Vancouver's innovative tech startups have continued to lead the way in creating technology that is smaller and more accessible. Things like cellphone apps, wearable computers and social platforms are the hot software, but Scott Larson, CEO of UrtheCast Corp. (TSX:UR), is making high tech that’s literally far above everyone else’s.
The multinational company started in Vancouver four years ago, and its headquarters are nestled on the scenic Coal Harbour waterfront. From Larson’s large, window-walled office at Canada Place, one can see many models of satellites scattered around the rest of the UrtheCast suite. They aren’t just decoration – the company’s primary business is building high-fidelity cameras for the International Space Station (ISS).
Larson’s launch into the space sector came after years of working for several Canadian banks helping businesses manage buyouts, sales and financing. One day he got a call from his brother Wade Larson asking if he’d be able to raise $500,000.
“My brother used to work for MacDonald, Dettwiler and Associates (MDA),” Larson said. “He said, ‘It looks like we have an opportunity to install a couple of cameras on the International Space Station. Do you think this is a good idea?’”
The opportunity came from Roscosmos, the Russian space agency, which was looking for a company to build two cameras they could install on the ISS. The deal wasn’t going to work for MDA, so the Larson brothers came together to form UrtheCast in Christmas 2010.
The cameras were transported in November to the ISS to collect data on the Earth below. While the Russian Federation has the rights to use data within its own boundaries, UrtheCast has the worldwide rights.
“We do two things with it,” Larson said. “We sell it to people who want pictures of Earth from space, and secondly we take it, process it and stream it out over the web in as near real time as we can.” So far, UrtheCast hasn’t made any revenue – the last four years have been spent building the cameras and opening satellite offices in San Francisco, St. Louis, Washington, D.C., and Moscow – but now that the cameras are taking photos, Larson is ready for the company to enter the $1.5 billion Earth observation industry.
“Historically it’s been governments, the ministries of forestry we sell to. Mapping, agricultural, border patrol kind of stuff,” Larson said. Private citizens, however, are a growing part of the market. “You can enter your address and see a picture of your house taken two weeks, eight weeks, 16 weeks, 32 weeks ago, kind of scroll back and forth in time, see how things have changed. You can organize your outdoor event around the image from space. Your buddy’s on a green field spelling, ‘I love you, will you marry me?’ And then you can go back inside a few hours later, stream it over the web, download it, edit it, remix it and share it.”
The UrtheCast San Francisco office is building out the online portal for that side of the business, something Larson has experience managing.
“I left university in 1995 and helped start one of the first online financial portals, kind of like a Yahoo Finance if you will. Of course now that’s no big deal, but back then it was Netscape 1, and you couldn’t get financial updates anywhere other than newspapers.”
Other offices focus on other aspects of the business: St. Louis does the image processing from the cameras, turning it into valuable data, and Washington manages much of the business development. But it’s Vancouver that focuses on the engineering, corporate and marketing side.
“It’s an incredibly skilled workforce. Lots of PhDs, lots of masters in engineering. It’s a combination of rocket scientists, image specialists, data specialists and computer software engineers,” Larson said. “We’ve got about 85 people in the company right now. Two years ago there were about eight.”
UrtheCast quickly scaled up the size of the company as the cameras were nearing completion, opening the four satellite offices around the globe and raising capital to fund its pre-revenue startup ambitions. In 2013 alone the company raised $58 million and went public on the Toronto Stock Exchange.
“It’s not an app, it’s not some software online. It’s stuff that you have to build, and that stuff is expensive. It takes a long time,” Larson said. “Fortunately, when you do start making revenue the margins are incredibly high and you can scale up quite quickly.”
UrtheCast may be a new company but it’s not entering a new market. Earth observation is a huge industry that comprises hundreds of orbiting satellites. DigitalGlobe (Nasdaq:DGOOF) out of Colorado does about $700 million a year making large expensive satellites, and the French company Airbus (Nasdaq:EADSF) owns about 25% of the market with its products. A small company in San Francisco called Planet Labs builds small, low-resolution satellites about the size of a two-litre pop bottle and launches them all over the world. Larson believes there’s more coming, but he is confident UrtheCast will be successful.
“Space is hard, it’s complicated, it’s not cheap, but it is popular, and I think 15 years ago no one cared about it, but now it’s popular again,” Larson said. “You’ve got SpaceX and people mining asteroids and wanting to go back to the moon, and something like 200,000 people have signed up to go to Mars and not come back. They’re going to get up there and they’re going to burn the ships basically. They’re not coming back. It’s ridiculous. Space is popular.”
For Larson, however, there are significant challenges. Managing a business that’s headquartered in Vancouver, spread out in offices across the world, doing business with Russia and launching satellites out of Kazakhstan has been difficult. Larson knew the challenges overseas, but some things have been out of his control.
“All the geopolitical stuff that’s happening in eastern Europe right now is not helping,” Larson said. “It’s just a massive distraction for shareholders, investors, the media, things like that, what’s happening in Ukraine and Russia and so forth.”
But despite geopolitical turmoil on Earth, in space there are no borders. Larson doesn’t suspect the political situation will affect his company, especially given that Russia has spent roughly $12 billion on the ISS. UrtheCast’s relationship with Roscosmos has been a positive one, and Larson is confident he has the skills to manoeuvre the company through a strained political climate.
“I think having a broad background has helped. We have an incredibly highly qualified world-class team here, and it’s because people have latched onto the UrtheCast vision and what we’re doing, and want to be a part of it. We’ve got people who have been in the industry for 30 years, moving across the country to work here at UrtheCast because of what we’re trying to do, so that’s incredibly gratifying.”
As for Larson, he is happy right where he is.
“There’s lots of jobs that I could not even get close to doing; I’m not even sure I’d get hired to be a receptionist,” he joked. “There’s only a few jobs that I could actually do in the company right now. I happen to have one of them.”
As for what’s next for UrtheCast, now that the cameras are launched, the company is getting ready for that first dollar of revenue, Larson said.
“We’ve been waiting three years for that,” he said. “I’m looking forward to it.” •