The Coolest Drone Company I have seen

A reminder to always think about ‘protector’ companies

TL;DR: is a very cool drone company. It helps remind us that ‘selling picks and shovels’ doesn’t require you to be an enabler — you can also be the security or protector of a new market phenomenon.

I was having drinks with Noah Jessop in the typical Silicon Valley cliché — happy hour in SOMA while discussing life and start-ups. We were trading notes, and he mentioned SkySafe (his friends are CEO and CTO).

It was one of those company ideas that you gravitate towards immediately, and the type of company I can invest in after a one-hour meeting.

Disclaimer, I am not a drone expert. Many of the people I advise are excited about the drone market, so I have dug in a little in order to be helpful.

The phenomena of emerging markets — enablers are the first frontier

For the ~40 drone companies I have seen so far, they are all about enabling drone creation, deployment, and applications of operational drones. Whether it be software stacks (drone OS’, API’s, etc.), robust drone platforms, or package delivery services, they all ride the upswing of the drone hype cycle. These companies will rely on the growing popularity of drones and try and fill in the ecosystem — enabler business. No doubt there will be a bunch of winners in the enabler category, but the ecosystem is messy, crowded and hyped.

Also, the prize for ‘winning’ in drones could very well be a low margin business, given the hardware required to create real value. The software stacks risk being squeezed on margin, because the ‘last mile’ will be controlling the hardware or the business application.

Protectors — the ‘yin’ to enablers ‘yang’

SkySafe is the perfect reminder to always look at the opposite side of bull market — what capabilities are required to control a new phenomenon?

The starkest example of this ‘yin’ is Palantir. With the rise of online communication (email, Social Networks, etc.), protecting against terrorism required a whole new discipline: digital data analysis and correlation. This was the early premise of Palantir, which used these correlation engines to build something much bigger. Props to Aki Jain and team for these innovations.

We want to believe that all new technologies will be used benevolently and in a socially responsible way — but that is not reality. As I write this, I am sure drones are bringing drugs across borders, rendering custom agencies ineffective, and drones are wreaking havoc in air spaces.

Always be on the lookout for ‘Protector’ Businesses

As we look at hot new trends, always be open to the ‘counter’ or the ‘backlash’ business. What problems will Bots create? How will Virtual Reality be mis-appropriated?

The downside of the protector businesses is they are usually smaller than enabler businesses (think Amazon vs. Rapid7). However the upside is there with less players, and it is a higher expected value outcome.

What other emerging markets are there? What are the protector businesses that will come of them?

Legalized cannabis is one that comes to mind.

Adam Marchick & Noah Jessop

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