who's ordered 350 times from Zipline in the last year. She's 80 years old. Amazing. Actually, nursing homes are like big Zipline. They're like big demand centers for Zipline.

48:26Keller Rinaudo Cliffton:It's probably pretty fun if you're in a nursing home.

48:28Eric Watson:It makes sense. And actually, it's funny. People perceive, I think, old people as like maybe being, you know, not capable of using technology, they're all like living on their iPhones, you know, like they're probably doom scrolling actually, which is maybe not a good thing, but like they are very comfortable using like, you know, Apple ID, Apple pay or Face ID, Apple pay, and just ordering and having it delivered directly to them. So there are definitely not enough humans in the United States to do 55 billion deliveries. The only way we're going to be able to serve this kind of demand is with automated systems.

49:01Eric Watson:And there's definitely not enough roads. When you look at traffic in most of our major cities, you're like, oh, can we just maybe double the number of cars on the roads so that we can do way more deliveries? It obviously doesn't work. We actually need to be taking cars off the roads if we want to enable human growth and flourishing. And so I think this change is inevitable. So how many flights are you doing a day now and how many will you do in a month? So Blani is now doing almost 5 ,000 flights a day. And we're anticipating exiting this year at above 30 ,000 flights a day. And our goal is to get to a million flights a day as fast as humanly possible, which we expect to achieve in the very near future.

49:41Eric Watson:Like all of the supply chain manufacturing capacity decisions we're making right now are designed not just to get us to a million deliveries a day, but also accelerate past that. The things that are interesting to think about on the unit economics front is whenever we meet hardware companies and you always talk to them about how much do you think the system is going to cost? And they're always like, it's going to cost X. And you're like, cool, it's going to cost 10X. Just so you know. When you build it, it's going to cost 10X. That's your advice to founders. That's my advice to founders. For hardware companies, because I try to be a good seed investor and pay it forward and stuff.

50:14Eric Watson:And you're always meeting these founders and always like, it's going to cost this much. I'm like, cool, just assume it's going to cost 10 times that. Does it work and what would you do if it cost 10 times that? And we're speaking from experience. When we launched our system in 2016, we were charging$30 of delivery to deliver a blood transfusion over 80 to 100 miles. And that was cost comparable. And so that's what we signed the contract for. And we thought that we were going to launch a system that cost about$30 of delivery. How much do you think it cost when we launched? 300 dollars. Yeah, it cost$300 of delivery.

50:44Eric Watson:And Alfred was surprisingly chill about it. And we were like, all right, we got work to do. And so the next year we got it to like 120, then the next year we got it to 75, then the next year we got it to 40, then we got it to 28, then we got it to 18. It's now 12 for the long-range technology that we operate outside the U.S. Right now what's happening this summer is the fully burdened unit economics of these systems is just now in the process of falling below the cost of using cars to deliver things. And so I think it is a cool moment that I think most people don't really realize. It's happening quietly.

51:18Eric Watson:You're not reading about this in the New York Times or whatever. I think that this thing is happening in the next month or two that is going to have a big impact on the world and how the world looks and how most normal people even live their lives because it is now more cost effective to use a robot in logistics than it is to use a human. And that's really good news for the environment. It's really good news for neighborhoods that are going to get quieter and safer and less traffic, less pollution, and it's really good news for customers because you can get things way faster and more reliably and for less expensive.

51:54Eric Watson:You know, our customers love, like, there are obviously so many cool things about the system that, you know, you can talk about and that you see customers taking advantage of, but like, no tip, exclamation point, exclamation point, exclamation point is like a big, you know, that's probably the number one comment. I think that customers love not having to feel guilty and being able to just have a system that they know how much it's going to cost. Well, thank you, Keller and Eric, for being here with us. I thought you were going to say it takes longer than you thought, not 10x more than it costs.

52:25Eric Watson:But anyway, that's a great way to end. It does also take a lot longer. I mean, I think the memo that Sean wrote here at Sequoia a few years ago, I think is deeply true. I don't know if he'll ever publish that publicly or if it'll be allowed. But I do think, suffice it to say, there is an internal Sequoia memo that has had a big impact on me talking about A, why hardware companies are going to be some of the most impactful companies for humanity's progress over the coming decades, and B, why it's super hard to get those companies off the ground and fundraise for them and see how investors should think about funding those kinds of companies.

53:03Eric Watson:It's interesting when you look at the world today to see, I mean, wow, how fast the world changes. Because think about it, we spent 10 years being the freaking black sheep, like a hardware company, no thank you. Like, let's invest in, you know, SaaS, let's invest in margins. Like, this is where the whole future was and like, you know, iPhone apps, blah, blah, blah. So I don't know, I guess I feel like - Now you're cool. Remember Bane in Batman, what does he say? Like, you adopted the darkness, I was born in it. Like, man, we built a robotics company for 10 years before building a robotics company was a cool thing to do.

53:35Eric Watson:But I do think that especially important for US competitiveness and just for our ability to build the future that we'd be really proud to hand to our kids and to our grandkids and to build the sci-fi version of the future that we were all promised, we got to get good at building stuff again. And we got to get good at building not just vehicles and hardware. We got to get good at building infrastructure. We're depending on the crumbling infrastructure that our grandparents built for us. I read the other day, we just installed these anti-suicide nets on the Golden Gate Bridge, if you guys heard about that project.

54:10Eric Watson:It cost more to install those nets than it cost our grandparents to build that bridge.

54:17Keller Rinaudo Cliffton:I believe it.

54:17Eric Watson:So anyway, we get really excited. We think the future, promising future, is we should be able to build infrastructure. We have to be interested in it. And I think people have to have the stomach for it. And we have to learn how to manufacture and run complex supply chains again. And we have to be bold and believe in sci-fi versions of the future if we're going to build them. Awesome. Let's end it at that. Believe in the sci-fi future. Yeah. Thank you guys for being with us. Thank you. Thanks for having us. Thank you for inviting us.

54:59Thank you.