When Government gets out of the way!

If Government Gets Out Of The Way
Drone Delivery Could Be A Reality Within Monthsarlier this week I attended Zeitgeist, a wonderful conference which Google organizes each year. In between sessions, the Google X team shared an early look at “Project Wing", which promises to deliver items via drones anywhere in a 5 mile radius within 5 minutes. Here’s a brief clip of what we got to see: a drone delivering a package into a drop area (luckily, it contained a water bottle and not eggs!).
The prospect of an automated, instant delivery system for the planet is incredibly exciting. It makes no sense for a human being to climb into a 3,000+ pound gas-combustion vehicle and drive 10 miles to pick up a 2 pound package, as happens today. Nor are people willing to wait for batch delivery by Fedex or UPS, as happened in the past. Drones could be 10 times cheaper and 10 times faster than any current alternative; they offer the best hope of instant, personalized deliveries in a resource-efficient, low cost way -- if regulators allow it.
Technology Moving Quickly
The good news is that the general flight technology for automated aerial logistics is months — not years — away from being ready. Looking more closely at the model of Google’s drone (above), we see that Project Wing is a big quadcopter with fixed wings to improve its lift-to-drag radio. Most likely, it has a lithium ion battery for forward flight and a lithium polymer battery (10x the power) for hovering. The guidance and navigation system for these kinds of hybrids are significantly more challenging, as the Marines' experience with the V-22 Osprey demonstrates. But object avoidance is a much easier problem to solve for a drone than for an autonomous car, as over 30 feet they are unlikely to hit anything other than the occasional skydiver or hot-air balloon.
All the components of the technology exist today; they just need to be integrated and tested to deal with a drone’s biggest enemy — weather. There are powerful airflows over ridges, and rain and snow to deal with. Closer to the ground, weather is more variable and it will take some testing to ensure drones are rugged enough to deal with whatever the elements will throw at them.
Regulation — Not so Much
While drone technology is evolving quickly, the regulatory framework for drones in the US appears to have stalled, or perhaps even be moving backwards. Under current FAA rules, it’s possible that even Google’s simple demonstration was illegal. Any commercial operation of drones is not allowed unless you get a Section 33 exemption which gives you the right to operate on private land which you own, or at one of 6 approved testing sites in the middle of nowhere. This week, the FAA announced that drone hobbyists must register their drones or face unspecified penalties.
Amazon and Google Will Lead In US
Despite regulatory obstacles, there are reasons to be hopeful. Drone delivery is a key strategic battle ground, so both Amazon and Google are pushing hard for sensible drone regulation. If Amazon can have drones flying from its fulfillment centers directly to your home, it can provide instant gratification, removing any need to ever visit a store. Google cannot afford to cede that ground, for fear Amazon would then capture all  searches with commercial intent — the bulk of Google’s AdWords revenue. So both are investing heavily in drone development, without any pressing budget constraint. And both are lobbying hard for rules that would allow drones to fly below 400 feet in a kind of "boundary layer" between earth and sky. If drone delivery is to happen in the US, it will most likely be with these two leading the way.
Startup Opportunity In Emerging Markets
For startup companies, it may be better to look towards emerging markets. Many less developed countries have large open spaces, making drone delivery easier. Poor road infrastructure and the absence of delivery alternatives such as Instacart* or DoorDash* also make it much more valuable than in US towns which are already well covered. Perhaps as a result, regulators in many emerging countries are more willing to take risks. This gives startups the freedom to focus on solving real customer problems, such as medicine delivery to remote areas, rather than worrying about the government. We can reasonably expect drone delivery to be one of the few areas where more innovation will occur outside of Silicon Valley, and the US, than within it.
However things play out, there’s no area that offers greater promise for the future. Just as the Internet took the cost of moving information to almost zero, so drones could do the same for physical items. We should look forward with optimism to a future of autonomous vehicles, on land and sky, that will massively improve our standard of living.
* Sequoia Capital is a close business partner to, and investor in, DoorDash and Instacart.