Eyes in the Sky: How HEO is Revolutionizing Non-Earth Imaging - Will Crowe

So yeah, make sure you check it out. Before we get to that, Rob, just looking at news and and things that, things have been in news in the space industry the the last week. I as I was actually on the flight up here, I was having a listen to Space Capital's podcast. They put out their quarterly report, and I thought this there were some interesting trends that they were they were kinda highlighting. But they kind of framed it around Q2, particularly given the amount of uncertainty in the market broadly, that has shown space tech overperforming in a number of areas.

And you can access this online. But one of the things I noticed was they don't break the industry down in those different segments and talk about various trends. They also relate it to kind of general market trends and how different indices have performed over time and then how all that could be correlated. Like one example in particular, which I liked was how the whole trend around SPACs that happened kind of several years ago, what it looked like when a company that was trying to raise enough public capital went through a SPAC or other type of IPO, how the valuation changed quickly over time from kind of the initial day to what it would look like over the weeks and months following and kind of the reasons why. They look at the multiples for several companies.

In one particular Voyager space, which you and I talked about a couple of weeks ago, I think it which I think is a fascinating company. They talk a little bit about what the predictive value could actually look like, just given the fact that the historical trends of some of their competition or others like them. And then they make a recommendation on where they might be able to kind of increase their top line and keep that valuation. And they specifically call out defense and national security specifically for them. I think you and I talked a little bit about how the company, I think uniquely has defined those segments right out of the gate.

So I thought that was interesting too, how they just try to correlate historical trends around public offerings and public capital raises with this particular industry and what it might mean and where maybe companies that are going through it now where they might want to target just based on the analysis that they do. So highly recommend others read it. Yeah.

And as you said, they are trying to make this bit more mainstream and I guess show how people can, I guess, educate people on what's going on in the startup space? It it was kind of interesting how they were talking about like you talked about Voyager. They in their podcast, they referenced the couple of the big IPOs, for Voyager and Planet and and how they'd really they'd really kind of taken off. But they pulled back a little bit and they kind of, I guess, sort of posed the question as like the IPO investors are making a lot of money, but these companies have got to really translate, I guess, move towards demonstrating strong top line growth. And I guess they kind of highlighted that one of the challenges for investors in this space is helping helping people understand the fundamentals of of the space companies.

It can be a bit tricky for for for investors that that have that don't have the technical background, but I thought that was cool. They also talked about, I guess, the momentum. We've talked about the momentum building in defence in Europe and how that's having a real the government investment there having a real kind of profound effect on on what the space industry looks like there. They called out the potential sort of combination of the space businesses of Airbus, Tasselinia and Leonardo potentially in the second half of the year. I know you kind of work in this space, Rob.

I don't if you had any thoughts on that.

And you can see how Europe is an investor. They're the second largest in this particular analysis, but it's remained pretty consistent. So the fact that, only recently the NATO members, they set a new pledge to contribute 5% of their GDP to defense spending going forward. I think it's exciting for the space industry because now you might have a much bigger market that you can sell into. And it's really just about figuring that out.

So I think that's also, I liked that call out to your point with this kind of global rebalancing. There's a bit of the isolationist thing happening in other countries, especially those in Europe are looking at this and they're saying like, we have to have a plan. And we've mentioned this before too, there's a rearm strategy and they call out investment. I'd love to see like, what does that bargain look like next year and the following? How much are we going to see that investment increase in Europe?

So that's the part of it that I really liked and I'm excited to see how that changes over the next couple of years.

During those times, we can, apply our software, turn the cameras around on the satellites, and take photos of other spacecraft as they fly past. And this kind of area is actually it's got a name, not a great name. It's called non earth imagery or NEI. And really what it's about is just taking objects of or taking images of objects, sorry, in space that aren't the earth. Sometimes earth is in the background, so earth is part of NEI as well.

But yeah, that's the name and it's kind of sticking and that's what we're dealing with here. So that's what we do it here.

And it was in the 70s and it was a US satellite looking at Russian satellite as it flew first by. And I can't remember quite if it was an accident at first or if it was just convenient that they thought maybe we'll try and turn around and what they see. So it's been happening for the last five decades, but it was super secret. No one was allowed to know that this was a thing. You couldn't even say the name of it outside of a specially protected room known as a SCIF.

And so people like us just had no idea it was possible. Now, people like myself were really interested in asteroid flyby missions where you fly past an asteroid and you take a lot of images as you fly past. And NASA really pioneered that technique and has done many of these missions. So I knew something similar was possible. And actually the company was originally set up to take photos of other objects on satellites because we're really interested in asteroids, But, there wasn't really a customer base there.

So fortunate people in uniform said, hey, maybe you should try and look at other satellites. So we did. And then, they freaked out. So they're like, how did you do that? Just two guys in a carriage in Sydney. So, yeah, that was that was kind of the origin story.

The really cool thing about that is that when they fly that close, you don't need to leave orbit to do asteroid fly by missions. So I was really excited about that. I was like, you can do it so much more cheaply. But yeah, again, market dynamics kind of prevented us from, I guess, having a successful business there. But really fortunately we had replicated this five decade old technology, and we're just applying it to different objects, I guess.

So, really lucky in many ways, but that's how things came to be.

But they've run into this issue where the adversary said, well, we're just going to launch hundreds of satellites then, and you won't know which one to look at, and you don't actually have enough of your own satellites to look at these. So necessarily we had to come up with a software first solution and kind of API ing into a bunch of satellites that other people owned. And so we're able to do it at relatively low cost. And so, yeah, the customer was really excited about that. And so the US government is a customer of ours through several different agencies.

The other thing though, is that allies had seen this technology, but they weren't able to build it themselves with a couple of exceptions, but primarily they weren't able to do this themselves. Getting access to this technology was really important to them as well. So we've got a lot of allied governments as customers. And then regulators never really had access to this because they weren't necessarily in those rooms having those conversations. So think they're really excited though because regulating space is actually really hard and it used to be based on relationships.

And now with so many cowboys in space, the relationships are kind of void. And so we need to think of ways to properly regulate space now that we can't trust people at their word anymore. So the community is just not tight anymore for us to do it that way, that's okay. But I think this is potentially a regulatory tool. I think there are commercial cases as well, but, yeah, maybe I'll pause that.

But when the satellite stops communicating with the ground because it's broken, there's no way to kind of verify what's happening. So, I mean, I actually did condition monitoring in the train industry for a couple of years. And so for me, was a no brainer. It's like, actually you've got to monitor assets and you've got to do it remotely from a second asset. And then you've got to do that broadly, like do that on like look at pretty much every asset at regular cadence.

And then those assets with problems, that's when you bring the maintenance vehicles. So I think there's a lot of great companies like Starfish Base, Astroscale, ClearSpace, a bunch of others that are looking to do that maintenance piece. But kind of these go hand in hand with the inspection piece. For me it was very obvious, but I guess that is partially my background. And I don't think in space we're thinking enough about minimizing total cost.

So people are saying, well, just throw this away. I was like, cool, you're going to throw a $10,000,000 satellite away or you could get like six months or maybe even more, kind of runway out of operating it in a slightly more nuanced way. Yeah, I think I'm really passionate about that because I think really that's the true way to sustainability, but also to get in space economy is start to do this kind of thing.

Mean, it seems like a no brainer. Though, how are those companies thinking about it?

Things are allowed to break in space. Things break on earth all the time, but there are remedies and we should accept that that's going to happen in space and that, inspection is actually empowering, not kind of, I guess, something that you should do that's ashamed or should be shamed. So I think there's a cultural shift that we need in the space sector. I'm here for it. I think interestingly, everyone outside of the space sector is like, why aren't you doing that already?

It's like, let's create this cultural shift in the sector.

So the maintenance and the auditing or not maybe not auditing, but just like kind of the review of an asset on orbit for a particular customer. Is there a particular orbit where that business case actually makes more sense? A lot of people listening might not know the difference, but I mean, to me, it seems like more of those assets that are in Neo and Geo would probably be the ones that would be the targets. And LEO, some people at least I hear you're more of an expert, but some people when I hear they talk about LEO, they kind of equate it somewhat to like cloud computing and thin server horizontal scaling environments where if it's cheaper to launch, cheaper to build these kind of spacecraft in LEO, then why not just let it burn up and throw it away, launch another one? So is that true?

Like is the business case really more in those outer orbits or just want to learn a little bit more about that?

So he made this great analogy where he said to his team, he's like, if that was a, like, pallet of money just falling through the sky, you would try to catch it. Right? And and That's a point. That really Yeah. Yeah.

Exactly. That really did work for me. So I think and I think it's true in LEO as well. Like, these satellite like, I've I've I've heard the estimates of, like, you know, less than $2,000,000 for these Starlink satellites. It's really like, yep, sure, maybe for the build, but also you had to integrate it.

You had to pay for the rocket launch even though yours is subsidized by the main business. You had to do all these other things to get that asset into orbit. So I think the all in cost is probably closer to $10,000,000 and that's before the, I guess, loss of activity cost of a satellite dock and then you're not having coverage over a certain region. People keep getting annoyed by Starlink going down, even though it's very good, it's not perfect. So having more units available is an important thing.

So I think there is a huge opportunity cost. And I think really the reason people have been doing this is actually the maintenance companies aren't doing themselves favour because they're saying, great, every time we talk with you, that's $50,000,000 And then the company is like, well, even our all in cost of this asset is $10,000,000 So no. I don't think I should reveal our prices, but it's crazy low. It's so low. Yeah.

You're doing this. Like You should be hammering this home. And then we give you the knowledge to know if you should bring in that maintenance craft. And by the way, we know when, how many times on average we need to bring in a maintenance craft, we can probably defray that cost to less than $5,000,000 per engagement. And now for the most high value task, it actually makes sense to do that.

So if we can image a spacecraft, Hey, it's in safe mode. And none of your commands that you're sending up to it are actually getting it off safe mode. So you should just send a maintenance spacecraft up there just to turn it around so the antenna can pick up your signal. That becomes just a no brainer. That's like for a $10,000,000 satellite, maybe you're paying $5,000,000 but you save $5,000,000 I mean, it's awesome.

So I feel like people just aren't thinking about the unit economics in that way.

So I just wanted to make that clear. And maybe we should be charging more, but, yeah, that's that's kind of yeah. I see this as kind of like a whole of a whole of ecosystem opportunity. But, yeah, back to sorry. Can you can you just

So maybe it's just sheer volume of satellites launching. That's probably it. I would say the next technical enabler is the AI revolution. So again, the majority of technology for that was already existing. Most of the ML or the AI we use today is just classic ML techniques.

I do think AI, the current kind of take of large language models and maybe it's like a large space model or something, I think that will bring something new. Although I think most of the value for that will be in maybe in the two year timeframe. That's kind of like people have got now that LLMs exist, people have got to think about how to apply them to different kind of landscapes. So yeah, it's kind of, it's a little bit depressing, isn't This business should have probably been around ten years earlier. And, like, I guess maybe the bigger enabler is the market.

So just sheer volume of satellites has made this possible. Because really, I would say we're in the wilderness for the first three years of our business, mainly because no one believed SpaceX's projections except us. And we're like, we've got to be ready for this. And now that's happened and now like adversary nations are watching a lot of satellites as well. Really it was a market enabler rather than a technology enabler, if that makes sense. Totally.

I was like, jeez, that cloud costs a iPhone. But, like, I think if you're gonna spend money on the cloud or on hardware on Orbit, I would say dollar for dollar, you're probably getting a good deal on the cloud and people are under investing in it. The way I think about it is that if you've got good software and bad hardware then, or maybe good software, but moderate hardware, you're going to win. If you've got moderate hardware and moderate to bad software, you're going to lose in space. So I think that's really important.

The other thing I'll say, and I think, yeah, I don't think this is obvious to a lot of space companies. So I think a lot of investors ask us, they're like, how do you get your software on a satellite? And sometimes we do have our software on a satellite, but most of a satellite software is actually kind of disaggregated, I guess. It's like there's firmware and basic functions rolling on the satellite, but the majority of interesting application use cases, analyses, but also tasking and kind of like how you operate and move around a satellite. Most of that's happening on the ground, which is really interesting.

So I think this has been a quiet revolution, but it's a real one. And I think a lot of people ask us, yeah, how do we make things work end to end? But I think maybe the reason why it's so easy is because everyone's running on the cloud already. And so it's just like now it's like any other software application and tying together any other business. So I think that's been an interesting but quiet revolution.

Do you see do you see a trend where there will be a need for more compute and intelligence on the spacecraft?

And now we can just analogize with the earth again. So it's like, if more compute's happening on the edge on earth, more compute should happen on the edge in space. And I think there's a few reasons for that. Yeah, it's kind of like some of it's like conserving bandwidth, but I think companies will come along and just have just ridiculous amounts of bandwidth. I would say there's other reasons like speed to answer or speed to insight.

So you probably want to do some of the compute on the edge then. Then what's great about that is that then you're generating more value to your customer because they can get more value from or give more value to their customers. So I would say that's how people should be thinking about this because yeah, otherwise, you say there's this constraint, therefore you should do edge compute, I don't buy that. I just

So I think there's a lot of silly things like that happening in the space economy. And I guess it's just a sign that it's not an efficient economy yet, if that makes sense.

Exactly.

Oh, sorry. Just to finish that that point, Rob, I thought thought that was really good. And like, obviously I agree with you, is maybe we should disagree more. But it's interesting, like we are so not bound by downlink at the moment that we just send everything down, even though that might be true. And every time I think it'd be nice to do onboard compute so we could get images back faster, but then it's just like there's almost no difference. So it's it's been an interesting kind of debate.

Can you just tell us about like how you came to make that decision? How did you go about even in doing that, how's it going so far?

And we worked with nations where that was also true when we were using their hardware. Obviously, Us existing has allowed The US to both declassify and deregulate, and it means that we can now access hardware from US companies, which has been really amazing. But it was because a foreign entity, Us, was able to perform this technology that was previously highly classified. So they said, well, there's no reason for us to kind of hold those rules. Continue Oh, yeah. Go on. Yep.

And none of the regulators from then are still around, so they don't know what rules they could break. I think there's some of that thing going on. But the majority of things we haven't done here, so we don't actually have regulatory baggage, which is good because in The US that regulatory arrangement was legacy and it wasn't fit for purpose anymore. So a lot of our customers in The US were so stoked when we came around because they said, Look, we've been trying to declassify. At the moment it just takes one person to veto declassification for it not to happen.

And that's why we're overclassifying things. But you coming along, we just were able to kind of say, well, what if someone else in another allied nation could do this? And then the person that would veto every time or the group of that would say, oh, yeah, we can agree to that. And so that was written in. And so as soon as we came along, they're like, Great, trigger, done.

We're deregulating, declassifying. So that was really interesting. So that's how we came to be. In terms of how we started the office, so I was listening to Trace Stevens actually from Andrewell and he was saying, Well, if you're going to have US business, you're going to have to hire lobbyists as soon as possible. And so we did.

Originally, it was me going over there and kind of engaging with the lobbyists every single month for a week, every month, and that was not sustainable. No. I had a fresh kid at that time, like my eldest kid had just been born, so it was not a great situation for my family. So that's how that started. But fortunately, had a really great network.

We had really great customers. Some of our customers had people that were just cycling out of government and going into industry. And so that network, were able to really push and get some really great people that had both that customer side experience as well as some industry experience and hire them. So honestly, really excited with how Teams progressing over there, and it's been really positive so far.

And we're like, oh, we're not geniuses. They were just really good at keeping secrets. Oh. Okay.

So I think I think that's part of the key element. I think there's probably a more the more we've been thinking about it, the more we're like, actually, I think there's a lot of benefits to being an Australian that we want to explore as well. I think there are benefits to being in The US as well, but I think a lot of entrepreneurs are filling those gaps quickly. And so actually, I think there's less kind of greenfield opportunities right now. And I think this is why we're seeing spikes in aerospace wages, which is very good for the employees, and I'm really happy that that's happening.

But it's making it difficult to kind of launch new space companies, especially when a lot of talent is just getting sucked into Kuiper or or Yeah. Blue Origin or, SpaceX or whoever. And Yeah. Those Kuiper guys.

And I hear a lot of them and I know some that are very close to me and young professionals and they're saying, Oh, I just want to go to SpaceX for two years and I'll just like blow through it and I'll do everything I can. I won't sleep, I won't eat, but you know what, I'll have it on my resume and I'll learn a ton. I'd much rather do that than go to Boeing and sit at a desk all day and maybe have every other Friday off. So there's some of those things that I think are really you're right. I think a lot of it's linked.

This can't be a coincidence. So, but it's an interesting problem. It's interesting problem to solve. I think, I was reading something, can't remember what it was a couple months ago where, which also I think is pretty scary to me, is that China graduates more engineers per year from undergrad school than we produce just undergraduates totally, in total. So like that's an issue.

At the same time, I think we're seeing a lot of young people wanting to study engineering now. So that's a good thing. But we're definitely in that kind of weird, I think, I would say like a catch up mode right now.

I think what this means is that the alliance play is the play. It's the right play. And, yeah, it's just about making sure that that talent can be activated. The other thing that I noticed is that not as much talent as you would think wants to move internationally. So I think that's another reason why you've got to have, like, multiple bases in The US.

Maybe a few states have to have headquarters for companies, but then you need companies to be a part of the industrial base outside of The US probably as well. So that was weird kind of rabbit hole I went down one time as well. Was like, Oh, people don't move. They just get jobs in other industries. Finance industry in Sydney is going nuts because we're underemploying aerospace people. I'm like, So we're getting great finance products, but we should probably be putting them to work on aerospace.

We always like to finish the show at a lighthearted moment. I do wanna say I had this stupid grin on my face at the start of the episode when you were talking about the origins of HEO and taking non earth imagery. And my mind went to as you were describing looking at asteroids and stuff like that, my mind went to that, to Austin Powers, when they're tracking tracking the objects in space.

There are a bunch of Doctor Who references because I I was a big Doctor Who guy when I was a kid. Like, growing up in Australia in the eighties, like, 05:00 every afternoon on ABC was it was Tom Tom Baker was, like, my generational sort of, Doctor Who for anyone that Willie, surely you watch Doctor Who. Like, people