Planet sets sights on the long game: Building robust subscription business

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This article originally appeared in the Dec. 3, 2018 issue of SpaceNews magazine.

Four hours after the Camp Fire broke out Nov. 8, one of Planet’s Dove satellites captured an image of the deadly Northern California blaze, not because it was tasked to observe the area or detect fire but because the company gathers daily, global Earth imagery with more than 130 satellites.

The California Office of Emergency Services noticed the image Planet tweeted and immediately contacted the San Francisco company. Within 24 hours, Planet employees were in the agency’s mission control center, providing access to medium-resolution imagery from Planet’s shoebox-size Doves as well as high-resolution and near-infrared imagery from its dorm-room-refrigerator-size SkySats.

Now, Planet and California’s Office of Emergency Services are drafting a contract. Emergency managers may opt for a paid subscription during California’s fire season, said Robbie Schingler, Planet co-founder and chief strategy officer.

That’s how Planet’s customer base grows. Planet or a prospective client spots a new application for the company’s data. Customers then sign up for subscriptions.

“That way, we sell one thing again and again, which then decreases the cost per user and expands the number of people who can actually afford it,” Schingler said. “We are playing a long game of building a subscription business, which is predictable, recurring revenue to build a resilient organization that can continue to invest in products two or three years in the future.”

It’s a far cry from the traditional remote sensing business, dominated by government agencies tasking large satellites to capture scenes of particular places on specific timetables. Instead, Planet draws on cloud computing and machine learning to create data products that, in many cases, include no pictures at all.

Agriculture customers, for example, may prefer to see changes in the health of crops on graphs instead of false-color imagery created by the Normalized Differential Vegetation Index, an indicator of plant health based on the way plants reflect light in different wavelengths.

“Every industry has indicators like this,” Schingler said. “It tells them something is about to happen and it helps them make a better decision.”

As a private company, Planet holds financial information close to the vest. Interviews with employees, customers and investors paint a picture of a company growing steadily while seeking to dramatically expand the market for data captured via satellite.

Chester Gillmore, Planet vice president of manufacturing, tours Planet’s Dove cubesat factory. Credit: Planet
Chester Gillmore, Planet vice president of manufacturing, tours Planet’s Dove cubesat factory. Credit: Planet

Not content to fight for a share of the existing $5 billion geospatial information services market, Planet is introducing data products to individuals, businesses and government agencies around the world who never consumed geospatial data before.

“The real opportunity is to deliver insight in a way that helps anyone make a better decision,” Schingler said. “That’s when we will evolve this smaller industry, which is about a $5 billion addressable market, to be part of the business-to-business information services economy, a $100 billion, $200 billion industry. That’s what we’re focused on.”

Since it was founded in 2010, investors have poured $300 million into Planet, a startup that dispensed with aerospace traditions, favoring consumer electronics and agile development to radiation hardening and flight heritage.

“They are the poster child for the new way of doing aerospace,” said Steve Jurvetson, one of the first venture capitalists to back Planet and SpaceX. “As one of the earliest investors, I was investing when Planet was valued in the single digit millions, now it’s in the billions. Just like SpaceX, there has never been a reversal in Planet’s price per share.”

Planet employs 422 people around the world, including 191 in San Francisco, where it moved Nov. 26 into spacious headquarters brings its management, engineering, sales and testing operations under one roof for the first time.

Planet won’t reveal annual revenues, but Trevor Hammond, chief of staff, says 2017 sales were twice those of 2016. The firm completed 180 agreements in the third quarter of 2018, including new deals and expansion of previous contracts.

Agriculture is Planet’s largest market segment. “We essentially have a contract with every major agriculture company,” Schingler said. “They keep renewing and upselling.”

Next largest is the firm’s government business. Civil, defense and intelligence agencies comprise about 70 percent of the market for Earth observation data. Planet has sales agreements with government agencies in Japan, Germany, Canada, the Netherlands, Australia, Thailand and Brazil.

“It’s hard to get those contracts initially,” Schingler said, “but once you do, there are quite a few things you can do together.”

In Europe, for example, Planet joined an Airbus-led consortium supplying high-resolution imagery through the Copernicus Earth observation program, an ambitious European Commission campaign to offer a wide array of free data. Planet then won additional contracts to supply data to Copernicus Emergency Management, Land Monitoring and Security programs.

In late September, NASA’s Earth Science Division announced agreements to purchase data from Planet, DigitalGlobe and Spire under contracts with a maximum value of $7 million over five years. A few days later, the National Geospatial-Intelligence Agency announced a $5.9 million six-month contract for Planet data. The contract, which includes an option for another six months, is Planet’s third NGA deal in three years.

To make inroads in smaller countries, Planet’s business development team is working with a country in the Middle East, which it declined to name, to demonstrate the value of its data products.

“Rather than a large initial contract value, we’re doing a three- to six-month pilot engagement that includes training to fully empower them and show the return on investment,” Schingler said. “The goal is to prove that return on investment in a month so it turns into an enterprise contract. We do those for people we believe will become enterprise customers for anywhere on the order of a decade.”

Not all of the deals revolve around imagery. Increasingly, Planet customers subscribe to spatial information feeds, updates on objects in specific areas of the world. A government agency could, for instance, track ship movement in the North Sea.

Through machine learning algorithms, Planet keeps tabs on roads, buildings, ships and planes globally. Energy customers subscribe to alerts showing new roads near Oklahoma’s Cushing Oil Field. Brazilian forest managers get alerts when roads appear, an early indicator of illegal logging.

“The first thing that goes in is an illegal road,” Schingler said. “They start thinning trees from there.”

No one would task a satellite to find roads in Oklahoma. Since Planet’s algorithms highlight road changes anyway, it’s an easy product to offer, Schingler said.

Planet alone can’t come up with all the possible applications for its imagery even as it expands its sales and marketing staff.

“The most exciting part is discovery,” Jurvetson said. “What if I can see every water reservoir in the world or every new housing start? What can I do with that data?”

Partners build spatial information products on top of Planet’s data to serve specific markets.

“We see ourselves as helping to enable companies to go further up the value chain to come up with products or information feeds that are specific to the needs of the customers in a particular market vertical,” Schingler said.