Industry Leaders Interview with Bobby Healy, Founder, Manna

InterviewFood DeliveryGrocery Delivery

The drone delivery service is trialling its technology in Ireland with plans to launch in the UK and US.

Irish drone startup Manna Drone Delivery has just secured a $25m (£18m) investment as it looks to launch delivery services in the US and UK.

Set up in 2018 by entrepreneur Bobby Healy, Manna has developed aviation-grade drones that fly at 80km/h and deliver groceries, takeaways and medicines, within a three-kilometre radius in less than three minutes.

Manna is piloting its service in two towns in Ireland and is soon adding a third.

In this wide-ranging interview with Future Food Finance, Healy talks through the Manna business, which he believes will “change society”, proclaiming that “there is no way that things will be delivered by roads in five years time".

Healy also tells us what gave him the inspiration to launch Manna, working with governments and regulators and future plans for the business including undertaking the "biggest IPO ever".

Interview

Paul Cuatrecasas: So Bobby, can you give me the 30 second pitch of Manna Drone Delivery? Where you are today and where are you going?

Bobby Healy: Manna is a drone delivery-as-a-service. We want to power large brands and large retail organisations to provide their last mile delivery service.

We aren’t focusing on building a B2C Brand. You might have seen we just did a deal with Samsung, which is a good example of the future for us. Our deals with Tesco and Just Eat would be very similar.

If you look at those three, we’ve got an aggregator, a retailer and a direct brand. That is a beautiful encapsulation of what we're about. We're simply a delivery company, but we're a delivery company that goes as the crow flies at between 60-80 kilometers an hour, and gets everywhere in three minutes.

We're going to change society with this, not just retailing profits, or efficiency of retailing, but we really think that we can make physical businesses work online as a pure online play. It’s that ambitious.

We are helping big brands get directly to consumers with an online product, and allowing them get to consumers in five minutes.

The last thing is that we're real. There's one town in Ireland (Oranmore) that we're operating in, with just over 10,000 people…each one of those lines is a delivery to a unique customer. We've reached over a quarter of the population in this town already. What’s important about it this is a couple of things:

Drone delivery is real. Customers are using it today. And, it's viable at commercial scale.

So actually, people are very comfortable adopting the technology, and once they do adopt it, they don't go back to road-based delivery.

PC: I read about the Oranmore project in Unmanned Aerospace in October, which gave some details as to what you’re doing. What has been the impact of Manna for Tesco, for Just Eat, and the local merchants? What have they said about the impact on their businesses from this?

BH: The merchants are the most interesting. If you look at a Tesco, the store we work with has 26,000 products, and we carry 9,000 of those 26,000 products. And they're in ‘learn’ mode.

If you look at Tesco’s long term strategy, it's about urban fulfillment centers on the edge of large populations and very much about online delivery. It's very much ‘learn’. What Tesco is doing now is they collect all the data because again, it's their customer, we're not a B2C operation.

So, Tesco sees in real-time when an order comes in, when it gets dispatched when it gets delivered. They're very much in learn mode and they will be for quite some time.

Ultimately, what Tesco want to see is what we've already demonstrated, that adoption happens, that this isn't some crazy thing that everyone gets a delivery once and never again.

The fact is that 70 per cent of our customers now are repeat users. They're just normal repeat users. That's the giant guy.

Then there’s the small guy. The local coffee store, called Thomas and Co., we've doubled their basket value. Outside of drone delivery, you get about a 9 EUR / $10 (£7.20) basket value. That's on average 1.5 coffees and a croissant. Now it's 19+ EUR with us.

The reason is that, in what world is coffee delivery real? In our world it's real. We've doubled the business of these coffee stores. The reason, it's so obvious, but sometimes it needs to be said, is that we get there in three minutes, and we don't spill the coffee.

 

PC: Wait, what?! Well, I tell you what, my wife would go crazy over this!! We’d see a Starbucks drone at the house every morning!

BH: Everyone's going crazy for it, Paul. We'll see one house making two orders at once from two different coffee shops and it's because the wife likes Brasco coffee, the husband likes Tomas and Co, or coffees for the parents and hot chocolates for the kids.

But we already see behaviour going to what would never have been done before. Hot drink delivery, that's one thing, but one household ordering from two different places at the same time!

We have a bookstore that's on the platform, a tiny bookstore, all the usual bestsellers, your standard village bookstore.

The difference is that this bookstore has a better product than Amazon can provide to the population of Oranmore - every book they have on their shelf is available online, and delivered in less than five minutes.

That's important, because we really think that this allows for a much wider deconsolidation of big retail.

The reason that happens is because if you get the same day delivery from Amazon, that's great, right? Fantastic product.

But, if you give them a five-minute delivery promise, that's a whole other thing, right? That changes things.

Then if you look at our relationship with Just Eat. Like Uber or Deliveroo or any of the big platforms, super businesses growing like crazy, really serving a market and a consumer need, even prior to Covid, but during Covid even more so.

The economics of operating road-based delivery, relative to the basket value that they're dealing with, like $20 (£14.40)-$30 (£21.70) basket value, and a human being that's being paid $5 (£3.60)-$10 (£7.22) an hour or, or more, their average cost to operate a delivery across all of the platforms is between $6 (£4.33) and $9 (£6.50).

Straight out of a basket value of $20 (£14.40)- $30 (£21.70) is crushing economics. Not only difficult to scale, because it's human, but it just ruins the business model.

PC: So just going back a little bit here. How do you procure your drones, the equipment?

BH: We design and build our own aircraft. The company that wins in this space will be the company that gets to scale safely, and there's no compromise available there.

So therefore, you build a very unique drone that actually has commercial aviation levels of safety. That ain't easy. There's a fair bit of engineering, obviously, but it's also about testing and validation of every single thing, constantly.

There are no commercially available drones to do what our drones does. Obviously, the delivery mechanism is not in a lot of drones, but more the safety. For example, we carry three completely separate flight systems, and any one of those flight systems can fly the aircraft.

I love consumer-grade drones, they’re great products, but you fly them 10,000 times, and flight 10,001 it is going to fall out of the sky, and that's simply not an acceptable number (for us).

To get to 100 million or a billion you need a very unique architecture. So, we design and build our own drones. It's this same argument with Volocopter. If there's commercially available aircraft that has the requisite levels of safety, we'd be happy to adopt them, but they just don't exist today.

PC: That's interesting. The operating platform is also challenging to build, you've got that. Now you're getting data accumulated experience on that, which will only grow over time. And as you grow, you'll be able to adopt new technologies, if others can achieve that same commercial flight capability.

Just backing up a bit here, what actually inspired you to set this company up? I can see you're an entrepreneur, school of hard knocks, etc. What inspired this?

BH: It's funny, right? Because it's such a crazy idea. It's so out there to a lot of people. But to me, it's always been super obvious. There were definitely a couple of moments that were triggers for me to spark the curiosity.

I live in a suburb of Dublin. A place called Rathfarnham. It's about five or six miles outside of the city centre, and I can't order anything for delivery here. I have to get my car and drive down to the restaurant, which might be one or two miles away, and nothing's available.

25,000 people live in this suburb, so why isn't somebody serving that need? The reason is very simple, because it's impossible to profitably serve 25,000 people with road-based delivery, it just doesn't work.

A lot of restaurants do this on their own, which is why Just Eat works so well. Any restaurant that does it is ultimately eating into their margin by doing that. And yet, everyone is willing to pay to get stuff delivered to their house, but when does it all fall apart? It falls apart at the weekends when everybody needs everything at the same time, and you just can't scale up to that.

So, you're right. I'm an entrepreneur, I see a big opportunity in the problem, and if you can solve the problem, but then I'm also a programmer, so I'm a techie at heart. My background has always been building code and I still write code. So, I'm able to understand how to solve the problem.

Knowing what I know about drones and that confluence of commoditized drone technology and gigantic last mile delivery problem, to me, it's the most obvious thing in the world.

PC: That's exactly it, that's what I say all the time. No one believes it.

BH: Yeah, it'll change. We already have a lot of inbound from the US. We've hired our head of USA, our head of regulations in Manna helped to write the regulations in Europe and works with the FAA (Federal Aviation Administration) a lot, so we can see that there's an accelerating rate of forward movement in the USA.

Ultimately, the way all this works is, markets harmonize regulation. In the aviation space, they're all talking to each other. Singapore is waiting to see what the Americans do. American is looking at the EU saying, ‘what's going on here’, and the EU are dying to share all the stories.

Between us and Wing, we're real, we're delivering, we have all the safety systems, all the airspace integration that's required. So, we're kind of there.

PC: What gave the IAA (Irish Aviation Authority) the confidence to go ahead with this, to be the first out there to say, you can use it live in a town where people could get hurt or damaged or there may be safety issues or noise?

BH: That's a super question because everyone's looking at us saying how the hell are they allowed to do that?

The other regulators call the IAA saying, ‘what the hell is going on here?' because I tweet that picture, but it's very simple. We have close to 50,000 successful flights on the clock now without a hitch. We publish that data.

The IAA look at our data, inspect our operation, see our processes, and know that we are an airline and an aircraft manufacturer rolled into one. We have all of the governance and safety systems of an airline or an aircraft manufacturer, or both. We're completely open, they get right into our data.

I can literally pull up a report that says, show me every flight where a battery failed, show me every flight where a motor fails, show me every flight where a prop failed over this wind speed, all these different things we've shown it all, we've demonstrated failure in every single component of the aircraft many times and demonstrated the mitigation that takes place if you lose a motor.

We have eight motors. You can intentionally lose motors. We design motors to fail as a test, but we also lose them unexpectedly.

You get about 500 hours out of electric motor. There's a range of 500 to 1,000 hours, and no matter what you do, it will fail at some point. If you have four motors and you lose a motor, you're going to fly like a brick, as they say. So, you need to have an expectation that a motor will fail, and then how do you deal with that?

So how do the IAA let us do what we're doing? Because we've grown for three years here in Ireland. You crawl, walk, then run, and we're at the walk phase. We don't take any risks, we’re very conservative on our operation, we have visual observers everywhere spotting the aircraft. We over egg the safety right now.

But we'll have an EU wide license in the course of next couple of weeks.

In 12 months, we'll put another half a million-plus flight on the clock that will give not just us a lot of comfort, but also gives the regulator's a lot of comfort to let us increase the scope of what we're doing.

The nice thing about us is that we've raised finance, so we don't have to make money. What we're about is proving that we can do it, that it's safe, and that it's scalable, and that's great for the regulator, because it means that the regulator's learning as well.

If we didn't exist, and if Wing aviation didn't exist, there'd be no one for the regulator to learn from to understand what actually it is they need to regulate and how do they regulate it.

So it's an incredibly strong partnership between us and the IAA at the CEO level, where we're working together to break the mould. We want to go at a commercial pace, but not yet. We want to the IAA to be ready to allow companies like us to go at commercial pace and to be almost the incubator for this.

PC: The IAA presumably is close to the EASA (European Aviation Safety Agency), so they're talking a lot and they're in sync on a lot of this?

BH: Correct.

PC: Now do the IAA and EASA see the benefits for the public? For the citizens? For governments? For saving time, money, taxes? Saving on budget improving? Do they see how important this is for society?

BH: Yeah, they're definitely influenced by it. Their remit is air and ground safety, and nothing comes ahead of that for them. So, is the air safe, and is the ground safe? And people on the ground, obviously.

But they also have secondary considerations, both positives and negatives. One of them is privacy, another is noise. They look at that and right now, they're working with us, but they're going to want to know what our position on this is, and ultimately, if we have a problem with noise or privacy, they're going to clip our wings, right.

Then, on the other hand, government are all over this because this is going to be such a stimulator for jobs, and not all in the R&D.

We're an Irish company and we're building aircrafts. That's the short answer.

The long answer, though, is if you bring a pervasive or ubiquitous system to suburban and rural towns in the market, it allows decentralisation to happen.

If you give rural and suburban dwellers an equal footing, and rural and suburban vendors or small businesses an equal footing to big tech conglomerates, you allow governments to have a strategy that involves decentralization, that actually works.

Everyone gets broadband, but what's the point if you still have to order a book and it comes from Holland, 1,000 miles by boat etc. So, there's a lot of stimulation that happens when you provide the two that we're providing, which is just a scalable and super-efficient system. So, the government see jobs and innovation here, long term and short term.

PC: Do they also show interest in the ESG elements? This presumably produces less carbon emissions, uses less power etc.

BH: It's not one that they think about straightaway when they think of us. When we say what are our benefits, we're private, we're safe, we're secure, all that stuff, and we're green.

What is green? We're battery powered. So, in the future, we can get our energy from green sources, like wind in Ireland, and there are ways to buy green energy, but most importantly, we don't produce any CO2 and never will.

The alternative is your average motor vehicle that does suburban deliveries, a car, not a bike. A car weighs two and a half-three tonnes on average and it produces massive emissions, there are different arguments for that.

But, it's not just CO2, look at the amount of road deaths in the world and the injuries from using the road. Then the subset within that of food delivery drivers that are killed or injured every year. It's significant.

That's not going to be a problem with drones. So yeah, governments know about that and they think about it, but the big reason they lean in is for the job creation and the effect on the economy that we'll have when you have this pervasive.

PC: You have said that by 2026 you can see one city of 20 million people replacing half of road-based deliveries via drone. You see that?

BH: Yeah, I already know the city. I have it picked out. 100 percent. There are lots of cities and suburbs that this applies to. There's 82 million single family detached houses in the United States. 82 million homes that should get everything of a reasonable size by drone in the future.

There is no way that things will be delivered by road in five years’ time, if things go the way I think they're going to go.

That's a big statement to make, but if you saw our product operating in real life, you would ask yourself, ‘why would you use a human being in a car to do this?’

PC: I love talking with you about this because I've been saying that over the last two years, based on all the writing and work we've done in tech, it's inevitable. Exponential technology advancing, it's inevitable. People say it's never going to happen, but you're doing it. Do you have videos that you show people?

BH: Yes. This is a delivery to a family of four from a local Thai restaurant.

PC: How many hitches have you had in that operation?

BH: None in Oranmore. The worst we've done is we've picked up a bag. So, we delivered and as the aircraft ascended, we picked up the bag because a relay failed on the aircraft, but that's fine because we've got an automated guillotine, so if the thing gets stuck, we guillotine it.

It was nice to actually test that out but no, no other hitches. I tweeted the other day, someone ordered 24 eggs and flour, baking at home, and not one egg cracked.

We're three years in this, we'd be the biggest idiots in the world if we hadn't figured it out at this stage.

PC: For most people I'm sure it's nowhere near as simple as you may see it now. I want to ask you about the radius. Because in the article again, you refer to the two to four km radius. Do you see that over the next five years expanding as you get better batteries and other technologies into the drone itself?

BH: So, we can fly further. That aircraft with that battery can fly 20 km in total. Worst case 10 km in each direction.

We actually choose that range now because we think about throughput. What we want to prove at the moment is throughput per aircraft.

So, one aircraft will do six or seven deliveries per hour today, and if you double the range, you have the throughput.

As I said, we're learning now. If we went to a town with let's say, a big McDonald's in the middle of the town, and there's 100,000 people in the town, but it's three or four miles radius rather than two, we could totally support that.

The difference is we would just need more aircraft because we'd get less throughput. So technically, where you run into trouble, and it's not that difficult to solve, is energy. The amount of energy you have in an aircraft is like fuel in the car, it's heavily affected by the wind speed.

So, if we have a 30 mile an hour headwind, we have to burn an extra 30 miles an hour of energy to get to our target airspeed. So actually, we could be using twice as much energy in a windy flight as we are a non-windy flight, and so you have to budget for that.

You either have a battery that can do that long flight with the wind, or you shrink the radius dynamically, which is what we do now. For example, if we have a horrible wind, we'll shrink the radius, and you'll come to our site to order a coffee and suddenly, because you live three miles away instead of two miles away, we're not available. That's dynamic radius. So, we already do that now.

Ultimately, what we will support will be looking at the data, modelling that particular suburban footprint and wherever the centre is that we're operating from we'll say where's the population? How far away are they? And what winds do we want to support based on the historical data for that town?

And we'll size the battery for that particular operation. But that's all very surprisingly easy to do. It's on a per town basis, but we won't know the answer until we actually collect the data.

PC: Okay. Interesting. The speed is something you expect over time to be able to increase presumably that may affect delivery time?

BH: We can fly now about 140 kilometers per hour airspeed which is 80-90 miles an hour on the ground. Obviously, we don't need or want to fly that, and it uses so much energy you'd be crazy. We think the right speed is 40 or 50 miles an hour.

We think in meters per second, so that's roughly 18-20 meters per second, a little bit more. That's the way we think about it. And again, 40 to 50 miles an hour as the crow flies it's pretty awesome to be honest with you. You don't need to go faster.

You increase the lifespan of the batteries through not draining the power as quickly, and one way you do that is you fly more slowly. In the end, we give people a three-minute promise, we say we're going to get there in three minutes, it will never be longer, and we make that work.

PC: But even if you had other towns and territories in 10 minutes or 15. That's far better than what they may be currently getting by land?

BH: Yeah, it is. I don't think we'll ever need to do that. I think the worst we would do is five minutes, because in the end, we'd just do overlapping sales. Three miles is a 30 square mile catchment area. That's a ton of people. Four miles is 50 square miles. So, you're really quick, because it's the square, every additional mile is really impactful.

We actually think that we want to be sub five minutes, we ideally want to be three minutes, but there will be towns where 90 per cent of the people will be three minutes and the others would be 5. 10 to 15, we would just add another sale.

PC: And that's from pressing the order button?

BH: No, I wish. For coffee, yes, it will be 60 seconds plus three minutes.

So, there'll be a lot of stuff that are stored right there with the aircraft. But a meal, like a nice Indian dinner, you have to consider prep time as well. The big difference is we operate with flight slots. So, when you put through an order, you can say ASAP, which means we just get to you as quickly as we can, or you can say I want it at 6:25pm or whenever.

That flight slot is allocated to that restaurant. That restaurant is told when the flight slot is, and they're told what the deadline is to have the product to the aircraft. So, that is very different.

Whereas today with a driver, the restaurant gets the order and then makes the order, and an aggregator will get the driver there at some point.

There'll be batching, so the rider might be waiting in the restaurant 15-20 minutes to wait for a bunch of orders, or they might show up late or early, but it's not that important because you have a heat lamp. 20 minutes or 40 minutes before they go out with a product, big deal, right, the customer gets it in half an hour to an hour, so it’s fine.

It's kind of a latent, batching process, which by the way, really works well and that's the way it should be, but with us it's totally different. You work backwards from the arrival time and everyone syncs up behind that, which is how we operate today and it works great

PC: That's what I think also the consumer wants end of the day, they want to know when they're going to get it, and you work backwards from that.

BH: Correct. You can't do that if you have people on the road. It's too expensive to make that promise work.

PC: Now, around people and being able to recruit. Has that been to your expectations? You've been able to find the people you need to find and were able to recruit?

BH: Yes, we're just over 40 people now, so it's not it's not a giant problem. We're a pretty interesting and exciting business to work for, so we're in that honeymoon period where everyone wants to work for us.

It's our job to make sure that it's an enjoyable and exciting place to work always as we scale, which is really difficult to do. I've done it before, it's probably the hardest, most difficult part of scaling businesses is the human part.

But no, we've some absolutely awesome robotics engineers and software engineers that got us to where we are, and they've been not easy to get but it's such a great mission with such a great prize to go for that, so far anyway, it's not been difficult.

PC: What happens if other Mannas come into the IAA and say 'we want to do it too. We've built something that we think is just as good'?

BH: We welcome them. It would be great. If this is a multi-trillion-dollar industry I'm happy to take just half of it.

PC: So, there's no problems in terms of the airways and air pass and regulations and all that?

BH: That's solved. That's solved through UTM (unmanned traffic management system). So, it's like air traffic control, but it's digital. And we use multiple UTMs.

So, let's say Wing Aviation came to Ireland, we would know about each other.

Before we took off we'd alert them to our flight, they would accept it, and then we fly. So, that part of coordinating airspace is actually pretty straightforward, technically, and also operationally.

PC: OK and if you're going to get to your own goals over the next, say, 12-18 months with Europe being able to open up in certain places, how are you going to scale that? How much more capital do you need? And have you got plans for what you need to raise by when?

BH: Yeah, so we've raised quite a bit so far, but as an R&D business, and we will run for another 18 months, largely as a R&D business preparing for scale. Thereafter, it'd be a market-by-market scale up and the numbers are not for the faint-hearted.

We have combination of aircraft manufacturing, and it isn’t cheap. Even the per unit cost in aircraft isn’t cheap. If you look at just the UK market, our initial entry for the UK market would need 40-50,000 aircraft, so the numbers are staggering.

They're in the hundreds of millions, but even for a medium sized market, but that's fine, because the cash profile of the business is very positive.

So, it's not like these mobility companies where you lose money on every ride until some autonomous driving happens in the future.

We make money on every delivery right from the start.

So therefore, firstly, getting debt or VC financing for the business should be relatively straightforward once we're ready to scale.

This industry, part Manna, is going to take hundreds of millions and billions to start to scale such that it becomes mature, but with an unusual profile in the sense there is a very short time to return, I think, on that cash invested.

PC: Interesting. So 2030. How do you see Manna Aero in 10 years from now?

BH: Well, we'll have been the biggest IPO ever.

I'd like to think that we'll have changed the fabric of retailing, and operating retailing and small businesses around the world everywhere.

I'd like to think that people will live differently (because of us), and I think that small businesses (will be) fairly transformed in what they can do and what they can provide, because of us.

So, I say look what Stripe did for payments and small businesses to help small business on the Internet….I think we can add even more by providing logistics to those very same businesses.

And to have that done in a ubiquitous way in most countries by 2030. Not ambitious at all

PC: Fantastic. And this works in all countries?

BH: There's no country where this isn't valid. We're in the country with the worst weather for drones on the planet.

PC: But what a great place for a laboratory though, right?

BH: Of course. And that's the thing, great tech centre here. Very entrepreneurial culture here. Very, very supportive government. Very, very supportive regulator. So actually, structurally, we have an advantage over anybody else doing this so look, let's see.

PC: Yeah, fantastic. Bobby, super. Congrats on your achievements so far, a long way to go still, which is exciting. It's just so refreshing to hear this so many ways. Thanks for your time today. You're doing great and look forward to catching up for an update soon.

BH: Thanks and look forward to it, Paul.