Thomas Heath
Thomas Heath
Columnist

Value Added: A forecast for more profits

Tracy A. Woodward/THE WASHINGTON POST - Bob Marshall, founder and CEO of Earth Networks in Germantown, Md., stands inside his company’s Meteorological Operations Center surrounded by Earth Networks’ weather stations.

The big joke in my house is what a weather junkie I have become.

I can sit for hours in front of the Weather Channel, nervously following those green radar splotches creeping across the screen, signaling trouble.

I thrive on those live stand-ups of correspondents hanging on to a lamppost in a hurricane. I click on Web sites looking to see whether I can jog without getting soaked. My wife tells me to look out the window

Bob Marshall, 45, has built a business around nuts like me.

He prays for crazy weather.

“We buzz off this stuff,” Marshall says, staring at his computer monitor as it follows a path of lightning across Massachusetts.

His company, Earth Networks, grosses $50 million from its 10,000 suitcase-size weather stations spanning the globe.

The information pours in to the privately held company’s Germantown headquarters, home to Marshall and a posse of scientists and meteorologists.

Local emergency crews subscribe so they can jump on flash floods or lay down sand before the snow hits. Sports leagues need to know whether that thunderstorm heading their way is going to hit the stadium.

Utilities such as Pepco rely on Earth Networks’ array of neighborhood sensors so they can more efficiently allocate electricity and predict storm risks to power lines. Canada’s wheat board uses Earth Networks’ dew-point predictors to help farmers decide when to plant and when to use pesticide. Even the National Weather Service is a client.

It’s lucrative stuff; organizations pay between $10,000 and $250,000 a year for subscriptions, accounting for about half of the company’s revenue.

The other half comes mostly from online advertising on Earth Networks’ WeatherBug site, where pharmaceutical companies (weather affects allergies and other conditions), American Express (travelers need weather reports), big retailers such as Home Depot and Lowe’s (where can I buy a snow shovel?) and farm-equipment companies such as John Deere (farmers need to know if they can plant today) all pay to be seen.

Earth Networks employs more than 170 people. Most are in its 50,000-square-foot headquarters. The rest are scattered around the world, including Silicon Valley, New York City and Milan.

The $50 million in revenue returns a profit somewhere between $5 million and $10 million.

The biggest cost by department is sales and support at 23 percent of revenue, research and development at 21 percent, and marketing at 10 percent. There is little debt.

Marshall is the largest individual shareholder, with about 10 percent of the company. Employees also own a big chunk, as do Polaris Venture Partners and Harbour Vest Partners, both based in Boston; and Silicon Valley-based Sequoia Capital.

Most of its profits over the next five years will fund a $25 million network of greenhouse-gas sensors around the world, which Marshall is betting on to drive growth.

The plan is to eventually take the company public.

Adept at math and science, Marshall grew up in Montgomery County and studied engineering at the University of Maryland Baltimore County.

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