The Exchanges

Q Double. It's just, it's a lot of Google drives. Um, and, and so you are not profitable. You haven't, you're not, uh, but, but, Is there a path to profitability, a clear path to profitability?

A Yes, it's absolutely clear. Um, we already have very clear, uh, users in at least four markets in agriculture, where big companies buy our data. That's the biggest market we have. We also service governments, um, and then we help with defense and intelligence customers, where we help them to see new threats around the corner. And then, um, we also help Companies like Google improve maps. So we supply data to Google for their maps. Uh, they do huge numbers of requests to us. I'd like to update the maps online so that it stays up to date. So your directions are up to date. Those are four use cases that are already working very well and they're growing very fast. And, um, so we have very clear line of sight now on a growth path, you know, going just over 40% a year for the next five years we project. And, uh, uh, that gets us to profitability in the next couple of years.

AI assessment note: “Yes, it's absolutely clear... that gets us to profitability in the next couple of years.”

Q Okay, so you've been working and basically building all these small satellites, and then I guess around April, It's launch time, and you've booked one satellite on an American rocket and one on a Russian rocket, right?

A Yeah, we had planned them to be six months apart, um, so that we could take the results from the first one, and if something went wrong, iterate the satellite and try and fix that before the second one, except because you can't control the launch date, and they ended up launching just days apart, and in fact, the two satellites got deployed within Within 48 hours of one another. And we were like, what is the chances of that? And then it was suddenly a scramble to try and connect with both of them as they popped out of the, of the rocket. And it's really critical time when the satellite pops out. We need to be action stations, you know, manning the ground stations, manning the mission control, and making sure the thing works.

AI assessment note: “Yeah, we had planned them to be six months apart”

Q Hmm. So, all right, you're, you're both writing and collaborating on, on various papers about, about these types of things, and, and I guess in 2002 you got together at another space conference, but this, this one was in Houston?

A That's right. One of the, uh, fun things that happened that, that conference is, uh, we met Pete Warden. He's a good character introduced because he's relevant to our stories, so, uh, we've written one of these papers. One of them was basically about, Space weapons and keeping space from weaponization. And then in this bar in Houston, where this conference is at, a mutual friend had introduced us to General Pete Warden, who is basically running all the space weapon programs for the United States government in the Air Force. And we were like, what? And our friend was like, well, this is, you know, the people that think that space weapons are a bad idea. This is Pete Warden that runs the space weapon programs. Have a go. And And we're in, in this evening, we had this fascinating conversation about, you can't build space weapons, that's bad, that's economically doesn't make sense, and it doesn't even work technically, and we were writing equations out on why it can't work technically, and then he was like, oh, you don't understand, I've got to protect US assets from threats, and you don't know what you're talking about, da da da, and we got increasingly drunk, actually, because he kept on buying his drinks, and, um, But the next day, to his credit, he wrote us an email, and he said, well, I really enjoyed our conversation last night. Why don't you write a paper together? You guys …

AI assessment note: “That's right. One of the, uh, fun things that happened that, that conference”

Q They're huge or expensive. They, you know, they're not always totally reliable. Um, so the idea was, hey, can we start to look at smaller satellites? It may not be as robust. It may not be able to do the kinds of things that like the Hubble can do, but Could do pretty important things like take images of the earth. Was that the idea behind this, this NASA project?

A That's exactly right. That's exactly right. And, and that especially leveraging the miniaturization of electronics for phones and computers, it was a revolution. And we were like, how can we In the space community, leverage that revolution. Historically, NASA had had to invent almost everything. It's radios, it's microprocessors for the Apollo program, and they developed all this stuff themselves. But now, the billions and billions of dollars that would be going on in the consumer electronics industry, like Apple and Samsung and Google and all these companies, was far outpacing what NASA could spend on the development of electronics. And we were just like, okay, well, what if we Learned to follow and leveraged this technology. A small phone sat, like the one that we launched, couldn't do what Hubble does, because it doesn't have a big telescope.

AI assessment note: “That's exactly right. That's exactly right. And, and that especially leveraging the miniaturization”

Q Alright, here's my question. How, why did you need to prove this concept? If you had already essentially tested it when you worked for NASA.

A Phonesat didn't take exquisite imagery. Remember, it's just a phone camera floating around in orbit. To take quality imagery, we were really going to have to add a telescope. That was a really high quality telescope to take pictures. We're going to have to add a high resolution camera. You know, I mentioned our mission was to image the whole earth that was designed because we wanted to be able to see a tree because we thought we can't stop deforestation if you don't See all the trees every day and see one being knocked down. And so we didn't know for sure we could see that tree from space. Um, the physics said it should be possible, but it wasn't completely obvious, and we had to design a telescope out of a material that wouldn't expand and contract with temperature. Otherwise, uh, the, the camera would go out of focus. So we had to really put it in space, because that's the only way you can really test it, ultimately, is it going to work?

AI assessment note: “Phonesat didn't take exquisite imagery. Remember, it's just a phone camera floating around in orbit.”

Q These are the UN Millennium Development Goals, right?

A Yes, correct. Which was basically a summary of all the world's problems. We looked down that list and said, how can we, as space geeks, help the biggest challenges on the earth? It seemed to reason that if we could take more regular images of the earth, we could help a lot of them. And it's really true, like, we could help stop deforestation, help people grow smarter crops, so help with their food access. We could help after disaster response, after floods or fires. There were so many things that If we had more regular imagery of the Earth, typically before our mission, you could only get a new image of the Earth maybe once every month or sometimes every year, depending on the resolution you needed. We thought, well, why couldn't it be every day? And then that would be much more useful, a disaster response, not having to wait for a month for the flooding information. How about have the day before and the day afterwards?

AI assessment note: “Yes, correct. Which was basically a summary of all the world's problems.”

Q So, all right, now that you had Space on a rocket. What, and, and, and you knew that it was going to happen, this is 2011 when you signed this deal. Did you, were you now able to go out and raise money? Because it was still going to be another, what, presumably a year before you could launch this proof of concept.

A We had to raise a little bit to do these first couple of missions. So we decided to do the first two satellites. We worked out that we'd need two or three million dollars, but we didn't have all the capital to pay for those rocket rides in full. So let me rewind just a tiny bit on one of the tests of PhoneSat. The satellite project that we were working on at NASA, we met, uh, someone there who was quite unassuming there called Steve Jurvetson, who was a venture capitalist, um, actually became the main funder of Tesla and SpaceX, and, and we met him, he, cause he likes launching rockets on the weekend, and we were doing our NASA rocket, and he was doing his, um, personal rocket, and, um, we took our test satellite, um, And, uh, around November, 2011, we plonked it on his desk, and we told him the plan. We said, we're gonna put a hundred of these into space, and they're gonna image the whole world, and it's gonna have all these commercial opportunities, and it's gonna have all this impact on the planet. Will you give us some money? We also attracted a couple of other investors, and then we had our first money in December

AI assessment note: “We also attracted a couple of other investors, and then we had our first money”

Q investors, I understand that, you know, there, that you had idealistic motivations, which, you know, many entrepreneurs have, and that's certainly continues, but you still have to appeal to people who want to make money. Um, and so what was the, how did you explain to investors that they, they would make a return on that investment? Like, how, how, how were you guys going to make money for them?

A We actually had quite a clear view about this, that it was obvious that this data had value to people. To help improve crops for farmers, to help Google get better maps, to help governments do disaster response. There was obvious value in it. I mean, remember that if you went back and asked Google what their business plan was, they didn't have an extensive business plan. What they Realize was that search would really help the world and, and that had value and there was probably a way to monetize it. Similarly here, like the venture capitalists didn't have to believe that there was value. They just had to believe that we were going to be smart enough to then harness that somehow.

AI assessment note: “it was obvious that this data had value to people.”

Q I mean, I know that you, you've kind of solved the problem of, of cheap satellites, and they'll get cheaper and cheaper, obviously, as time goes on. But is there a way to solve the problem of expensive rocket launches? Can you make, is it possible to make rocket launches cheaper?

A Yeah. Yes, it is our biggest expense, or it was, now it's actually people, um, but it's our biggest capital expense. The rockets have, in fact, got cheaper. Just the last five or so years, they've gone down about fourfold, and mainly because of SpaceX. SpaceX, with its reusable rockets, has brought the price down, which is really quite a big deal, but I would say one thing that people often miss, though, is actually Even more radical is that the capability performance of satellites, the cost per kilogram, the cost per given capability, has gone up about a thousand fold in that same period. That sort of change of a thousand X in five or 10 years is very unusual in history. Even the Model T Ford, when it first came out, was two to three times lower cost than the lowest cost car at that time, and people were like, that's a revolution. But we are talking a thousand X. A closer analogy for this is not Model T forward, but the transition from the mainframe computers to desktop computers. Big companies would have one or two computers, right? Our countries would have one computer, and it was the size of a factory. And now with, with desktop computers, suddenly everyone could use them for lots of more purposes. Space is undergoing a revolutionary shift right now, and that is leading to all these changes. What in particular, the biggest upshot is the revolution in data that helps us to t…

AI assessment note: “The rockets have, in fact, got cheaper... mainly because of SpaceX.”