Welcome, Commercial Drone Pilots!
Join our growing community today!
Sign up

"Drone Bubble Implodes, Wipes Out Startups And Hammers VC Firms" [Article]

Kristina Fowler

Well-Known Member
Joined
Jan 20, 2018
Messages
187
Reaction score
90
Don't mean to be a Negative Nellie, but I think it's prudent to take a comprehensive look at the entire industry, including the flame-outs at the upper levels. For aerial service providers like myself, I think the market will eventually settle into the "concierge" provider category, where innovative and ambitious Part 107 pilots clear their own path inside their local (100-mile radius) market. It's pretty much there already, IMHO. It appears that's where you can find shelter from the storm. Marketing, persistence, and rolled-up sleeves play a major role here.

Drone makers look to be the hardest hit. Firms that provide mission planning, execution, and after-mission processing services, such as Drone Deploy, Pix4D, Precision Hawk, and Maps Made Easy, seem to have found loyal followings.

Here's the article: "Drone Bubble Implodes, Wipes Out Startups And Hammers VC Firms"
 
  • Like
Reactions: fleiguy
I know there are a lot of people doing this as a serious business. I work in a university research lab so my situation is a bit different, but for me, it is still how I put my frijoles on the table. This seems pretty similar to the classic hype-boom-bubble-bust cycle where eventually things settle out with real people doing real work, but it's not like the original hype portrayed it.

There isn't just one single thread of drone-reality though ... there are many aspects to the industry. Some areas might be just hitting the boom, some busted a while ago, some areas have become pretty stable and mature. Much of the media that reports on the industry reports the industry generated hype. There is a lot of motivation and reason to keep the hype train running as long as possible.

I have wondered how many DJI drones are collecting dust on someone's shelf with only a 1/2 dozen flights in the last year or two? I have wondered if DJI discontinuing the phantoms is a reflection of the larger bust in the pro-sumer cycle? If the original hype was true, there should be drones buzzing over our heads all day long by now, instead dji is canceling products and making little effort to keep most of their items in stock. When there was the demand [and the competition], DJI was kicking out a new generation of drone every 9 months. I wonder how much FAA drone policy and regulation were driven by the silicon valley hype machine and predictions designed more for venture capitalists than for public policy makers?

Now I'm worried that we will face a post-bust world where DJI has forced all the other serious contenders out of the market by basically winning the fight. But if they now wander off and focus on the market segments that generate the most sales (Mavick?) and put less attention on the work horse drones that can carry a payload for a decent flight time ... what then? Maybe there are opportunities for new drone designers to re-emerge, but probably at a much smaller scale than what was hyped up a few years ago. Or we could go back to just DIY building what we need from banggood parts?

Did we over hype and then over bust?
 
Last edited:
Interesting article. Thanks for sharing. Boom-bust is a normal progression in virtually every industry - i.e., tech, housing, autos, etc. Those looking to make a fast buck are usually the ones that disappear. Those committed for the long-haul with long-range vision are usually the ones left standing.

I won't be quitting my day job. Can't anyway since DSAR is a non-profit 501c3 and nobody makes a dime off it. ;)
 
I think part of the implosion is entry into the market before the market has fully developed, somewhat similar to electric cars and solar energy. Will we eventually get to a place where electric cars and solar are a significant factor in transportation and energy? Maybe, but I don't think it's going to happen in next 5 years and maybe not in the next 10 years. Will commercial/industrial applications for drones become much more pervasive? I'm thinking yes but it didn't happen in the last five years (not enough to support the companies looking to profit from the business) and maybe not in the next five years.

The company I work for brought to market 10 years ago electronic components that were some of the smallest in the industry. Of course smaller is better, right? Eventually yes but not necessarily today or tomorrow. The problems was the components were so small none of the pick and place or PCB manufacturers were geared up to product equipment that could efficiently handle the components or create a reliable surface to place them on. The equipment has been developed over the last ten years but is much more expensive to make (exceedingly accurate placement is required) so unless there is some real pressure to downsize a product, and a company had the resources to purchase the expensive equipment needed to handle it, these components never really took off in the market place (still true today). Will we eventually get there? I'm pretty sure we will but the when is anyone's guess.
 
I never could get my head around the biggest hyped business models, but.then I'm just a dumb photographer. I am intrigued by the obvious work-horse advantages like mapping acreage and the.various inspection needs. And tell me if I'm alone, but - I still don't see the general public becoming enamored with a sky full of drones delivering toothpaste from Amazon. Seems to me that UPS can do that better.

But as for photography - it's a great camera with a big tripod that can get to places I can't otherwise go. I love it.
 
I always get a kick out of electric car references. I’m still waiting to learn how a battery powered vehicle can be considered non polluting, efficient, and practical when the batteries require replenishment from a primarily fossil fuel electrical source. The vehicle is still powered by fossil fuels unless and until batteries charge themselves or a new power source becomes practical. I won’t mention how environmentally dirty battery production and disposal is.

For the record, that was not “political”. Just the honest truth.
 
  • Like
Reactions: js1600 and fleiguy
Correct, Pat, except for one important but understandable error - “fossil fuels” don’t exist and the accepted definition is intentionally misleading.

Coal and petroleum products are not fossils. Nor are they dead dinosaurs. Oversimplified, but they are the result of chemical reactions to underground and underwater layers of organic sediment in the absence of oxygen. And it is constantly recurring over time. Even now!
 
  • Like
Reactions: js1600 and fleiguy
I was curious about Pat's assertion, so I did some googling for my home state. This is a gov't site, so believe it or don't believe it ... oh shoot, that last sentence was probably a bit political. :) As I drive around the state, I'm seeing more and more solar and wind farms popping up. I'd be open to an electric car if the costs started to come down a bit. I don't need to race a tesla on the autobahn. I do sure like my electric powered drones and RC airplanes. Blowing smoke and making noise can be fun too, but clean, quiet, convenient, and instant start isn't bad for day to day reliable operations. I can't imagine what a dji drone would look like if it had to burn gas to fly and spend 10 minutes trying to get the a finicky engine running every flight. And I'd be wiping exhaust residue off the lens every 5 minutes, I know that. :)

In 2018, coal fueled 37% of Minnesota's net electricity generation. The state's two nuclear power plants, located on the Mississippi River in southeastern Minnesota, fueled almost one-fourth of state generation in 2018.32,33,34 Almost all the rest of Minnesota's electricity generation comes from wind, which provided 18% of the state's net electricity generation in 2018, and natural gas, which provided 15%. Small amounts of electricity were generated from biomass, conventional hydropower, and solar energy.35

Source: Minnesota - State Energy Profile Analysis - U.S. Energy Information Administration (EIA)
 
Last edited:
  • Like
Reactions: fleiguy
Hey, when it works unsubsidized, it's all good. But your point regarding electric cars is telling. Nobody wants one priced full-boat, and somebody somewhere is burning coal to make it run.
And all of the alternative approaches need flowing natural gas as an ultimate back-up.

And solar-powered aviation is never going anywhere. Not in our children's lifetimes, anyway.
 
  • Like
Reactions: js1600 and fleiguy
Correct, Pat, except for one important but understandable error - “fossil fuels” don’t exist and the accepted definition is intentionally misleading.

Coal and petroleum products are not fossils. Nor are they dead dinosaurs. Oversimplified, but they are the result of chemical reactions to underground and underwater layers of organic sediment in the absence of oxygen. And it is constantly recurring over time. Even now!

In good humor I’d like to suggest most life on earth is organic and decomposes in time, breaking down to become other things.

Semantically, the term “fossil” is both correct, but incorrect as it is used in an all encompassing manner.

I love the concept of “renewable” power sources (which in its own manner includes the breakdown of organic life over time) but solar still lacks the needed efficiency. I designed, sold, and installed consumer solar systems in the ‘80’s. In concept and intent it was and still is great but the fact is the stuff still lacks efficiency and the cost is much too high for the power it produces. Worse, few consider a power storage medium to provide power after the sun goes down.

Just for giggles, we spent more time selling tax credits than selling the benefits of solar energy as the cost versus benefit just didn’t pencil out. Pretty much the same is happening today as the reduction in monthly utility bills is usually offset by the monthly payment on a solar system. Interestingly, the life cycle of a solar panel is about 20 years, which is usually the term of the payment contract.

The greatest benefit of solar electric goes to oil companies and public utilities. Oil companies as they own most of the patents on solar panels while utilities see the demand stress on their grid reduced while obtaining solar generated excess electricity at reduced cost, and charging a higher rate to the consumers generating the excess power.

Wind turbines do somewhat better but I don’t foresee everyone having a desire to stand up a few in their yards and there’s still the issue if where power is obtained when the wind doesn’t blow, which often coincides with the period the sun doesn’t shine.

Sorry to sidetrack, but this is fun. Not political unless it involves people that might view a discussion about anything as political. I see it more as a financial/profit motive discussion.
 
Last edited:
  • Like
Reactions: js1600 and fleiguy
Going back to the original topic of drone boom/bust. Quad copters are a pretty amazing tool that serve as a super cool, fancy tripod for an ok quality camera. For other tasks, quad copters are extremely inefficient compared to airplanes (or even traditional helicopters.) For tasks like agricultural imaging, power line inspection, and many of the other "dull", "dangerous", or "dirty" jobs, I sincerely believe fixed wing aircraft will win out in the long term. And even worse, it will be large fixed wing aircraft. It won't be 2 meter wing span foam planes that small businesses can fly an hour or two. When this all settles out it will be things the size of a Cessna 172 ... or maybe a 737 roaring over our heads ... these will be able to stay aloft for 10's of hours or days, carry super high quality and high resolution sensors, advanced communication equipment, etc. This is what will be needed in order to scale up high enough to make these tasks economically viable.

As I typed the above, I noticed that I'm describing some of the advanced drone aircraft the military currently flies. At some point, civilian versions of these will probably be sifting down to groups with big budgets. Already happening for big organizations like NOAA and NASA. It might be lockheed or raytheon selling civilian versions of their stuff, or it maybe smaller private companies stepping up into the bigger space, or some of both.

In today's economy, how often do we even see a full size helicopter fly over. Around here if I hear a helicopter I jump up and look. It's probably 50/50 between a flight for life chopper or a national guard chopper. Once a year there's a guy that drops anti-mosquito pellets in the swamps around here. And maybe once every 3 years I'll see the news helicopter going somewhere (which probably means something especially bad is happening for the news channel to pay to fly it.) Oh, and I might see a small R-22 once in a while training someone with a lot more $$$ than I have to get their helicopter rating.

Hey, when it works unsubsidized, it's all good.

Gosh, it would be slightly ironic if the USA gov't is also subsidizing our own oil and coal industries ...
 
  • Like
Reactions: js1600
Google “Tad McGeer flexrotor” for a sample of long duration, long distance drone crossing both the military and civilian worlds. No ITAR restrictions.

While you’re at it; look up Martin UAV and “V-Bat”.

Both platforms are intended for both civilian and military applications. Both are VTOL, both carry extremely sophisticated payloads. Such as they are the future of the BVLOS and long duration civilian drone market. The military/government side will be served by long duration, heavy lift, weapon bearing, persistent surveillance equipment.

From my perspective the future of multirotors is quite dim.
 
Last edited:
  • Like
Reactions: js1600
In today's economy, how often do we even see a full size helicopter fly over. Around here if I hear a helicopter I jump up and look. It's probably 50/50 between a flight for life chopper or a national guard chopper.

I camp about four weeks during the summer months on the south shore of Long Island. I would say at a minimum there are 30 helicopter flights per day flying just off shore heading east out to the Hamptons or west toward NYC. They are not National Guard or flight for life helicopters and I'm pretty sure it's people whose lives are not impacted no matter what is going on with the economy.

I don't know a ton about imaging but I have to imagine there are imaging jobs that have to occur on a regular basis that are not going to be waiting for the next high altitude 747 flight or even Cessna 172 flight, neither of which is going be economically feasible versus a drone. A 40 year old Cessna 172 is going to cost in the neighborhood of $70K. Annual cost (insurance, tiedown, annual inspection, fuel, regular maintenance, etc.) is going to be around $5,000 figuring a hundred hours of flight time per year not count set asides for engine rebuilding. Personally I don't see anything like a high tech 747 or specially equipped C-172 taking the place of drones in many imaging/inspection applications.
 
  • Like
Reactions: js1600 and fleiguy
Don't mean to be a Negative Nellie, but I think it's prudent to take a comprehensive look at the entire industry, including the flame-outs at the upper levels. For aerial service providers like myself, I think the market will eventually settle into the "concierge" provider category, where innovative and ambitious Part 107 pilots clear their own path inside their local (100-mile radius) market. It's pretty much there already, IMHO. It appears that's where you can find shelter from the storm. Marketing, persistence, and rolled-up sleeves play a major role here.

Drone makers look to be the hardest hit. Firms that provide mission planning, execution, and after-mission processing services, such as Drone Deploy, Pix4D, Precision Hawk, and Maps Made Easy, seem to have found loyal followings.

Here's the article: "Drone Bubble Implodes, Wipes Out Startups And Hammers VC Firms"

Good article and to me...not that surprising. I worked for several huge startups during the DOT COM bubble from 1998 to 2004 and I shuffled around with about 50 to 100 different professional, that would work at some pretty big, fancy, new web start up agencies. Then within 6 months move to another startup, then another and so on... We all knew each other we just moved around to the next company that got huge investment capital. We would watch the people at the top management level, pitch the hype, buy fancy office space, cars, boats, lavish conventions and then poof they were gone with a 3-6 months then after the dot com bubble burst there were non existent.

I ended up starting my own company BadDog Digital Services in 1999 as a DBA. I never took any capital, I never took any business loans and I am still here today as BadDog Digital Productions, Inc (S-corp). I am not a millionaire by any stretch of the imagination but I pay my bills, put my kids through college and live a decent life. I have now added Drone Services to my roster as Drone-Scapes.com. You don't have to own or dominate the entire industry to be successful. I am aiming for 1% of the drone industry. 1% of a billion or 2 billion dollars, is still a lot of money.
 
  • Like
Reactions: dempseycreekkid

Members online

Forum statistics

Threads
4,277
Messages
37,605
Members
5,969
Latest member
KC5JIM