I just returned from AUVSI's Unmanned Systems 2015 trade show in Atlanta. The show was pretty impressive, with 8,000 attendees and 600 exhibitors. Although they didn’t have a booth at the show, I was able to speak with Helen Greiner, the founder and CEO of CyPhy Works Inc. In addition to being an MIT graduate, Ms. Greiner holds numerous technology and business leadership awards. She is the co-founder of iRobot, the company which designed and built PackBot, the military robot, and Roomba, the world's first mass-produced consumer vacuum cleaner robot.
The LVL1 from CyPhy Works, uses unique Level-Up Technology for stable, level flight.
The LVL1, a new sUAV developed by CyPhy, has a unique design they call Level-Up Technology. As Ms. Greiner explained, multi-rotor drones need to tilt to move in any direction. That tilting motion often creates an unstable platform for shooting video or collecting remote sensing data. The problem can be mitigated by using a stabilizing gimbal, but this equipment adds additional weight and cost. CyPhy’s LVL1 prototype has been able to achieve stable, level flight by placing each rotor of its hexacopter in a different plane. Other LVL1 features include: an integrated camera, a geofence that contains flights within a safe area, live video streaming to social media and using a smart phone app, Swipe-to-Fly, as the flight controller. By eliminating the gimbal and separate flight controller that other drones use, Ms. Greiner estimates CyPhy will be able to offer their LVL1 for approximately $600, or about half the current price of competing UAVs.
CyPhy has already received $13.5 million funding from four different investors, including General Catalyst, Lux Capital, Felicis, Motorola Solutions and Draper Nexus. As of May 20, 12 days into a Kickstarter campaign, CyPhy received commitments from 737 backers for a total of $415,094. This is $165,094 more than their goal and the campaign has another 20 days left to run. The generous funding is a testament to Ms. Greiner and her team, considering CyPhy has only built a small number of prototypes and won’t ship production LVL1s for another seven months. The Kickstarter campaign price is more than $100 off the expected retail price of $600.
CyPhy’s success is by no means a slam dunk. DJI, the industry leader, just raised $75 million from Accel Partners. The expectation is that their revenue may approach $1 billion this year. A second competitor is Paris-based Parrot. According to Robohub, Parrot has sold over a million AR.Drone quadcopters since the sUAV was introduced in January of 2010. On the domestic front, competition comes from California-based 3D Robotics.
Despite the relentless competition from both established players and numerous startups, I think CyPhy will succeed, but not because of their technology — new technology doesn’t make a successful company. It gets you in the game, but unless you have the right manufacturing skills, marketing, distribution and support capabilities, you won’t be able to leverage the technology no matter how good it is.
For one thing, hardware startups require significantly more capital than software startups. That’s why most venture money flows into new software entities. Think of it like this: if you’re a software developer, you monetize your solution by driving visitors to your website where they receive information, entertainment or assistance. Support entails creating upgrades that can usually be downloaded.
With hardware, you also want people to visit your UAV site, but that’s where the similarity ends. Once on your website, prospective buyers can’t download a UAV — they have to order it. This means you must have manufacturing, procurement, shipping, receiving and repair facilities, plus associated personnel to staff the operation.
The need for additional resources does not stop there. To be successful, you really need to make sure your sUAV is available through Internet retailers like Amazon or eBay and a brick and mortar retail distribution network. This can get expensive because many retail chains require vendors to provide co-op marketing funds. In other words, in addition to providing a 35 to 45 percent margin, resellers often require funds for advertising, extended payment terms and a liberal return policy. To sum it up, there are many more ways to fail when producing high tech hardware products than in developing software solutions.
Ms. Greiner’s CyPhy team is unsurpassed in accumulating the collective knowledge for developing, manufacturing and marketing high volume, low cost robotic products. CyPhy’s expertise will continue to attract investors and allow them to develop an end-to-end video and geospatial solution. You can get more CyPhy details and, like me, become a CyPhy backer by going to Kickstarter.