Life in Dubai. Conversation with Mitia Muravev
14 november, 2022
UVL Robotics, a global start-up that makes drones for warehouse inventory and fast delivery, was the first to launch 15-minute delivery in the Middle East. Currently, it has a vast network of clients in Europe and MENA and plans to expand into the UAE market.
We visited UVL Robotics office in Hub71, a startup accelerator in Abu Dhabi created by Mubadala, the sovereign wealth fund of Abu Dhabi, and talked to Eugene Grankin, CEO and founder of the company. In this interview, he talks about the unique features of the Middle East market, challenges he faced while creating delivery drones and the future of autonomous delivery.
— Eugene, basically, your company has two main areas of activity: delivery and warehouse inventory. How is your delivery business developing now? How much weight can your drones lift?
— Right now, it is up to 10 kilograms. Initially, we decided to focus on the most popular delivery segment — postal parcels and e-commerce. If you check the statistics of UPS, DHL, FedEx, you will see that 80 percent of all the shipments they make are parcels that weigh under five kilograms. We work in this segment and we try to scale up. There are other, oversized shipments, for which we need heavy lift drones. I'm confident that over time, technologies will allow us to mass-produce them as well. Even though heavy-lift drones are currently in the test phase, they are not as reliable as they need to be to put them into mass production and start operating.
— Last-mile delivery drones are being developed in the U.S. and East Asia, so the competition in this segment of the market seems to be high. What makes your company unique? Have you successfully entered the MENA market, when no one else was doing this here?
— It seems to me that for now, the competition as such does not exist. The market is quite young, it is nascent and geographically highly diversified. Some players just make a lot of noise, while others actually do commercial projects. Large corporations often create their drones for PR purposes, or in order to increase investor interest and capitalization. In any case, today we do not see day-to-day commercial deliveries neither in Abu Dhabi, nor in Europe and the US.
— Isn't Amazon actively developing such technology?
— Yes, Amazon is doing it, but in a very limited way. It all comes down to getting flight permit from the federal aviation authorities. Amazon develops its technology only in certain states, and outside of city limits. Their drones don't fly over houses and people, they always fly around. And so far only in test mode.
Our first advantage is that we're creating a complete delivery ecosystem — from the moment the package is loaded to the time the end customer receives it. In fact, this is not about drones, this is something bigger — we need to link several counterparties together, strike deals not only with clients, but also with the government and with the regulators.
Our advantage is that we have made a special launchpad, a smart parcel station (SPS). Using high-precision sensors, a drone lands on it and then the parcel is automatically unloaded. It falls into the station and takes its cell. Then the end customer comes at a convenient time and takes the parcel within three minutes at most. We don't waste time recharging the drone – the battery is changed automatically and that's it, it can set off for a new delivery.
The SPS is used to store parcels, sort them and issue them to the clients. In this way, we have automated the most important stage of delivery - the parcel pick-up. I am convinced that no one should directly pick up a parcel from a drone.
— Because it's dangerous?
— Yes, it is dangerous; spinning propellers create a certain risk. We decided to minimize and eliminate it altogether. Let the drones look spectacular in the sky, while the customer will be sure that no incidents occur.
Our second advantage is that we learned how to make safe drones. In the Middle East, three things are important: privacy, security and safety. Privacy means that the drone has no cameras, so that when it flies over houses and villas no one’s privacy is violated. In the Middle East, this is extremely important, even though many people neglect it.
The most important thing is safety: a drone that flies within city limits, over mosques and people should not cause any problems, such as noise pollution or create any other troubles for the urban environment.
— But theoretically, is it possible that a drone crashes? For example, if a motor fails.
— Global practice shows that all drones may come down. The question is how they do it. Our drones do this in a designated area and with the help of a parachute and a soft landing system. Even if the drone's motor fails or something happens to the electronics, it lands in the closest safe zone, away from people. Such safe checkpoints are designated in the drone's mission.
We also have a collision avoidance system. When there are thousands, tens of thousands of drones delivering something everyday, you have to know how they will interact with each other, how they will interact with small airplanes and bypass obstacles, such as skyscrapers.
We are creating a holistic ecosystem from loading the package to the drone to delivering the order to the customer. And we don't need qualified personnel for it. A person who works in a restaurant and prepares an order for the delivery will not be able to turn the drone on correctly and load a parcel. We want to make a fully automatic system: a restaurant employee cooks pizza, packs it, puts it in a container, presses a button, then the drone flies away and lands on the pad.
Payment is another issue. You can pay by card, cash, or make a prepayment. SPS allows you to make payment in any convenient way. Another important point, that many players in the market neglect, is reverse logistics.
— Say, for example, if a customer has rejected the order?
— Yes, this is a problem for the entire e-commerce sector, for all logistics companies. How do you manage reverse flows? Let's say a customer ordered a product, but then he didn't have time to pick it up. The number of cells in an SPS is limited and it is important to prevent a logistics collapse when all cells are full. For this problem too, we have an efficient solution, as we constantly monitor the SPS load and analyze it over the course of days, weeks, and months.
Our another advantage is that we originally started to work in the MENA market. Back in 2019, we were determined to start operating in this region. The climate here is different from the one in the West.
— Yes, how do you make a drone fly when it’s 50°C outside?
— To be honest, it's not the drones that I feel sorry for, it's the delivery workers driving around the city in such heat. A colleague of mine ordered some food, and a Talabat courier came to his apartment. He gave him the order and just fell on his knees, he just could not go on. It is incredibly hot in the city, and the delivery drivers try to perform their immensely high KPI, about 50-100 deliveries a day. At the same time, company managers set a 15 minutes time-limit, they just exploit the couriers like slaves.
First of all, I think, we can save their lives and health. On the one hand, we're not talking about taking their jobs away, we can retrain them as drone operators. On the other hand, we just feel sorry for the people. It seems to me that we also fulfill a certain social function.
— How difficult was it to adapt the drones to local conditions?
— First and foremost, we had to deal with the cooling system. We don't fly drones over the entire city, we do short flights, setting up a network of SPS so that the flight from a restaurant or a fulfilment center takes just 15 minutes. A drone with a pre-cooled battery can fly this distance and land safely. An SPS also has a cooling system that allows the drone to recover and set off for a new delivery. It is sand that poses many challenges, since tiny grains create aggressive environmental conditions.
— Can drones fly in a sandstorm?
— We made tests and they can. It is clear that the drone has to be protected and have special motors. But if we compare the heat factor to sand and wind, then the wind is the main risk. The cooling system can be properly adjusted, we can reduce the flight time as well. And as for winds, not only has the drone have a special structure, but also special aerodynamics. After all, there is a generally accepted wind speed limit of 15 m/s. Even airplanes stop flying in such winds.
— In addition to weather conditions, drones have another problem, which is getting an approval from the regulators. In one of your previous interviews, you said that the sky in the US is heavily regulated. Is it different in the Middle East? What does it take to satisfy the regulators?
— It takes the same three things — privacy, security and safety. You have to prove that you can meet these requirements. In Oman, we spent two years testing drones, making hundreds of test deliveries, testing them in various emergency situations, we were constantly gaining experience. Of course, we brought regulators from both aviation authorities and local governments to all the tests. We explained everything to them and built the regulatory framework together.
Then, there were some moments that became a kind of trigger. For example, last year, when we were testing mail deliveries in Muscat, the city was hit by a tropical cyclone. It caused a lot of damage, lots of infrastructure was destroyed, many areas of the city were flooded. Tens of thousands of homes were cut off from the outside world, from stores and pharmacies. The ground floor of the small house where we were living with colleagues was flooded and the electricity cut off. We couldn't go anywhere.
— So, you were in complete isolation, right?
— Yes, complete isolation. Fortunately, we were not in that part of the city that suffered the most. There was a real disaster in the south of Muscat. That's when it became clear that with our drones, we could help people. My co-founder Musa Karim and I contacted the police and told them we had drones and could use them to help people. The next morning, thanks to the trust of people from the Ministry of Transport, the police accepted our offer — all means are good. We went to the affected area and in the dark, in high humidity conditions sent drones with medicines provided by a company authorized by the Ministry of Health.
And we thought, what about the permit? It seemed like we had already been authorized to fly, but no documents had been formally issued... And what do you think? Literally ten minutes later, the police said that they would give us a permit: it was important to take the maximum crisis management measures, it was a matter of life and death.
Why was it important to bring the medicines? People panic, get sick and catch a cold. They need to get pills, get insulin, and so on. This case was the trigger. After that, the regulators realized that if we could deliver parcels in such difficult conditions, when it’s impossible to see anything, we would be able to make deliveries in any other conditions.
— Did you make these deliveries for free? Did you just come to help people?
— Yes, that's right. There were engineers with me who said that we could lose all the drones. But if we don't help, then in future we'll suffer from the fact that we didn't do it. There's a moral aspect and an economic aspect to this issue, and the moral one always makes more sense... Later some articles were printed about us. We didn't ask for it, the Ministry of Transport just made a post on Twitter, the police wrote about it, and all the authorities did. The next day, we woke up famous. I went to the gas station to pick up some newspapers and saw articles about us on the front page. That's when I realized that we must have done something good for society.
— And how did people react to the fact that a drone was coming to them? To what extent does it still surprise people, or is it regarded as something normal?
— Probably, not everyone has got used to drones yet. It's just a matter of time. We covered this problem very well in our white paper that we sent to the press. This has to do with customer acceptance. People who face difficult circumstances, like a tropical cyclone, see drones as an opportunity. The world is changing, not standing still. And drones are becoming a necessity, and sometimes a source of inspiration.
As for our audience as a whole, of course, the Arabs, probably like everyone else, have different attitudes. Some people understand that the world is changing and new technologies are entering our lives. For example, previously, we didn't have cashierless stores. It's a matter of time and habit. Certainly, there are those who do not accept such technology and it is understandable, because in the Arab world drones are regarded in a different way. For example, the Houthis in Yemen attacked oil refineries in Saudi Arabia with drones. This is what they remember here.
— So, for the locals the word “drone” has primarily a military sense?
— Yes, because it's hard to distinguish between "military" and "non-military” drone. The average person won't be able to tell from afar whether a drone is military or not. Besides, everyone is still used to the word "drone" being used in the military sense. It seems to me that the situation changes when you show people how it actually works. They start to see drones as a civilian vehicle.
— Over time, will everyone just get used to it?
— Yes, I'm sure they will. Today, cars don't surprise anybody. It's the same with drones.
— Okay, so how do you see the future of drone delivery or warehouse inventory, say, in 2050. What progress will technologies have made by that time, particularly in the Middle East? What will drones be able to do? Will they completely replace Talabat delivery drivers?
— I think there will still be humans doing deliveries in 2050. Perhaps they will work in some specific areas where drones will simply be unprofitable, it will be easier for humans to do it. But I think in 2050, there will be a huge number of drones in the sky, they will deliver the lion's share of e-commerce goods. Humans will be operators of the system, and drones will help people. There will be autonomous delivery vehicles. Drones will not only fly, but also drive on the ground.
— Like delivery robots?
— Yes. They'll roll around just like that, in this heat. There has to be interaction between ground and air transport in any case, because each of them fulfils its own specific mission. Humans will just operate the system, and will be more concerned with analytics and information processing. Information flows have increased significantly in the recent ten years. People will live longer, consume more information, process it faster, and naturally, we will not have to waste time travelling around the city. If you want, you can press the button in your office and order some food.
— And then you can put your hand out of the window and take it?
— Yes. Or a drone will land on the pad on the rooftop, the delivery package will come down, and you'll pick it up. As for warehouses, that's where intralogistics comes in, I am sure that drones will be the main element of the system. Right now, a huge number of operations is done manually, it's mechanical labour carried out with the help of trolleys and forklifts, i.e. a person is engaged in routine work, doing the same thing a thousand times a day. No value, no contribution to his own development. I think man was created to think, to create something new.
I believe most people will simply be retrained. Someone will operate all these systems, someone will be engaged in technical support or scientific and creative work. It will be enough just to look out the window, and there they are — the drones.
They will have landing pads, launchpads, large logistics centres. I think that by 2050, there will already exist heavy lift drones as well as taxis flying along special corridors. I am not sure that it will be possible for everyone to order a taxi to the office and fly somewhere, rather there will be some separate corridors for them. Presumably, there will already exist hyperloop technology, which will allow to move quickly between cities and there will definitely be sites for unmanned trucks. The human factor will be reduced significantly.
I think that by 2050, it is very likely that some deliveries will be done by heavy lift drones. Most likely, they will fly between small villages and towns, or to hard-to-reach areas where a lot of food or medicine needs to be brought at once. This can be also a big detail for some mechanism, for drilling rigs, for example. These things, yes, I believe they will exist.
But I doubt, that heavy lift drones will fly within city limits. Everyone will continue to order some food at Talabat, so smaller drones will perform their function in the city. As for the movement between warehouses, fulfilment centres, it could well be cargo drones that will carry the payload in containers.
— In the Middle East, you started with an unusual country — Oman. You signed a contract with Oman Post and only then came to the UAE, to Abu Dhabi. This is where you got your test licence and then, as far as I know, you will sign a contract with Talabat?
— We already have a contract with Talabat. We are starting to make commercial deliveries, and now we need to reach 6,000 shipments a day. That's an incredible figure, but it's one we are aiming for. We are looking at volumes and for us Talabat in Oman is a good launching pad. It will allow us to scale up.
The UAE is the next step. This country has a completely different type of terrain. Oman is more about mountains, serpentines, while Dubai and Abu Dhabi are flat. Abu Dhabi is about hundreds of small islands, so logisticians face other challenges here. In Oman we need to overcome real obstacles, like sea and mountains, as driving along the serpentine takes a long time. Here, In Abu Dhabi it is a matter of speed.
— And you also have to manoeuvre between skyscrapers?
— Yes. The UAE is a good market in terms of demand. Talabat is also represented here, and here it gets three times as many orders as in Oman. There are also Kuwait and Egypt. Egypt is probably the biggest market.
— Yes, there are 100 million people living there.
— Many more than even in Saudi Arabia. The demand in Egypt is crazy. Honestly, we should have gone there first, but since we ended up working with Oman, it became some kind of an advantage for us. We entered a completely new market, and initially we didn't attract a lot of attention. If you do something in the UAE, the whole world will know about it, but if you do it in Oman, it is different. This silence allowed us to refine the technology and present the proof of concept.
— Why did you come to Abu Dhabi and not Dubai?
— We actually have two businesses. The second has to do with warehouse inventory. In that respect, we actively work commercially in Dubai. We have a team and offices there.
— Are you only working with warehouses in Dubai, or are you also developing delivery services?
— For the time being, these are experimental flights. Why Abu Dhabi? This emirate accounts for 80 percent of the territory of the country. Dubai and Sharjah are very small. If you look at consumption, it's the same here as in Dubai. Also, in Abu Dhabi, we managed to become a Hub71 resident, which is a start-up ecosystem funded by Mubadala, one of the UAE sovereign wealth funds, and SoftBank Vision Fund. Participation in the accelerator made it possible to obtain certain subsidies in order to launch a business here. We realised that there were both customers and support from the regulators here.
— So, Hub71 was the determining factor?
— Yes, I think so. It is difficult to start something from scratch, and delivery business is, after all, an infrastructure project. You need to establish relationships with regulators, clients, partners, investors, and so on.
— Did you come to Hub71 yourself or did they reach out to you? After all, they want to gather a lot of cool companies that can create real value for the accelerator. In the press release I read, they wrote that they had accepted a new cohort of companies in October. It sounded as if they invited everyone themselves.
— No, we applied for participation ourselves. There are so many start-ups, that I don't think they have time to look at which start-up in particular they like and how they will put that mosaic together. They selected us from many start-ups; it was quite a tough competition, but we managed to win. And once we got here, we have become part of this community.
— What advantages do they give you, apart from the fact that you have access to regulators?
— The first thing they provide is a large network. In fact, this is the main thing, because you can create synergy with other residents of the accelerator. Right now, for example, we are launching a test delivery in Abu Dhabi with one of the companies from the dark kitchen sector. Combining technologies, we can create something new. The second is the opportunity to approach different Arab investors when they already know about us. You need venture capital to scale up, and it is difficult to raise money when you cold call investors. Hub71 gives us references. In addition, Hub has its own Emirates Angels Investors Association, while companies connected to the accelerator, are our potential clients, for example, Abu Dhabi Ports. There is a top manager at Hub71 who is an investor in Abu Dhabi Ports.
Finally, Hub71 offers good subsidies and incentives: it helps our employees with flat rental, visa procedures, office, etc. They also provide access to applications that are useful for work. It's very convenient, it just optimises our costs, and this is important.
— How do start-ups get into Hub71?
— Hub71 is the programme definitely worth applying for. I’d say not just applying, but proving your value specifically for the Abu Dhabi market.
— Specifically for Abu Dhabi, not for the UAE in general?
— Yes, specifically for Abu Dhabi, because different emirates have a certain jealousy towards each other. Abu Dhabi is a big financial centre and there is a huge number of businesses located here. Company founders will need to demonstrate how they see the implementation of a product or service here, in Abu Dhabi, what kind of advantage it brings. I advise to think about doing a pilot launch here and then going to Hub71: you would be able to say that you are already present in this market, you have prospects and feedback from customers.
The second important point, in my opinion, is participating in exhibitions and conferences. You have to come and show your product: the Arabs are quite emotional, they love new solutions, they are hungry for technology.
25 august, 2022