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1/ This is an interesting article from @philosophygeek: TL;DR It’s Descartes Labs rational for no longer selling data products (e.g. corn forecasts) and instead switching to a platform model so customers can build their own tools. Here’s why it’s scary. link.medium.com/VgLuVx33VV
2/ In my opinion, the “apply AI to commercial use cases” boom began in 2013 after Climate Corp was acquired and companies like SpaceKnow and Orbital Insight were founded by ex-engineering leaders from there. They proved you could raise money on the premise detailed in the post.
3/ The next year (2014) Descartes Labs was founded. All three companies successfully raised money, promising to transform commercial industries (Ag, Finance, Energy, Logistics, etc.) with analytics derived from satellite imagery. 5-6 years later, that hasn’t panned out.
4/ And the imagery companies caught on—@planetlabs and @DigitalGlobe have their own extensive AI teams and have built their own sophisticated platforms. But customers do. not. care. about. your. platform. Take it from someone who has worked on one (@rasterfoundry) for 3 years.
5/ It’s hard to say, on the one hand, “What we’re doing deriving these analytics is incredibly hard and takes a lot of investment,” and on the other, “we’ve made it so easy, our customers can serve themselves with our platform.” If those customers exist, I’d like to meet them.
6/ The truth is that all of these companies are thinly veiled services companies. You will not be able to build what you need on their platform. You also won’t be able to buy what you need off the shelf. Which is fine—great, actually. A lot of industries are services industries.
7/ But the margins of services industries, even platform-assisted ones, are not the kind of margins VCs invested in when they imagined data products being sold. I do not envy any of these companies position. Essentially: dress up services as a product in order to stay alive.
8/ There is a third way. You could just call it what it is, services. Companies like Azavea and @developmentseed are doing that with great success (and growing organically the old fashioned way). In some ways I’m relieved we’ve gone slow—the alternative looks stressful.
