The company’s strategy is producing inexpensive, reliable, competitive drones to take on the Chinese rivals now dominating the market.
A frequently cited version of wisdom about the folly of strategies — applied both to startup companies and warfare — is attributed to heavyweight boxing champion Mike Tyson . He’s reputed to have said: “Everybody’s got a strategy until I hit ‘em in the mouth.
” Was it folly to start a drone company from scratch in 2021 given that there were already hundreds of competitors in the United States? Darkhive co-founders John Goodson and Steve Turner say yes, possibly. But they had a strategy. My reason for seeking out these guys was my curiosity both about the problem with strategies and the nexus of startups and warfare. Specifically: If tech startups are already notoriously difficult, has Darkhive’s strategy been rendered impossible by the fact Russia invaded Ukraine in 2022 and drone-based trench warfare has seemingly upended military strategy ever since? How can you build a hardware and software military startup for a device that’s being innovated in real time in Ukraine? Conditions in the trenches change every three months. RELATED: Startup lightweight drone maker targets military, police, anyone needing quick, easy aerial recon Unmanned aerial vehicles — drones — and their tactics are central both to the Russian invasion and Ukrainian defense, something Goodson and Turner could not have known when they started Darkhive. Was the Russian invasion like a second Tyson punch? Surely this has bloodied their faces? Their response was much more encouraging than I expected. Darkhive’s strategy One Chinese-owned company, DJI, dominates the drone industry worldwide with an estimated 80% market share. DJI’s flagship drone, the Mavic 3, is affordable, reliable, and easy to use. The next biggest competitor, with an estimated 8% global market share, also manufactures in China. Goodson and Turner had enough background in both military service and military tech to know the United States and its allies would be gravely disadvantaged in the drone space in the event of a hot conflict with China. They set out to build the easiest-to-use, most reliable, most affordable drone manufactured outside the borders of a potential adversary. The United States has plenty of high-tech drone manufacturers for civilian and military use but nothing that currently comes close to the Mavic. The Mavic 3 sells for between $1,500 and $3,500. The Darkhive prototype Yellowjacket drone is meant to be simple enough that anyone could fly it with an iPhone in their hand to control it and inexpensive enough that they are ultimately disposable. The public safety officer or soldier in the field, Darkhive’s original strategy held, doesn’t need one specialty-built high-tech drone that costs $100,000 and requires dozens of hours to learn to pilot. Instead, they need a $5,000-or-less drone-in-the-backpack that can be flown right away and lost in action without serious consequences for the operator. READ NEXT: To fly F-16s, Ukrainian pilots need English, and they’re in San Antonio to learn it Far from being punched in the face by the Russia-Ukraine conflict, Goodson and Turner see it as an extraordinary validation of their original strategy. Both sides in the trenches have access to expensive, complicated, custom-built and innovative drones. And yes, through hacking and trial and error, tactics are being updated all the time. But what front-line fighters on both sides consistently return to is the Mavic 3. The Chinese model has been the star performer for both armies while higher-cost drones sit unused or have been easily destroyed. Cheap, easy, affordable and therefore plentiful was the original strategy for Darkhive. Three years later — with everything that has happened in Ukraine — they are even more confident that was the right way to go. Goodson and Turner acknowledge that their Yellowjacket is not yet price-competitive with the Mavic. They estimate DJI has a decade or more of a headstart on U.S. drone manufacturers, but, as Turner said, “You have to start somewhere.” Their belief is that the Yellowjacket and other drone tech from Darkhive begins to empower the United States and its allies with a tool procured within friendly borders. Validation So here’s further validation: They won early small business contracts from the military in 2022. Then larger contracts in 2023. Then, finally, very substantial orders in the form of letters of intent to purchase their drones at scale in 2024. With those customer orders in hand, Darkhive recently closed a $21 million investment from private equity firm Ten Eleven Ventures. RELATED: San Antonio drone maker Darkhive lands $21 million investment to fuel further growth With such investment in hand, Darkhive is ramping up manufacturing for 2025, when it intends to deliver on two prototype drones and three software solutions for drones. They also seek to achieve manufacturing scale and start to deliver their drones to customers such as the Department of Defense and other public service users. Scale to them means being able to manufacture and deliver 10,000 drones per month. Possibly not coincidentally, a report from summer 2023 estimated that Ukraine was losing as many as 10,000 drones per month. Defining success Goodson served multiple tours of duty overseas as a drone pilot supporting special forces teams. Turner has worked in private industry primarily serving the U.S. military. These guys are mission-oriented. Success for them is not measured in dollars, they say. It’s in making a difference for boots on the ground in public safety and military roles. Founder and CEO Goodson began to explain their philosophy about what success means to their customers. “The way the DoD measures success a lot of times is how many contracts were awarded, how many units did you deliver and on what timeline?” he said. “But there’s never any ‘on the ground validation’ of whether you solved the problem.” RELATED: Darkhive to move drone business from a garage to new HQ; is on track for $30M in Pentagon contracts Goodson and Turner said they don’t see contracts as success. They are not trying to compete with other U.S. drone makers. They are not trying to be the most sophisticated, high-tech, complicated or profitable company. They want to make drones that are the most widely-requested and used by people in the field. The company is on a mission to make the United States and its allies competitive in drone-making, with DJI’s Mavic as, essentially, the only competitor they care about. Turner finished Goodson’s thoughts on success. “Yes, I would be happy if we sold 10,000 drones a month,” he said. “But if those drones just sat in crates, that would be a failure. That would mean we have done a disservice to the United States if that’s what happens because we’ve sold something that nobody wanted.” These guys don’t talk like they’ve been punched in the mouth. Their strategy seems consistent and right on target. Is this the most interesting startup technology company in San Antonio? To me, it is. I’ll be happy to hear from others who have another candidate, of course. Michael Taylor is author of “The Financial Rules for New College Graduates” and host of the podcast “No Hill for a Climber.” michael@michaelthesmartmoney.com | twitter.com/michael_taylor
Darkhive Mavic Mavic 3 China Ten Eleven Ventures Pentagon Department Of Defense Mike Tyson John Goodson Steve Turner Michael Taylor Yellowjacket United States San Antonio DJI Ukraine Chinese Russia China English $30M Michael@Michaelthesmartmoney.Com | Twitter.Com/Mi Iphone No Hill For A Climber The Financial Rules For New College Graduates
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