Japan’s Secret Strategy for Global Drone Domination

Blue Innovation attracted a lot of international attention last year when they announced the T-Frend drone system.

This dystopian drone flies around offices after hours reminding staff not to work overtime, and taking pictures of those who violate overtime policy so that management can be alerted.

We’ll talk about this particular drone, of course, but Blue Innovation's technology is much broader and is making an impact an many more important, if perhaps less visible, areas. Founder and CEO Takayuki Kumada explains the early days of the company and why they decided to pivot into drones in the first place.

We also talk about the future of drones in Japan and globally, about what’s really holding the industry back, and why the Japanese government crackdown on drones might have actually forced the industry to focus on a very specialized and very lucrative niche.

It’s a great conversation, and I think you’ll enjoy it.

Show Notes

What is a drone integrator, and why are they important? How Blue Innovation pivoted from environmental consulting to drones How drones navigate with no WiFi no GPS and no light What kinds of jobs drones should not do Why flying drones make more sense than swimming or crawling drones Which industries will be most affected by drones What's really holding drones back How Japan can overcome China's lead in drones

Links from the Founder

Check out everything Blue Innovation is doing Blue Innovation's Facebook page Japan Drone 2018 on the Blue Innovation blog Friend Takayuki on Facebook

[shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript Welcome to Disrupting Japan, straight talk from Japan's most successful entrepreneurs.

I'm Tim Romero and thanks for joining me.

One of the ideas I've talked about a lot over the past few years and one that's finally gaining some acceptance is that the bulk of meaningful innovation in Japan is going to come not from startups but from midsized companies. Of course, Japanese venture capital and the ecosystem will adapt to include these players but things are going to develop differently in Japan than in the United States. With this in mind, perhaps you won't be too surprised to learn that Japan's leading drone company is not a traditional startup but a midsized company that pivoted into drones from a completely different industry.

Today, we’ll sit down with Takayuki Kumada, founder and CEO of Blue Innovation, Japan's leading drone integrator. Now, Blue Innovation attracted international attention last year with the announcement of their T-Frend drone. Now, this drone is designed to reduce overtime by flying around the office taking pictures of staff and telling them to go home, and yeah, we talk about how effective this is likely to be but we also talk about the integrator strategy, the one that's being pursued by a lot of the most successful high-tech startups in Japan. It's a strategy that allows them to quickly collaborate across industries and brings an immediate cash flow, but it does come at a cost and it might not be stable long-term, but we’ll get into that. We also talk about the future of drones, both in Japan and globally and what's really holding the industry back, and why the Japanese government’s crackdown on drones might have actually forced the industry to focus on a very specialized and very lucrative niche,

But you know, Takayuki tells the story much better than I can, so let's get right to the interview.

[Interview]

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Tim: So I'm sitting here with Takayuki Kumada, the CEO of Blue Innovation, and Blue Innovation is developing civil engineering services using drones. So thanks for sitting down with me.

Takayuki: Thank you very much.

Tim: Okay. On your website and in interviews, I've heard you describe Blue Innovation as drone integrators. I was wondering if you could explain, what exactly does that mean? What is a drone integrator?

Takayuki: Ah, I see. So drone integrator means hardware and a software, and a solution. We manage each component.

Tim: So you work with various different companies in different industries to sell drone technologies, right?

Takayuki: Yes, that's right.

Tim: Before we get into all of the different systems you're developing, let's step back a bit because Blue Innovation, it didn't start out making drones. Blue Innovation started in 1999.

Takayuki: Yes, that's right.

Tim: And you were focusing on environmental issues or coastal erosion?

Takayuki: Yes, yes, that's right. First, our business side is power protection to disaster, so we developed the countermeasure against beach erosion and tsunami. So we need some aerial photograph because we try to understand the cause of disaster, so aerial photograph is very, very important. So we bought the aerial photograph for some company in the past but we could not gather it after the disaster. After the disaster areacs photograph, we could not get that, so we thought, so how to get and how to take a photograph after that disaster at a point.

Tim: So it turned out that at the time when it was most important to get that information, to get the photographs, you couldn't get it?

Takayuki: Yes, yes, that's right. Right after the disaster, yes.

Tim: So at that time, did you contract out to drone companies? Did you buy drones yourself? How did you start using your own?

Takayuki: 10 years ago, we searched the technology for how to take a photo, aerial photograph. We found the technology in University of Tokyo. So the University of Tokyo developed the drone system. So we met the professor, so Professor Suzuki developed the UAV, or unmanned aerial vehicles.

Tim: So he was developing the hardware or the software that controlled it?

Takayuki: Both.

Tim: Both?

Takayuki: Yes, hardware and software. The main part, the main research part is software.

Tim: And this was in 2000 – what year was this?

Takayuki: 2006.

Tim: That was pretty early in the drone -

Takayuki: Yes, so we try to – "Please print the area robot," so Professor Suzuki said, "Okay, let's together try the research." So first time that we used the coastal monitoring by this UAV, we developed the coastal monitoring system using the UAV.

Tim: At that time, you were still a coastal erosion environmental company just using drones, so when did you make the pivot to become a drone company yourselves?

Takayuki: So ICAO decided their own concept to aircraft, so many company developed the Revised Aviation Law all over the world. At the time in Japan, the government didn't move the Revised Aviation Law, but some maybe IT venture, the Yahoo, Google moved very faster, then maybe some IT venture company contact us, they said, "So we want to develop the UAV system, drone system. Do you have the drone system, UAV system?" So maybe about four or five years ago, maybe companies contact us about drone system because there are some drones on our website.

Tim: So these startups and venture companies were contacting you, hoping you would be a customer for their photography services or were they contacting you to be a partner for developing drone systems?

Takayuki: No, case-by-case, so development and they were service, and the aerial photograph, security. So many, many company contacted our company. So the contact number of drone is very larger than the coastal problems so we decide that we focus on the drone business maybe five years ago, yeah.

Tim: Okay, your background when you were in university, your whole career was on studying that coastal erosion, so that must've been a hard decision to make.

Takayuki: Yeah. About 10 Years ago in Japan, the big tsunami attacked Japan.

Tim: Right, the big earthquake and tsunami.

Takayuki: Yeah, yeah, yeah, so at the time, so we had so many, many jobs as a countermeasure against tsunami. So many, many jobs, and after three years, the coastal problems gradually smaller. Yeah, yeah.

Tim: So the environmental and coastal monitoring business was going down at the same time drone business was going up?

Takayuki: Yes. This is a very crosspoint. So our company, this is a big chance to re-contract our company.

Tim: Okay. Well, you've certainly done a lot since then. So let's talk about some of the use cases because you're working with companies and organizations in so many different industries right now. So one of the ones that you've announced recently is that tunnel inspection projects with Mitsubishi. Can you talk a little about that?

Takayuki: Yeah, Mitsubishi project, this system is a very narrow space in atomic, and no GPS and no radio waves, okay? So how to fly area? So our team drone can fly without GPS and without radio waves. So this drone, so some sensor on the drone, so … .

Tim: A lot of your use cases are indoor drones and as you mentioned, it's very challenging to navigate without GPS, without Wi-Fi or radio waves and sometimes, even in the dark. So what technology do you use to do that?

Takayuki: This is a very, very secret system. So for example, in office and the factory, and the tunnel, we select a different sensor unit. This is a very, very secret system there. In the factory and in the office, we use a different sensor. This is very, very difficult to select the sensor and the sensor fusion is very difficult. This is our technology.

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Tim: Can you talk about the general base of the technologies, is it like infrared, is it sound? Is it too secret even to give that level of description?

Takayuki: So it's a secret system because before the announcement, okay?

Tim: When are you planning on announcing?

Takayuki: Maybe April.

Tim: Okay, alright, we’ll have to follow up for later. Well, actually,