Exclusive: Google-backed intelligence contractor is avoiding bankruptcy by attempting to merge with Steve Wozniak's satellite company
Orbital Insight raised $130 million but devalued itself down to $50 million to avoid bankruptcy with an emergency $3 million loan. Its biggest client is the Indonesian military, codenamed Alpha.
2023-10-16: Added comment from Planet Labs.
The small tax haven of Monaco is best known for two things: the Monaco Grand Prix and Casino Monte-Carlo, the inspiration for Ian Fleming’s novel Casino Royale and a prominent set piece for both Sean Connery’s James Bond in Never Say Never Again and Pierce Brosnan’s in Goldeneye. Monaco’s population is only roughly one third the size of Beaumont, Texas, but the small principality carved out of the southeastern coast of France is home to three billionaires, making it perhaps the wealthiest region in the world.
Just a five minute drive southwest of the famous casino is Monaco’s Fontvieille ward, an artificial extension off the Mediterranean coast built half a century ago from the designs of Italian engineer Gianfranco Gilardini and the company he founded for the project, SATIF Group. Mr. Gilardini has since passed, and his company now provides strategic consulting and late-stage venture capital under the leadership of his son, Pietrojan, alongside fellow partners Javier Guerra and Robert Koenig. From an office located less than 300 meters north of the famed Monte-Carlo casino, Pietrojan and his company have been gambling on a company with deep ties to both U.S. intelligence and the Indonesian military, which it codenames “Project Alpha”.
The Palo Alto-based imagery analytics firm Orbital Insight must have originally seemed a sure bet. Beyond Google Ventures (now GV) being the lead investor, Orbital had prominent backing from the Central Intelligence Agency’s primary venture capital arm, In-Q-Tel, as well as a spot on the Pentagon’s first operational artificial intelligence surveillance effort, Project Maven. Such military and intelligence infuences are clear in the brochure for the company’s primary product, TerraScope, which provides customers the ability to analyze the combination of satellite imagery and numerous sources of geolocation data, including for tasks such as detecting ships which have disabled their location beacons. Orbital also sells business intelligence capabilities which fuse satellite imagery with commercial cellphone GPS surveillance data, which has historically been hoovered up through backroom deals with mobile app developers. The current biggest corporate customer for this technology is an energy analytics susidiary of Dow Jones named OPIS.
Orbital’s commercial and government revenues began plummeting in 2020, and, even after significant layoffs, the company has spent the year on the brink of bankruptcy, including being sued for defaulting on the $370,000 per month rent for its California headquarters. Yet documents obtained exclusively by the author map out the company’s nascent efforts to expand out from Indonesia into supporting militaries around the world, including the Israel Defense Forces, the Ukrainian and Taiwanese militaries, and well as those of the Saudis, Emiratis, and Qataris. The documents also show that Orbital surprised many of its investors this week by privately entering into the due-diligence phase of a merger with Apple co-founder Steve Wozniak’s satellite company, Privateer.
The news was particularly surprising given that Orbital was in the middle of raising its third emergency loan for the year and had just stumbled through a slew of failed merger attempts, including from geospatial-intelligence companies Ursa Space and Descartes Labs. As part of attracting its three emergency cash infusions, Orbital had painfully downgraded its $200 million liquidation “preference stack”, first down to $137 million to generate $3.5 million to last through June, and then down to $50 million in September as part of an attempt to raise another $3 million to survive through November. The flagship member of SATIF’s portfolio was collapsing, and the tension politely came to a head during an hour-long Zoom call on Thursday, September 7th, starting at what would be 9 a.m. San Francisco time for Orbital’s four executives and 6 p.m. Monaco time for the more than 15 attendees from SATIF.
The conversation awkwardly lurched between Orbital’s potentially imminent bankruptcy and their myriad current and planned military and intelligence contracts. Orbital would describe requests from the commander of the U.S. Pacific Fleet and a “classified agency” to conduct simulations of a Chinese invasion of Taiwan, as well as how the company is currently pursuing work with the Israeli, Saudi, and Ukrainian militaries, and how Orbital is responding to the CIA’s fear of unclassified satellite imagery.
According to Orbital founder and Chairman James Crawford — who famously helped lead Google Books — the CIA is petrified of the possibility that its access to unclassified satellite imagery could be both ‘deepfaked’ and monitored by China. Orbital CEO Kevin O’Brien quipped: “You talk to anybody in CIA and they’re going to say, ‘Are you on JWICS [Joint Worldwide Intelligence Communications System]?’ First question out of the gate.”
The ‘post-mortem’ on Orbital’s commercial business
Despite being formally junior to the two Managing Partners at SATIF, Mr. Koenig led the meeting, albeit with his dark blue Zoom background advertising his credential as a Doctor of Professional Practice in Arizona State University’s Thunderbird School of Global Management. Donning clear plastic eyeglasses and a serious tone, but with the top buttons of his shirt breezily undone, Mr. Koenig defined the agenda through five items:
An update on the “operating performance of the business…I don’t know if there are any customers that have left, and so forth”.
“The current cash runway of the business”.
“The current financing round that you are contemplating.”
“The sales process. I don’t want to say the ‘post-mortem’, but it would be good for investors to understand where does it stand”. And,
“The worst case scenario, assuming that the financing does not come into place…It’s probably going to be an inevitable question from some of our investors.”
The lead on Orbital’s side was Kevin O’Brien, who took over as CEO from James Crawford roughly three years ago. Much of the initial press surrounding Orbital focused on Crawford’s time as a robotics engineer at NASA and then an engineering director at Google Books, but O’Brien’s background was more modest, including his path to CEO through four years as Chief Operating Officer. And the handover from Crawford to O’Brien would come just one month before a Forbes cover story highlighting the company’s work with both U.S. Customs and Border Protection and on the Pentagon’s first operational artificial intelligence surveillance program, Project Maven.
Mr. O’Brien opened with “Good morning, good afternoon, good evening for everybody” before disclosing that he was “just coming off a brief bout of COVID”, perhaps in an implicit request for sympathy from SATIF’s investors. Despite having winnowed the company down to roughly 40 employees — including laying off the entire sales and marketing team in favor of “guerilla” alternatives — O’Brien would tell SATIF that, “In summary, we are very, very, very tight on cash.”
The central plank in O’Brien’s pitch would be the company’s quasi-secretive “Project Alpha”, which he introduced in the second slide as a “Multi-Sensor Fusion” effort supporting a “US Coalition Partner in SouthEast Asia [who] wants best in class geospatial software and services to provide regional wide monitoring capabilities across a portfolio of sensors”. Despite the nominal secrecy, O’Brien would directly state that two Orbital employees work out of Jakarta on the effort, and later slides named the Indonesian Navy, Indonesian computer vision firm Nodeflux, and the Indonesian venture capital firm Alpha JWC as potential partners for extensions of Alpha. Meetings for the effort were also said to take place in Jakarta and nearby Singapore, and investor materials would in places directly refer to “Alpha/Indonesia”.
Roughly twenty minutes into the presentation to SATIF, Mr. O’Brien went so far as to explain that:
“Alpha is an extremely ambitious program by the Indonesians. We are linking together 12 out of 14 different suppliers into [our software platform] TerraScope...You’ll have [commercial satellite imagery provider] Maxar, you’ll have Planet, you’ll have radar sensors…I believe it’s the biggest program in the world right now around geospatial software and analytics implementation. I haven’t seen anything close to it…Everything that we’re doing for that customer, we’re gonna to sell it to the Air Force, we’re gonna sell it to the Navy, we’re gonna sell it to the Army, we’re gonna sell it to NGA [National Geospatial-Intelligence Agency]. It’s things around synthetic data generation. It’s around computer vision model development…Alpha and the Air Force, quite honestly, are underwriting and paying for our roadmap.”
Each of Orbital’s three bridge loans so far this year was described in terms of how much revenue they would allow Orbital to “unlock” from Alpha. According to Orbital’s official estimates, the Indonesian military was expected to provide roughly $5 million of Orbital’s $9.5 million in 2023 revenue. And Orbital’s current largest commercial client, an energy analysis subsidiary of Dow Jones named OPIS, was the primary user of Orbital’s “Site Intelligence” integration of cellphone location-tracking data for monitoring consumer foot traffic, which O’Brien noted as experiencing a “supply chain disruption” last year.
As O’Brien summarized the relationship to SATIF in early September, “Dow Jones is a $1.5 million customer, I met their CEO in New York two months ago. Walked through the business, I told him we’re getting the company financed. They’re launching a new product based on Orbital.” But, beyond OPIS, the Orbital’s commercial business had largely ground to a halt. One of Orbital’s only new commercial revenue sources this year was a $27,000 agreement with the geopolitically sensitive Taiwanese semiconductor manufacturer TSMC.
Orbital Insight’s Chief Financial Officer, Jim Cook, directly laid out the failure of his company’s commercial business in the September 7th update with SATIF:
“We made a strategic decision about nine months ago, maybe a little bit longer, to purposefully put our commercial business on ice and to reduce the expense load associated with what we’ve been trying to do for the last seven or eight years with over 50, maybe even 60 people associated with the commercial business. It just wasn’t working. We just weren’t hitting the same inflection points that we’re hitting with federal. And so the strategy is clearly, to have much fewer people — [Chief Technology Officer] Matt [Falk] mentioned 40, 42 employees plus 15 contractors — get profitable on federal and then relaunch our commercial business based on all the success and being profitable…But, quite frankly, we were trying to do too much at the same time, [through] a growth-at-all-cost venture scenario…”
Neither Orbital Insight nor the three named SATIF Group partners responded to requests for comment by email. Further, Orbital’s primary phone number, 650-353-2060, has not functioned for at least the past two weeks. And SATIF’s official contact email, email@example.com, bounces.
Orbital’s plan for international military contracts beyond Alpha
The opening slide of Orbital’s presentation jumped straight into the company’s four major ongoing military and intelligence contracts: Project Alpha with the Indonesian govenrment, a new contracting arrangement with the Office of the Director of National Intelligence (ODNI) on generating synthetic training data for object recognition, the company’s “Harmonious Rook” project through the Defense Innovation Unit on detecting GPS jamming, and its spot on the U.S. Air Force’s component of the Pentagon’s major data modernization program — known as Joint All Domain Command and Control (JADC2).
By September, Project Alpha had already become old hat to investors, as the promise of millions of dollars in future revenue from “the Indonesians” had served as the carrot through what was becoming a full year of desparate fundraising. And so the lead item of the four was the new relationship with the ODNI and the National Geospatial-Intelligence Agency (NGA) to help the U.S. Intelligence Community detect “rare objects” through image analysis software. As Orbital CEO Kevin O’Brien explained, think of “a Russian MiG-29, or a Chinese J-21 stealth fighter, or a particular type of missile launcher”. He would later explain that Orbital’s first project on the effort “mapped three rare objects: missile launchers, ships, and one maritime asset”.
Beyond the initial $84 million project scope of Orbital’s agreement with the ODNI and NGA, Mr. O’Brien predicted that it will ultimately generate “hundreds of millions of dollars” in revenue for his company. As he tells it, much of the benefit is due to the formal contracting structure of the arrangement — known as a Broad Ordering Agreement, or BOA — which sets Orbital up so that “a customer can buy any product or service that we make, not just around synthetic data generation…So if they want to buy TerraScope, they can do that…they can contract it as fast as two weeks, which is unheard of in federal contracting.”
Orbital’s agreement with the ODNI and NGA is managed by the contracting support organization FEDSIM — which Mr. O’Brien described as “the Cadillac of administrators in the U.S. Government; they only manage very large programs.” O’Brien also emphasized that Orbital’s “Harmonious Rook” GPS-monitoring work is expected to be absorbed into the “FEDSIM BOA” and will likely also expand into monitoring interference with both shipping and aircraft sensors, possibly even in collaboration with the Federal Aviation Administration due to alleged jamming of civilian aircraft landing in Tel Aviv and Ankara.
There would be essentially no discussion of Orbital’s nominally $950 million JADC2 contract — which is perhaps explained by public contracting records only showing $1800 in payouts to the company, despite the large contract ceiling.
Perhaps the most interesting detail regarding the four ongoing government contracts would come from a subsequent slide laying out each of the formal components — or “Work Orders” — making up Orbital’s ODNI/NGA BOA. According to O’Brien, “We’ve had multiple people asking about simulations of an invasion of Taiwan by the Chinese. We’ve got that from U.S. Commander of the Pacific Fleet, classified customers as well as NGA.” The slide would list the effort under Work Order 4 as “I&W [Indicators & Warnings] to Predict Build Up Towards Taiwan”.
It has long been a contentious talking point that — should China invade Taiwan — ‘patriotic’ citizens would detonate the coveted semiconductor fabrication facilities of TSMC, which happens to have been Orbital’s only new commercial customer at the beginning of the year.
Orbital CEO Kevin O’Brien emphasized to SATIF Group that building out Orbital’s “domestic defense and intelligence business” was the company’s “number one goal”, but his presented customer pipeline told a different story. A tightly packed table on his fifth slide contained a sprawling overview of the international military partners Orbital is currently wooing, beginning with the Israel Defense Forces (IDF). “We’re talking to the IDF about doing a pilot of linking Maxar and Planet together”, O’Brien explained.
While O’Brien would strongly hint that his conversations with the IDF had advanced much further than with other potential military customers, he provided context for the inclusion of the Saudi Armed Forces in the pipeline by stating “I’m talking to the Saudis on Monday. I’ve already got sessions set up with them. They’ve already requested us to come downrange, and do onsight visits, and I said ‘I’m busy with some financing right now’. We’ll get that probably in October to do those.”
The pipeline slide also claimed that the Qatar Armed Forces were interested in a “Maxar/Planet integration”, similar to that being pursued with the IDF. As O’Brien would tell SATIF, “we have open invitations to the Emiratis, to the Qataris, and the Saudis.” Orbital’s pipeline targets for the UAE Armed Forces even included an assertion that the Gulf military was a “Strong HawkEye 360 customer” — a clear reference to the NSA-linked non-traditional satellite surveillance company focused on geolocating radio-frequency emissions from space. While not a household name, Hawkeye 360 is the ‘H’ in the popular U.S. defense tech acronym ‘SHARPE’.
When reached for comment on Planet’s alleged role in both Project Alpha and as part of Orbital’s proposals to the Israel Defense Forces and Qatar Armed Forces, the company stated:
“While Planet has partnered with Orbital Insight in the past, we do not have an active contract with them to provide our data to this [Project Alpha] or any other customer. Further, Planet’s expired contract with Orbital Insight explicitly barred the use of our data to support defense and intelligence. We are actively inquiring into their marketing and use of our data.”
Hawkeye 360 did not respond to a request for comment through its public relations agency, Pinkston.
Mr. O’Brien was bearish on prospects with the Ukrainian military, despite having listed it second after the IDF: “I’m not sure about the whole visiting Kyiv bit right now”. Similar to its giveaway of an alleged “strong” relationship between Hawkeye and the Emirati military, the fine-print description of Orbital’s plans in Ukraine named “Delta Software Teams” — an ostensible reference to the Delta targeting app supported by data fusion giant Palantir within the country’s Diia app.
(Just as Hawkeye contributes the ‘H’ in SHARPE, Palantir is the ‘P’. Subsequent Orbital slides would also reference the ‘A’, Anduril, as a potential investor target.)
Orbital’s commercial satellite alliances would reflect those of classified U.S. priorities; according to Mr. O’Brien, “the U.S. has a limited number of classified satellites — let’s call it four — almost all of them are trained on Ukraine or Taiwan”. Though Orbital would list its relationship with the Republic of Taiwan Defense Forces as still in its “preliminary stage”. And, beyond the company’s primary Project Alpha work with Indonesian military, numerous expansion and copycat projects were also listed, including to work with the Indonesian Navy through the country’s local computer vision company Nodeflux, and the beginnings of a relationship with the Singapore Air Force through Microsoft and its Azure cloud-computing platform. According to statements made by Orbital’s Chief Technology Officer, Matt Falk, “Qatar, Thailand, Singapore, all three of them, when they’re talking to us and we’re telling them about our technology, their response is: We want to replicate Alpha.”
According to O’Brien, the company is also seeking a European partner to work under for a large geospatial contract with the North Atlantic Treaty Organization (NATO): “I just had a conversation before this call with someone out of Austria that might be able to work with us on that, and I’ve got a call right after with another person in Eastern Europe.”
A possible resurrection under Steve Wozniak
It perhaps came as a shock to Orbital’s investors in the last week that — according to documents obtained by the author — the company had failed to raise more than $500,000 of its $3 million emergency cash infusion target, yet managed to enter into a 45-day due diligence period as part of a potential merger with Privateer, a satellite company co-founded roughly two years ago by Apple co-founder Steve Wozniak. The relationship was particularly surprising given that numerous merger and acquisition attempts had failed throughout the year. The dead ends had included potential mergers with analytics peers Descartes Labs and Ursa Space, potential acquisitions by the CIA-affiliated open source intelligence company Janes and the management consultancy Ankura, and possible asset purchases from Google-backed satellite imagery company Planet Labs and data-labeling startup Scale AI.
But there is a kind of logic to the match between Orbital and Privateer. The chairmen of the two companies — Orbital’s Jimmy Crawford and Privateer’s Alex Fielding — were both former NASA employees. Fielding is also a fellow board member of Ripcord, the company he previously co-founded, with a General Partner from Orbital’s largest investor, Google Ventures. And defense tech venture capital firm Lux has invested in both Orbital and Ripcord.
Orbital’s deep ties to both U.S. and international defense and intelligence agencies might appear to be a mismatch for the man universally known as ‘Woz’. But Privateer has already openly advertised its partnership with military drone manufacturer Kratos, whose XQ-58 Valkyrie drone has been coupled with the autonomous pilot technology of Shield AI — the ‘S’ in SHARPE. The primary purpose of the partnership between Kratos and Shield is to help the U.S. credibly threaten China’s military in the face of much lower U.S. troop counts.
The central question is whether Woz and company are aware of Orbital’s financial troubles and its pursuit of intelligence contracts with Gulf dictatorships. But Privateer did not respond to a request for comment.
The impact on Indonesia and Singapore if Orbital fails
The concept of a potential ‘domino effect’ regarding the spread of communism dominated U.S. thinking about Southeast Asia during the Cold War — most prominently through President Eisenhower’s decision to send Army Green Berets to train South Vietnamese troops in 1957 and for President Johnson to send 16,000 troops by the end of 1963. As documented by former Washington Post reporter Vincent Bevins in his book The Jakarta Method, the U.S. Government helped back a massive extermination program in Indonesia which began in October 1965 and claimed the lives of roughly a million peaceful Indonesian civilians.
Influential New York Times columnist C.L. Sulzberger blamed the massacre on supposedly innate racial characteristics of Indonesians in an April 13, 1966 New York Times article, writing that Indonesians have “inner, frenzied blood-lust which has given to other languages one of their few Malay words: amok.” Sulzberger also asserted that in “violent Asia”, “life is cheap”. Much of the covert bombing raids and propaganda distribution that surrounded the anti-communist mass murder were conducted from Singapore, including through the British government establishing a “director of political warfare” in the city-state in December 1964 and feeding The Associated Press salacious disinformation.
But a different sort of domino effect regarding U.S. anti-communism is now potentially at play in Indonesia and Singapore, albeit regarding knock-on effects from the significant possibility of Orbital Insight declaring bankruptcy in the event of an unsuccessful merger with Wozniak’s Privateer. It is no secret that the U.S. military has been aggressively building international surveillance alliances targeting China, and that Orbital’s “Project Alpha” contracts with Indonesia and Singapore would be supporting such a campaign.
SATIF Group partner Robert Koenig asked Orbital’s management team a pointed question towards the end of their September 7 meeting: “If Orbital were to have to retreat by force because of a bankruptcy, what would happen to Alpha?”
Orbital Insight CEO Kevin O’Brien replied:
“There would be a lot of stress in Jakarta and Singapore, that’s for sure. You know, they’d have to do a major, major reset on that program [Alpha]. They would have probably a very big problem with the actual end customer…They could possibly find, in due course, some alternative supplier, but I think they would lose probably a year…they want to ship and deliver in the first half of FY24…and it would be a big, big problem if they didn’t have Orbital.”
Orbital’s Chief Financial Officer nevertheless remained cautiously optimistic. After lamenting that “you know, we were once deemed this unicorn company”, Mr. Cook told SATIF’s investors that “we’ll probably get back there some day”.