5 Reasons Why the "Uber for Drones" Business Model Will Not Survive

I start to cringe now every time I hear the phrase; "We're going to be the 'Uber for [insert industry name here].'" The unmanned aircraft systems (UAS) industry is no exception. Companies are starting to emerge with plans to round up remote pilots into a comprehensive, on-demand database so they can attempt to replicate the Uber model and seek out ridiculous valuations from venture capitalists.

Good luck with that. I don't see it happening.

Don't get me wrong, I am a huge supporter of the emerging UAS industry and want to provide as much support to my peers as possible. Nevertheless, part of that support is providing thoughtful, honest analysis on what will work, and what will not. The "Uber for drones" business model will ultimately fail. Here's the Top 5 reasons why:

1) Small Pool of Certified Remote Pilots: In 2014, there were 214,000,000 licensed drivers in the U.S., according to the Office of Highway Policy Information. Comparatively, 12,000 Remote Pilot applications have been received by the FAA as of September 22, 2016. Even with the FAA's revised forecast of 1.3 million licensed drone pilots by 2020, the pool of potential remote pilots will pale in comparison to the number of potential Uber drivers within the marketplace for the foreseeable future. There will just not be enough pilot resources to be able to replicate "the Uber model" successfully.

2) Airspace Restrictions: Unlike America's roadways where cars and motorcycles are on equal footing with trucks and busses and a driver can basically drive wherever they wish; airspace operations are much more complicated. Small unmanned aircraft systems must obtain a Certificate of Waiver or Authorization (COA) from the FAA or Air Traffic Control to operate in certain classes of airspace -- especially near major airports. UAS's must "give way" to larger, manned aircraft whenever possible. Thinking about flying your UAS over a crowd of people, or flying at night? Think again, unless you have a COA. You still better check the latest Notices to Airmen to make sure you are up to date on any current airspace modifications. The issue of airspace separates those pilots and businesses who have COA's from those who do not, and creates a serious quandary surrounding when, where, and how UAS's missions may be legally performed -- especially in urban environments.

3) Payload Requirements: With either a car, truck, or van, an Uber driver can perform their basic mission of hauling people and personal items from point A to point B. The scope of work for drone missions are much more complex and not well-suited for a one-size-fits-all approach. Some clients will want still photographs, other will need 4K video, and some will want mapping services or other forms of specialized imagery. In many cases, a basic DJI Phantom 4 or DJI Mavic may not have the firepower to do the job needed by the client. A specialized payload package may be required which only some operators have access to. This further reduces the potential pool of remote pilots for certain types of jobs. Clients who are seeking a fast turnaround may not be willing to wait for a Remote Pilot to procure access to needed equipment. Cost variation in payload packages will also lead to pricing variations within the model which could become complicated and distracting, especially for clients seeking ease of use via "the Uber model."

4) High Marketing Costs and Lower Operating Margins: "Uber model" companies seeking to recruit and retain FAA certified Remote Pilots will need to spend considerable marketing dollars to build their technology platform, locate, recruit and retain remote pilots, and then advertise the service to potential clients to procure jobs for their pilot corps. This will be expensive. Unlike Uber which may be used by a person several times in a single day, UAS flight services will be used much more infrequently. This means that Uber can afford to pay more to acquire a rider (or a driver) who will deliver value to the company with repeated transactions on a daily basis. That type of consistent usage will not be prevalent with the UAS marketplace where clients are perhaps seeking UAS services a few times a month (at best). This will drive down the operating margin for companies employing the "Uber model."

5) Cutting Out the Middleman: I wish I could tell you how many times an Uber driver has given me their personal business card and asked me to call them directly anytime I need a driver. It happens a lot. It will happen even more in the UAS industry. Companies that employ an Uber-esque model will likely spent significant time, effort, and money to recruit Remote Pilot and connect them with paying clients who need aerial UAS services. These companies will be rewarded for that first connection and job. Perhaps even the second or third between the two parties. After that, it's over. When the Kansas farmer hires the drone pilot from the next county over to come and help him analyze his corn crop for the third time in a single summer, the two of them will put their heads together and finally figure out that they really don't need the middle man connecting them anymore. They will exchange contact information and do business directly with each other moving forward. Remote Pilots will love these "Uber model" companies for finding them new clients at little to no cost. In the long term, the companies will lose out.

Does this mean that there is no place for these types of business models in the UAS industry? No. I believe the perfect model will entail maintaining a cadre of dedicated remote pilots (your core team) and independent contractor pilots (subcontractors) who you can utilize much like a general contractor would operate in the construction industry.

Why? Write to me at [email protected] and I'll explain further.