April 11, 2022 – On today’s podcast we welcome special guest, Satellogic CEO Emiliano Kargieman. Satellogic is a leader in high-resolution satellite data collection.

On the show, Emiliano discusses:

  • The market opportunity for satellite imaging
  • How the company is making Earth Observation imagery accessible and affordable
  • How Satellogic’s Earth Observation data is helping the Ukrainian people
  • His advice on finding success as an entrepreneur
  • And more


Welcome investors to The Absolute Return Podcast. Your source for stock market analysis, global macro musings and hedge fund investment strategies, your hosts, Julian Klymochko, and Michael Kesslering aim to bring you the knowledge and analysis you need to become a more intelligent and wealthier investor. This episode is brought to you by Accelerate Financial Technologies. Accelerate because performance matters. Find out more at accelerateshares.com.

Julian Klymochko: Welcome to the podcast, Emiliano, how are you doing today?

Emiliano Kargieman: Doing great. Thanks for having me, guys.

Julian Klymochko: We appreciate you joining all the way from Barcelona. Hopefully it’s not too late, but won’t keep you up way, way late tonight. So, let’s kick things off here. I wanted to start with the genesis of the company you founded in 2010. At that point in time, I assume satellite technology was way, way underdeveloped versus where it is now. What was the underlying thesis behind the founding of Satellogic way back then?

Emiliano Kargieman: Totally. And yeah, you’re completely right. There was a single you know, private aerospace company that was you know, an example for us at the time. SpaceX had yet launched their first [Inaudible 00:0:48] rocket, right? So, it was very early on. And the reality is, I’m not an aerospace guy, right? I come, you know, my former background is mathematics, but I’ve been building technology all my life and, and you know, the information technology sector are mostly information security, like first companies for information security companies. And I landed on satellites, you know, by chance, a little bit by chance. I was looking very interested in understanding the trade ups between food production and distribution and energy generation and distribution and how we manage natural resources to tackle the challenges of, you know, increased volatility in the world and you know, due to climate change and to interconnectedness that we have.

And that got me thinking of, you know, the models we use to make decisions around those big topics. And when you look at those models, you know, the models might be fine, but what was clear to me was that we were feeding those models with very stale and old data, right. And so that, you know, that’s what got me down this map. I started to think, okay, what is it that we’re doing? You know, when we need to find out what’s going on, anywhere in the world, what are our tools, right? What can we do to, you know, to do that? And you know, in the end, it doesn’t matter if you’re flying a plane with a camera, you know, flying a helicopter. You’re usually calling someone on the phone that is close to whatever you’re interested, knowing all what’s going on and asking them, you know, what’s happening around the corner.

All of those things share amongst them, the problem that, you know, it’s very expensive, it’s very expensive to collect data. There’s a huge opportunity cost, right? We have to figure out where to send people, where to send clients, even where to point satellites, right? All those things, a lot of huge opportunity. And I started thinking, okay, is there a way for us to build the technology to build infrastructure so we can collect data of anything, anywhere in the planet, you know, without having to pay a large opportunity cost, without having to pay this big, you know, data collection cost. And that, you know, I was pretty agnostic on the technology side, but I’m a technologist. So, I knew there was a technological solution to this problem, right? So, I started thinking, you know, sensors in the ground, but those are very expensive to allow.

And, you know, I was going up, right. Sensors in the ground, stuff on, you know, on mobile phones and cars and planes and helicopters and balloons. And I ended up [Inaudible 00:03:19] And I realized that satellites are really well positioned to collect data of what’s happening on the planet. But it was just a matter of putting enough satellites, you know, so that you could collect data basically over all of the earth at the right frequency to be able to distribute an affordable cost and state announced 10 years, not, you know, the vision of what we’re trying to do, but actually realizing the unit economics that you need to realize in order to be able to implement this model, right. To put enough satellites around the earth, that we can remap the entire surface of the planet, right.

That, you know, that required for us, that we improved on, you know, individual satellite costs by a factor of a thousand compared to what would exist in when it started in 2010. So, we’re building satellites are literally a thousand times less expensive, but even if you think about it, in terms of the data collection capacity than satellites have, we are currently building satellite that are hundred times more cost efficient than any other means of not only satellites, any other means of data collection that we have, right. And that’s really the key to be able to implement our model, go and remapping the entire surface of earth and deliver this data to every customer in the planet. Governments, corporations, small companies, individuals to make smarter decisions about this big problem.

Julian Klymochko: So, remapping the surface of the earth from space is certainly an ambitious goal. It’s taken you guys over 10 years to go from founding to now, you’re nearly a $1 billion market cap, publicly traded company. You’ve raised hundreds of millions of dollars in capital. I was wondering as a founder and CEO; how did you grow a company that needed over 10 years of development prior to generating sales? How did you, you know, convince stakeholders, investors, employees of that long timeframe?

Emiliano Kargieman: Yeah, and it’s a super good question. And the real answer to that question is, you know, we have always been a purpose driven company, right. There’s a reason we’re doing what we’re doing because we think there is a role. This technology needs to play in helping us negotiate the straight ups and improve the way we are managing the resources of our planet, right. And you know that purpose basically has been at of the basics that we had to develop, you know, internally employees of the company and so on. But also, it meant we had to go out and find, you know, very patient investors, right. Investors that would be willing to put up with a very long development time. We were able to do that early on. We were able to find those investors. It wasn’t necessarily easy, you know, raising money for a space company back in 2010, was not the same thing as raising money for space startup in, you know today, right.

It was harder to convince people that there even was a thing as commercials space, right. And much more than, you know, that you needed to spend. You know, of course we didn’t expect it to be 10 years at the time. We expected it to be a little bit less than that. But even if it was, you know, six, seven years of development time, right. It was difficult to do that, but we were, you know, we were lucky to find the right set of investors with long term view that, you know, really work with us throughout all this process. And you know, very successfully, as you say, we raise over $400 million in last 10 years to bring this idea to fruition. And, you know, that shows in this huge differentiation we have compared to anybody else, right.

And that differentiation is really not because, you know, we really wanted to maximize how much, you know, or minimize the cost per satellite. It was really about reaching the right unit economics to be able to implement this business model. And you know, yes, finally last year we were able to launch up satellites to demonstrate in orbit, not only our unity comics, but the fact that we can deliver data at scale to customers. And you know, and this year is all about scaling, right. We’re doubling this year, doubling again next year. And really getting ways to deliver weekly remap of the entire planet by the end of next year and daily remaps of the entire surface of the earth and higher solution by 2025.

Julian Klymochko: So, you talked about minimizing costs, optimizing unit economics, all through scaling. Can you talk about how Satellogic is making earth observation, imagery accessible and affordable? I assume that this is not an inexpensive endeavor.

Emiliano Kargieman: No, a hundred percent. And look, we’re still a satellite company. We’re still in a sense of capital and intensive company, right. But you know, what we’re trying to do in essence is, we’re trying to change the business model for observation so far up until now, with satellites, you have the same situation that you have with planes or with helicopters, and with people in the background. Humanity has a few high-resolution observation satellites in orbit. And when something happens, we need to go and point the satellites to the targets, right. That means that any time we’re selling with the number of satellites, we’re choosing which customers we’re going to sell to, we’re choosing basically based on how much customers are willing to pay. And what that means is, you know, we can only sell a limit number of customers. This market cannot grow, right. So, if you look at the earth observation market today is mostly defense and intelligence, right. It’s you know, 90% of the market is governments for high-risk solution imagery, mostly for defense and intelligence purposes, right. And it’s been impossible for the industry to break out of this market. That for me, you know, I consider this a niche market, even though it might be a, you know, $2-3 billion market, it’s really a niche market compared to the value that the technology we’re building can bring to a lot of other industries, right. And the way to break out of this market and really be able to deliver on mainstream applications for this technology in insurance, agriculture, forestry, infrastructure monitoring, and so on, it has to be able to deliver the data to the customers at the right price point. And to do that, you have to figure out a way to avoid having to point your satellites to every particular target and having to choose which customers you’re going to serve all time, the way we manage to do that.

And this is really the only possible solution is, by just putting enough satellites in orbit that even if we just point all the satellites down, we’re going to remap the entire surface of the planet, right. Every week, and then every day. So that for any customer in the world that wants weekly data first, for any customer that wants daily data later, we will be in a position to deliver this data basically with zero marginal cost, right. And I think that’s really the beauty of this model. Once you reach the point where you are able to deliver data to customers that are near zero marginal cost, right. Just the cost of putting the data through the internet. You get to the point where you can serve every customer in the world, for every potential application of this technology, right. That explodes the market, or well beyond the existing defensive intelligence market and you start replacing all these other inefficient means of data collection we’re using today, like helicopters and planes and boots on the ground, right.

Which is really, you know, the large source of data that companies are using today to make decisions, right. And we think that brings a lot of efficiencies to markets, you know, and you know, very positive economic impact overall, but it also will help us manage and make the best use of the resources that we have, right. So, we think and we’re now finally, you know a few months away from being able to deliver on that business model. But that’s because we spent the last 10 years, you know, reaching this unit economics building. So our vision is one of democratizing access to our observation data so that it can be used. The data that we collect for orbit to improve [Inaudible 00:11:42] for every industry and every company in the world.

Julian Klymochko: So, in terms of hitting on this hockey stick type growth curve, you have to break out this two to three billion defense and intelligence niche market to more applications, more customers. I saw in the investor presentation; you estimate the ultimate market size as about $140 billion. Can you talk about some potential applications where you see your technology being applied and opening up these new markets?

Emiliano Kargieman: Totally. So, you know, it’s funny when you’re trying to build a platform like this to go and acquire data, right. And our business in the end is data business. You have this tendency to say, okay, you know, we’re going to go out, pull this capex, start collecting this data. And then we figure out what people’s going to use, use it for, right. It’s kind of build, and they will come you know strategy of course, you know, we’re very scared of that strategies. So, over the last a few years, what we did is, we went out and piloted end to end solutions using the technology that we had been putting in orbit, the prototypes that we put in orbit, and we used those to you know, go really deep in four or five verticals, you know, from financial services to agriculture, forestry and infrastructure monitoring.

And we developed 12 different applications for end customers, right. We’re working with end customers. Ranging from pipeline monitoring for oil and gas companies to agricultural supply chain management for vertical integrated agricultural companies all the way down to monitoring of renewables, you know, hyper electric solar wind and so on. And what we were able to show this [Inaudible 00:13:38] of you know, pay pilots that we did with customers is that the data we’re collecting for the satellites is good enough to replace the applications that you know, of the other sources of data that companies are currently using to make their decisions. But we were also able to validate the pricing, right, how much they’re willing to pay for replacement solution. And only in this twelve pilots that we’ve done, we were able to validate a $40 billion total addressable market that becomes available to us immediately when we reach weekly remaps of the service, right.

So, by the end of next year, you know, good market for observation will grow by just putting out the infrastructure and putting in orbit to a $40 billion total addressable market, just in this 12 applications that we’ve showcased already, right. And from there on, you know, we think there’s a large number of applications that are still to be discovered, and there’s a large number of applications start to become available. Once you start going from weekly, all the way to daily remaps of [Inaudible 00:14:44]. We’ve sized up and we’ve done this internally, we also, you know engage with third parties to validate these numbers, but with size up $140 billion total addressable market. And a lot of it is, you know, is not new. It’s not that we’re going and building new markets is, we are going to be replacing, you know, other sources of data that people are currently using to make decisions with something is more consistent, more efficient, and that, you know, you can build and automate algorithms on top to give you faster and more consistent answer.

Michael Kesslering: So earlier you mentioned some of the unit economics of your business. Could you go into a little bit greater detail on the economics perhaps per satellite currently, and then how you expect that to look in the future as you get even greater scale?

Emiliano Kargieman: Yeah, a hundred percent. So today we are building our satellites for around $500,000 in develop materials. We can build them and put them in orbit, doing launch cost for a fully loaded cost of less than a million apiece, right. This compares to, you know, small satellites in our peer group that are over 10 million. So, it’s 10 times a lower cost per satellite, Capex cost per satellite. But so, this satellites that we’re building because of the camera technology that we built, and this 10 years of development that we have behind us. They collect 10 times more data than, or peers, right. So, when you compare a million-dollar satellite to a $10 million small satellite that produces higher solution imagery, we are not only 10 times more cost. We also produce 10 times more data. This is the recent, we have this a hundred times that our unit economics that are peers, right.

If you compare this to traditional satellites in our industry. Traditional satellite from [Inaudible 00:16:46] is going to be an $800 million $600 million satellite, right. That is producing exquisite data. But when you run the economic calculation, you know, how much it costs for each 2000 data you’re collecting, we’re also going to be 120, 150 times better unit economics than this very large satellite. They have a lot of capacity. The other problem is, you know, there’s only a few of this very large satellites today. And we can scale with, you know, million-dollar satellites. We can basically put 900 satellites, put the cost of the signal warranty satellite, right. Now, looking into the future of how the unique products evolve. What I would say is, if you look at our Capex investment, and particularly if you look at our Capex replenishment rate to remap the entire surface of the earth every week, for example, we have a Capex investment that’s around $50 million and a Capex rate.

That’s alluded, you know, it’s around $18 million a year, right? We think this is a very sustainable Capex replenish rate that we’re not really looking into, you know, how can we lower this, you know, this Capex cost going forward, how we lower the Capex replenish rate. What we’re looking at is, how do we improve the capacity of satellites over time keeping the same cost structure, right? So, if you look at our unit economics going forward, they unit economics improve, but not because the cost of each individual satellite becomes smaller, but because the capacity of the satellites increases, right? So, we’re basically putting earth observation satellites into a more small type of curve where we are in a position to basically double capacity of our satellites more roughly every 18 months. And this is also a way in which we continue to push technology forward. We continue to deliver more valuable customers and also, you know, create long term barrier for competitor to common play in remote.

Michael Kesslering: As I understand, you’ve used SpaceX for launching your satellites into the atmosphere. When you look at the industry for the actual launch, what sort of innovations are coming into this sector that will have some trickle-down effects on your own business as we move forward? And is there many credible partners that could be used in lieu of SpaceX? What what’s that overall industry looking like that would trickle into yours?

Emiliano Kargieman: Yeah, I think we’re currently launching with SpaceX. We have a multiple launch agreement with them that covers all this year, next year. I think SpaceX is unmatched today. I mean, there’s just no other [Inaudible 00:19:45] that’s in a position to launch with similar cost structure, right. And that’s a Testament to the innovation that they brought to this industry, right. By doing, not only becoming the first completely vertically integrated launch company, right. Which gives them a really good advantage in terms of Capex for rocket, but also, you know, the innovations around the reusability of rocket, right. Which gives them, you know, maybe another 20, 30% advantage compared to competitors, tight. And what space done over the last few years is something that for a long time, nobody’s [Inaudible 00:20:27].

If you look back in time, you know, launch cost per kilogram has been kind of stable, you know, know the lower point on launch cost for kilogram had been, you know, around $10,000 for kilogram, for decades, right. And finally last year’s SpaceX brought their own price to market down to around $5,000 per kilogram which was you know, huge, like really huge. It starts enabling new businesses. It starts enabling new business models, right. That didn’t close with a $10,000 per kilogram. Now what’s coming from SpaceX themselves. You know, we have been working Starship, the promise of Starship, you know Elon would say, they’re going for $150 per kilogram, right, in orbit, even if you think it’s going to be a $1000 or $1,500 per kilogram, right. It’s still a next, you know, step into decreasing the launch cost to puts stuff in orbit, and it actually starts to make other business models viable, right. That weren’t before. Of course, other companies innovating in space. We see a lot of companies building small launchers and the small launchers, you know, they’re not trying to compete in price per [Inaudible 00:21:45], or they’re trying to compete ability you know, the fact that you can pick exactly where to send the rockets exactly when to send them. So, there’s a lot of advantages to using a small rocket, to launched things into orbit but for rolling out a large consolation of satellites, like what we want to do, you know, it’s really, for us, it’s all about unit economics. It’s about how, you know, what’s the lowest price that we can pay to put these things in orbit, right. And nobody’s doing a job as good as SpaceX, we don’t see anybody competing. The other interesting, longer-term technologies that are being developed today that I think might in the future compete.

But, you know, for the next five, six years, I don’t see anybody else in a position to launch for a competing you know, cost per kilogram, right. in terms of what this means to us. Well, I mentioned before, when we started launching, you know, we were building $500,000 satellites and you know, at 42 kilograms we were spending another $500,000. Let’s say satellites in orbit, right. Today adjusting the cost per kilogram, without taking into account shipping and, you know, insurance and all the other things that go on top. So, when you looked at the fully loaded cost, what it meant for us is we were looking at 1.3, 1.4 million per satellite, right. The reduction in launch costs has allowed us to, you know, to be well below a million dollars per satellite today. Which is great, right. It means we can put more satellites in [Inaudible 00:23:15] cost, right, which is awesome. I think it also means we can relax a little bit in terms of mass, right. And so, you should be surprised that over next generation of satellites, you know, instead of 42 kilograms goes to 60 kilograms, right. Because now, you know, mass, you know, those extra 20 kilograms mass might not be a huge impact unit economics and might give us a lot of flexibility into, you know, the services that we can provide. So, I think that’s, you know, that’s really good bit about the evolution.

Julian Klymochko: Now on the business development side, you guys have certainly been busy, a number of key news items over the past few months, number one, which is huge. You guys went public via a SPAC merger with CF Acquisition V. I was wondering, how is this going public transaction and how is it working with Cantor?

Emiliano Kargieman: Yeah, so of course, you know, the SPAC market has been very difficult over I would say over the last year. And so, we went through this process, hard time, right. We announced or we closed our agreement with Cantor early last year, we raised our pipe, announced in July last year, right. Then we closed the transaction in January this year. And, you know, the market, there were a lot of head lifts, right. And SPACs in particular, I think Cantor Fitzgerald, you know, Howard Lutnick in particular, Cantor Fitzgerald, you know, I would say probably the most important reason why we were able to close this transaction, right. It’s been great working with them. You know, when we started looking at partners to take the company public through SPAC, you know, when you look at the SPACs that you have, you have this kind of three different groups, potential groups of SPACs. At the time, you had the, I don’t know if this exists today, but at the time you had the, you know, celebrity spa, right. Like there was someone there, big name, you know, they kind of build a franchise around that. And, you know, we were running away from those, for kind of very obvious reasons.

Julian Klymochko: Right.

Emiliano Kargieman: And I think you had the operators, right. People that come from some industry that have expertise in some particular business, you know, and they put together this vehicle to go find a target and really help on the operation side and in our industry, you know, I think that’s great. If you can find someone that can really add a lot of value to your particular business, in our case, you know, we thought that was very difficult for us to really go and find. And so, we were focused on the financial institutions, right. Institutions that have the track record with SPACs, that have track of raising the funds, you know, and not necessarily interested in operating company. And, and from those, I think we were very lucky to meet Cantor. We were very lucky to choose each other. I think the experience has been you know, considering the market, which really [Inaudible 00:26:29]

Julian Klymochko: And one other interesting part of that deal is the $150 million investment from Liberty Strategic Capital, albeit, as you indicated in a very tough market facing a number of headwinds specifically on the capital raising via SPAC side. But now the former U.S. secretary, Steve Minuchin on the board of directors is non-executive chairman, so congrats on that. I’m sure that was instrumental in providing the capital you guys need to grow. So, one last thing I wanted to touch on was, you know, the war happening in Ukraine, you guys recently announced an agreement to distribute earth, observation data directly to the Ukrainian government and humanitarian organizations. What are some of the implications like, how does Satellogic help the good guys get through this?

Emiliano Kargieman: Yeah, and look in this situation. First, you have to understand that we have a very strict policy for, in terms of us of use of our data that, you know, we only allow our customers to use data for peaceful purchases, right. We don’t sell information to, you know, active military campaigns for targeting or anything like that, just really only peaceful use. And so in this situation like this, we have to evaluate, you know, who we think is going to respect our terms of use, right. Really use this information for good. And, you know, what we saw on this situation in particularly had been monitoring, of course, the border for, you know, for a long period of time. For Ukraine, for U.S. government, for other NATO allies. And just really interesting knowing, you know, what’s going on with this accumulation of troops on the other side of the border, right and what’s happening. And with the conflict start we decided to continue to provide information to Ukrainian government directly, to continue to U.S. and NATO countries. And the reason for that is that, you know, we see this information can really make a difference in helping evacuate civilians, you know, in helping figure out the logistics to continue to provide for the people sitting on the ground, right. Anything we can do, monitoring the troops, monitoring the buildings, you know, monitoring the checkpoints, understanding the routes to bring equipment and to bring food and help to the civilians in the ground and whatever we can do to help figure out what’s the best group to evacuate people. I think those are very important things. And, you know, we’re literally helping save of some lives with the imagery that we’re collecting for orbit, right.

And, and that’s, you know, of course, something that we’re extremely proud to be able to do. We are working with a series of governments, but we’re also opened up our data to humanitarian organizations working on the ground, NGOs, working on the ground to just basically take or collection every image that we’re taking every day of Ukraine and surrounding areas for free to use it, to be able to implement some of these campaigns, right. And again, this is, you know, something that we [Inaudible 00:29:49] to help a situation like this. So, anybody interested in this information, you can go to ukraineobserver.earth and through a partnership with build a company called Austraea that puts together an analytics platform to deliver the data. We are giving free access to humanitarian organizations to you know, to use this data to try to save some people or help some people on the ground.

Julian Klymochko: There’s certainly an awful situation, but it is great to see organizations such as yours contributing positively. Now, prior to letting you go Emiliano, I’d like to get, pick your brain quickly on, you know, the fact that you’ve built this tech startup in a field that you were not an expert in, and you have a, you know, tremendous amount of success. What advice would you give to finding success as an entrepreneur?

Emiliano Kargieman: I think the only advice I can give people is you have to really enjoy what you do, right. You have to really have a very good reason to become an entrepreneur because, you know, we typically hear from people that’s been successful, right. Or, you know, we hear from people that at least survive, right, this called survivor bias into this interview, right. You always hear this podcast and, you know, and someone on their side, well they actually got some, right. And the reality is, you know, the chances of that happening when you start a tech startup are very, very small, right. So, you know, the most probable thing, the expected outcome is that you can spend you know, your life trying to build something and put everything into it, and it’s not going to work, right. So, you have to enjoy it. You have to really, really have reasons to do it because you know, that’s the only thing that you can be sure of, right. The outcome most of the time you can’t control. So that’s my advice to something that you love, try to do something matters, and if you’re successful, then that’s good.

Julian Klymochko: Do something you love, and success will follow. Well, thank you for that Sage advice for investors interested in Satellogic, it’s trading under the tickers symbol, SATL. So, Emiliano, thank you for coming on the show today. It’s exciting what you guys are building and the great work you’re doing. So, keep it up and we wish you the best of luck.

Emiliano Kargieman: Thank you, guys. It’s great to be here.

Julian Klymochko: All right. Thanks. Bye everybody.

Thanks for tuning in to the Absolute Return Podcast. This episode was brought to you by Accelerate Financial Technologies. Accelerate, because performance matters. Find out more at www.AccelerateShares.com. The views expressed in this podcast to the personal views of the participants and do not reflect the views of Accelerate. No aspect of this podcast constitutes investment legal or tax advice. Opinions expressed in this podcast should not be viewed as a recommendation or solicitation of an offer to buy or sell any securities or investment strategies. The information and opinions in this podcast are based on current market conditions and may fluctuate and change in the future. No representation or warranty expressed or implied is made on behalf of Accelerate as to the accuracy or completeness of the information contained in this podcast. Accelerate does not accept any liability for any direct indirect or consequential loss or damage suffered by any person as a result relying on all or any part of this podcast and any liability is expressly disclaimed.


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