It’s a Pipedream... (Business Feature #8)

🧠 Top of Mind Technology

• What happens to all of the trash that goes into our landfills? Well, it sits there… for a long time (like centuries). Never fear, however, as scientists at the University of Texas at Austin have created a plastic eating enzyme that will be able to breakdown some of these plastics in just hours.

• Another week, another successful SpaceX Launch. Check out the YouTube video of SpaceX’s Starship rocket surviving its 4^th test flight.

• Just because an article is outdated doesn’t mean it is irrelevant. Take, for instance, this one from 2021 that shows some of the long-term issues with Solar Power we are still seeing today.

🍪 Business Bites

• Inflation was down, but still no rate cuts. Jerome Powell signaled on Wednesday that the Fed would leave rates unchanged, and noted that there will be only one potential rate cut this year. But with a better-than-expected CPI index, markets shot up on Wednesday, though Thursday they stayed relatively flat.

• In the backdrop of the U.S. Open this weekend at Pinehurst, some progress is being made on the PGA Tour-LIV Golf merger, with Tiger Woods saying during his press conference on Tuesday that both parties are eying the ‘End Game’ of a deal.

• For those Apple fans that missed the company’s annual Worldwide Developers Conference (WWDC), you can catch up on all of the news here.

Business Feature of the Week - Pipedream Labs

The One Liner - Pipedream Labs hopes to redefine delivery by sending packages directly into homes via a network of underground pipes.

💸The Business

At the beginning of civilization, humans transported goods via the only method they had: by foot. Over time, transportation evolved to horses, then ships, and then to more modern methods like cars, trains, and planes. Today, we leverage our phones for on-demand delivery via companies like Postmates, Instacart, and Uber. One is left asking if this process could any better? Many would say no, but Pipedream Labs thinks otherwise.

Pipedream Labs wants to provide on-demand, almost immediate delivery of goods via an extensive network of underground piping and robot delivery systems. Watch a demo of their robot below:

They have recognized a few issues with our current methods of last-mile delivery, including:

• Even for items coming from overseas, the last-mile delivery component is on average 30% of the cost of that product.

• It adds to traffic congestion and is therefore harmful to the environment.

• There exist current safety concerns such as porch pirating.

Using the same construction methods and protocols as sewage pipes and water pipes, Pipedream Labs believes they can build the infrastructure and delivery robots needed to send something directly into your home.

🧑‍💻The Model

The business model at this time is quite unknown, mainly because Pipedream Labs has not actually made any money yet. They are still in the prototype phase, but if they were to pull this off, the revenue opportunities would be massive. Therefore, we are only analyzing potential revenue streams and expenses.

💰Revenue Streams (Expected)

• Delivery Fees – Similar to how Postmates drivers get a fee for delivery of your food to your home, so would Pipedream Labs, although part of the appeal of this service is that a robot should be cheaper than a human driver.

• Installation Fees:

  • Installation of pipes within a city or location

  • Installation of package receivers within homes.

• Maintenance Fees

🔻Potential Expenses (Expected)

We list a bunch below but there are definitely many more:

• Delivery robot development

• Software Management

• Piping ($$$)

• The rail/track that is installed in the pipe

• Labor costs for installation

• Upkeep costs (power, grease, etc.)

😎 Customer Appeal

• The delivery is hypothetically faster, cheaper, and more eco-friendly than the current marketplace options.

👍The Good Stuff

• 3 Major Customer Benefits – As aforementioned, this form of delivery should be cheaper, faster, and more eco-friendly than what currently exists.

• “All-In” – Everyone loves a long shot.

👎The Risks

With a big bet like this, there are many risks/issues, and that’s ok! We listed out some below:

• Logistics Nightmare – How is the company going to be able to install all the necessary piping to make this viable?

• Long-Term Robot/Network Repair and Maintenance – What happens if the robot breaks down mid delivery? How do you get it out of the pipe? How do you upgrade the pipe and internal rails over time? You can’t just open up the ground and take out the pipe whenever you want.

• Investment Size – To make this work, the company is going to need to attract A LOT of capital. Per the company website, it appears that they are looking to partner with cities that will pay the company to build the system and infrastructure, and then the city would get a cut of the revenue for every delivery made. At the same time, the company mentions that deliveries will cost approximately $1 using this system. That means millions of deliveries will be required just to break even. How feasible is that?

🧠 The Op Ed

While we believe this idea is still years away from a full implementation in a major city, we think working on a project this massive is important for the future of human civilization. Traffic congestion and delivery costs are painful expenses that society incurs today. Partially eliminating them would do everyone good and vastly improve the economy.

We believe this company can take two routes:

•  Go “All-In” and try to fully implement this idea in a major city.

  • Likelihood of Implementation: Very Low

  • Likelihood of Successful Exit: Very Low

• Continue to develop the innovative technology and target revenue via licensing fees and/or research grants. On top of that, they can look to sell the business to a large company that may be willing to put in the investment required to make this product a reality.

  • Likelihood of Implementation: Moderate

  • Likelihood of Successful Exit: Low to Moderate

📚For the Road

• What happened to pneumatic tubes?

• How last-mile delivery could be reshaped by technology