Why Growing a Drone Business Is Like Sticking Your Testicles into a Vat of Lye

Lye is one of the mafia’s favorite tools. Heat it up a few hundred degrees and in a few hours you have transformed a corpse into a nicely liquidated substance that’s a lot like mineral oil. And a solution of lye at room temperature is a torturer’s dream. It burns the skin almost like a blow torch but even better: it’s almost impossible to effectively wash off. So it just burns until the chemical reaction is done. Happy thoughts all around. 

Now, if you’re like me, you’re having a hard time sitting right now, but you’re also contemplating which is more painful: growing your drone business or burning your testicles off with lye. Well, there is a strong case to be made for the former. 

30% Gross Margins
That’s the average gross margin for a drone operator. Now 30% isn’t horrible, but it’s not great either. It means that you can pay your employees decently and draw a healthy salary for yourself, but it also means that you don’t have a lot of cash available to self-fund the expansion of your businesses. And it also means that you’ll have a hard time convincing any investors or financing sources to fund you (we’ll talk about why in another post). 

So you’re trapped in a Catch-22. You can’t raise money because you have low margins and you can’t self-fund for rapid expansion. And that’s why growing your drone business is as painful as… you know.  

Short-flight times drive low margins. A drone business’s main expenses are labor, drone purchases, and batteries. Those expenses are high (and, therefore, gross margins are low), because drones have short flight time. Short flight time means you need a lot of ground staff to manage the drones and swapping batteries. Short flight time means you need a lot of batteries so you can swap and recharge on site. Short flight time means dedicated rooms in your offices to keep a massive inventory of batteries constantly in a state of charging.  

But drones with long flight time are expensive to buy and to maintain — which can drive your margins even lower. 

Or what if there were a drone for less than $6,000 that had hours of flight time? Well, that’s just a shameless pitch for the Modovolo Lift. Long flight time means far fewer batteries, less ground staff, and more margin. More margin means more growth. And less lye + testicles.