Live from Web Summit: Drone Delivery & Turning Buildings into Teslas

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Emma Varvaloucas (EV): Welcome to a bonus episode of What Could Go Right? I’m Emma Varvaloucas, executive director of The Progress Network. We’re hard at work putting together a season two, which will premiere in the spring. And in the meantime, we have a number of bonus episodes for you that’ll come out in the coming weeks. Recently, Zachary and I went to Web Summit, a conference that brought together 30,000 people and startups of all sizes to Lisbon, Portugal. While we were there, we sat down to talk with a few people for the podcast whose companies and work are trying to make the future better. They’re game changers in their respective fields. And all of them are aiming to impact society positively.

Our first conversation was with Donnel Baird, founder of BlocPower, a company that retrofits residential buildings to wean them off dirty energy and become green. They operate in New York City and are hoping to go national soon.

ZK: So we’re with Donnel Baird here at Web Summit catching up with him, talking about all things buildings, green, sustainable tech-land, all the catch words you need for the reality that we crave. So Donnel, how did you get into doing all of this? How did you get into retrofitting buildings and becoming the green entrepreneur of fuel and internet. How did that all happen?

Donnel Baird (DB): So it’s great to be here with you guys. Portugal’s fun. Even though my phone isn’t working. So I started out in green energy. I was, it was my assignment from the Obama administration. I was a senior staffer for the first Obama campaign. I did seven primary states and then the general election in Pennsylvania. And once we won I had fallen in love with my wife. I didn’t want to leave her in New York and move to DC. I’m not a DC person. And so I asked them what kind of assignments I could take on from New York. And what we came up with was as an outside consultant to the US Department of Energy during the stimulus. So if you guys remember back in 2009, we were investing six and a half billion dollars. Vice President Biden, President Obama US Department of Energy were investing six and a half billion dollars in green buildings through the stimulus, the 2009 stimulus. And so my job was to help supervise and implement that green buildings program. Some of it worked, some of it did not work. And so, 10 years later, here I am, still trying to figure out how to make the greening of buildings in America a reality. Because it’s important, right? I mean, 30% of US greenhouse gas emissions come from American buildings. So we have to reduce emissions from buildings. And that’s what we’re about.

EV: That was what I was going to ask. Why buildings? Because it might not be something that’s on people’s minds, that’s like a huge generator of something that uses fossil fuels a lot. But you’re saying that actually, one, it is a huge contributor, and two, it’s easily done. Is that true with the tech?

DB: Yeah. So I mean, cars are sexier, I guess, depending on how you feel about Tesla and Elon Musk and all that stuff. People get very excited about electric vehicles and changing the transportation sector in greening it, but buildings, there’s 125 million buildings across America plus or minus. And they all use gas or oil. They mostly use fossil fuels. In certain parts of the south, people are running on electricity anyway. And then the utility industry that feeds energy to those buildings burns coal or gas. And so we need to shift all of that to renewables. We don’t have to invent anything new, right? We don’t need a new moonshot from Google X. There’s existing, all-electric technology that allows us to turn buildings into Teslas. We can make buildings smart, healthy green, all-electric. And we can do that with existing heat pump technology. And so we just need to go building to building for 125 million buildings and install it. And voila, we’ve reduced 30% of US greenhouse gas emissions.

ZK: So why aren’t people talking about this more? We’re sitting here while COP is going on in Glasgow—I guess you’re going after you’re here. But President Biden’s big address really had to do with methane capture and gas. I mean, a lot of the programs that are talked about have to do much more with what people think of when they think of emissions, right? They think of the energy industry, they think of the oil industry, they think of transportation, as you just said. Why isn’t more attention given to what you’re talking about? Is it just not sexy enough? I mean, I don’t know.

DB: It’s not sexy enough. So, like Justin Timberlake, we are trying to bring sexy back to green buildings. I think that, you know, the president announced a methane leak reduction. Like they want to reduce methane emissions across the world, which is great. We’re running gas pipelines in New York and across America up to all of our homes to run gas into our buildings, so we can burn it, so we can cook with it, so we can heat our showers with it. And those gas pipeline infrastructure, it’s pretty leaky. We have a partnership with a tech company called Aclima. I think they’re here. And they have like Google street view cars where they have methane leak detectors on top of a car. And if you drive around Brooklyn—I’ve been in the car and seen it—there’s far more methane in Brooklyn or in Manhattan when your kids are walking to school, like they’re like breathing in leaking methane from gas pipelines. So I was excited to see that the president announced that we’re going to lead the world in reducing methane and gas leaks.

ZK: This is why I don’t live in Brooklyn.

DB: Where do you live?

ZK: I live in Manhattan.

DB: Well, you’ve got a lot of gas.

EV: I used to live in Brooklyn and now I’m worried about my health.

DB: I’m going to send you guys some photos of the maps. There’s black carbon, there’s ozone, there’s methane, there’s nitrogen dioxide. If you guys have gas stoves, nitrogen dioxide is slowly poisoning you and your family with your gas stove.

ZK: I have induction.

DB: Okay, there you go. So we need to, we need everybody to have induction, all-electric everything. And part of that is the president’s focus on reducing methane in the gas system. And then part of that is the vice president and the secretary of energy did come out to JFK yesterday, where I met with them, which was amazing. And we did talk about heat pumps and moving buildings to all-electric. And so that was… One of the two major initiatives that they announced yesterday from the White House was, globally, President Biden talked about reducing gas usage around the world. And in America we talked about the solution. And so the vice president talked about making all electric buildings is the solution and the response to reducing methane across the world.

ZK: And so all this needs to be subsidized, right? I mean, the only way this happens is if there is some degree of… The pain of transitioning from an old system to a new system has to be offset. Otherwise people won’t do it, right?

DB: That’s exactly the role of the American government. It’s supposed to make long-term plans and make some investments to help the private sector understand where to invest infrastructure dollars and pension money and long-term money to help people make this transition. So we do need some federal rebates and subsidies to kind of get the snowball rolling down the hill. But, you know, Goldman Sachs our biggest investor, they announced a $750 billion investment infrastructure. They have loaned us, I think like 70 million bucks to get this going and develop a new asset class for clean energy. And so Wall Street’s ready to go. We’ve got a new partnership with Apple, a new partnership with Google. Silicon Valley’s ready to go. People are, people are ready to work on this and move America’s buildings to all-electric energy.

EV: So we talked about the climate section of the business, but there’s also a racial equity section that we haven’t touched on. Explain a little bit how that works and also how you balance, you know, this is a business, for profit, but it’s also a social enterprise. How do you walk that fine line?

DB: So we’re a public benefit corporation, which is a new classification of corporation. It means that in our corporate charter and operating documents, none of our venture capital investors can ever fire me or sue me because I did not maximize their for-profit returns as financial investors. I, as the leader of the company, have the ability to balance the need for financial returns with climate impact and with economic development impact and workforce development. And so, legally, like my job is to balance those three things in the day-to-day operations of our corporation and to report on them. So it’s a new kind of model, so that’s cool. And I’m glad our VCs didn’t force us to change. And some of them were quite thrilled, frankly. So that’s one part of it.

I mean, we do have a new project with the de Blasio administration. The mayor has hired us. We won a contract. It’s $35 million to train and hire 1,000 low-income individuals in the city’s poorest neighborhoods. These are neighborhoods that have been neglected. It’s Brownsville, Brooklyn, where Mike Tyson is from, where he grew up, terrible neighborhood. It’s East and West Harlem. It’s Hunts Point which has one of the highest crime rates in the city, Jamaica, Queens, highest crime rate in the city. And so in these neglected communities, we’ve hired so far about 600 people who need work and who have been involved in incidents of gun violence. This is a way of reducing crime, but we’re training them on how to install all-electric heating and cooling technology in New York City buildings. We’re training them on how to do solar panels, how to install wifi so that they and their kids and grandparents have internet access for free during the pandemic, through these rooftop antennas. And so, you know, the idea is how do you make money while helping people reduce greenhouse gas emissions and get connected to the internet? We think there’s ways to do that. So that’s what we’re about.

EV: It seems like something that’s, it’s almost like too good to be true, like make money and you do good. But it’s it’s possible that maybe the winds are blowing in that direction generally. Do you think that we’re going to see more and more companies that are set up like that?

DB: Well, we, I mean our company we’ve, I think we’ve grown something like 1200% this year. We got selected as one of the top 50 companies in America, by CNBC as a disruptive startup. And part of the reason is not that we’re so great, but that there is a mega-trend across America and across the world of moving to more responsible social and climate impact. And so if we’re going to build a digital platform to help cities and states and utility companies and individual building owners become greener, become more responsible socially, if you build a digital platform to help everybody do that, then you should have venture like returns and be able to build, you know, multi-billion dollar companies. And so, you know, venture capital investors go where the money is. And we think the money is in helping people, you know, not fry the planet. So that’s what, that’s what we’re about.

ZK: Are you unique. And I mean that in the sense of you don’t really want you to be unique, right? You want 50 of you, you want a hundred. You want a lot of people, a lot of different companies and a lot of different cities and a lot of different states and a lot of different countries doing the same thing.

DB: What does it look like to have a Google for green energy? What does it look like to have an Uber for green energy? That’s everywhere all around the world to connect into every building, to help every single building in the world have the opportunity to reduce greenhouse gas emissions by 30%. That’s what we’re building. So we’re working with Jeff Bezos and the Earth Fund and his team. They’re going to give us money to build a digital map of every building in America. And every building in America is going to get a free plan on how to reduce their greenhouse gas emissions for their specific building. Then we’re going to work with the Biden–Harris administration to train and hire tens of thousands of young people who are coming out of college on fire about climate change—forgive the term, but you know, the planet’s fucking burning, so we can pull punches. We’re going to train those people to go door to door and building and building and use their smartphones to go through the green construction plans to upgrade the buildings. And we’re going to go build into building and green out the building. So at scale, I mean, we want to, we want to be a hyper-aggressive technopole just like everybody else. It’s just that we want to do it on behalf of saving the planet and creating some jobs for low-income people.

ZK: Well, that’s a good place to end it, or start it as the case may be.

DB: Yeah, I’m a tech baron like everybody else. I’m hyper-aggressive, and we’re going to do this.

ZK: That’s cool. Thanks.

EV: Big thanks to Donnel Baird for taking the time for us.

Our second conversation is with Bobby Healy, who’s the founder of Manna, a delivery company that delivers everything from books to coffee by drone. They’re operating out of Ireland right now, but you might be seeing them in your neighborhood as well soon.

Zachary Karabell (ZK): So drone deliveries, commercial drone deliveries, raises all these… If you’re of a certain generation in the United States, think about the Jetsons, the new world where everything is automatic and robotic. So is this something a lot of people really want, or… Because I know a lot of people get a little freaked out by the idea of…

Bobby Healy (BH): For sure there’s question marks over “does the world want a full control version of drone delivery?” Well, 98% of respondents to surveys, independent surveys, want and will pay for drone delivery. And fun fact, we already deliver to 40% of the homes where we operate on a repeat basis. And that 40% number, compared to road-based delivery, it’s nearly three times the average use rate of road-based delivery. So, early days, of the 10,000 people that we serve, very strong signs that people want them.

EV: What do they like about it?

BH: They like the speed and convenience. It’s obviously hugely entertaining. The first drone delivery is like the circus coming to town. And everyone’s [inaudible]. It’s so viral, like literally the whole town comes out for the first delivery. And then every road is, we light up a new road. Everyone’s out there filming, they’re tweeting Instagramming, but then it quickly becomes, I won’t say boring, but all of our users now when they use the service, they don’t come of their house anymore. We feel a little bit sad about it. They stay in their house, and they track the drone, and we give them a live feed of the drone as it flies, and they track it. And you know, the moment the drone has dropped the package, they get a notification—that’s when you see their door opening; they come out and grab it. So it becomes very normal very quickly, but part of what they love about: it’s cheaper than road-based delivery.

They don’t have to tip the drone, and the drone doesn’t have COVID. The drone doesn’t eat some of your friends fries. You know, there’s all sorts of good things about robots that, yes, there’s also the dark side: “Does it take jobs away? Does it make noise? What about my beautiful sky?” All those things. But the fact is is that we’re better for the environment. We’re quieter than the road. We’re quieter than an electric car driving past. So once people actually experience it, all the doubts go away, questions go away.

ZK: I mean, that is an interesting question about the job question, right? This is true of autonomous vehicles. It’s true of drone deliveries. It probably is not helped by the fact that Amazon is aggressively moving into the drone space and they don’t tend to have a public image of wanting to help. And I’m not saying that that is the right public image. It just is. And then people get worried about surveillance, and not relevant to anything you’re doing. I’m just saying these are, these are where people enter into it. But I guess in rural areas, which are having a hard time maintaining population anyway, the job issue is much less acute, right?

BH: The job is definitely there. And the success of Amazon is the failure of local businesses. It’s literally that simple. We work with a local bookshelf in one of the towns where we operate. That local bookshop has a better product than Amazon has. You can get any of their books and have it arrive at your house in less than five minutes, without needing to leave your house. So we actually, we’re certain that giving a community, be it rural or suburban or high-density suburban, giving them that infrastructure where they can just move stuff around, it turns every physical business into an online business because we can do all the transactions online. We don’t charge those suppliers, by the way. We charge the consumer a delivery fee. So, no, it’s going to be a massive creator of jobs. Not so great if you’re a delivery guy, but otherwise it’s great. And in parallel for businesses to compete with the big guys.

ZK: As somebody who owns parts of three independent book shops, that would be great, to be able to just…

BH: Imagine if you’re a website. Imagine if you could reach 50 square miles of customers in three minutes for free. How would you change your business?

ZK: Right.

EV: So explain to us, you’re operating out of Ireland right now, right?

BH: Yeah.

ZK: And Wales.

BH: We have an R&D center in Wales. We don’t fly in Wales.

EV: So for those of us who are not in Ireland and will not experience drone deliveries probably in the near future, explain to us how it works. So we can imagine this.

BH: Yeah. So you get our app, you discover all the local stores that have drone delivery. You go into normal basket process, you purchase, you know, your coffee or your book or whatever it is that you want. We’re monitoring the weight and volume of your basket. That’s the only thing we do is monitor weight and volume. You do the transaction. We notify you when that cargo is being loaded on the aircraft. You get your flights [inaudible]. We tell you, “we will arrive in two minutes and 12 seconds.” Like we tell you to the second when we’re going to arrive. It’s not like, “we’ll be there soon.” It’s literally to the second. And we’re usually within about five or six seconds of our planned times. So the experience is, you get notification when we’ve taken off, you track the air… in real time you see where the aircraft is, and you get another notification when we’re overhead. About 30 seconds away from your house we’ll say, “nearly there,” look up [inaudible], and then another notification when the bag is on the ground. And that’s it. And as I said earlier, most of our customers don’t even come out of their house now until the bag’s on the ground. It’s just delivery now, not even drone delivery. It’s just, it’s so simple. It’s so natural. And I know, as wild as it sounds, it makes so much more sense than a three-ton vehicle burning diesel with a human being in it that’s doing a job that makes no sense for a human to do.

EV: So maybe I can’t order 10 books at once, but if it’s really fast, I could order five.

BH: We have that all the time. So we have, if you order it, so lots of families, they won’t agree on what to eat, right? We have families all the time ordering from two or three different restaurants, and they just get what we call an armada, which is three drones, three drones, three different restaurants, or a squadron, which is five. So you can order some books in a squadron, and the only difference is we cue them all up 60 seconds outside of each other. So you’re only gonna have to wait 60 seconds for each other before you start eating.

ZK: So is Ireland unusually friendly at a regulatory level to allowing this?

BH: Europe is. Europe is very advanced. Europe is very cohesive, straightforward thinking, and very pragmatic view of the drone future. And then Ireland in particular is very business-friendly. It’s a hugely business-friendly country, almost like [inaudible], but the regulator in Ireland particularly has been pushing the envelope as far as pace goes. And that’s what’s enabled the industry to work in Ireland. And what we do in Ireland, we have a European-wide license, so what we’re doing in Ireland, we could go anywhere in Europe and do the same system.

ZK: And are others doing it?

BH: No, it’s us and Alphabet are the only two companies that I feel are ready to scale or in a position to scale.

ZK: And will the regulatory framework in other countries, whether it’s the United States, [inaudible], Asia be much less friendly? I mean, you do, obviously the China… Alibaba and Amazon in the United States are testing out various forms of drone delivery. But there are some real governments getting kind of nervous.

BH: I think the US is one of the slower markets, and it’s probably a couple of years behind Europe. There’s lots of other markets, the Middle East, particularly, Latin America, very, very forward-thinking. And what’s going to happen, it’s a political thing really.

ZK: Right, it’s not a technology thing.

BH: Not at all, no. The problems are all solved technically. What’s going to happen is, USA is going to see our progress—we’re commercializing. We’re going to be reaching about a million customers in the next 12 months with drone delivery. It’s going to be as normal as a ham sandwich. But the thing is, there’s gonna be a lot of questions to ask in the United States. Why aren’t American companies leading? Why aren’t, why can’t I have a ham sandwich by drone in America, or a cheese sandwich, whatever your favorite sandwich is? And that’s gonna, that’s gonna force the change to happen. So it will just be a correction of pace in the US, and that’ll happen in the next 24 months.

ZK: And then the technology itself, the hardware, right? You make most of what you…

BH: We make it all, yeah. All the software, all the hardware, we even make the, even the carbon fiber airframe, we make that. And the batteries, we don’t. Batteries and sails we import. Our drones are, you know, I probably shouldn’t say this, but they’re not the prettiest looking drones you’ve ever seen.

ZK: I doubt people are using you for aesthetics.

BH: They’re not really, you know, they’re not buying them. We just operate them. And all you should care about when you think about drones is are they safe? The safety is what enables scale. You can’t, we’re going to be doing a million or 10 million flights a day. All we really care about is just how safe the aircraft is. That’s it, that’s all that matters.

ZK: But wouldn’t you, at some point, I mean, it’d be unusual for you to expand and be both a service and a hardware manufacturer.

BH: I think in this case, it’s the sensible thing, the full stack. We can sign up a large chain or large brand, like we’ve signed up Coca-Cola for example, right, and we can say to Coca-Cola, “we’re going to roll out everywhere in all of these markets and you don’t need to worry about anything.” We take care of the capital rollout, the capital manufacturing, the operation of service, everything, and we protect your brand as well. And we don’t get between you and your customer. It’s important for us to be very clear about being a full stack delivery company, not a consumer brand, which is what we are.

EV: And what does make a drone safe? I mean, should we be worried about them falling on our heads?

BH: I mean, if the drone’s a bit of an unusual drone… So we have, for example, three flight computers in the drone. Three totally different avionics stacks. And what that means is each one of those stacks thinks it’s in control of the aircraft. It’s flying, it’s meeting all the sensors. It thinks it’s in charge, but only one of them is. And then we have a hardware voting system that basically monitors the health of those flight computers and switches off to a different computer if something’s gone wrong on the main one. And you need three, because two isn’t a vote, it’s an opinion. Three is a vote, right? And then we have two power systems. So our battery can totally fail. Even an exploding battery won’t stop our aircraft. Motor failure: we have eight motors instead of four. If you look at most drones today, they have four motors. If any one of those motors fail, there’s no way to recover that aircraft.

It’s going to spin horribly into the ground. So we have eight motors. We can live on four, but we have eight. We have all sorts of safety systems that are both heavy, expensive, and difficult. It means that the mechanical part of the equation is resolved. And so we can fly at the same level of safety as commercial aviation over your community, without anyone even needing to think that there’s an issue. And again, we’re highly regulated by aviation regulators. So they’re, they’ve got oversight and they look at us as if we’re both an airline and an aircraft manufacturer. So we have to have all the governance, all the process, all the safety systems of an airline, and then all of the process around designing and building an aircraft. It’s really incredibly difficult.

ZK: So how big in size could this get before you’re essentially flying autonomous airplanes?

BH: Well, we are. We’re autonomous now.

ZK: No, but I meant how large. Like, could you deliver a couch?

BH: Oh yeah. The cargo… So you break it… The energy equation doesn’t work above, we think, about five to 10 kilos of cargo. And what I mean by that, the cost of the energy and the depreciation on the battery versus the value of the product your selling.

ZK: But presumably that will change as battery technology continues to improve and composite materials for the drone itself continue to evolve.

BH: The way to practically think about it: Our supermarket [inaudible] or Tesco, they have 19,000 different products in their store, and with our new aircraft, we can fly 15,000 of those 19,000 products. So choice is there, convenience there. But yeah, you’re not going to do your weekly shopping. You’re not going to say, I need five kilos of potatoes and, you know, a load of water from Fiji or something like that. You’re gonna go… The bulk heavy stuff, you’re going to always source a different way. But the high-frequency, impulse, or high-demand things, you’re only going to get by drone. And we can, as I said… Six and a half pounds of cargo at 30,000 cubic centimeters is a lot of cargo. And it’s 95% takeaway meals.

EV: Yeah, I work from home. There’s plenty of opportunities I can think of. “I Want a can of peanut butter right now. I want my lunch right now. I don’t want to go out of my house and go to the grocery store if it’s going to take me 35 minutes.”

BH: A bottle of milk is one of my most popular things to deliver. So, you know, we live in Ireland where everyone’s drinking tea all the times a day, and you go to the fridge, no milk. We have a super offer on milk. You get milk to your house in four minutes. You might’ve made the tea, realized that there’s no milk, and you don’t need to remake the tea to get there quick enough. It’s just, you have to think about this as if your arm was three miles long. That’s the way to think about it. You literally can reach into everybody and everything in a community and get what you need instantly. So it’s a totally different behavior from the draw.

ZK: So if we’re talking to you in five years, as we kind of wrap it up, would you… Do you want to be in every country in the EU? Do you want to be saturated, and like, what’s your… And are you then an actual manufacturer opening factories that manufacture your own drones, and then logistics, and then delivery?

BH: Yeah. Correct. It’s going to be, think of Tesla. Tesla build their own cars. We’ll be building our own aircraft so that we can control the quality and safety and the scale. The scale is in our hands then when we do that. We will have rolled out across most markets in Europe. We’ll be in the United States, and we’ll be one of like maybe two or three of the big players. Will Amazon do their drone delivery? Yes. And will they do it well? Yes, they’ll do a great job. But it will be for Prime customers, and we want to be for everybody else. We want to be the arms dealer of moving things around quickly and efficiently, power everyone to compete with each other. And we’re really the antidote to Amazon in that place.

ZK: Thank you, Bobby.

BH: You’re very welcome. Pleasure.

EV: Thanks to Bobby Healy for sharing about a delivery method I would unabashedly call really cool.

And for our What Could Go Right? Listeners, be sure to come back next week for part two of our Web Summit conversations.

To find out more information about The Progress Network and What Could Go Right?, visit theprogressnetwork.org. You can also sign up for our weekly newsletter to stay up to date with everything happening with The Progress Network. If you like the show, please tell a friend, share an episode, or leave a rating and review on Apple podcasts, Stitcher, Spotify, or wherever you’re listening to this podcast. What Could Go Right? Is hosted by Zachary Karabell, and me. Emma Varvaloucas. We are produced by Andrew Steven. Jordan Aaron is our production coordinator. Executive produced by Jeff Umbro and the Podglomerate. Thanks so much for listening.