Why just taking pics from space is not enough?
Earth observation business is a tasty morsel for both small startups and well-seasoned players on the space market. Precious Payload’s CEO Andrew Maximov sat down to talk with Awais Ahmed, founder and CEO of Pixxel, an innovative space startup from India working in Earth observation business, about ways for startups to gain a foothold in this sector of the space industry, discuss the various hurdles on the way to dominating the EO market as well as the best ways for collected satellite imagery to find its way to the end-user.
Andrew Maximov: Hi, guys! I’m continuing my series of videos and interviews with entrepreneurs who are pursuing startups in the space industry. I consider the true heroes of the sector, the teams, CEOs, and entrepreneurs of the companies trying to build products and sell services to end customers in the space industry.
Today with us is Awais Ahmed, founder and CEO of Pixxel.
Awais, thanks for finding the time to talk to me. Let’s dig a little bit deeper into the nitty-gritty of the Earth-observation business. I’d like to hear your insights about what it takes to run an innovative vision company at a pretty early stage while preparing to launch your very first satellite. I know you have been successful in fundraising, building the team, navigating the legal barriers, running your business across multiple countries. So, you’ve already done a lot. Again, I just want you to take your story to other entrepreneurs to inspire them to build a service that leverages a space domain and products for non-space organizations because that’s the way to keep this industry sustainable.
Awais Ahmed: Thanks for having me again, Andrew. It is always a pleasure to talk to you.
Andrew: Ok, so, here goes a couple of tough questions I prepared for you. The first one. When we talk about companies that try to put some sensors in space and then try to build the business by distributing the data, I guess the toughest thing in their journey is that you have to wear different hats.
Not only you have to be a company that knows how to build a satellite, but then you have to make that satellite. You have to do all the proper management in terms of how to deliver a satellite to orbit. You have to be the satellite operator, to process the data so that the data becomes insightful and useful for the clients. Then you have to become an IT product company that will distribute the information derived from that imagery, that is, sell this data around the world to the customers.
So, it’s hard even to imagine how you manage to blend so many types of expertise under one booth, and then to make it all successful, and build a sustainable business. Can you perhaps share how you see that, how you overcome these challenges?
Awais: Yes, so I think it’s like you said. It’s a supply chain, and in each part of it, you have to have your core expertise. Especially for a startup getting into all of this, doing it all well is simply not possible. There are too many factors to consider. First, there are satellite manufacturing and satellite operations. Then the selling of the Earth observation data, distributing these data, analyzing the data itself.
There are quite a few companies in the Earth observation business. If you look at least the leading players in the industry, you have DigitalGlobe, and you have Planet. If you look at them, they are satellite operators.
DigitalGlobe doesn’t build their satellites; they just operate the spacecraft and sell their data to customers. Planet develops its satellites, but they mainly operate those satellites and then make sure that this data is sold to its customers. They haven’t been able, at least now, to get into the analytics part of the business.
Companies like Orbital Insight come into play because the use cases for Earth observation imagery are widespread – from agriculture to oil and gas to urban monitoring to even defense and government-led applications.
There are so many different sectors, and each of these sectors requires its nuanced approach. A company limited in its resources cannot possibly excel in each of these sectors. And even if you look at these downstream sector companies like Orbital, etc., they can only cut deals in particular industries. Orbital goes for the oil and gas sector and the financial sector; others concentrate on agriculture either.
What we will see as the companies grow will be a more substantial consolidation. Many of them will be trying to acquire other companies to build as much of the value chain in themselves.
But startups need to be very careful as to which sector, which part of that supply chain they need to be in. They need to define whether their expertise lies — in manufacturing the satellites, operating these satellites, distributing the data, or in data analysis. Trying to do all these activities with limited resources may end up in a disaster.
So, where I see the industry going into is consolidation, building a healthy balance trying to bring as much under their roof as possible. Or we could also see a different approach, where certain sectors and specific companies like agriculture will become the hub for everything in agriculture, and satellite operators will provide data to them. So, there is consolidation coming as the balance will become stronger.
That is how I see this industry’s value because trying to do everything simultaneously is simply not possible.
Andrew: So, if I understood you correctly, your general advice to entrepreneurs who are thinking of starting a space startup, would be not to build expertise across the entire value chain, but to define some gap in the market, in the industry vertical, that they have knowledge with, or in their geographical area, and then just blend in themselves into that gap.
Hopefully, the next wave of consolidation will bring them into a more verticalized environment that will provide the solution for some sectors of the industry, such as agriculture or the oil and gas market.
Awais: Yes, startups need to identify a particular niche where they can do something ten times, or even a hundred times better. Once they have an offering that is at least ten times better, they have some sort of a foothold to expand where they want to. So, I think that is the learning that you have to do: you should concentrate on your core expertise, and then you double down on it.
Andrew: Got it. That’s very helpful. You seem to be very knowledgeable about the market overall, globally, you know different companies, different supply sectors, so where do you see the gaps yourself? If you were not you, where would you see the weaknesses right now?
Awais: The gaps would be in two or three places. I think one would be in terms of easy-to-use tools and software for analyzing satellite data. You have SD, and you have NV, you have these legacy software systems for analyzing imagery. There is a tremendous opportunity to make it easier for companies to have something like AWC to create a custom copy-paste image-processing model. They can take this imagery, and then they can do whatever they want with it to get to the end-user.
The other thing would be as follows: the approach here really has been B2B, which is enterprise to enterprise sales. Satellite data and analytics have been catering like each of these enterprises’ different ways of looking at it; they try to integrate it into the workflow.
What you would sort of need in the industry is a straight model for payments, instead of going after the end-user instead. They should be going after the developer community because it’s the developers that work with the payment systems and integrate them into the existing workflow.
It should be as easy for people to take satellite imagery and data and utilize them for whatever purposes they want. And the other thing is, not just one type of data will help the customer solve their problems. If you look at the oil-and-gas industry, all this satellite imagery will not help them tackle the leaks. They will need other types of aerial drone data as well as AOB sensor data. Or if you look at agriculture as well, just high-resolution imagery or satellite imagery is not going to be enough.
So, moving ahead, you will need multi-sensor data fusion, where you need to have multiple types of data working with each other to come to the end goal. So, the end goal here has to be the output data coming out of it and not what particular data you are using. And to get that, you need to be able to work with multiple types of data. So, I think that’s where the gaps are for making Earth observation much more widespread than it is now.
Every person everywhere on the globe uses GPS. So there is that potential for Earth observation as well. It may become not only B2B but also B2C, where people can look up things on their phones and use this for something they would need to do. So, I think there is tremendous potential for Earth observation, and there are multiple gaps to fill.
Andrew: I think this is something I also gathered as insight from working earlier with other companies in the sector. I think their biggest challenge is trying the traditional enterprise sales or B2B sales models in this extremely fragmented market. The average sales cycle is probably 6 to 8 months. The average deal is $25 000 to $50 000. And I completely agree with you that this question of distributing the data and moving from B2B sales to B2B SaaS model and then always B2C is extremely important for any company. That’s number one.
Number two: you’ve just touched upon something that I also see. When you try to play with the data, there is a barrier that you have to overcome. What I mean is, I’m working in some terrestrial industry, and then there is satellite data. I have a high barrier for my team to integrate that data into existing software solutions. And that’s where developer tools, as you said, help you build this as a plug-in or an SDK. So, I respect what Skywatch does in that matter, in Canada. They are trying to tackle that problem. That’s also a crucial topic.
And then, as you also mentioned, the fusion between the different sets of data is essential. But, I think, more broadly, it’s necessary to blend satellite data with social media monitoring or other sources of media or other sources of terrestrial intelligence. And that’s a broader vision of the fusion.
Awais: Yeah, definitely. And you also mentioned that the Earth observation sector is very B2B at the moment, and sometimes the contract values are minimal. Contract values range from $10,000 to $25,000, or even millions, depending on which customer you are going after.
Of course, some companies have strong business models that are selling the data, and they can get what they want. But it’s not enough for the industry, because, as you said, it needs to be as easy for any company, or even a non-technical person, to take some sort of satellite image and use it for their analysis. It needs to be, as I said, like auto-augmenting, a drag-and-drop model, which has not been the case until now. It would be outstanding in that sector – trying to tackle the issues that make life easy for the developers and users and getting different data sources that can work together.
So, there is a lot of potentials there. It doesn’t need to stop just on satellite data. There are other types of data, as well. All these different data sources can be plugged in, such as weather data, financial data, or social media data. The combination of these disparate data is something that we will come across.
It will be the end goal of what we are trying to do here at Pixxel. It will be a good idea for trying to build different databases, and it gives you an insight into where it possibly might get. Similarly, you should be able to put inside these databases any other data. And you don’t need to know what’s going on inside there – it’s a black box. But at least it gives you an insight into what you will be able to get by combining all that data.
And if you can get to that level, it can genuinely become something from B2B to B2B SaaS, or even B2C, where anyone would be able to put anything in and get insights.
Andrew: Yeah, that’s a great insight. Thank you so much, that’s all I have for you today. So, where can people follow you and learn about the history of your company?
Awais: We are on Twitter @PixxelSpace; we are also on Instagram and Facebook. We were supposed to launch this month or next, but we have been delayed until November, so wait for more updates. We are getting ready to start in November as well. You know, we are trying to fill the gaps in the Earth observation industry, making it as widespread to use as many people as possible. Thanks for having me!
Andrew: Looking forward to chatting with you closer to the launch date.
Awais: Of course. Fingers crossed.
Check out more posts from Precious Payload and videos from Andrew Maximov’s vlog if you want to learn more about Earth observation business and Pixxel: