Connected Things Business Models: Zipline Medical Logistics

Medical Logistics

Zipline is a medical product delivery company that is changing the way medical supplies are delivered throughout the world

Founded

Before Zipline, the was founded in 2011 by Keller Rinaudo, initially under the business name Romotive which was a robotic toy controlled by an iPhone. Romotive continued production of the toy through 2014 until it was shut down for a complete overhaul and the company pivoted to become Zipline to design and create drones.

Funding

Zipline is a private company that has received over $233 MM in venture funding first from YC and Sequoia for the toy company then from Visionnaire Fund, Katalyst Ventures, and The Rise Fund, and it should be noted that Bono has recently joined the board.

Sustainable Development Goals

Zipline has no deliberate company commitments to achieve any specific SDGs, but their primary customer, the Government of Rwanda, has a strong emphasis on SDG 3: Good Health and Wellbeing.

Mission

Zipline’s mission is to provide every human on Earth with instant access to vital medical supplies.

Where on the Resiliency Scale?

Business Model Moves

Robot Toy Origins

Before Zipline there was Romotive, an iPhone-controlled toy robot company that ran a modest kickstarted and went through Y Combinator Accelerator in Seattle. Romotive pivoted into Zipline in 2014 when the founder realized that the competition was not other toys but Minecraft and phone apps.

Solve a Customer Problem

Throughout Zipline’s many moves, the company has focused on the core customer that would have them: the Rwandan Ministry of Health, and solving for complex challenges involved in a mountainous rural country without ground based infrastructure.

One of the founders, Keller Rinaudo got the idea while on a trip to Tanzania. He met a researcher with a database that enabled health workers to send text alerts whenever they lacked blood or other medical supplies. But with all of the hundreds of patients in need there was little the researcher could do to solve the problem.

It would take hours for a rural doctor to put in an order for a specific blood type, then travel on difficult roads and back to get blood to the patient in time.

When Zipline launched in Rwanda, they focused on a major problem for the Ministry of Health: the number of women that die from severe bleeding as a result of childbirth. Zipline’s battery-powered drones, called “Zips,” can carry up to three pounds of blood or medicine, and can fly for up to 75 miles on a single charge. Hospitals can order blood or medicine via text message, and have them delivered by parachute from a Zip. The 22-pound planes navigate using GPS and cellular networks, and can make deliveries within 30 minutes, negating the need for onboard refrigeration.

Business Model Aligned to Value Proposition and Continuous Service

Zipline worked in partnership with the Rwandan government to develop a logistics system that essentially leapfrogs the infrastructure capabilities despite not having a strong road system. The company recruits and trains local engineers, health workers, and flight operators.

The government subsidizes the overall cost to the country, and then Zipline charges a shipping fee similar to Fedex or UPS. This business model encourages the medical system to expand their use of drones for medical supply delivery.

Zipline can deliver with high accuracy onto the doorstep of a hospital or a lab or a health center.

The Soft Power of Bono

Bono joined the board of the company in 2019 with the investment from his Rise Fund and based on his assessment of need after 20 years working on medical issues in the continent of Africa, and aligned to lifelong pledge to the concept that “where you live should not decide whether you live.” Bono’s relationships in international development and at the country level are expected to grant Zipline the soft power they need to get new countries on board.

Drones Not the Lead Idea

“Our contract with Rwanda doesn’t even mention drones,” founder Keenan Wyrobek told Miriam McNabb of Dronelife. “We’re couriers – drones were just the best way to solve the logistical problem of delivering supplies in that environment.”

Data Rights Transparency

“American drones” do not have the best reputation, and Zipline claims to be that its Zips are not surveillance vehicles. Zipline’s founder told ReCode’s Kara Swisher that the drones do not have cameras. Rather than using vision or depth-sensors like cameras and LiDar for navigation, the planes use data provided by GPS and by the local government’s answer to the Federal Aviation Administration; in Rwanda, that is the Civil Aviation Authority.

Yet the company gets a murky grade for data governance since they do not publish a privacy policy or other data policy on its website.

Growth with Permission of Government

Zipline’s strategy is to work with governments. They believe that if they work at the country level to establish trust they can create strong logistics which then create a hyper scale scenario; which has worked in Rwanda.

Yet in other countries Zipline has been shut down by citizens skeptical of the government subsidies, or delayed by the slowness of aviation administrations.

After launching in Rwanda, the company initially announced a planned contract in Tanzania supported by The Gates Foundation. But the contract negotiations collapsed when critics challenged the spend suggesting the money should go to other priorities such as clinics and ambulances.

The international development community is encouraging debate about these types of public-private partnerships, suggesting that donors should not cherry pick solutions from Silicon Valley but instead encourage competition for contracts, building local capacity for medical cargo drones, and supporting safe regulatory environments that drones for delivery require to succeed.

Meanwhile in the US The FAA has only recently allowed pilot programs despite major medical supply bottlenecks during COVID19. The company hopes to be part of the growing supply chain for the underserved rural states in the US despite acknowledging a deep cynicism about drones across the country.

Bilal Zuberi, a partner at Lux Capital who has invested in other drone companies, declined to invest in Zipline, saying that the “downsides of tying any business too closely with government include long sales cycles, bureaucracy, and potential for corruption.”

Yet despite pushback from governments and the slowdown of regulators, Zipline shows how deliveries are accelerating on an upward curve.