When Elon Musk decided he wanted to send the first rocket to Mars, he went rocket shopping. That’s when he found out the price of a rocket was astronomical, yet materials only accounted for 2-3% of the cost. So, he decided to build his own rocket and SpaceX was born. The end result is a company that will soon provide connectivity to every person on earth, something we wrote about in our piece on The Global Impact of Cheap Satellites and Launches.
Elon Musk employs what’s called “first principles thinking” which is not just a great phrase to use when someone asks you a question in a meeting and you’re hard up for a clever response. We can describe first principles by citing cryptic stuff Aristotle said, or we can sum it up simply in a single sentence as James Clear did – “the best solution is not where everyone is already looking.”
So, when a man who embodies first principles thinking decides to acquire what someone else thought up, you know it’s something special. Today, we’re going to take a look at a company called Swarm Technologies that was recently acquired by SpaceX.
When a big company swallows up a smaller company, you need to collect information fast before it all gets shoved behind a corporate firewall. That’s one reason we wanted to write about Swarm Technologies. The other is that it relates to a company in our own tech stock portfolio – Trimble (TRMB).
Founded in 2017, Silicon Valley startup Swarm Technologies took in $27.7 million in disclosed funding to meet the “enormous and growing demands for a low-cost IoT network with 100% global continuous coverage.” Nearly 90% of the Earth’s surface does not have cell or WiFi connectivity. Once Swarm has launched their full constellation of 150 satellites, every point on Earth will have at least 3 satellites covering it at all times. The two flagship components of Swarm’s offering can be seen below – the Swarm Tile (a dedicated satellite two-way data modem that retails for $119) and the SpaceBEE picosatellite (not for sale, about $20,000 with launch included).
The gentleman in the above picture, Dr. Ben Longmier, is a Co-founder of Swarm. He’s holding a chip that can embed any printed circuit board with cheap IoT connectivity anywhere in the world. The woman in the above picture, Dr. Sara Spangelo, is the other Co-founder who is holding the smallest commercially operational satellite in space with a weight of just 14 ounces (400 grams). Dr. Spangelo is an incredibly accomplished scientist and entrepreneur who shouldn’t need any introduction because her face appears on most women’s magazines and countless television shows. Oh wait. (Checks notes.) Sorry, that’s Kim Kardashian, someone who inspires young women to pursue a career in anything but STEM.
Slow, Cheap Connectivity
Best estimates are that 80% of Swarm’s satellites have now been deployed (launched into space by SpaceX, of course) and that the entire constellation will be in orbit by the end of the year at a cost of less than $3 million. That cheap cost is what allows Swarm to offer data plans starting at $5 a month. But don’t expect to surf prawn in remote areas of the Darian Gap for that price. The speed at which you can read and write data to Swarm’s satellites – 1 kilobit per second – is what you might expect from a 2400 baud USRobotics modem running ZMODEM.
The founders of Swarm also employed first principles thinking and built every part of the stack themselves, from the ground chips to the satellites to the software that the entire ecosystem uses to communicate. And in true nerd fashion, they’ve laid the entire thing out for anyone to play with. If you want to let your family know your sailboat arrived safely in Tristan Da Cunha, just shell out $499 for the below device and you’ll be cooking with gas.
Messages are retrievable using an application programming interface (API) or webhook, so grandma will need to learn some basic coding skills. The Swarm network is a store-and-forward system, meaning you send messages to the satellites, and they forward them on to the recipients on the ground with each satellite able to store 4000 messages. Swarm’s data plan is an annual contract that provides 750 data packets per device per month, up to 192 characters per packet. That equates to about 514 tweets worth of text per month, plenty of capacity for any industrial internet of things (IIoT) device that needs to relay important information to its stakeholders.
A cursory glance through Swarm’s blog provides some insight into progress being made outside of just counting how many satellites they’ve launched. There’s a partnership with Ford which hints at how cheap IIoT connectivity might be used to gauge the performance of a supplier’s part in a vehicle. There’s mention of how Swarm has integrated their solution with Semtech’s LoRa Devices. And there are a few interesting use cases that might appeal to all you ESG types out there.
SpaceX Fights Forest Fires
The amount of carbon dioxide put off by forest fires dwarves what cars put off. Add up all the land that burns globally in an average year and we’re looking at up to 13 billion metric tons of additional carbon in the atmosphere annually (out of an estimated 50 billion metric tons in total). Maybe we can save the planet by not letting it burn up?
The ability to collect information anywhere and transmit it to a central location is helping a company called Dryad Networks fight fires. Their sensors are able to detect a new fire within 30 to 60 minutes, depending on sensor placement, and they can even detect fires while they’re still smoldering, before they become dangerous open flames.
Dryad’s solution is specifically designed to address the outstanding need for fire sensing in remote areas, where there are no passersby to report early signs of a fire. This means that Dryad’s sensors typically operate in regions without cellular coverage. Without a cost-effective solution like that being offered by Swarm SpaceX, Dryad wouldn’t be able to help save lives and reduce carbon emissions across the planet we all call home.
SpaceX Feeds the Hungry
Half of the world’s habitable land is used for food production, but much of it does not have cell coverage. In Australia, for example, where 58% of land is used for agricultural purposes, more than 75% of the country is not covered by terrestrial networks. This makes it very difficult to deploy effective agtech monitoring solutions.
Farmers use a lot of the earth’s most precious resource, water, and a firm called SweetSense offers a low-cost remote water monitoring solution for monitoring pump devices. It’s not just about monitoring water usage. On average, electricity is a farmer’s third-largest expense, and California farmers spend a combined $1 billion a year on electricity for groundwater pumping. (Roughly 85% of California’s population and much of its $50 billion agriculture industry rely on groundwater, as opposed to surface water, as their main water source.) With one million groundwater pumps to monitor, SweetSense needed a cheap way to relay information. Below, you can see how they embedded a Swarm Tile into their monitoring device.
The result is a solution that’s 6X cheaper than the previous satellite provider they were using. Water is conserved, farmers’ margins are improved, and less energy is used. Everyone wins.
In going back to our earlier comment on Trimble, the infrastructure Swarm has built complements existing IIoT offerings rather than competing with them. It also opens the door for new use cases that were previously inhibited by cost. Companies like Trimble can realize a great deal of savings by utilizing a solution that costs up to 20X less than existing methods. These savings go right to the bottom line for all the areas Trimble dabbles in – construction, fleet management, and agriculture. As shareholders, we’d rather they spend less time and effort on divisive D&I initiatives and more on truly innovating in the way that Swarm has.
When you employ first principles thinking, the competition is a moot point. You already vetted what they had on offer, and it sucked. That’s why you decided to build everything from the ground up. In a previous article titled Satellite IoT Startup Plans to Track Everything from Space, we looked at a number of startups trying to solve the IoT connectivity problem using various methods including satellite connectivity. If you’re an investor who backed any of these companies, you ought to be very scared right now. That’s because Elon Musk only sets his eyes on the biggest prizes.
Sure, there’s room for more than one player, but the lowest cost provider of a commodity offering like connectivity will always win in the long run.
Speculations abound as to why SpaceX might have acquired Swarm, but it’s quite simple. A talented pair of entrepreneurs solved a big bold problem using first principles thinking, and His Holiness Elon Musk blessed their methods and output by giving them mountains of cash. A SpaceX satellite weighs around 570 pounds, so adding IoT capabilities for less than a pound of weight increase seems like a logical thing to do. Add storage as needed and SpaceX has solved the IoT connectivity problem.