Interview with Aleksey Matyushev (CEO Natilus), By Eric J. Lyman

Former Dow Jones, now freelance journalist and writer Eric J. Lyman interviews Aleksey Matyushev, CEO of Natilus, a California-based startup now testing a new seaplane concept that could evolve into huge cargo drones that fly freight across the Pacific. By 2020 the firm plans to build a machine that can carry nearly 2 metric tons of cargo and allow companies to open new air shipping routes.

At the age of 25, Ukraine-born engineer Aleksey Matyushev had his sights set on raising $10,000 to launch a project to manufacture an aluminium gadget called the Sabine, which used acoustics to amplify the sound produced by iPad tablet computers.

Five years later, Matyushev finds himself on the verge of sending deep ripples across the worldwide transportation industry.

To learn how it happened, it’s necessary to go back to the fall of the Soviet Union. Aleksey’s father, an electrical engineer, was struggling to make ends meet in newly-independent Ukraine, and turned his sights abroad.

“In those days, a U.S. company could hire an experienced and talented engineer with 15 years of experience in Ukraine for the same amount of money as a U.S. engineer fresh out of college who had never worked in the field,” Matyushev recalled. So the family, including ten-year-old Aleksey, came to the U.S.

Over the next few years, the naturally curious Matyushev graduated from Legos and reading Jules Verne stories to the cultivation of his own interest in engineering -- it’s a family trait, he said, noting that in addition to his father both grandfathers were engineers. Matyushev studied aerospace engineering at Florida’s Embry Riddle University. He moved through increasingly challenging jobs, including one with Piper Aircraft in Florida and another with Norway’s Equator Aircraft.

But the big break came with Sabine. Matyushev and partner Tommy Reed turned to the crowd funding site Kickstarter to raise the money they needed. It took them just ten days.

“The project was a big success on Kickstarter, maybe too big a success,” Matyushev said. By the time the funding window closed, they had raised nearly twice the amount they needed and they had plans to take the Sabine – which attached to the back of the iPad and directed sound forward from the built-in but backward-facing speakers -- into mass production.

But there was a problem.

“We outsourced materials to different parts of the world, including Asia,” Matyushev said. “We just couldn’t get the things we needed fast enough. We talked about it a lot and were distressed that there wasn’t a way to solve our problems.”

So Matyushev decided to make one: in 2015, Matyushev and partners LZ Zhang and Anatoly Starikov founded Natilus, a company with designs on taking on the worldwide transportation industry dominated by large seagoing vessels and costly air freight options by using drones.

According to Natilus’ figures, sending 200,000 pounds (around 91 metric tons) of cargo from Los Angeles to Shanghai by cargo ship would cost $61,000 and take more than 500 hours. With a Boeing 747 cargo jet would cost $260,000 and take around 11 hours. But Natilus sees a sweet spot between the two options, estimating that its Leviathan drone (not yet in operation) could take the same cargo the same distance for $130,000 in about 30 hours.

The worldwide cargo industry is massive, totaling more than $16 trillion per year. But Matyushev said he envisions Natilus being most active in the e-commerce sector, either transporting goods for courier services like United Parcel Service (UPS) or FedEx, or for large retailers like Costco or supermarket chains.

The company says it saves costs by avoiding costs associated with flight crews and pilots, and by flying at lower altitudes -- no more than 6,000 meters (just under 20,000 feet) on long-haul routes -- than those used for commercial cargo and passenger traffic. Matyushev says the company also saves by adapting to use existing technologies rather than developing new solutions for specific needs.

“One easy to example: an actuator [a kind of server] made for a military drone about the same size as the prototype drones we make costs $10,000 to $15,000 and the part is made to order, which means it takes about two months to get it,” he said. “We can take something off the shelf that costs $2,000 and have it right away. It will do the job but it isn’t make to military specifications. But right now, we don’t need the level of reliability needed by the military or a big country like Boeing because we’re still in the prototype stage.”

Matyushev said they use components from world of the quad-copter (a simple kind of drone) and some technologies from the automotive world, and then “when we absolutely must we use techniques and components from the aviation world.”

The savings in terms of time and money are enormous: “Put it this way: the U.S. military developed the drones it uses over the span of many years at a cost of $2.4 billion,” Matyushev said. “We developed a drone of about the same size and capacity in 14 months at a cost of around $100 million.”

But the company needs a bigger aircraft to be profitable. Matyushev said he envisions announcing the company’s first big contract later in 2018, and launching its first commercial flight within a year.

Natilus is not the only company working in this area: Dronamics, a company in Bulgaria, is also working on cargo drones, but on a scale similar to Natilus’ prototypes and for short-haul routes. Singular Aircraft in Spain is also active in the sector, but it is not optimizing its products for cargo. As such, Matyushev said he sees a long and fruitful pathway for California-based Natilus going forward.

“I think autonomous drones will change the face of air freight as we know it,” he said. “As long as Amazon and Alibaba exist, I think we’ll be just fine.”

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