APEX Insight: Aerospace heavyweights join Silicon Valley consumer tech giants in place and pace.
Twenty-five miles north on Route 101 sits San Francisco and roughly the same distance in the opposite direction stands San Jose: If you work at JetBlue’s venture capital arm, saying you are at the epicenter of global tech innovation is no exaggeration – it’s fact. “It completely makes sense for us to park ourselves here: literally and physically in the middle of Silicon Valley. It couldn’t be any more centrally located to innovation in the world,” Bonny Simi, president of JetBlue Technology Ventures, says. “We just sit here and wait, and people are coming through our doors.”
Here and Now
JetBlue Technology Ventures stuck its claim in the Valley February last year, becoming the first air travel provider to set up shop in the area. Presence on the manufacturing side is slightly more robust, but is still in the early stages. A3, Airbus’ Silicon Valley innovation lab, was announced fully operational last January, and Brazilian aerospace conglomerate Embraer joined the club early this summer with its own facility. The aviation cohort is growing, but, with the exception of Lockheed Martin, which has been in the region for more than 50 years, is still fairly young compared with the automotive industry. Mercedes-Benz established an R&D facility in the area in 1995, and Tesla was founded in the early aughts by a group of Valley engineers. Ford, Honda and Renault entered the scene within the decade.
There are, however, benefits to arriving late to a party. For one, aviation factions are equipped with insight into carmakers’ early missteps. “If you were the head of GM or Ford five years ago, the conversations in the boardroom had absolutely nothing to do with ride-hailing services,” Simi says. “When they heard about those things, they thought to themselves, ‘Those are crazy ideas that will have no impact on us. Isn’t that funny? Isn’t that stupid?’”
“It’s clear to everybody that it’s not just about what you do, but where you are.” — Antonio Campello, Embraer
But, of course, five years later, Uber, Lyft, Didi and others have completely transformed the business. “What does that mean for aviation? What will happen to airlines in 10 years, 20 years or 50 years? Will they still exist? How will our core business of being an airline change?” Simi deliberates. Her hope: JetBlue’s front-row seat to the startup bubble will keep it ahead of the curve. “I don’t see us being blindsided.”
Embraer, the latest aviation company to make the move out West, is also banking on the hope that the density of innovation in Silicon Valley will ensure its success. “It’s clear to everybody that it’s not just about what you do, but where you are,” Antonio Campello, VP of Innovation and Business Excellence at Embraer, says. “When we looked at the US, we said, ‘Where is the temperature high in terms of innovation?’ Then we looked at venture capital – the flow of money – to see where the money goes. We found out the West Coast and East Coast were the main points.” Embraer plans to establish a Boston outpost by the end of the year, covering its bases in both extremities.
In the Valley of Tech
The acceleration of technology in the aerospace industry is inextricably tied to the shift from defense to consumer electronics as its main driver. “The overall trend of democratization in various industries has primed consumers to demand and expect new products and services in all aspects of their lives – and that includes aerospace. Access to large new markets is a powerful driver for the pace of technological acceleration,” Rodin Lyasoff, CEO of A3, says. “Consumer demand puts pressure on regulators, resulting in even greater opportunities. The demand for autonomous systems in cars and in drones has galvanized regulators around the world to be more progressive.”
“Access to large new markets is a powerful driver for the pace of technological acceleration.” — Rodin Lyasoff, A3
Growing interest in the air mobility industry from the likes of Google, Microsoft and other bigwig tech companies is throwing the confluence of aerospace and consumer electronics into startling relief. Amazon’s fleet of Boeing aircraft, Google’s voice-controlled flight search, airlines’ Facebook chatbots and Microsoft’s partnership with air transport communications company SITA point to big tech’s intent on permeating the aero space.
When asked to comment on whether disruption can be achieved “from the inside” – as Airbus, Embraer and JetBlue aspire – or is best begot from external actors, Microsoft’s managing director of Worldwide Travel and Hospitality, Greg Jones says, “I truly see the digital transformation of the airline industry as being a partnership between the industry and technology leaders.”
Consumer-centricity is apparent in each of A3’s projects, which aim to “raise all boats” – that is, for all classes. Vahana, the company’s autonomous air taxi, which is maturing to full-size flight test stage, is designed to alleviate urban traffic for commuters. In the coming months, Voom, A3’s on-demand helicopter service, currently available in São Paulo, Brazil, will be expanded to other cities worldwide. And finally, Transpose, A3’s reconfigurable modular cabin, can be transformed into anything from a pop-up restaurant or collaborative workspace to a family play area or exercise zone. Simi similarly foresees a future that “will bring convenience and joy back” to travel for the masses. “Unless you are a high-status, gold-bonus-points, superstar person, your journey is not as pleasant as it could be,” she says. She envisions a journey that will begin with travelers being picked up at their homes by autonomous vehicles that will have already factored in traffic. Travelers will then breeze through smart airports, with security and bag screening going off without a hitch. In flight, the experience will be personalized, and upon landing, a car will be waiting to bring them to where they need to go.
Be it vertical takeoff and landing aircraft, electro-propulsion vehicles or other forms of multimodal transport, short-haul travel is primed to be the biggest form of disruption, Simi and Campello agree. But when it comes to the long-haul journey, “People will still go to the airport as we know it today and fly an airline, as we know them today, for long, long, long into the future,” Simi says. “There is no major disruption that is going to put all major airlines out of business.”
“There is no major disruption that is going to put all major airlines out of business.” — Bonny Simi, JetBlue Technology Ventures
And even if there were, Lyasoff warns, it’s best not to fall into the trap of over-architecting the future. “When it comes to developing products for future markets, the key governing term is ‘uncertainty.’ There are a lot of unknowns, so we don’t want to be too specific in our predictions,” he says. For instance, when it comes to the emerging trend of self-driving vehicles, Lyasoff says, “We don’t necessarily want to start a fully autonomous ride-sharing service today, but we can guess the cars will need sensors and vision processing technology. So, we see the companies that make these components actually committing to real products today. And that’s logical. You act on the near-term opportunities without committing to an overly architected vision.”
Nonetheless, the mandate to disrupt the travel industry by committing to what Simi and Lyasoff call “moon shots” is at the root of why aerospace ventured into the Valley in the first place. “Over several decades, Silicon Valley has developed the tools and the mindset to make long bets, and to be effective in an uncertain business environment. This is reflected in the financial instruments for venture capital firms, which made the Valley famous,” Lyasoff says. “But it also breeds a work culture that values agility and is comfortable with change. Our teams execute fast, and adapt even faster. This is what we need when we are building the future.”
“Nothing Ventured, Nothing Gained” was originally published in the 7.4 September/October issue of APEX Experience magazine.