#24. Drones in Africa
Drones are happening in Africa first, Uber retreating from Southeast Asia and some thinkboi material.
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Drones are happening in Africa first, the US follows
“It’s a pretty amazing paradigm shift. Most people think that advanced technology is going to start in the U.S. and then trickle its way out to these other countries. But that is not what we’re seeing. At least with certain kinds of technology, it’s quite the opposite.” – Keller Rinaudo, co-founder of Zipline
Back in the past, when people dreamt of the 21st Century, they would dream of flying cars in cities. They would be pretty bummed at the fact that we keep using roads and we were locked at home not so long ago. 🥲
But ask yourself the following: do you really need a flying car if the roads are just fine? Probably not. And the strongest force for innovation is need.
The same happens with drones. When in my logistics class people would daydream of them, our lecturer would remind us how hard it is to regulate for them, probably why they are not around. Boring.
A few days ago I discovered a not boring company: Zipline. They manufacture small autonomous airplanes transporting medical supplies fast in Africa, in countries such as Rwanda or Ghana.
Zipline is born after a pressing need: medical supplies delivered fast.
The road infrastructure in Rwanda is poor, especially in rural areas, and the rainy season doesn’t help when you embark on this journey on muddy paths. Zipline has devised an autonomous airplane capable of undertaking this journey fast. The airplane is pretty cool, below is a video on how it is made.
Zipline doesn’t define itself as a drone company but as an instant logistics company. This little nuance influences their modus operandi: the process is optimized for speed and safety, both in the airplane and in the operations. Instead of landing with the medical supplies at a hospital (time-consuming), they parachute the medical supplies down so that somebody picks them up, and the plane returns to the takeoff location.
Zipline operates nowadays in several countries in Africa and has been a key part of the COVID relief efforts. They have been delivering facemasks and vaccines to Ghanaians, which qualified as having the most prepared supply chain in Africa for vaccine delivery.
Last year they arrived in the US, as part of the medical relief efforts for COVID-19, and they are pretty optimistic about achieving a commercial license for FAA. Zipline is valued at $2.75BN, and last month they closed a Series E funding round for $250M.
Failure story: Uber leaving Southeast Asia
First mover advantage matters when you are entering a market, especially in a winner-takes-it-all market. Uber knows that.
But the first-mover advantage is not everything, especially when the second player does it better than you do. That was the case for Uber in Southeast Asia.
Back in 2015, Uber was enjoying its first-mover advantage and focused on securing a dominant position in the largest countries in Southeast Asia: Malaysia, Indonesia, and even China.
But an underdog appeared to take that market share: Grab.
Grab entered the Southeast Asian market with similar aggressive promotions as Uber, but some strategies made them achieve a longer-term win:
Grab used a localized approach, city by city. Uber replicated the Western App without significant changes when arriving in Asia. Grab, with their localized approach, created offerings adapted to each city, such as the Grabbus service in Indonesia for people to attend the mosque.
Grab had faster reactions to changes in demand. Grab, being aware of traffic jams in some cities, offered the services of Grab Bike, where taxi drivers would ride a motorbike. Uber took 17 months longer to deploy this. Cash payments were also an inflection point: Grab was ready, Uber wasn’t.
Nonetheless, it is worth noting that Grab had 5.7 times more money to burn to win the Southeast Asian market: $4BN dedicated to the expansion. Uber allocated only (only 🤣) $700M; and his big difference can explain a less localized, slower updated version of Uber.
But something that can hardly be bought with money is reputation. Grab knew it was a reality that taxis were not trusted: stories of assault or robbery made some people reluctant to ride them alone. Grab focused on being safe, including a ride-tracking feature that you can share with a loved one so that they know where you are. Uber, on the other hand, suffered strong reputational damage: it got banned in Delhi for cases of rape by Uber drivers.
Uber sold its Southeast Asia operations to Grab in 2018. But it wasn’t bad for Uber at all: they got a 27.5% equity of Grab in exchange, under the promise to never come back. And another hidden winner is our beloved Softbank: an investor in Uber, which got that extra stake in Grab.
Source Recommendation: Unevenly Distributed
Unevenly Distributed is a bi-weekly newsletter tracking the diffusion of tech, entrepreneurship, and VC in Emerging Markets. It includes original analysis, curated resources, and perspectives from operators and investors across Emerging Markets.
It is written by Derin Adebayo, who leads Global Access to Capital at the non-profit Endeavor, and has previous experience at a startup, a VC, and an incubator.
This one gave me imposter syndrome (like Rest of World did): it is probably how Emerging Markets explorer 🧭 would look if I were more experienced. Thinkboi material, brilliant insights, I have a ton of notes referring to it. Derin recently started writing it and I’m looking forward to more.
You can read it here: https://unevenlydistributed.substack.com/