Latest tweets from Da Jiang Innovations (DJI)

Da Jiang Innovations (DJI)

The rise of China's drone technology

Sector: Futuretech
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A drone crashed on the White House lawn in January 2015. A month later, a drone delivered a 9.15-carat diamond ring to Zhang Ziyi, the Crouching Tiger, Hidden Dragon actress, in a marriage proposal engineered by Wang Feng, a rock star in China. Two months after, a drone deposited small amounts of radioactive waste on the rooftop of the Japanese Prime Minister’s office, as a protest against using nuclear power in the country. All three drones were made by Da Jiang Innovations (DJI).

DJI’s drones accounted for 70% of the global civilian drone market. The Shenzhen-based firm was considered to be the first drone-maker to assemble a turnkey package, such that all users had to do was to unpack the drone and it was ready to fly. The demand for such drones was not apparent as late as 2012. As one analyst pointed out, “DJI started the hobby unmanned aerial vehicle market, and now everybody is trying to catch up.

DJI was reportedly valued at US$10 billion, making it one of newest “decacorns”, which are “unicorns” that valued at least US$10 billion, thus joining the ranks of Xiaomi, another Chinese firm, and other global technology firms, such as Uber and Dropbox. The startup had gone through three rounds of funding, raising at least US$105 million and counted established venture capitalist (VC) firms, such as Accel Partners and Sequoia Capital, among its backers. DJI also became known as one of the more globally- minded Chinese firms that ventured overseas aggressively early in its game.

Started in 2006, and based in Shenzhen in China – DJI is primarily a drone making company. Many fans also call it the “Apple of drones, because of its 70% market share of consumer drones.

Founder Frank Wang is often said to be the world’s first drone billionaire, the 38th Richest Chinese and with a net worth of $3.6 Billion. A shy Frank, with circular glasses, tuft of chin stubble and golf cap that masks a receding hairline, who comes off as brilliant, cutthroat, philosophical, and yet remarkably grounded and measured, all at the same time.

Here is an extract from a recent Forbes article on Wang:

Frank Wang Tao has never been arrested. He pays his taxes on time. And he rarely drinks. But on the eve of a January sit-down with FORBES–his first public interview this year with a Western publication–the Chinese national who happens to be the world’s first drone billionaire found himself on the wrong end of American authorities.

A U.S. government intelligence employee in Washington DC, some 8,000 miles away from Wang’s perch in Shenzhen, had had a little too much to drink and took a friend’s four-propeller drone out for a spin in the wee hours. Inexperienced, he lost the aircraft in the dark and, after a brief search, called off his drunken hunt. By dawn that 1-foot-by-1-foot whirlybird was a global news story and subject of a Secret Service investigation–after crash-landing on the White House lawn.

Wang built that robot. He also created the one that a protester used last month to land a bottle of radioactive waste on the roof of the Japanese prime minister’s office and developed the one a smuggler used to sneak drugs, a mobile phone and weapons into a prison courtyard outside of London in March. The idea of people using your product to break laws and social boundaries would give most CEOs nightmares, but the inconspicuous mastermind behind the world’s drone revolution just shakes it off.

“I don’t think it’s a big deal,” shrugs the 34-year-old founder of Dajiang Innovation Technology Co. (DJI), which accounts for 70% of the consumer drone market, according to Frost & Sullivan. His company spent the morning developing a software update it blasted out to all its drones, prohibiting them from flying inside a 15.5-mile-radius centered on downtown Washington, D.C. “It’s a benign thing.”

Or maybe it only looks that way to Wang because success has inured him to controversy. Last year DJI sold about 400,000 units–many of which were its  Phantom model, and is on track to do more than $1 billion in sales this year, up from $500 million in 2014. Sources close to the company say DJI netted about $120 million in profit. Sales have either tripled or quadrupled every year between 2009 to 2014, and investors are betting that Wang can maintain that dominant position for years to come. In May the company closed a $75 million round of funding from Accel Partners, which sources say valued the company at about $8 billion. DJI is also currently raising a new round of funding at a $10bn valuation and Wang, who owns about 45%, will be worth about $4.5 billion. DJI’s chairman and two early employees are expected to be billionaires from the deal. “DJI started the hobby unmanned aerial vehicle [UAV] market, and now everybody is trying to catch up,” says Frost & Sullivan analyst Michael Blades.

DJI drones are being used on the sets of Game of Thrones and the newest Star Wars film. Now DJI needs to keep stoking the consumer market with better and cheaper flying machines, just as it did in January 2013 when its Phantom drone debuted, ready to fly out of the box at a price of $679. Before then you pretty much had to build your own drone for well north of $1,000 if you wanted a decent flier.

DJI faces the headwinds of cheaper rivals and rearguard bureaucrats at the Federal Aviation Administration, which currently has a blanket ban on the commercial use of small drones without exemptions and has been slow to enact meaningful policy. A formidable challenge is brewing in 3D Robotics, a Berkeley, Calif. company cofounded by former Wired magazine editor Chris Anderson and staffed by laid-off DJI employees. Among them is former DJI North America head Colin Guinn, who accused the Chinese company of screwing him over and called 3D Robotics the “David to DJI’s Goliath.” His new company, however, is fighting with more than slingshots–it has raised nearly $100 million. There’s also French manufacturer Parrot, which sold more than $90 million worth of drones in 2014, and a plethora of Chinese copycats eager to drive margins down for all. This year’s Consumer Electronics Show in Las Vegas saw dozens of barely hatched companies zipping their UAVs across Sin City’s cavernous conference halls.

With his circular glasses, tuft of chin stubble and golf cap that masks a receding hairline, Wang cuts an unlikely front man for a new consumer tech powerhouse. Still, he takes his role as seriously as when he launched DJI out of his Hong Kong dorm room in 2006. Wang is on a warpath–discarding former business partners, employees and friends–as he seeks to turn DJI into a top-ranked Chinese brand akin to smartphone maker Xiaomi and e-commerce powerhouse Alibaba. Unlike those two, however, DJI may become the first Chinese company to lead its industry. Its dominance has earned it comparisons with Apple, not that Wang has much use for the implicit praise.

Dashing into his office, he passes a Chinese-language sign on his door that reads “Those with brains only” and “Do not bring in emotions.” The DJI CEO abides by those rules and is a sharp-tongued, head-over-heart leader who works more than 80 hours a week and keeps a twin-size wooden bed near his desk. Wang says he was a no-show at DJI’s April launch of its new Phantom 3 in New York because “the product was not as perfect” as he expected.

“I appreciate Steve Jobs ideas, but there is no one I truly admire,” he says in his native Mandarin. “All you need to do is to be smarter than others–there needs to be a distance from the masses. If you can create that distance, you will be successful.”

 

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