Starlink & IoT: Analyzing SpaceX’s Acquisition Of Swarm Technologies

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Written By Viktor

Product manager by day, Starlink enthusiast by night.

In August 2021, SpaceX made its first and only acquisition, acquiring a small startup that is now prominently featured on Starlink’s website as IoT.

In this article, I explain what Swarm Technologies does, how it started as well as the roadblocks it faced along the way, and how SpaceX and Starlink benefit from Swarm and vice versa.

What Is Swarm Technologies?

Swarm Technologies is a provider of global Internet of Things (IoT) connectivity solutions that is primarily aimed at business customers.

Said connectivity is provided thanks to Swarm’s sandwich-sized mini-satellites, which roam low-earth orbit (LEO) at an altitude of about 450 km to 550 km.

In fact, Swarm currently operates the smallest satellites in space, measuring just 11 cm x 11 cm x 2.8 cm and weighing about one-thousandth as much as SpaceX’s Starlink satellites (V1.5 version).

A total of 160 satellites are currently hovering above us. Swarm’s constellation needs to be replaced every 4 – 5 years as old satellites completely burn up when reentering Earth’s atmosphere.

Swarm’s satellite network, unlike Starlink, is not tailored to deliver high-speed connections for data-heavy tasks such as video streaming.

Instead, its system is intended for the occasional transmission of minimal data, such as GPS coordinates or soil moisture measurements, roughly every hour.

The firm’s customers can connect to the internet by purchasing Swarm’s M138 modem, which is then embedded into a third-party IoT device. Customers need to order a minimum of 25 modems, costing $89.

Being able to transmit data from and to the modem costs another $5 per month, regardless of how many modems customers aim to connect.

Furthermore, Swarm sells a so-called Eval kit that allows customers to transmit 1-way messages or GPS positions from anywhere using a mobile phone app or laptop.

While the out-of-the-box kit is as easy to install as Starlink’s hardware, it certainly doesn’t come cheap at a one-time cost of $449.

SpaceX quietly acquired Swarm Technologies back in August 2021 – a move that proved to be beneficial for both firms.

With that being said, let’s take a closer look at how Swarm began and how we got to where we are today.

Dissecting the Founding Story of Swarm

Swarm Technologies, headquartered in Mountain View, California, was founded in 2017 by Benjamin Longmier and Sara Spangelo.

Both founders have been breathing and living space tech years before embarking on their shared startup journey.

Longmier, who is also a licensed pilot, spent the majority of his career in academia, most recently as an assistant professor at the University of Michigan’s aerospace department

However, he’s also no stranger to the world of business. Back in 2010, he started a company called Aether Industries, which developed a stratospheric balloon platform for imaging and communications.

Apple ultimately acquired his firm in 2015 after which Longmier stayed on as an R&D Manager for another 1.5 years.

Over the course of the next months after departing Apple, he started 3 different firms – one of which became Swarm Technologies. The vita of his co-founder, Sara Spangelo, certainly was just as impressive.

In 2012, she completed her Ph.D. thesis at the University of Michigan on the potential for satellite networks to carry large amounts of data, effectively a precursor of what was to come.

She then moved to Caltech’s Jet Propulsion Lab (JPL), where the world’s best space researchers plan and perform space missions for NASA. And if that wasn’t enough, Spangelo was also a finalist to become a Canadian astronaut.

Google eventually hired her as a Systems Engineer under the firm’s ‘moonshot factory’ called X. One of the projects she was involved in at X was Wing, a drone that could be used to deliver goods.

Having two people of such experience and stature is certainly a recipe for success. Their endeavor was further supported with a $225,000 grant from the National Science Foundation as well as a $2.7 million seed funding round from Chamath Palihapitiya’s Social Capital.

For the first few months of the business, Longmier and Spangelo simply kept plugging away and worked on the sandwich-sized satellite prototype without much media fuzz.  

In April 2017, they filed with the Federal Communications Commission (FCC), with the intention to begin experimental operations by September of the same year (for a duration of 6 months to 2 years).

Unfortunately, things would soon take a turn for the worse. In March 2018, the FCC revoked Swarm’s authorization to launch four satellites on board a Rocket Lab mission slated for April. But why did the regulator undertake such drastic measures?

Back in January, Swarm had launched prototype satellites on the Polar Satellite Launch Vehicle rocket built by the Indian Space Research Organization – despite the FCC dismissing Swarm’s application in December 2017.

“The International Bureau requested that the grant be set aside in order to permit assessment of the impact of the applicant’s apparent unauthorized launch and operation of four satellites, and related statements and representations, on its qualifications to be a Commission licensee,” the FCC wrote in the letter revoking the permission to launch.

Anthony Serafini, chief of the Experimental Licensing Branch of the FCC, previously voiced his concerns about the size of Swarm’s satellites and the firm’s alleged inability to properly track them.

Swarm had suggested using both experimental GPS locators and radar reflectors, which Serafini thought wouldn’t be sufficient.

Over the coming months, the two parties remained in constant exchange to sort out this apparent misunderstanding. Finally, in October 2018, Swarm received permission from the FCC to launch a new batch of satellites later in the year.

More precisely, Swarm planned to launch three satellites on SpaceX’s Falcon 9 rocket from California in November alongside nearly 70 other probes as part of a mission called SSO-A – the largest rideshare mission SpaceX had done until that point.

“You know, looking back, I definitely am regretful and I view it as a mistake,” Spangelo later said in an interview with The Atlantic. “I feel terrible for the confusion and the additional regulation that we may see come. It’s a very difficult situation, and we’ve done everything we can to resolve the issues to move forward positively.”

However, the permission to launch came at a cost. In December, the FCC fined Swarm Technologies $900,000 for the unauthorized launch of its four satellites. And just a day after the FCC handed Swarm its fine, the team was already back into attack mode.

They filed yet another application to deploy dozens more satellites. Eventually, in October 2019, the FCC would grant Swarm Technologies permission to operate a constellation of 160 satellites, which it does until today.

So, what ultimately convinced the FCC to accept the application? Swarm’s team made a variety of improvements to its satellites, including radar retroreflectors to boost visibility, a partnership with LeoLabs to track its new constellation and provide a second source of orbital data to supplement the U.S. government’s Space Surveillance Network, and utilizing automatic maneuvering.

Additionally, Automotive giant Ford, wireless multinational company Vodafone, Stanford University, and more than a dozen startups all chimed in during the application process to underline how Swarm would be benefiting their connectivity efforts and bottom line (especially compared to the prices Swarm’s competitors were traditionally charging).

Its satellite expansion was supported by another $25 million in Series A funding, which Swarm announced back in January 2019.

Interestingly, the blowback came from a previous ally. SpaceX, in a filing with the FCC, wrote that Swarm’s satellites would “pose a serious threat to the International Space Station, those working aboard, and other nearby high-value systems.”

Whether or not SpaceX actually believed it is hard to prove. It may just have been an effort to stop a potential competitor in the IoT space who, due to the small size of its satellites, likely did not contribute material revenue.

After the FCC slammed down SpaceX’s and competitor Orbcomm’s (interference concerns over shared frequency bands) respective complaints, it was time to get to work.

Setting up a proper ground station infrastructure took the two founders to some pretty remote locations. In Antarctica, for example, they set up a ground station at McMurdo Station, which is operated by the National Science Foundation (NSF).

Throughout 2020, Swarm would launch more and more of its satellites, mostly hitchhiking on SpaceX’s Falcon 9 rocket. It solicited further help from California-based Momentus and Exolaunch of Germany, both providers of in-space transportation services for satellites.

Then, in September, the firm finally let the cat out of the bag and revealed the pricing for its IoT connectivity service, charging $5 per month for the service. More than 200 companies had already signed up for early access to Swarm’s network by that point.

Service was ultimately turned on in February 2021 when Swarm already operated 81 miniature satellites.

Meanwhile, Swarm and Orbcomm remained embroiled in a regulatory conflict over sharing spectrum in VHF bands. Orbcomm contested an FCC letter meant to clarify spectrum sharing, while Swarm accused Orbcomm of attempting to confuse international regulators and delay its growth.

Unfortunately for Orbcomm, Swarm would soon attract a substantially more powerful ally. In early August 2021, Swarm revealed in a series of filings with the FCC that SpaceX acquired the company.

Swarm would continue to operate as a wholly owned subsidiary of SpaceX while the acquisition price itself would not be disclosed.

At the time of the deal, Swarm already operated a constellation of 120 satellites, with the rest (40) then being transported by the Falcon 9.

Ever since the acquisition, Swarm has been quietly plugging away and mostly just attracted new customers like Yabby or Symboticware.

Now, let’s take a closer look at how the two companies (that is SpaceX and Swarm) have benefitted each other since the acquisition.

How Swarm & SpaceX Benefit Each Other

Both SpaceX and Swarm Technologies have remained fairly secretive about not just the price the former paid but also the purpose behind the acquisition.

SpaceX’s takeover of Swarm, based on the few news pieces published since the acquisition, can be best described as an acquihire.

At the time of the sale, Swarm employed around 30 people, including both CTO Benjamin Longmier and CEO Sara Spangelo.

The two co-founders have remained with SpaceX ever since and are now not just working on Swarm but are even involved in SpaceX and Starlink-related projects.

Back when the acquisition was first announced, media was speculating why SpaceX would want to acquire a company whose capabilities (LEO-based satellite communication) it theoretically boasted in-house vis-à-vis Starlink.

Almost two years in and those questions are at least partially answered. Today, both Longmier and Spangelo hold the title of Sr. Director of Satellite Engineering at SpaceX.

In practice, both of them have been involved in the development and launch of Starlink’s Gen2 satellites as well as various new connectivity solutions.  

Longmier, for example, also leads Starlink’s electric propulsion group, which was responsible for developing the new argon Hall thrusters that SpaceX implemented for the V2 Mini sats (the very rare krypton was previously used as a propellant).  

And Longmier certainly knows what he was doing: he was the lead author in a variety of papers on electric propulsion systems that use argon gas.

Meanwhile, Spangelo appears to be heavily involved in SpaceX’s and Starlink’s direct-to-cellular connectivity solution that is developed in conjunction with T-Mobile. A similar partnership has already gone live in New Zealand with local player One.

Swarm Technologies, on the other hand, heavily benefitted from the acquisition as well. “Access to basically free launch is pretty exciting,” Spangelo said in an interview with TechCrunch, underlining that Swarm “launched probably three or four times” the usual payload within a year of the purchase.

“We’ve had access to just more support systems,” she pointed out further. “So legal, accounting, HR, recruiting, logistics, supply chain and production. That’s also helped us accelerate a lot of our production rate, [and] our hiring rate. We’ve been scaling up and we’ll probably do 10x the number of devices sold this year vs. what we did last year.”

Another aspect to consider is target customer synergies. Since SpaceX and Starlink both sell to business customers, Swarm could simply take advantage of that pre-existing relationship and effectively get a foot in the door.

The same also applies to lead generation, though. Starlink’s website, where Swarm is advertised on the top under “IoT”, is visited over 5 million times every month.

So, even at a 1-percent click-through rate, you’d still have 50,000 potential leads visit your website every month.

However, in July 2023, SpaceX allegedly told customers that it will stop selling new Swarm devices.

The announcement appears to be closely linked to SpaceX’s impending foray into the satellite-to-cell industry.

Swarm has informed its customers of its plans to offer a variation of its energy-efficient M138 modem, which will be compatible with SpaceX’s Direct to Cell network.

Despite confirming that it will persist in facilitating ongoing VHF communications between Earth and space via its SwarmBEEs satellite constellation, Swarm also implied a future concession to its parent company’s objectives to establish connections with mobile phones and IoT devices on its proprietary network.

With that said, it’s safe to assume that both parties greatly benefitted from being under the same umbrella. It will be interesting to see how long Longmier and Spangelo remain with SpaceX, which is likely dependent on when their lock-up period ends.  

Lastly, SpaceX also obtained Swarm’s FCC license to operate in the 137-138 MHz (space-to-Earth) and 148-149.95 MHz (Earth-to-space) frequency bands – initially granted in 2019.

The acquisition of Swarm Technologies’ FCC licenses allowed SpaceX to access additional spectrum, crucial for expanding and enhancing the performance of its Starlink satellite network.

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