Closing Bell - Manifest Space: Sorting Space Junk with LeoLabs CEO Tony Frazier 9/5/24

Episode Date: September 5, 2024

Within the next decade, thousands of satellites are set to head to space, but satellites may need to duck for cover. As more payloads enter low Earth orbit, space junk— debris from previous rocket launches, inactive satellites, and more—is also on the rise. LeoLabs is a startup that analyzes it all, and says number of active payloads it tracks has increased tenfold. With an additional 13,000 pieces of debris in orbit, what’s the future of space traffic management? CEO Tony Frazier joins Morgan Brennan to discuss the trajectory of space traffic, using AI to analyze satellites, and his six months on the job.

Leo Labs is a Silicon Valley startup tracking and analyzing all of the stuff orbiting Earth. And there is a lot of stuff. We always talk about how space is becoming more congested and contested. But just in less than five years, the number of active payloads has grown in low Earth orbit from 900 to over 9,000. Today, you're along with about 13,000 pieces of space debris. And so keeping track of all that and then giving our customers a sense of when their high value assets might be at risk is kind of the core of our value proposition. And that number is growing. Just last month, a Chinese Long March 6A rocket broke apart after

a satellite mega constellation launch, creating a cloud of space junk. CEO Tony Frazier says Leo Labs was, over the course of several days, not only able to verify that explosion, but chronicle, and now track, the growth of the resulting debris cloud. As more activity takes off in low Earth orbit, space domain awareness and space traffic management needs are as well, both for companies and countries. If you think about, you know, how we navigate in the terrestrial world, you know, today, you know, with our GPS devices, you know, and mapping services and what's happening with autonomy and all the other areas, having a living orbital map will be important in space. Just as we wouldn't leave our house to get to the office or the airport or any other location without having real-time traffic information. So I think there's a lot of parallels to what we've come to expect on Earth.

We need to apply the same to space. On this episode, Leo Labs' new CEO, Fraser took the helm in February, discusses the trajectory for this nascent market and how artificial intelligence will help propel it. I'm Morgan Brennan, and this is Manifest Space. Okay, you're six months in at Leo Labs. How's it going? It's going fantastic. You know, when I came in, I thought there was a lot of potential for the business. And as I've had six months now with the team, really bullish on what we can do to really be a key leader in the space domain awareness and space traffic management

markets. And so just a little bit of background here, what Leo Labs does, you just talked about it, space domain, space traffic management markets. Yeah, I guess just walk me through some of the stats and some of the particulars. Sure. Yeah. So what we're doing is we're building a living orbital map to enable dynamic space operations. So we own and operate a network of ground-based radars that are geographically distributed around the world. And then those radars are able to sense activity in low Earth orbit out to 2,000 kilometers where we have built a catalog of over 22,000 objects where we understand where things are, where they're going, and when there might be risk for safety and security missions. So that what's been really interesting is, you know, we always talk

about how space is becoming more congested and contested but just in less than five years the number of active payloads has grown in low earth orbit from 900 to over 9 000. uh today you along with about 13 000 pieces of space debris and so keeping track of all that and then giving our customers a sense of when their high value assets might be at risk is kind of the core of our value proposition. 900 to 9,000. Wow. That puts it in perspective. The space debris part of this, I think, is really fascinating because I realize it's a very, the smallest particles can create the biggest risks. And we have more debris in space now just in this past month after a Chinese rocket exploded in low Earth orbit as well. So what kind of impact is that having? have more debris in space now just in this past month after a Chinese rocket exploded

in low Earth orbit as well. So what kind of impact is that having? It's been really interesting. You know, when we talk about what's driven the bulk of the growth in low Earth orbit, it's been the investment that's going to these mega constellations. And so, you know, SpaceX with nearly 6 000 you know active satellites but in addition to heavy investment from the us and other allied nations china is also making heavy investment in space and so a couple weeks ago they were launching the first of first 18 of a 14 000 satellite constellation

that they're building to rival Starlink, but the second stage rocket exploded and created 700 pieces of space debris. And so that's just an example of how this is a growing problem, whether it's through the launch phase, early operations, and then re-entry, that there's a need to be able to maintain awareness of where all these objects are and then what risks they might impose. So when something like that happens or when that did happen just a couple of weeks ago, how did it play out at Leo Labs? Is that a situation where you started picking up this debris and tracking it in real time? And how did you gather that intel? Yeah, it's been a really collaborative process with both government stakeholders and industry where the U.S. Space Command

provided kind of the early indication that there was a breakup event. And then that allowed us to be able to task our radars to be able to track that event and then eventually help catalog all the objects as the debris cloud dispersed. And so that's consistent with what we're seeing as the opportunity is that, you know, there's a need to be able to maintain constant awareness, you know, where all these objects are and provide as much detail as possible on how to characterize them.

And so we've been able to play a critical role in the detecting and tracking of those. And then we work with other partners to be able to fully characterize that. And so over a period of a couple of days, we were able to not only verify the explosion, but then what was originally reported as 50 objects and, you know, when Space Command put out their announcement of at least 300, you know, then we were able to track the

dispersion of the debris cloud. And then that allowed us to see that, you know, there's 700 new items that we need to keep our eye on. So as space gets more congested, what does that mean in terms of the demand profile for the service that you're providing? How much of, I guess, how much of the incoming business is on the commercial side? How much is on the civil government side, the defense side? Yeah, we've had really good customer traction across all segments. So we issued an announcement a couple weeks ago just summarizing the momentum that we had in the first half of the year. And we were able to disclose that in the first half of 2024 that we were awarded more than $20 million in new contracts. That's fueling over 100% year-over-year growth for our company. And that came from a diverse set of customers.

So there were multiple U.S. government agencies, international partners, as well as commercial organizations. So the bulk of our revenue comes from public sector customers because the civil and national security space missions are large and we can play a real role in augmenting what their sovereign sensors are. But then we also work with many of the commercial operators in the world.

And so typically the use cases fall into these categories of space traffic management and space domain awareness. Around space traffic management, there are civil agencies like the US Department of Commerce. They're in the process of building out their TRAX system for space traffic management, and they're evaluating how commercial providers can augment that architecture.

But then we also work directly with many of the large commercial operators that have us in the ROPS center to give them early warning if there's a potential conjunction between one of their objects, their payloads, and a piece of space debris. And so that's one key use case. And then the other is really helping our military space operators both protect their assets, but also get early warning if an adversarial space object is maneuvering in a way that would cause them concern.

And so is that a situation where you can track and you can work with military customers and say, hey, we've got this, I don't know, call it Chinese satellite that's reaching an arm out and is about to start messing with another satellite right now. Yeah, yeah, those are those are the types of missions that we're supporting. So as an example, you know, China has launched and operated a number of space plane technologies. And we had a recent case where the Shenlong-3, which is a Chinese space plane, was doing a set of maneuvers in space. I had deployed an object called Object G. We were able to track that deployment,

and then they separated and then came back together and there was a reacquisition. And so, yeah, that type of persistent monitoring is a real, that's kind of our core value proposition. I mean, it's really interesting. I mean, coming from 13 years at Maxar, that was our, we were looking down, providing similar services and now with LeoLabs, we have our ground-based network where we're looking up to, again, offer that type of indication and warning

to our military customers. Do you see parallels? I mean, 13 years at Maxar, you were instrumental in building out the portfolio there and transforming that company. Do you see parallels in that part of the business versus this part of the business where you're now looking up? Yeah, absolutely.

I mean, Maxar, it was a wonderful journey to help take the company from a focus on just data to information and insight and getting much deeper into a variety of missions where we could you know not only uh prove that we could support you know mapping mission but really get integrated into other types of you know tactical operations and and so you're investing in ways to uh increase both our coverage and our revisit rates and the timelines to be mission relevant for operational users. All those lessons learned, we're applying here at Leo Labs. And I'd say that

the remote sensing market or geospatial intelligence kind of applied to the terrestrial maritime domain. We're probably 10 to 15 years, you know, kind of ahead of where we are with the space domain. But what's been super exciting is there's a real sense of urgency, you know, across the customer base, both US and allied and commercial that, you know, with all the billions of dollars that have gone into, you know, to adding all these face-to-face services, that there's a need to be able to support sustainability and then how that then translates into what

industry partners can help enable, whether it's civil missions or national security missions. So that's all been easily transferable from Maxar. I think the other piece has been that we can build a really attractive business model over time. And so where we invest our capital from our private investors to be able to build a capability and then deliver that as a service that is both mission relevant

as well as a commercial offering, that allows the taxpayer to get a good return on that investment, but also build a business that is able to attract the type of growth equity that have been on our cap table for our Series B round. So it's almost like SaaS. I know we usually talk about software as a service, but we're talking about basically space as a service. It is in a lot of ways. I think we talked about software as a service, but we're talking about basically space as a service. It is in a lot of ways. Yeah, I think that's a great way to summarize it. Interesting. So are we at an inflection point? Do you see us at an inflection point for commercial space then?

I see that. Absolutely. I mean, we're seeing that across the fields of remote sensing, satellite communications, precision navigation and timing, all of these services are becoming part of our everyday life. And what's been enabled through the $300 billion in investment and commercial space by the private sector, we're now starting to see that adopted and integrated into different mission areas. One thing that's been really exciting is that I think the U.S. government has leaned in and going from high-level policy statements and strategies to starting to transition that into how they're thinking through acquisition. And that's going to be a key unlock for the industry.

I know you were at the Space Symposium when the U.S. Space Force and USDOD released their commercial space integration strategies. And space domain awareness is one of the eight mission areas that was called out there. And we've seen that really drive a lot of productive discussion between industry and government on how to really help address the threat in a way that is not just building on the way that we've prosecuted these missions in the past. But it's fully leveraging all of the innovation that's happening in commercial industry, you know, to help contribute to the mission. I think it's interesting, too, that, and you touched on it, and I want to dig a little deeper into it, and that is the international piece of this, and the fact that you are seeing more demands and more business coming from allies and the like. Absolutely. Yeah, we're seeing,

that was one of the things that really kind of differentiated LeoLabs from a number of the other companies in the sector that I was looking at. And there were a lot of parallels to Maxar. You know, at Maxar, yes, we had the big contracts with the NRO and the NGA and the U.S. Army, but we had built a customer base of over 60 allies and partners that were using our geospatial

intelligence capabilities in different capacities. And so coming into LeoLabs, what was really exciting was that whether it was in Asia or in Europe, a number of an optical telescope in their country or just kind of near their borders. But in order to really get the revisit rates and minimize the gap times for greater persistence and the things really required for the full mission, you need to be able to tap into a global network. And that's what we've built. And so we've been selective about deploying the types of radars you see over my shoulder in locations where there's gaps in other U.S. government and allied sensors. And then to be able to provide that as a service,

you know, to our customers, you know, it allows them to focus on their core operational missions. And so we're seeing that as a pattern that we can really build on. And if you look at the U.S. Space Command, their kind of stated partner to win strategy, they've identified 41 nations

that the U.S. needs to partner with. We feel like all those customers are part of our addressable market. Okay. You raised money earlier this year to build out AI capabilities. And when I hear about all this data you're collecting, I would think it's probably a very natural fit. So how does that play out? Yeah, no, great question. So we raised a Series B extension at the beginning of the year, so it was $29 million. And part of the application of AI, from our perspective, is to go from just collecting data to be able to make sense of that data. And, you know, when you have a orbital catalog of 22,000 objects where we're getting over a million measurements a day, you know, across those objects, one thing that, you know, we

want to do is to be able to help our customers understand, you know, where to look, you know, across all that data in order to be able to inform, you understand where to look across all that data in order to be able to inform their mission, mission operations. And so one of the things we're doing with applying AI is we're building a pattern of life across all 22,000 of those objects, and then building essentially signatures

that will allow us to understand what's normal and when there's some anomaly to normal. And in particular for our space domain awareness customers, that's huge for them because they have a limited number of orbital analysts that are supporting their mission centers. They want to be able to get tips to help cue where they should

take a deeper look and so that's been you know a really important part of our overall value proposition and consistent with things i've seen uh to again just broaden the addressable market for uh for offerings so so where does leo labs go from here what here? What is the near-term vision? What's the long-term vision? I think the near-term vision is how we build out that living orbital map to support dynamic space operations. And so what we're seeing is that the, you know, the, with space beginning more congested and contested, there's a need to be able to have more machine to machine navigation planning, you know, where if, if there is a risk posed by a conjunction with orbital

debris, you know, or if there's a rendezvous and proximity operation or portal activity, you know, from an adversary, you know, or if there's a rendezvous and proximity operation or portal activity, you know, from an adversary, you know, we want our customers to be able to, you know, get that early warning so that they then can, you know, take action to keep their assets safe. And so that's really kind of what we're focused on now is scaling adoption, you know, of those services, you know, in a way that, you know, helps a way that helps create a mission force multiplier for them.

Longer term, we're starting to invest in our next generation sensing capability as well as broader partner capabilities to offer a more complete value proposition. Because our services today are very focused on the LEO orbital regime and in the areas of detection and tracking, but we see an opportunity to really support

that full mission through partnerships. So for example, we have the ability to accurately queue other sensors to be able to characterize an object. And so we have a set of partners, companies like Maxar and True Anomaly and Heo Robotics and a number of others, where we're able to provide a more complete commercial solution to our customers. So that's an area that we're focused on. But we're also investing in the next generation radar technology that will support the areas like very low Earth orbit tracking, as well as extending out to other orbital regimes so that we can offer kind of the, be the kind of end-to-end mission partner for those areas.

Very low Earth orbit. I've been having more and more conversations about this and activity in the stratosphere as well. Okay, so finally, we've gone from 900 to 9,000 in low Earth orbit satellites and spacecraft that are active. Where do we go from here? What are you projecting? What are you expecting? So we're we're expecting north of 50000 objects in low Earth orbit by the growth of the mega constellations with SpaceX, with Starlink, with Kuiper, and a number of others across both U.S. and allied territory. 60 constellation is projected to be 14,000 satellites that they'll have in that constellation, you know, over 600 that'll be operational by the end of 2025. And then there's a number of other

constellations that they've announced that are forthcoming. And so, so clearly the, the Moore's law of space, you know, in terms of, you know, more objects being operational is continuing to grow. But also, as you know, with some of the work continue to push the cost of launch down with capabilities like Starship, you know, coming, you know, that's also going to create more diversity, you know, in who can get to space, which just adds to the level of complexity. And so we see strong tailwinds that will continue to drive demand for these services. And I'm excited for a future where we're integrating our capabilities deeply into uh these applications where instead of

having uh humans in a loop you know the need to be able to to leverage our data in order to make a decision uh that we can just support again more dynamic space operations um you know and for for a wide set of customers you know across uh commercial operators, national security organizations, and civil agencies. So I'm going to finish this out with a really basic question and that is we keep hearing about how crowded space is getting, how congested it's getting, we're talking about 50,000 spacecraft by the end of the decade. I mean I think about space, I think about the great expanse, is there room for everything? How does that mean in terms of navigating the busyness? It's become much more complicated, for sure.

So I think that with the right types of systems, we can enable the type of dynamic space operations that's required to make space sustainable, safe and secure. But we need to evolve our capabilities. If you think about how we navigate in the terrestrial world today, with our GPS devices and mapping services and what's happening with autonomy

and all these other areas, you know, having a, you know, living orbital map is it will be important in space, you know, just as we, you know, we wouldn't leave our house, you know, to get to the office or the airport or any other location, you know, without having real time traffic information. So I think, you know, there's a lot of parallels to, you know, what we come to expect, you know, on Earth. We need to apply the same to space. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get

your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.