Startups are often seen as the playground of whiz kids, but the reality is that it’s proving tough for younger entrepreneurs to get off the ground. Like many Millennial success stories, Dick Zhang plugged into the growing network of innovation ecosystems to help launch his drone business.
Dick Zhang was less than a year into Goldman Sach’s cutthroat analyst program when he quit to start a drone company. The University of Pennsylvania grad had joined the Wall Street bank, convinced he was on a well-trodden path to success, when he finally succumbed to the nagging temptation of striking it on his own.
“I tackled the Wall Street challenge,” says Zhang, who last year founded Identified Technologies. “But ultimately realized that founding and starting your own company is the ultimate challenge.”
For young entrepreneurs such as Zhang, the challenges of launching a successful business can be immense — in part due to a Great Recession that burdened Millennials with a high student debt levels, low savings rates and a job market that makes it difficult to gain valuable business experience.
That’s why despite the popular conception of Millennials as the Entrepreneurial Generation, according to the Kauffman Foundation, the rate of business creation among Americans born between 1981 and 1997 has actually dropped since they entered the workforce around the beginning of the century.
“There are a lot of challenges to being a startup founder,” says Zhang, not the least of which is “selling your friends and family on the vision as well.”
Luckily for Zhang and other success stories, a patchwork of incubators, accelerators and Makers communities has sprouted up across the country to help nurture America’s creative spark. Old school manufacturing bases like Pittsburgh and Detroit are reimagining themselves at innovation hubs, providing an ecosystem of financing, knowledge and networking to foster startup communities.
After Zhang’s team won the University of Pennsylvania’s Y-Prize Competition for innovative robotic technology, they traveled to the western end of the state to get the help they needed to commercialize their drone technology. They earned a spot at AlphaLab Gear in Pittsburgh, an offshoot of local startup accelerator AlphaLab that specializes in nurturing companies that manufacture physical products.
Zhang and his team moved to Pittsburgh with a great idea, but a year at AlphaLab Gear gave them the time and support they needed to turn an idea into a viable, revenue-generating company. “We walked in with nothing but walked out with our first customer, revenue a prototype and a clear path to the second and third customers,” he says.
AlphaLab Gear not only offered financing, but also a collegial atmosphere to share insights with other budding entrepreneurs and local business leaders. For Zhang, Western Pennsylvania provided the optimal setting not just for locating the right talent — fed by leading tech institutions such as Carnegie Mellon University — but also a customer base built around the region’s gas development boom.
The company’s nimble Boomerang drones specialize in aerial imaging. At a fraction of the cost of a gas-guzzling helicopter, these agile machines can shoot crisp clear areal photos, but also capture a wide-array of data to compile 3D maps.
Zhang was quick to realize the business potential of these unmanned flying objects after reading an article about helicopters and aerial photography. “There was this one staggering fact that jumped out at me,” he recalls. The prohibitive cost of aerial photography, including renting a helicopter, which can cost as much as $2,000 an hour. “I thought that was outrageous considering drones could probably do the same job for a fraction of the price,” Zhang says.
Aerial imaging is a fast-growing business. Oil and gas companies use imaging to scan and assess the hydrocarbon potential of a field, while real estate developers can map out a project or even show prospective clients the view from the 10th or 20th floor of a building before it’s even built. Globally, aerial imaging is an $870 million market.
But the advent of cheap drones and regulations, including the Federal Aviation Administration (FAA) recent drone-friendly rule proposals, could more than double the market size to nearly $2 billion business over the next five years. That’s good news for Zhang, whose most active clients are energy companies developing the Marcellus shale, the massive natural gas play spread across much of Pennsylvania.
Today Zhang and his team of eight full-time employees are busy adding new clients and convincing existing clients to ramp up their drone fleet, with the hopes of doubling the staff by year end. He’s also looking to raise $3 million in venture funding. Some of that money will help him grow sales. A chunk of the money will also fund R&D on Identified Technologies’ next–generation products. One idea he’s toying with is high-altitude solar powered, drones able to float high above in the sky and capture data with virtually no need to recharge.
A little over a year into his entrepreneurial adventure, Zhang’s next challenge is to manage his company’s growth and ensure it keeps on innovating and meet client expectations. “We’ve all got ideas,” he says. “But I think what really separates somebody who’s got an idea from somebody whose got a successful company is execution.”
It also helps to have an ecosystem to provide the financing, knowledge and other support to help get your idea off the ground.
(Top GIF and video: Courtesy of FreeEnterprise)