Against a background of growing distrust of China in the United States, DJI is under significant pressure from the Federal Government that questions the company's intentions and alleges that its drones spy for the Chinese government. The intensifying focus on DJI has yet to show any signs of fading and is, according to the drone maker, politically motivated. The 2019 trade tariffs that resulted in sharp price increases for several DJI products did not help to improve the company's prospects in the U.S. However, the pressure is not only inflicted from the outside. No, DJI's own ‘Game of Thrones', or should I say ‘Game of Drones,' culture is breaking up the company from the inside out as well.
Introduction to DJI's ‘Game of Drones'
DJI's ‘Game of Drones' culture and recent organizational changes have had drastic consequences, that created a ‘sense of mutiny' among some of the North American employees and have even started to impact the company's end-users. To illustrate this point, some key individuals looking after online forums, helping customers with technical questions and issues, supporting GEO unlocks for end-users, and taking care of dealers, are no longer with DJI.
This article focuses on DJI's internal struggles specifically. If you want to learn more about the pressure on the company that is coming from the outside, I recommend listening to DJI's Vice President of Policy and Legal Affairs, Brendan Schulman's recent interview.
Over the last few weeks, I have been approached by several former DJI employees, current end-users and industry insiders, who shared with me quite shocking information about how the company is managed and the culture clashes that are taking place internally. Most readers would know this, but it is essential to point out that DJI is the world's largest drone manufacturer with an estimated market share of well over 70%, and is a Chinese company, headquartered out of Shenzhen. The focus in this article will be on DJI's North American organization, but some parts apply to the global company as well.
The first time I received detailed information that indicated that DJI was having internal cultural issues was earlier this year. Since then, I have collected more context and have worked on verifying as much of the story as I possibly could as an outsider. DJI is a privately-held company, and, unlike Amazon or Apple, it is not required to provide quarterly statements or annual reports to its shareholders that would be publicly available. The absence of such reports makes it near impossible for outsiders to get any sense of how the company performs.
However, after recent stories of layoffs and drastic reorganization measures, many people in the drone industry, including myself, have wondered what is going on with DJI.
The following ‘Game of Drones' article is as accurate a picture as I was able to put together. The goal of this piece is to shine a light on the DJI organization and to provide some more transparency. The message might be critical at times, but my aim is for it to be constructive and maybe empower other people to speak up as well. And, while I hope for a more balanced and more competitive drone market, I am also a fan of most of DJI's products and use many of them daily.
Coronavirus outbreak hurts DJI's sales and results in layoffs.
The coronavirus outbreak kickstarted DJI's recent changes. It caused the drone maker to close its offices for at least two weeks, and many of its employees had to work from home. Information I received from DJI insiders, and people closely related to the company, indicate that sales for March and April are down significantly. Profits are reportedly down even more. The dramatic decrease in sales is directly linked to the rapidly spreading coronavirus. However, the implemented trade tariffs, the aging drone product line, and the increasing geopolitical tensions between the U.S. and China had already set the downward trend in motion before the virus outbreak.
It appears that DJI saw the coronavirus as an attractive opportunity to reorganize its business, resulting in many layoffs across the entire organization.
“hundreds of thousands of man-hours have been lost over the last five months, and that will have an impact on future products,” said a DJI employee to DroneXL.
The layoffs appear not to be limited to only DJI's U.S. offices. We have received reports of similar organizational changes in Europe and Shenzhen, China.
In the U.S., most of the layoffs seem to have impacted the Burbank, California office, where reportedly mostly more experienced, Caucasian employees were let go. Other DJI offices in Cerritos, CA, Palo Alto, CA, and New York, NY, have seen layoffs.
About 10% of the total U.S. staff had lost their jobs during the first wave of layoffs. We have heard that this took place ‘unceremoniously' around the end of March. A second round, allegedly happened toward the end of April, which resulted in ultimately a significant number of U.S. staff having lost their jobs.
“By May 1st, DJI will have laid-off a substantial percentage of U.S. staff. This is support staff, repair staff, marketing staff, and software engineering staff – across all divisions in all U.S. sites from Burbank to Cerritos to Palo Alto to NYC,” said an outside senior legal adviser to DJI who has direct firsthand knowledge. “Large quantities of layoffs have occurred internationally, and more will follow as well.”
The Cerritos offices are DJI's primary repair and maintenance facility for the North American market. Even though select repair centers in Canada also perform basic repairs, any issues related to flight log decryption or analysis are dealt with in California or back in Shenzhen, China.
In Burbank, where DJI's marketing and sales operations are based, more than a handful of people lost their job. These positions have not been filled, except for an ex-Huawei employee, who is now in charge of DJI's North American Enterprise Division.
The Palo Alto office is home to around 40 employees, most of whom are part of the software team. That office has also seen a large turn-over over the past 18 months, including some recent layoffs. DJI's New York offices are smaller and house about less than ten people.
DJI's layoffs surprise partners, dealers, and end-users
Many of DJI's long term partners and dealers did not receive any upfront warning about the changes that were about to happen in the organization, leaving many of them wondering what had happened to their account managers.
One former employee said that “DJI terminated a large percentage of [its] employees without any advance notice, with only a few days left till the end of the month and end of health insurance coverage, during the worst pandemic that has hit the world in recent years.”
DJI's “heavy-handed and unprofessional approach” to the layoffs saw people being escorted out of the buildings by security and without any severance packages. The same outside senior legal adviser, I quoted earlier, said:
“DJI showed a remarkable lack of empathy and professionalism in discarding some very loyal employees. Even though economically, DJI is seeing a massive reduction in revenue and had to reduce employment positions, the way they handled this was unconscionable and reflected in such a bad way on the culture of this company. It isn't cultural as relating to China – because we deal with many other massive Asian companies. It is cultural to DJI.”
It is not clear if this approach was limited to only some locations or if it was applied across the DJI organization.
Some of the former employees were asked to return any drone equipment and other hardware belonging to DJI within a week of receiving their termination notice. This request was nearly impossible to comply with, given the coronavirus lockdown situation in New York and California. Allegedly, some former employees were threatened with law enforcement seizure and legal action for ‘theft' of company property, simply because they were unable to transport significant amounts of drone hardware back to the offices within the limited timeframe provided by DJI.
The situation at DJI's head offices in Shenzhen, China, is not much better. Many of the drone makers employees, half of whom were still working from home, had to come into the offices for a meeting to hear about the layoffs. After the announcement, the employees had to handover any equipment. They were then cut off from work email and escorted out of the building. The layoffs occurred across DJI's consumer, enterprise, and agriculture departments.
While we do not have any specific information about any layoffs in Europe, it seems that they did not escape unscathed.
DJI diversifies its product offering to offset diminishing drone sales
As DJI has seen a dramatic slowdown in drone sales over the last two years, it comes as no surprise that DJI has been looking to diversify its product offering. The company has had the Ronin-S, the Osmo, and the Osmo Mobile products for some time. More recently, they added the Osmo Pocket, Robomaster S1, Osmo Action, and made a big push into the LiDAR market with its subsidiary LiVOX.
DJI's ‘Game of Drones' culture
One of the recurring themes in my conversations with various people directly linked to DJI is the clash of cultures and internal competition between teams. A situation that some have likened to the famous TV-series, a ‘Game of Thrones', or as I will call it a “Game of Drones' culture. The corona-related layoffs were allegedly a convenient way to oust many experienced, Caucasian employees while at the same time promoting several less experienced Chinese people into key management positions. For example, a former-Huawei employee, is now reportedly in charge of DJI's North American Enterprise Division, without having any relevant drone or drone industry experience.
“During the restructuring earlier this year, some very experienced and outstanding people were let go while new people with no understanding of the industry of drones or DJI, who had only been here for a month or two, were kept,” said a DJI employee.
Frank Wang, the DJI founder, has allegedly hired a Huawei consultant to advise him on how to restructure DJI in these turbulent times. In combination with China now having become DJI's largest market, this has led to more Chinese employees being pushed into strategic positions within the company. Many international employees fear that with these changes, concerns in the U.S. about DJI's treatment of Data Security might no longer receive the attention it deserves. DJI's strategic focus now seems to be on producing suitable hardware and less so on offering the services and software that customers in Europe and North America are asking for.
“Frank has always only hired entrusted people from his environment that he either went to school with or are part of an extended family. That has always been the case. He had a very bad experience in the early days when Colin Guin was the CEO of North America, and that just again solidified [the belief] in him that only his own people should be in charge of the day-to-day business.”
Mario Rebello's (DJI's former Vice President of Government Relations) recent departure from DJI is an example of how things have changed within the company. During his short time with the drone maker in North America, Rebello was very focused on convincing the various departments of the U.S. Government that DJI drones could be safely used. For 15 months, the company worked closely together with the Department of the Interior to develop a unique ‘Government Edition' that would make it impossible for certain drones to transmit any information over the internet and possibly back to China.
Besides having hired a Huawei consultant, DJI's founder Frank Wang has allegedly brought several ex-employees from shuttered Huawei U.S. offices into DJI's Burbank location. Many of DJI's international staff oppose this move as Huawei's influence and an inadequate approach to U.S.-China relations have caused their company to be shut out of the U.S. market. And most believe that it would be best for DJI to distance itself from any Huawei association in light of the current geopolitical tension.
Mario Rebello will likely not be the last high-ranking U.S. executive to leave DJI. As reportedly, a small number of other senior employees are looking to exit the organization in the near future. DJI has some of the most senior and most active employees in the North American market. Individuals who have contributed to the success of DJI and the drone industry. Losing them would have a substantial negative impact on DJI and, quite likely, on the overall drone industry.
DJI's ‘Game of Drones' culture and recent organizational changes have had a negative impact not only on the DJI organization but also on its dealer network. It has even started to impact its end-users. The consequences may not be felt as much on the consumer side, but certainly on the enterprise side, where the current geopolitical environment and the on-going data security concerns are impacting the TRUST in DJI. Even if there is no data being sent to China, as DJI has stated numerous times, the constant media hits about it, are weakening the once so strong ‘wall' that DJI had built.
DJI's response to my ‘Game of Drones' article
I reached out to DJI and asked the drone maker to respond to a draft version of the DJI's ‘Game of Drones' article last Friday. This morning I received the following response.
DJI has been making changes to its business globally to better position the company for success during this unprecedented time. Like many of our peers in the global technology industry, we have been grappling with the unforeseen impact of the Coronavirus pandemic. Since early January, effects of the virus disrupted our supply chain and business operations which has impacted every market in which we operate. Because of this, we made the very difficult decision to make organizational changes and realign talent so that we can continue to achieve our business goals during this challenging time.
In the United States these changes included appointing new operational leadership and realigning our resources to better support our largest retail partners where the vast majority of consumers are choosing to shop for DJI's industry-leading products. With the well-received introduction of two of the industry's best drone products in the past few weeks, the Mavic Air 2 and Matrice 300 RTK, and with more exciting plans for the remainder of 2020, we are optimistic about the future and are more committed than ever to our employees, customers and partners in the North American market and globally.
DJI's ‘Game of Drones' culture, layoffs, and other organizational changes make you wonder what will be in store for DJI in the next few years. Specifically, in the U.S. market, where political pressure is still mounting, and trade relations with China remain very tense. Some of these factors are outside of DJI's control. However, that applies less so to its internal ‘Game of Drones' style culture in which teams reportedly clash and compete with each other in an unorganized fashion, without any clear hierarchy, and where weak performance is often penalized. It seems that for DJI to be successful in the U.S. market, it should carefully listen to its customers and consider the cultural and political environment in which the company operates.
The drone maker needs management and employees in its U.S. organization who understand the Western culture and speak their customers' language (literally and figuratively). DJI is in a formidable position with its large market share and strong hardware offering. However, if the internal culture clashes erode morale and ultimately, the organization, then DJI will only help to create the best opportunity for another, possibly American, drone maker to step in. I'm sure that U.S.-based Drone Companies such as Skydio, Impossible Aerospace, or Freefly would love to take a shot at it.
As I mentioned at the beginning of this article, some of this information has been presented to me by anonymous sources. These include former and current DJI employees and people who have been working closely with the drone manufacturer. I have tried my very best to cross-reference all the information I received and feel confident that this article provides as accurate a picture of the DJI as one can make from the outside at this point in time.
If you happen to be one of the people who have lost their job as a result of DJI's reorganization and would like to share your story, please feel free to reach out to me at haye at dronexl.co or @hayekesteloo.
What do you think about DJI's ‘Game of Drones' culture and the organizational changes within the company? Let us know your thoughts in the comments below.
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