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The drone ride from 3 Idiots to IPO | Ankit Mehta @ ideaForge
329 Plays1 year ago
Do you remember the drone scene in the movie "3 Idiots"? Well, the drone in that movie was made by a small company called ideaForge. Ankit and his friends bootstrapped ideaForge straight out of college and spent 8 long years before they were able to raise their first funding. Listen on to learn about the amazing journey of ideaForge and the evolution of the drone industry in India.
Note: This conversation was recorded some time back and the metrics mentioned may have changed since then.
Read the text version of the episode.
Read more about ideaForge :-
1.A Lot Of Civil Unlocking Is Happening As Rules Have Opened Up: IdeaForge CEO, Ankit Mehta
2.Ideaforge reaffirms defence’s central role in its strategy for growth
3.Revolutionizing Drones: CUMI & ideaForge Nanomaterial-powered future
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Transcript
Introduction and Journey of IdeaForge
00:00:00
Speaker
Hi everyone, I'm Ankit, co-founder and CEO of ideaforge.
00:00:16
Speaker
Just a quick note before this episode starts, we recorded this interview last year before the Ideaforge IPO. Do you remember the drone scene in the movie Three Idiots? That drone was built by a relatively unknown company at that time called Ideaforge. If you are at all interested in the equity markets, then you would surely know that today Ideaforge is no longer an unknown company.
00:00:38
Speaker
In fact, it just pulled off the most successful public listing of the last two years. While casual observers might think that Idea 4 is an overnight success, the truth is that there is a 16-year-long journey behind it, full of struggle, grit and perseverance. Ankit Mehta and his friends pretty much bootstrapped Idea 4 straight out of college
00:00:57
Speaker
and spent eight long years before they were able to raise their first decent funding round. Listen on to this heartfelt conversation between your hosts Akshay Dutt and Ankit Mehta about the amazing journey of idea fort and the evolution of the drone industry in India. And don't forget to subscribe to the Founder Thesis podcast and any audio streaming app for more such stories of grit and perseverance.
Entrepreneurial Beginnings and Challenges
00:01:26
Speaker
So actually what happened was that I was looking to start up pretty much straight out of college because I did not sit for the campus placements and I also did not apply outside for any further studies or anything like that. So I pretty much intended to start right off the bat and I was speaking to a few people but
00:01:53
Speaker
The terms at which I was likely to raise capital did not seem right to me at that time. What was the idea? So, I had filed a patent on a novel energy storage device, which was essentially storing mechanical energy in a way that you can accumulate it and then release it later.
00:02:19
Speaker
So, you can take energy from any disparate random source, but you can accumulate it in a reservoir of energy and then you can release that energy in a more controlled and more, you can say, smoother fashion to a device that can generate energy based on that.
00:02:41
Speaker
So that was one of the patents that I filed and based on that patent, we actually wanted to start a business to build these portable chargers that could charge mobile phones. Around that time, mobile phones had just started penetrating the rule.
00:03:00
Speaker
of the country and there were so many news items where you would see people charging mobile phones directly from Ledasen batteries. Some people would be charged paying money to get their mobiles charged at various retail stores and Kirana stores and stuff like that. So essentially it was those days and we felt that maybe if we gave them a means of sustaining this device, the usage will go up and
00:03:27
Speaker
We built our first hand-cramp charger at that time, which could simultaneously sustain calls as well. If you got a call, then you could speak on your phone and keep charging the device. So, and then we had a few innovative products around it as well. But the initial idea was that to work on alternative energy and that's how it started. And we ended up, you know, in a situation where
00:03:55
Speaker
I did not have any other backup at that time to sustain. For me, it's been very clear from day one that you pursue the path of your heart's desire till the time you can survive. If you can't survive, then you pick a temporary detour and come back.
00:04:13
Speaker
Our co-founding team, the technical team was still graduating, so I really did not have too much of a choice as well. So I got an off-campus placement and worked for six months, particularly trying to earn as much as I could. You know, helped me survive the next six comfortably, so I was happy. We started writing our business plan.
Incubation and Product Development
00:04:34
Speaker
And in 2007, we registered the company, we got some initial funding as an individual through a program called Technopreneur Promotion Program of the Government of India. That was the initial seed capital that we ended up making our first charges. Then when we got incubated, we got some additional funding through incubation. Where did you get incubated? We got incubated at IIT Bombay, sign IIT Bombay. So
00:05:04
Speaker
So how it started? We started with the chargers project, but we were also doing these sustenance projects on the side. While that was the main product, we always knew that we are not going to be building a company purely looking at alternative energy.
00:05:23
Speaker
And that's the reason why we came up with the name Idea Forge because we didn't really want to box ourselves into saying alternative energy or robotics. But we were always excited about mobile robotics. So most of our body of work was around either energy devices or mobile robotics, including the first prototype drone that we had built in 2004.
00:05:47
Speaker
So since then we've been working with this tech. So because we were already doing this, IIT Bombay aerospace department worked with us to further build on that technology and the efforts that we had built and we made some data loggers for them and we ensured that we are able to help automate those kind of operations. And then in 2008, there was this competition where alongside MIT,
00:06:16
Speaker
and MIT US and many colleges from the rest of the world, we competed in a competition called MAV 2008, which was jointly held by Department of Defense US and the Indian Army. So in that competition, we held the IT Bombay secure the pole position alongside MIT US. So then, because of that, there was a lot of
Advancements in Drone Technology
00:06:41
Speaker
Acknowledgement that there is a company or a team in India that can actually get these kind of technologies from scratch because at that time, there were very few sources of getting your autopilot from. There was one German company that we were aware of and those guys were getting expensive and it was hard for people to integrate if they do not have first principles understanding of what it takes to do this.
00:07:09
Speaker
So we ended up becoming attractive for a lot of DRD labs to deliver our tech to them for their programs. So we helped initially a lot of our autopilots that was the brains of the drone that actually governs how the drone would go from a location A to B that you pointed it for it to go to.
00:07:35
Speaker
We actually did a lot of vehicle DRDO in the initial days. So, we supplied a lot of our autopilots there. In fact, in 2009, we launched the world's smallest and lightest autopilot of that time. It would be almost half the rate of the nearest competitor.
00:07:58
Speaker
and would be able to control more types of devices than what the other autopilot used to be able to do. So, with our own approach... This autopilot that you were supplying, was it like a CPU in a way? Yeah, so it's... You can... Yeah, so...
00:08:25
Speaker
It's a computing device that has all the sensors on board that are required for the drone to understand its state and understand where it is in reference to the world and then take decisions according to its health and its state and continuously keep it flying and operating at a minimum, you can say a benchmark.
00:08:53
Speaker
So it would have like a gyroscope and GPS. Yes. And the DRU was looking to deploy this for like if you are conflict in the desert or if there's extra ice.
00:09:10
Speaker
Yes, so the promise of drones existed, particularly small drones existed even at that time. But usually people were looking at drones which were fixed doing drones. So even DRDO's had a lot of programs and projects around fixed doing drones where you could throw them with your hand and have them do a mission with a camera on board and then come back and land, be comfortably retrieved.
00:09:37
Speaker
So how does it fly then? What is the type of fan also to propel? Yeah. So if you're aware of radio controls flying, a lot of people do hobby flying, right? You can think of this as an evolved version of hobby flying where you are no longer flying the aircraft. You are actually merely, you can say,
00:10:07
Speaker
You are merely giving it the direction to go from point A to B, doing certain launch events. But in radio control flying, you are supposed to do the full manipulation of the system.
00:10:25
Speaker
In this scenario, you are essentially doing nothing. You're just sort of telling it to go from point A to V and it'll automatically figure a way out of going there. So the entire software and the hardware that does that real-time control of that aircraft, actures its brain, is what an autopilot typically is. Okay. The goal would be at point B to capture some images of things and then those images could be transferred from the
00:10:55
Speaker
Yeah, so usually those images are live concentrated. Okay, got it. So you were supplying your autopilot boxes to DRDO by dead watch.
Security Applications and Market Expansion
00:11:12
Speaker
So essentially in 2008 again, you had the terror attacks on Mumbai.
00:11:22
Speaker
And when those terror attacks were happening, we realized that, you know, we essentially were not able to help despite having the technology and when the naval helicopters were
00:11:39
Speaker
trying to look at the third and fourth floor of the Taj Hotel, we felt that we missed an opportunity to serve the nation and instead of putting more people in the harm's way, by obviously trying to do that, a drone could have done a much better job by staying out of here short and still be able to see and be not very visible. So that's when we decided that maybe the best use of our take is to
00:12:08
Speaker
build it for our forces so that they can deploy them for such situations, particularly in the last mile, where such large assets cannot really help you. So that was the thought I was saying. And that's how we decided that we've converted this into a product. In 2009, we launched India's first fully autonomous pure VTOL microwave. Okay, so what is, just break it down, what is VTOL?
00:12:36
Speaker
Vitor is vertical takeoff and landing. And then you said micro, what? Micro UAE. Micro UAE. So micro essentially is meant for a, you can say, backpackable UAE. So something similar, something that... And UAE is an aerial vehicle. Yeah, an crewed aerial vehicle.
00:13:05
Speaker
What were the use cases for that? What all sensors did it have on board? What did you price it at? So it had a camera sensor on board and it had two camera sensors. One could work in the day and the other could work in the night as well.
00:13:24
Speaker
because the drone is autonomously flying, even if you just have to give it location, you just have to ensure that the takeoff location is not covered with things overhead and it's a reasonably clear space to account for the accuracy of the sensors. But as long as those things were taken care of, the system would autonomously take off continuously being live video from that location and offer
00:13:52
Speaker
the ability to do dynamic control of the system. So, if you want the system to move a little bit less, try, go to another location, all of that was possible using the system that we had built. Okay, got it. So, this is the kind of stuff you see in Hollywood movies where they show targets, terrorists in Iraq, stuff like that.
00:14:15
Speaker
That is happening on much bigger systems. They are still drones, but they are much larger ones that need a runway to take off and land. What we build are drones that somebody can carry in a large backpack and deploy them at the last mile. You were selling this to defense organizations.
00:14:44
Speaker
Yes. So mainly we started by sending to our police forces and that subsequently went on to be used for or beyond that as well. Who was doing sales? I mean, you sound like a bunch of technical people. Someone must have needed to learn how to do sales, right? Yeah. So sales for us was something that initially one of our
00:15:15
Speaker
One of our other early teammates, Amardip Singh, he used to do marketing for us. He also was from IIT Bombay and he used to do the sales and marketing work for us. So in our case, the sales and marketing was primarily centered around the need for doing flight demonstrations of the system we had built.
00:15:38
Speaker
because at that time, it was really good enough for people to just see something flying because that wasn't such a commonplace sight.
00:15:46
Speaker
Most of our sales was just showing the system fly and getting like video and being able to see the aerial perspective or as we call it at times, the God's view of things. So we used to have a lot of fun in the field showcasing the technology to our end users.
00:16:11
Speaker
But police departments had the budget for it. You didn't need to really sell in that traditional sense of perfecting them to buy and all that. Essentially, they were already looking for this. You just had to show your product is technically served.
00:16:27
Speaker
So, the fact that it is available was a massive curiosity for everybody. Once they saw it flying, they obviously really, really liked what they saw and therefore were willing to carve out the necessary budgets to buy it. We also in the early days partnered with DRDO.
00:16:52
Speaker
to launch our Netra drone. It was the first flagship drone that we had launched Netra and Netra series is now in our fourth generation. And we are using that for, it's been used in many, many cases to do counter-insurgency, counter-terror or emergency response. Now they are also used for
00:17:20
Speaker
essentially mapping applications as well, where our drones are being deployed for creating land records for end users. So, how did you, like, were you able to break even once you started selling this to the police department? Like, what was it when you like? So, essentially what happened was that we started from a
00:17:45
Speaker
low, we started trouble, you can say a high volume, low margin, low tech product, which was the charges business that we were doing. From that to moving towards the low volume, but
00:18:05
Speaker
higher margin and you know, higher mix kind of a product. So we were very conscious that we will have to make money of our own because by then also one thing I had realized was that there was very, it was very unlikely to get funding for hardware projects, particularly if you wanted to get value from the deed. So
00:18:33
Speaker
We always were very clear that we have to build a product that the customer wants to buy, can use effectively and we can make money from it so that we can build the next one or the next one or the next one after that. Not just build it for the customer but also
00:18:57
Speaker
Invest in technology so that we can continuously improve what we are building. So that consciousness was there in us and therefore we were quite, you know, appropriate in terms of how we price it. It was commensurate to the, you can say it was commensurate to what it would have taken to survive in those times. Right, right.
00:19:23
Speaker
What kind of adult revenue are you doing in those years, like 11? Or I think about Corona soup or maybe three crores. I would have to go back and check much. Yeah, just as a boy. Yeah, I agree.
00:19:45
Speaker
So, you know, 2015 is when you got a reasonably good-sized seed funding round. How did that come about? So, you know, our story has been, and I say this very often these days that, you know, as far as funding is concerned, we were like, in every event, we were like a tiger out of his cage in a zoo.
00:20:12
Speaker
because people come to the zoo to watch the tiger, but if he's out of his cage, nobody wants to go near him. So that's who we are. And very, very challenging to get funding for these kinds of ideas. And problem was that, you know, it was just the times, right? Those times were all about the software, all about asset rights.
00:20:41
Speaker
In this, we earn an app. Nobody really understood in the venture world what it takes to build a hardware company.
00:20:48
Speaker
So that was, it was, it was what it was. And, you know, even when you would get funding offers, they would not sound right. And after having spent enough years in doing this, we knew that if we can't be valued, right, then there is very little merit in sort of getting into that partnership, right? It's only going to be win for one side and it's not going to be win-win for both of us. So.
00:21:13
Speaker
That way, we were very conscious. So, we had to prove the business model every step of the way before we got funding. So, in 2015, we got funding because we had one of the countries
00:21:28
Speaker
capital procurement, which usually the Army Navy Air Force headquarters do on the Air Force to give them mini wavy drones for some of their forces. So that contract, when we signed, was sizable. And therefore, because of that, people felt that, no, it seems like a business can be built here as well. And that's how
00:21:58
Speaker
interest came to us and because a lot of the capital was visibly going to go into execution of that contract itself, we had the good fortune of being able to raise some capital in 2015.
Funding and Business Growth
00:22:11
Speaker
And that was all you can say quasi pre-series A kind of funding that means. How big was that contract? Capital from the Air Force. I think cumulative value at that time was close to about
00:22:27
Speaker
between $5 to $7 million. Yeah, it was a big contract for those times. It was the largest in that time. So backwards, we journey there. And who was doing fundraise? That's also like Rick Sains, to do networking and get a chance to meet people and pitch and all that. How did you manage that?
00:22:57
Speaker
So I used to do it mostly. And so what happened was that after the initial days, right, it was very, very difficult to even attack the events where we would go and pitch because any industry event that would happen was essentially an event where mainly people were looking at IT products.
00:23:25
Speaker
So even if we would go and we have had events where people got up and said that I have goosebumps listening to a two-minute story that I would have shared about what we were doing with this technology here.
00:23:45
Speaker
But we would never get funding. So that used to be the case. So it was kind of hard to network also because the ecosystem was exhausted to that extent. Every new move wanted to know that there wasn't enough there in the private side of the house to be able to get. So we had to survive, but then we did find after we went through a few milestones approving that larger business is possible here,
00:24:14
Speaker
And slowly things started to turn around and get a little bit more aligned in that direction. And who was heading R&D? I guess the biggest, like maximum amount of money would be going into R&D product. Absolutely. I mean, I still, it's a very famous story in art.
00:24:44
Speaker
our company. We were on our last 20,000 rupees that we had for discretionary spending. This is 15th. Even before that problem. And we have been through near death so many times that it's not even funny. That was our reality for the most part of our entrepreneurial journey.
00:25:12
Speaker
So we had to take a call between getting a new water cooler and or getting four new motors to experiment a new type of aircraft or something like that. I don't think anybody irrespective of who was managing financials ever took the decision that we'll get the cooler but not the remotors.
00:25:32
Speaker
So that was our reality. So all money would essentially, anything we could spare would go to development and that's the reason. And we were very clear that in the absence of being able to raise on the business or on the idea,
00:25:49
Speaker
They only think that we increase the intrinsic value of the business as the technology it has. And its technology cannot suffer for the want of capital. Therefore, you have to earn enough that you can invest behind technology. That's the reason why we had a reasonably bootstrapped business for the longest time.
00:26:10
Speaker
As founders, you must have taken home very little money. If at all, they want to be the ones you can't be able to pay yourself. Mostly barely subsisting. So did 2015 even change? You had a big potential contract and you also got some amount of funding.
00:26:33
Speaker
No, to be honest, we are very clear that orders and funding are both great events to celebrate. But they are not the goal of what we are doing. And that recognition has always been there with us because we've seen times irrespective. And the only thing that matters to us as founders in most cases is that
00:26:59
Speaker
what we have delivered to the world, is it adding value to the world or not? And that is the only thing nobody can take away from us. What the product has done for the society or for the customers who have used it is something nobody can take away. But everything else is, you know, ephemeral and momentary.
00:27:22
Speaker
Funding is great, but it's just a means or it's a privilege to get funding, to have enough resources that you can chase behind your dreams a little bit faster. But they are by low means, events to, in my view, to consider yourself as having arrived because these events come with a lot of responsibility as well. Including getting a customer order is the same.
00:27:50
Speaker
unless you deliver and he uses or he or she uses the product and gets the benefit from the product, your job is not done. Or you have not arrived. The day your product is doing its job is the day you have arrived. At least for that hard world view of things. Tell me that journey like 2015 or like once you got that big contract and subsequent to that, what happened?
00:28:19
Speaker
We got the big contract. We got a few follow-on contracts as well. And we were cruising along really well, actually. In 2016, we signed our CVS investment. And in 2017, we closed it as well. And that was about net money. Yeah. And that was essentially the... So you need... you used to need...
00:28:46
Speaker
foreign investment approvals at that time. So, we are the first drone company to get institutional investment in the country and we were attacked even then by Infosys, Qualcomm and Celesta Capital. Celesta is a fund that is being invested
00:29:07
Speaker
founders have been investing in tech companies for a very long while and their own background is often building technology companies through very, very high and larger news.
00:29:19
Speaker
We had the good fortune of actually finally meeting people who understood what it takes to build a hardware business. And that's the reason why they backed us and then because they backed us, we had a bunch of additional interest from others and that ended up creating a good cycle for us. So that was a good moment.
Regulatory Challenges and Industry Growth
00:29:42
Speaker
But at the same time,
00:29:43
Speaker
the environment had become a little tricky because the regulations for drones that started to loom large and the 2014 note had banned private use of drones and then subsequently the new rules were to come out and those rules in the draft that were coming out were a little bit more challenging than one would like to have it.
00:30:12
Speaker
Then finally in 2018 when the rules came out, everyone knows that they were quite difficult to implement, but not probably because they were difficult to implement technically, but more because they did not envisage any gap between
00:30:33
Speaker
a government system being ready and the enforcement of the route. So what the government could have done, they could have used it a little bit differently, but there's stands, a hardline stands that everything will happen through the system, ended up creating a little bit of a log jam at that time. And for a couple of years, the industry was drifting along very, very, very, very, very, you can say on the margins.
00:30:59
Speaker
For an outsider who's doctor of this industry, what was the problem with these rules? Why did it crash the growth of that industry? So these rules essentially banned the use of drones by any civil user.
00:31:19
Speaker
without having a software piece that needed permission from the central government to deploy. So, it's like needing ATC permissions from the airport's authority every time you fly. Now, that mission for an industry like this, if it has to come manually, or if it has to come physically, or if it has to come through automated system, the system has been ready. But there was no system.
00:31:47
Speaker
and there was no system ready for that. So, till the system is not ready, you do something to keep the cardi moving, right? But that was not adopted as a measure and we waited for him to go dive very, very fast. In the end, even after, I think, two years, we were nowhere close to the finish line on that.
00:32:10
Speaker
So, that is where, you know, things were a little tricky because what was promised as readiness could not have been achieved. Considering a government system and a government, this one, it could not have been achieved. So, probably at that time that became a challenge. But, I mean, now that's all in the past because come pandemic, you know, everyone realized that, you know, we'll be losing more lives
00:32:38
Speaker
By not using drones, then we will lose by using them. So, the shields were broken. Suddenly what was good to have became must-have. Drones did pretty much everything it looks like to me during the pandemic. So, from spraying the streets to
00:32:59
Speaker
us deploying drones with megaphones on them or doing lockdown surveillance and all sorts of activities based on the knowledge of that time and that all of us were carrying, we've done so many things which were in that direction, right? So, essentially the pandemic and those events subsequent to that changed the color of the industry and we are now on a
00:33:29
Speaker
Cruising exponential growth path in terms of the industry itself. This restricts the new law which gave it private demand for drones, but your demand was largely government, police force, air force. See, the way some of the government demand works is that they were at that time testing these systems.
00:33:55
Speaker
So, if they are inducted in a reasonable number initially, then they want to assimilate operationalize, then more demand will come in, right? So, some of that was in that direction. And things were happening there, and that's the reason why, you know, whatever numbers happened, even those happened because there was some demand there.
00:34:15
Speaker
But in general, the growth or the exponential growth doesn't come purely from some of these kinds of customers. I mean, presently it is also because of the environment we are in. But generally, you expect enterprise and private side to grow much faster. And that's the reason why it was an important part of operationalizing drones.
00:34:42
Speaker
on a daily basis in our life. So, that did not happen. For many years, it was under restrictions, rules that were kind of half. Even if the rules were not half-baked, the preparation to implement them was half-baked. So, there ended up creating a goddess.
00:35:03
Speaker
Okay, okay. Help me understand the private demand for drones. What kind of bodies or what kind of customers buying drones? What are they using it for? So they're being used in mines for doing volumetric estimations, hall road mapping, all sorts of activities in mine, cut fill estimates, waste estimate.
00:35:29
Speaker
They are used in agriculture for spraying, they are used for agriculture in precision agriculture wherein you can judge the health of a crop progressively and if a specific area is not perfect, then you can do interventions in those specific areas, improve the quality of output as well as the
00:35:55
Speaker
maintain or increase the yield overall on that farm. So, essentially agriculture is another large use plus power line inspections, inspection of transmission towers, inspections of mobile towers, all sorts of use cases. Presently, the government is using drones for creating land records.
00:36:19
Speaker
you're essentially getting drones are taking high resolution images. And then they're being converted into maps, which are very, very accurately geo-referenced and property cards are being created with the reference of the same. Okay. So what changed pandemic? You, you said that, uh, that once a mindset changed, mindset changed that suddenly from what was buying was enabled through special exemptions. Then, uh, then you know, the,
00:36:51
Speaker
The locust swarms came in. People thought that drones could be used for helping spray insecticides for locusts to nook and to spread. They used drones for that. Then the Swamitva scheme, which I was talking about, where the government of India is mapping all the 660,000 villages in the country and is planning to create a property card.
00:37:19
Speaker
and distribute them to villagers, who will get ownership of their land for the first time. And that is what is happening on that scheme. So, that was launched by the Unregal Prime Minister. Then, we had the Galvan Institute, where
00:37:40
Speaker
The main reason why we got into that issue was because there was no information of what was happening at the border and because that information was not available.
00:37:53
Speaker
we ended up getting into a tricky situation. So that triggered emergency procurement from the government side where they wanted to induct technologies that could help them keep an eye on the border or better manage those situations and those kind of excavations. Then the war happened between Armenia and Azerbaijan, wherein Azerbaijan was able to completely outgun Armenia purely on the basis of what drones do in that.
00:38:23
Speaker
So, you had a slurry of things that happened which forced the government to not just open up private use for these kind of scenarios but accelerated the need to have enabling regulations as well as different side of the house also realized that unless they invest behind this technology, there is a fear
00:38:51
Speaker
that the next country that does not have drone power could be the next area as well. So in that broad sense,
00:38:59
Speaker
The entire outlook towards the industry changed in a short span of nine months. And we had a new set of rules that came out in 2021. And since then, we opened up our airspace in a big way to allow this technology to flourish in our countries as well. In fact, now it is a static mandate of India to want to become the drone hub of the world.
00:39:25
Speaker
Okay. So, what are these new rules? It is K-121. Now, you no longer need approval for every flight. So, as long as you are operating a type certified drone in a green zone, which is 85 to 90% of the country, up to 400 feet, you don't need anyone's permission. So, it has become quite equalised to flying or
00:39:51
Speaker
or taking a car out on the road. You need a street meeting car. You need a license plate and you need a driving license. For drones, you need a type certified drone with a pilot certificate and a unique identification number, which is called UIN. And you are free to fly the drone up to 400 feet in green zones in the country. And if the zone
00:40:17
Speaker
anything above 400 feet, unless it is declared as a red zone is a yellow zone. And if something is declared as a red zone, then you need central government's permission to operate in those areas. And these are typically areas around efforts for certain critical installations and stuff like that.
00:40:38
Speaker
How did your customer base evolve? Like you were both doing government sales and once COVID hit, how did your customer base evolve?
Post-Pandemic Opportunities and Expansion
00:40:47
Speaker
How did sales cycle and sales organization evolve? So, the pandemic did not really change the target customer segment. It only sort of accelerated some users and
00:41:09
Speaker
you know, certain other users were getting explored faster than the ones you would have thought we get explored a year. So with Swamitva, mapping became a rage and suddenly mapping has become a real thing. Now nobody wants to look at mapping in the conventional sense, in the sense that the whole age-old method of mapping the
00:41:36
Speaker
total stations and only total stations and those kind of things is done for. Now people are looking at mapping using drones primarily as far as land survey mapping is concerned. Similarly, asset inspections is becoming real. Security and use of drones for security situations has become real.
00:42:02
Speaker
So broadly it is just reinforced and some other use cases have come to the fore like spraying has come to the fore in a big way or spraying using drones is something that a lot of people are looking to explore.
00:42:18
Speaker
I would say that customer base hasn't changed. It's just that, you know, deployment across the entire base is actually now accelerated in the last. Mapping customer is still the government only, right? I guess for asset inspection, for spraying, these would be private customers. Well, even mapping, there are private needs for mapping as well for project planning, project progress monitoring, many, many, even on the private side, wow.
00:42:48
Speaker
Like say a map by India, we are using it also. Yes. Okay. Interesting. Okay. And as an organization, you know, like what kind of avenues were you doing? I guess you also raised more funding after that, right? Yes, we did.
00:43:13
Speaker
When the pandemic started, things were really touch and go. I mean, it was probably the lowest point for the industry in many years because regulations were really not letting anything flourish. And then pandemic happened, things started opening up and things started looking well, you know, on the upswing as well. And then we had some job programs come in.
00:43:34
Speaker
Some of our drones, the first drone company in India to get their drones certified or qualified for the Swamitva use by the Survey of India. So, our drones started getting deployed for the Swamitva scheme and that progressively
00:43:55
Speaker
started to build the order book and now over the last few years, two years, the last two fiscal is not including the current one grown like 10X. So, that's been a good jump in terms of how things are done. 10X is amazing. I guess you also raised about 17-18 million dollars in the last two years. Yes. So, basically,
00:44:26
Speaker
last we had in 2017 and we were always frugal about how we spend and where we spend and that ends up.
00:44:35
Speaker
helping us sustain this challenging period. But the moment things got back on track, they got quite a good flurry of orders. And there's the emergency procurement from the government of India, also for the Swamitva skiv and stuff. So that ended up.
00:44:55
Speaker
creating a good momentum where we were able to raise funds from our existing investors as well as we had Florentry, Eximbank and some of our existing investors jump into our series B now. Okay, almost 20 million I guess your series B. Yeah, yeah on Tonto's.
00:45:19
Speaker
And what's your current data? Like this year, what are you expecting? That I can't disclose, but yeah, it's going to be, it's going to be healthier. Like have you grossed 10 million ARR? Yeah, yeah, long back. Oh, you're now touching or going towards 50 million kind of target. I'm guessing that.
00:45:50
Speaker
Not necessarily yet, but yes, we are on our way.
Drone Technology vs. Satellites
00:45:56
Speaker
Amazing. Amazing. I want to understand drones versus satellites.
00:46:04
Speaker
Because a lot of these use cases, satellites are also being used for it. What is the difference? Like say mapping, like say inspecting crops. So I don't believe that there are these satellite images on which machine learning algorithms can be used to do a lot of these similar use cases. So help me understand where drone fits in, satellite fits in.
00:46:32
Speaker
the difference between the two. Drones are very different, you can say, you know, technology as compared to satellites because drones, particularly of the class that we make, can be numerous in numbers trying to map the same patch of land.
00:47:00
Speaker
Imagine how many satellites can you have up in the air versus how many drones can you have deployed to map that same patch of land. Of course, it is also needless to say that the resolution at which you can map using the drone and the fidelity that you get in terms of data is almost 10x better than what satellites can do, even at the best resolution today.
00:47:28
Speaker
So, you will get 10x better data quality, you will get far more, you can say, far, far better availability of data from, in that nonsense, because, well, so, if you want real-time data, you cannot have one large sensor map the entire time. So, it's the same problem with
00:47:58
Speaker
or looking at very, very large drones, right? Ultimately, if you want to resolve the same object on ground, then the drone is going to look at the same patch of land and is going to deliver footage for that little patch of the ground only. And the context is that that has to be done a thousand
00:48:26
Speaker
kilometers away from the takeoff location, then it is all good. Then you need a larger system that can go a thousand kilometers away and then give you data of that one spot with that one small spot, right?
00:48:40
Speaker
or even for a satellite, it's pretty much similar if you want real-time intelligence. So one, there isn't substitute for real-time intelligence, but to have a device that you can't have one satellite look at one batch and then manage an entire battlefield or a batch in front of any other real data that's spread over a wide sector.
00:49:04
Speaker
So, essentially a lot of differences from that point of view and then even that larger drone, if you don't have to go 1000 km and you go see something 10 km away, then that 1000 km drone is an overkill for that patching. You would rather deploy a small drone that can go 10 km and get the job. It's almost like, you know, you always can drink Dal from a lady.
00:49:30
Speaker
But if you want to feed a horse, maybe, in fact, or an elephant, but for an elephant, you need a bucket. But for a human, you need a table stool. So it's something very similar in the one sense that stack lights are green. And they have very specific tasks which they can do really well, which is to cover very large areas, but the temporary
00:50:00
Speaker
feedback and availability of that data cannot be as heavy a number as what you can get using a drone. Sometimes clouds can obstruct the view of satellites, particularly if they are doing regular color imagery and stuff like that. Whereas drones operate, most of the small drones operate below cloud cover, so you can get that much better data in those times. Okay, okay.
00:50:29
Speaker
So what is the cutting edge in drone technology? Like for people who are not from this space, understand what can a drone do today? What all features have? I mean, for example, everyone knows what is cutting edge mobile phone like has a full day battery life or whatever. So what is cutting edge drone technology like?
00:50:57
Speaker
So, this will depend on who you speak. For example, for idea forge, cutting edge implies performance, reliability and autonomy.
00:51:10
Speaker
As much as the product can deliver better performance, can deliver more reliable operations, which implies can sustain heavy duty cycles of operations, and can be autonomous, which implies that it can help deploy the least expensive resource and operations.
00:51:29
Speaker
and probably the more needy one for a job as well, then you are doing justice to your customers by giving him the lowest possible cost of ownership for what he's buying. So we essentially look at these three parameters as our measure of what's cutting edge. And we do believe that we have leadership in some of our product categories in that area globally.
00:52:00
Speaker
Okay, so what do you mean when I say deploy lowest cost asset? Your system is essentially controlling a cluster of drones, what to decide? Which drone should be deployed for which objective? Is it like that? No, no. So what I mean by that is the following. So for example, if you want to map a very large area, then what do you need? You need a drone that can map as much as possible.
00:52:30
Speaker
a chunk of that area every slide by retaining the need for accuracy and everything. Two, it should be able to sustain repeat use because if it can only cover X amount of
00:52:48
Speaker
in a given time or in a given flight, then you should be able to fly it many times because you can't expect these systems to remain airborne all the time. They are all systems that have to take off from the roadside, be deployed to map an area which is completely unstructured and has to be carried
00:53:13
Speaker
on a bike or on foot or however, right? So, they have to be like to it as in sugar, obviously have limited time in the air, but how much more time can you pack for every palm that goes up in the air is essentially performed, right?
00:53:28
Speaker
So, you've delivered that performance plus you've delivered the ability for the drone to do repeat of this performance or remain safe in tough environments or sometimes even be operable in tough environments, you can ensure that the user gets more life out of their system. So, you've given him or her more coverage per flight and then you give him more number of flights also.
00:53:58
Speaker
So now he has the lowest possible mix of cost per flight as far as amortization of his hardware is concerned, right? Despite sometimes having a higher upfront cost of rushing. So that is a very important factor. So his amortization on the hardware is the lowest and then if it is
00:54:25
Speaker
in a way automatic or if it is autonomous, you don't need a very, very smart person to operate. You need a medium skilled person to operate it. So you don't have to go for the most expensive resource in the market to deploy, but you need to
00:54:46
Speaker
grow after the most sustainable resource to deploy. And therefore, as a combination of the cost of ownership, you end up creating the lowest cost of ownership for the customer despite being more expensive upfront.
00:55:02
Speaker
And that's desirable because at scale, the cost of ownership is what matters. Opponent cost doesn't do anything if you have to replace the system many times by the time the job gets done, or you have to maintain a large number of extra batteries, or you have to maintain a lot of visual oversight onto the system and stuff like that. Essentially, these factors are what we believe
00:55:28
Speaker
important and that's what defines cutting edge for us as far as this tech is concerned presently. And of course, I mean, the data that you get from the system has to be of adequate quality that allows for the inference the user wants to make from it. So that is a given, that has to happen otherwise it's of no use.
00:55:49
Speaker
Okay, so help me understand the software limit. One part of your software is inside the drawer, which is that meet its objective, whatever parameters are set like to visit a patch of get images and cover it and come back. What else is this?
00:56:09
Speaker
So there is the communication piece there and we make sure that the protocol that we use allows us to communicate with the drone by the drone giving you high quality imagery back in real time. At a large enough distance that the user feels more freedom in his operation.
00:56:36
Speaker
So that is one part communication. The other part is the camera controls, the camera, the stabilization that goes onto the system or the camera itself plus the control software that does both the job of helping you manage to drone in its flight.
00:56:59
Speaker
given the accessory instructions for our mission. At the same time, it also has sometimes features that allow it to do image processing on the data received in the real time displayed to the end user and stuff like that.
00:57:14
Speaker
I was reading recently that Russia is using Iranian drones in the Ukraine world.
Future of the Drone Industry
00:57:21
Speaker
So how is it like an advanced trip out like Russia is from Iran? I was a little curious about that. If that is something which you would like to cover. So what happens in this technology? It's a very democratized technology in the advanced sense. Drones, building a drone,
00:57:43
Speaker
is not really, you know, an exclusive science anymore, right? Because open source softwares are available, autopilots are available, control softwares are available, and there is enough that you can do with those to be able to at least rig up something well and progressively build in the right direction for reconcile.
00:58:08
Speaker
However, and also because the certification standards that one needs to comply for drones are in a way undefined because they are defined for manned aircrafts or defined for consumer products but not defined for something intermediate like what these guys are. So essentially, it's not very difficult to build a drone in terms of
00:58:38
Speaker
the initial stages and you can build quite reasonably sized systems in that direction. However, if you were to ask the question of, is that the best in the world? I'm quite certain the answer would come out to be not necessarily. But is best in the world essential for a specific job? Maybe in specific times it is not.
00:59:06
Speaker
In other times when you are not in such an emergency, it might be and therefore you would not rely on whatever is embedded.
00:59:17
Speaker
So, what is the future for the drone industry? How big is this bucket likely to get? Do you have some stats? How big? What is it estimated to reach?
00:59:37
Speaker
So, last year when the government announced the data for the PLI scheme, they mentioned that they received applications that added up to about 320 odd crores. So, that was including drone OEMs and drone component manufacturers. So, that was the size of the industry which
01:00:04
Speaker
There are reports on the Realize scheme itself that's talked about its potential for growth subsequently. So it is definitely slated to grow at a very fast click in the short term. And it is expected to grow and continue to grow all the way till 2030. For example, our own vision of being the drone of the world, if that has to mean something,
01:00:33
Speaker
then it is going to be a very, very large opportunity for the local industry as well. So this would be total cost of production by drone companies. Total revenue of the drone companies that were seeking the subsidy, the PLI subsidy.
01:00:59
Speaker
So the total market might be say three or four times of this number, including the non subsidy business. Not necessarily because the threshold for applying for subsidy was only two quarters. So it might not be as large because the threshold was fairly low in this particular. Okay. So are you global? Do you supply to outside India?
Global Expansion and Indigenous Production
01:01:29
Speaker
Are you global? Are you going global? What is your plan? Yes, yes, yes. So just in September this year, we took for the first time our systems to the US market and we're already delivering to some international markets like Oman, somewhere in Africa, even to our neighbors, some of our neighbors.
01:02:00
Speaker
Okay. What percentage of your drone is indigenously made? Like you must be importing some parts, some parts must be made in India. Yeah. So as far as our drones are concerned, we are able to
01:02:19
Speaker
We've been able to indigenize from a value perspective more than 70% of our system is indigenous. It could be higher than that as well in terms of indigenization. So now we've done pretty much. We've pretty much built this technology from scratch. And in a way, if you remember,
01:02:48
Speaker
the movie 3Dettes and our early prototype in the movie, we all pioneered this space. Oh, that was your job in 3Dettes? Yes, yes. Oh, okay. So, this was a time where nothing open source was available. So, essentially, we built the entire tech stack ourselves.
01:03:17
Speaker
That's the reason why we have one of the most vertically integrated shops in this domain. Amazing. Okay. And what's your account now? How big are you as a organization? So we are about 250 odd people on roles and another 200 odd people.
01:03:39
Speaker
on contract side of the house or essentially production. So directly employing close to 450 to 500 people. So you produce in-house or you do party manufacturing?
01:03:54
Speaker
We do a lot of third party component manufacturing as well as subsystem assembly, but we do the system integration ourselves and we do the testing delivery to the end customer at this point.
01:04:11
Speaker
Okay, amazing. And that brings us to the end of this conversation.
Conclusion and Listener Engagement
01:04:15
Speaker
I want to ask you for a favor now. Did you like listening to this show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in this show? I'd love to get your questions and pass them on to the guests. Write to me at adatthepodium.in. That's adatthepodium.in.