PODCAST: Drone Delivery Canada CEO Tony Di Benedetto on Shooting Down Drones
Drone Delivery Canada Corp (CNSX:FLT)(OTCMKTS:ASCRF)(FRA:ABB) CEO Tony Di Benedetto says people shooting down drones is the least of his concerns in this interview, and highlights the company’s path to profitability through deals with Staples, Napa Auto Parts, and various First Nations groups.
James West: Tony, thanks for joining us today.
Tony Di Benedetto: Thank you for having me, James.
James West: Tony, it’s been about a year since we’ve had you on the show. Why don’t you give us an update on what has developed for Drone Delivery Canada in the last year?
Tony Di Benedetto: A lot of things. We’ve been executing our business plan, we’ve achieved a number of different things. The first that’s fairly significant is, last October we achieved our first test flight license from Transport Canada. We’re the first Canadian drone delivery company in the country to receive such a license to test commercial within southern Ontario, and we’ve also just completed a raise with GMP Securities, and we raised approximately $11 million, 10.94 million to be exact, which is a really good testament to what the market is perceiving about this space. It’s happening, the market is here, and there’s a lot of developments coming out.
James West: You bet. Okay, so then, what is the – I mean, in terms of the actual delivery of packages on behalf of companies like Staples, with whom I saw you had a press release, what is the timeline until we actually see drones showing up in our backyards?
Tony Di Benedetto: So we’re anticipating by the end of this year to have a level of what we call is a license to operate within Canada, and we’re looking at rolling out commercialization in Q1 of 2018. So we’re going to be starting in the remote communities, that’s where we believe is the right place to start, and working with all of our various stakeholders, including the Federal government and various regulators and our academics, to start deploying this technology in these communities.
James West: Right. Okay, so in terms of your competitors in the space, would Amazon Canada, for example, probably compete directly against you? Or is there lots of business available for everyone?
Tony Di Benedetto: Right now there are no competitors. Our model is very unique: we look at ourselves as a technology enabler, a software as a service company, where we deploy our technology with our clients. We announced partnerships with Staples and Napa Auto Parts, and we’re working with approximately 40 more, and they range from some Crown corps. to corporate to retail, and we deploy our technology within their infrastructure. And they then utilize our platform to extend their logistics utilizing drones. So we’re not a hardware company; we don’t stock inventory, we’re all about enabling our clients to essentially go in and utilize that, and I guess in the future, compete against Amazon.
James West: So you don’t envision owning your own fleet of drones?
Tony Di Benedetto: We do own – we own the platform, so we will own the drones, we will own the software, the technology, all that’s behind it, to make this platform come to reality. But it’s outfitted within our client locations. Their staff is trained on how to utilize the technology, and we oversee the operations. Almost like a flight control centre.
James West: Okay. So then, is the $11 million that you just raised sufficient to achieve profitability? And if so, when do you see that happening?
Tony Di Benedetto: For sure. The money that we raised is simply to accelerate our development and get us faster to the starting line, and we expect to be profitable in 2018, once we commercialize. So the goal is to start in these remote communities and start rolling out the technology there, and bring a level of connectivity to these communities, which today have significant challenges in just obtaining simple goods. The numbers I’ve heard for a simple case of water in some of these communities costs them $25, a jug of orange juice is $35, and God forbid you need medical supplies in this instance, it’s in the thousands.
So with this type of technology, we can help overcome some of these financial barriers that these communities have.
James West: Sure. And what is the limitation as far as payload capacity goes? You mentioned a jug of orange juice; I don’t imagine that you could deliver a case of orange juice with a drone in the current technology…or can you?
Tony Di Benedetto: So we’ve become, over the year, our platform has become hardware agnostic, so we’re not necessarily building drones ourselves. We’ve developed our platform that we can utilize anyone’s drones that are coming to the market, and we simply put our autopilot, our logic, into these air frames as they come. And what’s happening, as the market has been evolving and accelerating specifically in Asia, there’s a lot of air frames now coming to market that have different capacities, different ranges. So really, it’s accelerating quite quickly in that respect there.
Today we’re working with 7 to 10 lbs, but as the weight technology keeps advancing, I’m sure these numbers will increase substantially over time.
James West: Sure, I guess ultimately it’s just a matter of power input ratio relative to weight, and there’s really no limit on that.
Tony Di Benedetto: Absolutely. Today we’re using lithium; we’re also exploring hybrid technology, a combination of gas and electric, and we’re also looking at gas. So there’s a lot of ways that you could overcome these obstacles. You just have to be thoughtful and look at the right solution for the right environment.
James West: Sure. When you say gas, do you mean gasoline engines, or like light air balloons?
Tony Di Benedetto: No, gasoline engines. So to propel a drone, you need a relatively small engine versus that of a plane or a truck, so although we’re using gas, the emissions are considerably less than traditional means. We see this as a green technology.
James West: Okay. One of the questions that’s really played around with my idea of profitability is, there is a current restriction on how you can deploy a drone in that the pilot must always have line of sight in current legislative frameworks. Do you see that sort of disappearing going forward in the future as the technology matures, or is that always going to be a limiting factor?
Tony Di Benedetto: So beyond the visual line of sight is this holy grail that everybody is moving towards. The Federal government, we’re very fortunate in this country that we have a very technology, pro-innovative government, and they came out last year in November and they announced the first federally approved drone test range in Foremost, Alberta, and the strategy behind that is to test beyond visual line of sight. So testing has begun there, and I know of some companies that have already gone. We’re going to Foremost in, I believe, April of this year, and we’re going to commence testing beyond visual line of sight at that site there.
So the government is pro- this technology, and as I’ve always said, there’s a right way of doing it and a wrong way, and we’re all about taking baby steps and listening to the various stakeholders, including the regulators, and working with them to get to where we need to be. But beyond visual line of sight is a reality, and it’s coming very quickly.
James West: Oh, okay, great. And the other thing that I thought might be a limiting factor is, we’ve seen instances in the southern US in particular where people have made a bit of a sport of shooting down drones that might have a valuable payload. What does the future look like in terms of that kind of air piracy as it applies to drones?
Tony Di Benedetto: So these are some of the areas that we’ve had discussions with the Federal government, and once we become a compliant operator, shooting down one of our drones is a Federal offense. So there’s legislation being wrapped around this, from what we’re told. It’s no different from trying to shoot down an aircraft, a helicopter or a plane. So there are, I’m sure there’s going to be these kinds of instances where people are going to try, but at the end of the day, it’s a criminal offense, and we’re working with our academics to build in some sort of technology to help prevent this, or at least try to mitigate these risks.
James West: Sure. Okay. And finally, what kind of progress is being made toward technologies that might permit these vehicles to deliver packages in urban environments like downtown Toronto?
Tony Di Benedetto: So we’re starting in Canada’s backyard; we think that’s the right place to start. Big, wide open spaces, far and away from obstacles, from people, and then slowly, as we prove out the model, then we start bringing it to more suburban and then urbanized areas. So we need to start somewhere. The backyard is the right place to start right now, and then over time, we’ll bring it closer. But it will come. It’s no different than three years ago, I made the analogy saying driverless cars, and I remember some bankers said to me ‘you’re crazy, driverless cars will never happen’. And now we fast forward three years and driverless cars, we’re seeing it happening.
So it will come, it will come in just course, but we need to start from somewhere and move ourselves to that point.
James West: Tony, that’s a fascinating update. Thank you very much for that. We’ll come back to you in due course and see how you’re flying along. Thank you for your time today.
Tony Di Benedetto: Thank you very much, James.