CEO Peter Platzer: SPAC Puts Spire on a Clear Path to $1 Billion Target
More than a year ago, Spire Global CEO Peter Platzer began working on a plan to prepare the company for publicity. As the Spire constellation of just over 100 radio frequency (RF) data collection satellites is fully deployed, Platzer’s rationale is not based on CapEx, but to increase customer confidence and increase sales.
In March Spire announced its plans to make it public by merging with a special purpose acquisition company (SPAC) NavSight Holdings, in a deal that valued the combined company at $ 1.6 billion. In this interview, CEO Peter Platzer talks about the radio frequency data market, the company’s Space-as-a-Service offerings, and how many hiring factors are in the company’s growth plans.
Via satellite: Why did you choose to go the SPAC route?
Place: We had a board approve a valid public plan about 18 months ago, so we were preparing the company for public markets. Our clients – governments, large corporations – find it more convenient to deal with a public organization. This gives us more credibility and greater visibility to build trust with the customer. We had evaluated different ways of publishing: direct listing, traditional IPO and different exchanges.
At the time, SPAC shone in someone’s eyes at best, at least from a serious person’s point of view. Over the last six to nine months, more confidence has been added to the SPAC route. After looking at the different options – why would you just go public when you can go public and get a fantastic partner? In our case, it’s Jack Pearlstein and Bob Coleman. They have deep operational experience and deep networks to build companies with customer bases that are very suitable for us.
Via satellite: You also recently announced funding with Francisco Partners. Can you explain why you made a financial deal while going through SPAC?
Place: We talked to various financial partners and had plans to do financial consolidation, typical things you do to clean up as part of public disclosure. It was an ongoing process. Things just happened a little faster, so these two funding are now significantly closer than we had originally planned. But Francisco Partners and Scott Eisenberg are fantastic partners and I expect this to be the beginning of a long-term relationship with them.
Via satellite: Spire forecasts very ambitious growth – from about $ 36 million last year, to over $ 1 billion in 2025. How will you achieve this?
Place: There are three elements. The first is the size of the market and the need for the types of products we have. Spire was built with a vision to create a connected network of satellites to collect sensors that collect data that can only be captured from space to solve Earth’s problems. By that definition, the things we have, you can’t get any other way. A global consulting company has built a detailed analysis of our address market and came up with just under $ 100 billion market opportunities in the order of 200,000 individual clients. There is a huge market for the types of products and services we have. Not only because we have the data, but we also have the analyzes and the fully vertically integrated structure of the company.
The next is that we have been growing at this rate for two or three years. We have a good sense of how to double the business. When we add sales, marketing and customer support, it increases the pipeline, revenue, recurring revenue and bookings. This is a very repetitive process. We look at our forecast by-product in terms of: how many people do we need to add to these features, how fast can it be increased, what is the percentage growth, what is the turnover? The biggest risk of execution we have is when hiring – attracting the right talent, with the right culture, with the right speed.
And the third is the stickiness of our business. All our products are sold as a subscription business, which makes it very sticky. We have a 98% gross retention rate. Customers continue to buy more than us after they start becoming customers – we saw a 145% net retention rate. We do not expect all these figures to remain the same for the next five years, but you can see where this confidence comes from.
Via satellite: Spire also offers Space-as-a-Service in addition to the analysis platform. What type of opportunity do you see here?
Place: I have to acknowledge where all this is coming from – Jeff Bezos and Amazon. He built an e-commerce business, built a fantastic infrastructure and allowed other people to hire him [through] Amazon AWS. They come to their customers and say, “What is good enough for us, we are pretty sure will be good enough for you.” We did the same.
Spire manages one of the largest space data operations. We make 40,000 contacts to the ground station per month, processing five terabytes of data per day. We had to build a massive infrastructure. We know how difficult it is, not only from the point of view of technology implementation, but also from a regulatory perspective. So why not rent out your infrastructure to other people, just as Amazon AWS leases out their infrastructure?
Via satellite: In this model, do you build the satellite for the client and manage it for him so that they have access to the data through your platform?
Place: For the client, they access their data through the API of our platform and the whole space beast behind it is completely abstracted. But we don’t actually build satellites for our customers. We build satellites for ourselves and launch them regularly. Sometimes we just add hardware that the client gives us, stick it in our platform and it goes into orbit.
Our constellation is very software defined, we have made 20,000 software upgrades in the last four to five years of our constellation. When we retire a satellite, it is more capable than the first day, very similar to Tesla. There are cases in which the client sends us software that uploads to the existing constellation and works as a virtual payload. In certain cases, the client wants so much use of an asset that we put only the client’s virtual or physical payloads in the box and it rises as part of the entire constellation.
Via satellite: Do you see more opportunities in selling Spire data as a customer subscription or in selling Space-as-a-Service? What will occupy most of Spire’s business in the future?
Place: We have the four businesses – maritime, aviation, meteorological and space services – and we see that they are all growing at a similar rate. For 2020, aviation was hampered by COVID, but the other three businesses were almost equal. We believe that the meteorological business will become a little bigger than a quarter, because it deals with the biggest long-term challenge facing humanity. [climate change]. We are passionate about helping humanity deal with this. We see very strong – doubling – annual growth in all four of these businesses.
Via satellite: What are the opportunities you see in different datasets and other industries that you would like to develop beyond maritime transport, aviation and weather?
Place: One thing that excites us about this transaction is the expansion of sales, marketing and products, as well as new industries and verticals and new types of data. We can take things that are on our roadmap where we see upcoming customer searches and speed it up. A classic example is spectrum monitoring, where we remain within our core area of core expertise: radio frequency signals and radio frequency data collection. With the advent of 5G and the increase in low Earth orbit [LEO] satellite constellations for broadband access and landing rights in different countries, there is a growing interest from both regulators, licensing agencies and operators to really understand who uses what spectrum, when and where.
Via satellite: Earlier this year, we spoke with a number of analysts who expressed skepticism about SPAC’s assessments. What would you say to someone who thinks Spire is overpriced at $ 1.6 billion?
Place: I would say look at the data. What is the actual estimate of companies growing by 100% on an annual basis, with a gross margin moving to the 90% range, with a net retention rate of 145%? They trade on up to four times the price of Spire. If you want to buy growth in a large market, with high margins, in a highly recurring subscription business, the data seems to show that you generally have to pay four times more for that growth.
Then take a look at some of the other companies in our industry. We trade a quarter or half of what we trade. For those peers who actually have a business, we have purposefully priced at a very attractive entry point. I don’t think so Tiger Global and Black stone they would push us to make a $ 245 million PIPE if they thought it was not an attractive option.
Via satellite: Do you see a synergy between the stages you have achieved in building your infrastructure and the time to market?
Place: A number of public companies in our industry are talking about significant investments in CapEx – building bigger constellations, bigger rockets, implementing infrastructure. For us, the initial motivation is trust and trust in our main customers. In fact, we were fully funded to profitability before this transaction. Revenues from this transaction are focused on sales, market and product. Not to expand the infrastructure. This resonates strongly among investors. CapEx is actually a smaller and smaller part of our business. We do not sell any capacity such as tasks, bandwidth or startup. We collect data once and sell it a million times. Our infrastructure is fully developed, so the impetus was the trust and confidence in serving our customers.
Via satellite: What is your prospect of becoming a public company and how can this affect either your management or the way you communicate about business?
Place: From the moment you start a napkin company, you think about the growth plan to have a strong corporate culture of control, processes, transparency and accountability. We have always strived for excellence. Publication is a natural evolution of becoming older, more responsible and more transparent. And not all this is convenient. There are certainly benefits to not knowing exactly what we will do next quarter. Some people say that people’s innate nature is lazy and you find ways to help yourself not to be lazy. Being a public company makes it impossible to be lazy.
Via satellite: It will be interesting to see this new wave of public companies through quarterly reports.
Place: This is an advantage for public investors. Over the past two decades, the public investor has had less and less access to the company’s growth from a $ 1 billion market capitalization to a $ 10 billion market capitalization. They were allowed to start participating around the $ 10 billion mark. All this value creation was locked by private investors. These transactions allow the public investor to once again participate in the creation of a value of 1 to 10 billion dollars. I think this will create stronger, better companies that serve all stakeholders. We absolutely move into the environment of all stakeholders – customers, environment, employees and shareholders.