I am a veteran and former pilot/ aerial photographer, turned drone operator, turned satellite imagery analyst, turned startup founder. I did not dream about being a unicorn startup founder when I started Paypixl. Rather, I just wanted to address a multi-sided problem in a fragmented, budding industry. I feel like I’ve hit every wall and obstacle along the way since starting Paypixl in 2018.
I call myself a roach. It’s a term of pride more so than self-deprecation. Because above all, I’ve learned that like roaches, you have to be a die-hard to survive as a startup founder. This is especially true if, like me, you’re not already affluent and not immediately connected to capital. But this article is not about the wherewithal needed to survive a startup; this is about things I’ve learned as I’ve been building this company with my team.
Lesson 1: What the drone industry landscape looks like
There seems to be the general idea in startups that consumer business models eventually evolve into B2B business models. That same concept can be seen throughout the drone industry. There are relatively few consumer-facing companies; whether they’re services, hardware, or software. Speaking to many of the founders building in the industry, the general thought is that consumers are hard to please, are hobbyists, and don’t have a lot of money to spend. Why is this important? Because most of the consumer-facing software lacks significant revenue or capital to become monoliths in the industry; nothing really stands out.
Consumers are often undervalued and preyed on. But they’re powerful in numbers. Case in point: a nationwide network of drone pilots (consumers) can collect imagery at scale faster and cheaper than any enterprise network of employees. Unfortunately, the companies that have built nationwide networks to do just that have done so to the detriment of pilots and the industry. These companies focus their loyalty on the customer, rather than the pilot. In doing so, they often ask too much from pilots while simultaneously paying too little in return. When pilots push back on these companies for compensation being too low, they are met with the rebuttal that someone will fly for the low compensation if they won’t. That’s not a great approach to dealing with the supply side of your business.
Lesson 2: Breaking down commercial and recreational pilots by the numbers
The industry classifies individual drone owners as consumers. Of the roughly 2.5 million drone owners in the United States, 270,000 are certified by the Federal Aviation Administration (FAA) as Remote Pilots under Part 107. This means that they can fly their drones for compensation. So a little over 10% of all drone pilots can fly for compensation. Based on pilot interviews, we estimate that 75% of those pilots have flown for compensation within the last 3 months. We estimate that about 110,000 (40% ) Part 107 Remote Pilots rely on their drones to produce a steady source of secondary or primary income.
We’ve informally spoken to a few hundred recreational pilots online and in-person at events. When asked why they hadn’t earned a Part 107 certificate, the majority responded that they would if there was an easy path for them to earn money; many suggested that the learning curve was too high to manage a business.
Lesson 3: We should refer to the majority of commercial drone pilots as droneographers
A droneographer can be defined as an individual who is both a drone pilot and a photographer and/or videographer. The three are unique skills, that when combined, allow a person to capture amazing aerial imagery and video. Droneographers may also use their drone to collect aerial mapping datasets, conduct thermal inspections, and in some cases, collect non-imagery data.
Most droneographers fulfill gig orders in addition to their primary jobs. The majority of Part 107 pilots can, and should, be considered droneographers. Most of these individuals also have DSLR cameras, and can at the very least, also capture ground imagery in addition to aerial imagery with their drones.
Lesson 4: The size of our two-sided market
I almost don’t want to admit how long this took me to figure out, but it’s incredibly important to know as a founder building in the drone space. Who buys aerial imagery? How much do they spend? Where do they buy, and who do they buy from? The answer is complicated; this is a highly-fragmented, multi-faceted industry on both sides of the market.
I’m referencing a Deloitte article in which they indicate that the drone industry as a whole will be worth over $100BN. According to them, about $13BN of that will originate from commercial aerial imagery collection. That’s our target, and what I wanted to break down even more.
The graphic shows the two sides of the Paypixl marketplace. On the demand side, we have customers in different wedges, who consume aerial imagery for various reasons and applications. On the supply side, we have pilots with different disciplines and fields of expertise (see Lesson 3).
The two sides of the Paypixl marketplace with Total Available Markets per segment (demand side)
Lesson 5: The biggest problems that plague the industry
- It’s hard to find drone pilots when and where you need them. Most people go to Facebook to find a pilot when they need images or videos. This problem is exacerbated when businesses need to acquire high volumes of imagery across a large geographic area.
- There’s no industry standard in file delivery, ordering language, or payment processing. Unless a client has a specific way they want their files delivered, pilots will often use the most obvious available tools; usually GDrive or DropBox. This means pilots will either allow customers full access to files before they pay, or the customer will have to pay before they’re able to preview the order. This system relies heavily on trust.
- 70% of pilots have experienced slow payments, 30% have experienced non-payment after files have been sent to customers.
- Unqualified competition inundates the competitive market. The FAA requires pilots to obtain a Part 107 certificate before they can fly for compensation. Pilots who are fulfilling orders illegally aren’t being held accountable, and often price themselves below market value. The FAA is historically not an enforcement agency. While they have the power to enforce and issue civil penalties, they primarily rely on local law enforcement to do so. Most local police don’t place enforcement of FAA laws high on their priority list.
- There is a lack of vetted, organizational leadership from companies that can positively impact the industry and answer some of these problems. Companies like Pilot Institute and Drone Service Providers Alliance (DSPA)are among the very few who have made it their mission to support pilots, improve training, and advocate for legal improvements across the industry with better representation. Most of the leadership originates in established drone groups on Facebook- not an ideal place to find vetted sources of information.
- Overregulation and the US Government’s fear of torts. I‘ll pull no punches in saying this: the FAA operates in fear of being considered inept at regulating the skies and maintaining safety. In response, they over-regulate airspace (my opinion) and move too slowly to adapt to the technological changes this industry introduces. This is the first time in history the FAA has had to deal with so many non-aviators occupying manned airspace.
- The public’s negative stigma toward drones is still very present. The stigma, fueled by negative media coverage, converts into enhanced local drone restrictions. Education, exposure, and time are the three most impacting factors that will reduce the stigma.
Lesson 6: The need for aerial imagery and data is constantly increasing
As location-based apps and location-based business intelligence become more widely adopted and commonplace so does the need for both current and archived drone aerial imagery and source data. New use cases for drone imagery are constantly emerging, proof of which can be seen in the industry’s ~15% CAGR over the last 8 years