Closing Bell - Manifest Space: Reach for the SkyFi with Skylar Capital’s Bill Perkins 2/22/23

Episode Date: February 22, 2023

Morgan Brennan speaks with hedge fund manager and natural gas trader Bill Perkins about his latest venture into the space economy, SkyFi. The satellite data app allows users to access and customize satellite imagery at a more affordable price point than ever before. Morgan and Bill break down the investor case for satellite imagery and the future of SkyFi. For more Manifest Space, listen and follow here: https://link.chtbl.com/manifestspace

Bill Perkins is one of the most famous natural gas traders in the world. Last year, a fund run by his Schuyler Capital Management gained more than 200 percent, capitalizing on soaring prices in the first half of 2022 before adjusting just as those prices fell back to earth. A contributor to that investing success? Satellite data. So I'm sitting in a meeting trying to buy satellite data. So I'm sitting in a meeting trying to buy satellite data to train a machine learning model to track cargo ships, right? I have, you know, we're going back and forth. I had to fly

to meet to buy the data. You know, I'm trying to write a $250,000 check and it's taking weeks and months. And I was ready to pull my eyelashes out. I'm just like what's going on here? Like I can order I can buy a house on LoopNet without ever seeing you know, or building I can buy a car. I can buy everything automatically online. Why you know, I said to the person I like you but why the hell am I here? Why am I talking to you?

This should be an automated process. It should be easy. I should be able to do this and download it on my phone. And at that moment, I realized, why am I complaining? Why don't I just do it myself? And so that's that's what happened. That's literally what happened. SkyFi officially launched to everyone in January after the startup raised $10

million to develop the app and tested a beta version last September. The app allows users to access and even customize satellite imagery. While being able to capture space-based data using commercial satellites isn't necessarily new, SkyFi's affordable pricing and easy access is. Photos of existing images begin at $20 and custom images start at $175. My mission is to democratize Earth authorization data so that the geniuses, the people of the world can have a meaningful impact on the planet. I'm Morgan Brennan, and this is Manifest Space. So how did this, how did this idea, how did this concept come into being?

Frustration. So I, as you know, I have a hedge fund called Skylar Capital Management, and I use satellite data to just get information on things that I care about. And one of the things I care about is rig counts and frac crews. And so we bought satellite data and then ran machine learning to track every single frac crew in the United States of America. Then I thought, you know, I'm just a small hedge fund and I'm spending a lot of money on satellite data to get one single answer. There must be other people who can use this data and have a bigger AUM. And so instead of what I call digging for gold, I started to say, let's sell shovels. Let's sell the tools that we're making. And so in the

process of trying to make those tools, you have to buy different types of satellite data, whether it be synthetic aperture radar, we can talk about that later, hyperspectral, optical imagery to build our models. And that was an extremely frustrating process. And I noticed that while these companies are great and brilliant and orbital science and that type of technology, they're not very customer focus. They're not very easy to use. They've been very government focused, long, big sales process, giant contracts, and not really paying attention to another market segment.

So out of that frustration, SkyFi was born. So what happened? Did you just go to some of these different companies and say, hey, listen, I want to have better access to your data. I'm going to build out this app and let's figure this out? Yeah, it's actually, right? And, you know, we're going back and forth. I had to fly to meet to buy the data. You know, I'm trying to write a $250,000 check, and it's taking weeks and months. And I was ready to pull my eyelashes out. I'm just like, what's going on here? Like, I can order, I can buy a house on LoopNet without ever seeing, you know, or a building. I can buy a car. I can buy everything automatically online. Why, you know, I said to the person, I like you, but why the hell am I here? Why am I talking to you? This should be an automated process. This should be easy. I should

be able to do this and download it on my phone. And at that moment, I realized, why am I complaining? Why don't I just do it myself? And so that's what happened. That's literally what happened. And Skyfy was born. At that time, we called it Sat Bunny. Sat Bunny was born, and then eventually we changed the name to Skyfy. So you just mentioned some of the different types of data that you are pulling and aggregating.

Are there specific companies that you're working with? Yeah, so there's Albedo, a new company. We're working with Satellogic. We're working with Seaway, G-Lin, Sen. We have a lot of partners on the partnership page on our website. Forgive me if I didn't name you and your partner. There's just many, many coming on. And we're not only focused on satellites.

Once again, we're an earth observation company. So we'll eventually load drone companies, plane, balloon, near space labs, things like that. And so we have multiple partners and we're an aggregator, a data platform. So you need many, many aggregators with many different types of sensors in order to meet the demand of what the customer ultimately wants. Yeah.

So let's talk a little bit about the demand. What is it looking like so far? It's, I am a zealot when it comes to this market segment, kind of the B2B and B2C, both kind of what I call the consumer to prosumer market. And I'm an outsider to the satellite industry. So when I come in and I say, hey, you're missing out on this market segment. It's huge. There's this pent up demand. They kind of look at me with a raised eyebrow and kind of like, you're crazy, right? But as our CEO, Luke Fisher points out, had you went to the big wigs, say 20 years ago or 30 years ago with GPS and said that the biggest use for GPS would be people exercising and teenage kids sharing location,

they would be like, you're crazy, right? Like, what are you talking about? But now everybody has maybe two or three GPS devices on them, right? For navigating their car, for running around the park and doing exercise. Snapchat has location sharing and kids are socializing, et cetera. They would have laughed you out of the room if you said that's going to be the major use case of GPS, right? Not missiles guided to a target. And so the satellite industry kind of has that look with the B2C and the B2B business, but we're seeing a lot of pent up demand as we

just kind of leaked it in social media, not that much paid advertising, just kind of leaked it in social media, you know, not that much paid advertising, just kind of letting it go out. And we're seeing a lot of people come and say, hey, I can use satellite data to do this. I can use, can you do that? I have a social use. I have a business use. I have a, you know, an enterprise use. And so we're careful because we just launched. We just have a couple of providers ready with an API. They're like, why do we need an API? The government just calls us and we make an order. And I'm like, we can't deliver images to thousands and millions of people globally picking up the phone.

And so we're kind of dragging the satellite industry to product market fit. And they're like, wait, we don't believe in your market. So they're not really rushing to have these APIs integrated in to have a data marketplace, but they're moving. They're not moving as quickly as we'd like them to, but they're enthusiastic and we see a very, very bright future. If you just notice today, a news organization used a satellite to look at a methane gas cloud coming out of the Permian. And that's a great impact, right? Like they admitted like, hey, we have this methane leak and it's going to prevent greenhouse gas emissions from coming out. So there's a new use case of a satellite watching a greenhouse gas emission, which positively impacts our planet. And that was from the journalism sector, right? So this is kind of like a, we call satellites the ultimate BS detector. And so it's true. So, you know, I'm excited. I'm enthusiastic. You could probably tell. And there's more use cases than my brain can actually explain. It's kind of like the Internet. Right. When you made access to information, you said, well, there's going to be the news. And while that's true, it's kind of quaint, right? Like the internet is used so many different ways and so powerful and such a huge impact on all of society. And then even

the data on use of the internet is useful, right? Like, wow, there's a million people checking for flu. There must be a flu outbreak, right? So data on top of data. And the last data unlocked on our planet is Earth observation data. And so when we make that easy and accessible to everybody, then they can take that data and do wonderful things. there's fire and rescue there's damage to bridges there's insurance there's all these categories plastic pollution uh deforestation there's probably a thousand that i'm not even thinking of that you know some 17 year old kid is going to have this killer app location on this data layer that's going to have a massive impact i mean it's just and when you lay when you lay it out like that it seems like duh this is obvious like, duh, this is obvious. Like, why hasn't anyone done this and sort of aggregated all this data and kind of democratized the data for the masses in an accessible way yet? You know, and that's what I find so fascinating about the conversation you and I are having.

In fact, you have finally built out this app. Expectations or I guess pricing strategies in terms of, you know, where you think your biggest markets are going to be? Is it going to be like other investors like yourself and businesses that are looking to, you know, spend money to get very specific types of images or data? Is it going to be just consumers and, you know, writ large that are looking for information and data? And I guess what does that mean in terms of the business model? Right, right. So first I will say, like, we're at the right place in the right time. You know, SpaceX and the industry has done a great job of lowering launch costs. So the cost to put a satellite in orbit or the sensor in orbit has

come down. The technology, memory, chips, sensors have gotten better. So we have better sensors at a lower cost in orbit. And so we have a proliferation of satellites in orbit and companies doing their vertical and things that they think are important. And this is the time for an aggregator to come in. There isn't just a Disney studio. There's a Disney, there's a Paramount, there's a Sony, et cetera. And then therefore a Netflix can exist or needs to exist. And so we're at the right place and right time.

And when we talk about, you know, where are we going? B2C, B2B, obviously, you know, enterprise is a little bit easier, large customers, large orders, and B2C is tough because there's a customer education part of that to kind of educate them on, hey, I didn't even know I needed or liked satellite data, right? And our approach is kind of what I call the Amazon approach. Amazon just made everything easy, right? They do have enterprise sales, right? But they made it so everybody could just get what they wanted,

whether you needed it in bulk, a million of them, or just one t-shirt or one book. And so we're kind of making it extremely easy, extremely intuitive, the interface there, and then testing the market and let the market tell us who the customer is and so we're kind of doing both at the same time so we we do have uh we do have uh customers that say hey this is great get the concept love what you're doing we want an api we want our own custom api we're like yes ma'am here comes your you know we will build the api and here you go

uh and then we have people that, I don't understand what a pixel is. What do you mean 30 to 50 centimeters? That's basically the resolution of 30 centimeters means a pixel represents 30 by 30 centimeters. That's the resolution where we have to educate them and kind of say, this is what synthetic aperture radar does. This is what hyperspectral does. This is what you can do with optical imagery. And we're going at both. You know, we're staying on mission. Our mission is to democratize access for all. And so we're not going to give up the farmer in Africa who has, you know, maybe a thousand acres but doesn't know how to use hyperspectral, but it will really help his crop yields, right? And we're not going to give up the you know the giant mining company that has you know

thousands of employees worldwide that uses satellite uh uh info for mining prospects or whatever we're going after both and we're doing that by making the process very easy and the price transparent yeah and of course what you said to start this conversation is that this was born from your own personal experience. Even if you do have this hedge fund that's successful, you're one of the most famous, easily one of the most famous natural gas traders in the world. How how have you yourself been using this data and how has it been, I guess, boosting your own investment thesis? Well, so, you know, as a fundamental trader, I'm not a technical trader. I need to understand the supply and demand balance and any kind of thing that may go wrong in between. So as I stated earlier, you know, I look at rigs, frack crews, and I have a much more informed view of what future supply will be.

I also, you know, incidents happen. If you're in the energy business, you know that Freeport LNG blew up. It went down. We use satellites for reconnaissance to see, okay, how much damage is there? We also task on through SkyFi, because there is a plane operator, a plane to fly around and give us pictures about what's going on there. There's synthetic aperture radar where we can look at how much storage is in a crude oil tank and floating crude oil tanks at scale. And, you know, one of the hardest places to get crude oil information is China. But you can take a synthetic aperture radar of the storage fields and you can see how much oil is in the tanks, you know, with a satellite,

not flying a plane over it like they do in the United States of America. So, you know, there's infrastructure, there's supply and demand variables that may be a recurring thing, like tracking rigs, or there might be a special event like this tanker ran aground in this channel. How bad is it? You know, are there any tugs on site? Are they going to solve this this week, next week, a month? You know, is it no big deal? Is it a big deal? So these are the type of things or questions that I may have that Earth observation data will give me the answer. And, you know, at the end of the day, people, you know, people like pretty pictures, right? They may care about the image or they may have a wedding and they're like, hey, here's your special day from satellite. This is what the earth looked like in your region on that day. But in general, people just want the answer. They don't

necessarily care about the imagery or the data or whether it's synthetic aperture radar or hyperspectral. So, you know, one of the things that we're doing, you know, I'm a hedge fund and I have, you know, analysts and machine learning guys and people that can extract information out of optical imagery or any type of imagery. But the average person doesn't. They need an application layer

on top of it. So Skyfi will also have application platform to help people extract the answer out of the data they're getting. Yeah, I mean, it speaks to, I just think we're coming up on like the year anniversary of Russia invading Ukraine. And I mean, I myself found there were commercial satellite companies putting the images out to the public and saying, look, Russia is saying one thing, but this is what's going on on the ground. And what was kind of fascinating is that from a market standpoint, we had on CNBC, we had folks coming on saying, oh, they're not going to do it.

And I was like, no, wait, look at the satellite data. It was a surprise and a shock. And it kind of rippled through the markets for at least the next couple of weeks, next couple of months as it all actually started to play out. And I guess I just I wonder if you think that it is being, I mean, I imagine you would since you've just launched this app, but do you think it's being taken more seriously as a more crucial data point, especially now in this time where we do have this uncertain world and you can't always trust what's told to you and the more traditional means of data, especially where something like China is concerned. It's definitely a great verification tool, right? And journalism is, they're on it, right? Like,

you know, the big news organizations or the people writing big exposés, like, hey, what's going on in Russia? Did they really create, did this massacre really happen? Look at these graves in China. They're exploding. You know how many people really died from covid green gas emissions in the Permian. You said you don't have greenhouse gas emissions. Well, here we can see the greenhouse gas emissions. You say there's no illegal logging going on in Brazil. Well, we got it right here. So who are you going to believe this This government official or your lying eyes? And so that's a great unlock and that's a great value add to society in a whole and to the journalism sector. And as the process becomes easy, the individual can do it. The individual can verify

for themselves. Oh, you're going to go to this ranch and buy this ranch in Wyoming and there's no construction or no garbage dump or whatever. And you take a satellite photo. You're like, wait a minute. This is not this is not as advertised. You know, these don't look like the pictures on the Web. Right. All kinds of use cases to verify things. And, you know, we're we're mainly talking optical right now. There's things called hyperspectral and that and just the hyperspectral basically looks at multiple segments of the uh of the spectrum in order to chemically fingerprint the pixel so imagine you had a tool that can chemically fingerprint each and every pixel on of the image imagine what you can do imagine what verification you do. Imagine what verification you can do. Imagine what

pollution you can track, plastics, et cetera. It's quite amazing what's coming. And, you know, the large organizations, you know, they see it, they're allocating budget to Earth observation data, but we're making it cheaper and the process easier so that everyone can verify. So I guess to wrap this conversation up, you've touched on it a little bit, but in general, looking over the next five years, the next 10 years, what is your vision for SkyFi? And do you expect that others are going to come in and compete as this takes root and people start to understand more about the crucialness of all this data? Yeah, so I'm going to go back to the mission.

My mission is to democratize Earth optimization data so that the geniuses, the people of the world can have a meaningful impact on the planet. So if we have competition that comes on mission, so be it. We love it. Okay. And, you know, our vision is that Sky-Fi will be a verb. You know, people will be like, well, you know how you say I Googled it. How'd you get that information? How'd you I Googled it? Right. Maybe they'll say I'll chat GPG, chat GPT, jet chat, GPT later.

You know, but I would like people to say Skyfi it. And so what I would like, you know, a success for Skyfi is that we were the tool that helped people have a meaningful impact. So when somebody gives their dissertation and says, you know, we saw that this walrus was endangered in the Arctic and we counted them and then we got them on the endangered species list and we did this study, it was because we use Earth observation data from Skyfi. When somebody says that we prevented this conflict or controversy or et cetera, they got the data from Skyfi. We're not going to be the ones directly having the impact. We're not going to beat the crowd. There's too many geniuses out there and nobody's smarter than the crowd. What we can be is the tool that helps them get done what they need to get done in order to have a positive impact on the planet. And that's the vision for Skyfi. And that's where I want to be in five years. All right. Well, Bill, I really appreciate the time and having you break down this new app that you have delivered to the world and

what that vision is going to look like. So thank you so much for joining me. Thanks for having me. It's been great. That does it for this episode of Manifest like. So thank you so much for joining me, Bill Perkins. Thank you. Thanks for having me. It's been great. That does it for this episode of Manifest Space. Make sure you never miss a launch by searching Manifest Space wherever you get your podcasts and by following the Squawk on the Street podcast. For more on the space race, be sure to watch Squawk on the Street on CNBC. I'm Morgan Brennan.