On Jan. 24, 1995, as Nader Modanlo watched from half a mile away, 240,000 pounds of liquid propellant exploded, launching Modanlo's FAISAT-1 satellite and shaking the ground below him in Plesetsk, Russia. For Modanlo -- who has "been there" for his share of historic moments, such as the Iranian revolution and the Berlin Wall's collapse -- that day, as his company became the first to launch a commercial U.S. satellite from post-Soviet Russia, was one he won't forget.
"I felt a lot of pride [in] getting to that moment," said Modanlo, who is chairman and president of Final Analysis Inc., a Lanham company that is commercializing National Aeronautics and Space Administration technology developed during the Cold War. Between the fear that something would go wrong and the excitement of being there, goose bumps shot up all over his body, he said. The satellite launched in 1995 was a test model, to be followed by a $350 million, 32-satellite cluster launched from the same Russian site in the fall of 2001.
Modanlo, a former NASA scientist, is the man behind a company hoping to capture 20 percent of a data-messaging market that is expected to grow to $5 billion in annual revenue in the next four years. Final Analysis will offer e-mail and paging, as well as a service enabling companies to keep track of resource usage and inventory.
The system works by transmitting data from customized chips to satellites. The chips can track anything, from the amount of water flowing through a pipe to the location of a delivery truck. The satellites then collect, process and send the data to ground-station networks 1,000 kilometers below. Monitoring inventory and assets in remote locations thus becomes nearly instantaneous and can be a powerful tool for companies that need to keep a constant pulse on their widespread operations.
Modanlo says Final Analysis will provide service that is more comprehensive and cheaper than that offered by the competition, which now consists of Dulles-based Orbcomm, a joint venture owned by Orbital Sciences Corp. in Dulles and Teleglobe Inc. of Canada.
A decade after the fall of the Berlin Wall and the lifting of the Iron Curtain, local companies such as Iridium LLC and Orbcomm have made a new frontier of commercialized space. Among telecommunications applications, low-Earth-orbiting satellite technology has made the biggest splash. NASA used LEOs, as the technology is known, to transmit scientific research data from space. Unlike their highflying geostationary (GEO) counterparts developed in the 1970s, these more recent versions hover about 1,000 kilometers over the Earth and can cover the entire globe, are less expensive, and can store, process and selectively transmit data in a way that GEOs could not.
"In the typical NASA environment, a project takes five to 10 years," and most of the projects get canceled along the way because of red tape or funding cuts, Modanlo said. "It's very frustrating, because you'd work for years on the project and nothing came through."
In 1985, President Ronald Reagan set up a Commerce Department group to encourage space ventures and required NASA to cooperate with companies and entrepreneurs with commercial space ambitions, which sped up the process. Then when the 1990s brought about budget cutbacks, Modanlo decided, in 1992, to strike out on his own.
Modanlo, 39, is a native Iranian who left his home country in the midst of the revolution and hostage crisis, when anti-Americanism was at a fever pitch. Being an Iranian immigrant during the 1980s made for "a difficult time," Modanlo said. He came to the United States as an apolitical techie who only knew America for Neil Armstrong and George Foreman, whom he knew from watching early-morning television in Sari, Iran, he said. He came to the United States to study at George Washington University, which he did from 1979 to 1987, picking up BS, MA and PhD degrees along the way.
Modanlo said he raised nearly $10 million in initial investments from friends and family to manufacture and launch the first satellite with a ground station. Initially, his plans met with investor resistance: "You think they'll let you launch an American satellite?" some chortled. But the success of the first launch drew a group of more than 30 individual investors -- nearly all work-related friends familiar with aerospace technology -- who increased Final Analysis's capital to more than $40 million.
The company expects to raise the remaining funds for the $350 million project from $110 million in equity investments, including investments from Russian aerospace company PO Polyot, which launches Final Analysis's satellites, and a Minnesota-based subsidiary of General Dynamics Corp. It will also offer high-yield bonds through an investment firm later this year to raise $150 million. Final Analysis, which employs 25 people locally and 25 more worldwide, should be out of the red and seeing profits by 2002, and plans to go public around 2003, Modanlo said. The company will hire 200 more employees by then.
Market leader and Final Analysis competitor Orbcomm launched 28 satellites from Wallops Island, Va., last November. The three-year head start the company has will help it develop a large customer base, said Wende Cover, director of marketing and communications for Orbcomm. Orbcomm, which has already signed contracts with trucking companies J.B. Hunt Transportation Services Inc. and Schneider National Inc., has installed 10 percent of the 116,000 cassette-sized monitors it has sold, according to Cover.
Final Analysis, meanwhile, believes its satellite technology will be 10 years ahead of Orbcomm's when it launches, giving it data-transmission power that is 60 times faster and therefore much cheaper. The first to market always makes mistakes, which means market followers have the advantage of learning from their missteps, Modanlo said.
Analysts say the market is large enough to accommodate two or three main players. The data-messaging market will do about $2 billion in business next year, and $5 billion by 2002, according to Riyad Said, an analyst with Arlington investment firm Friedman, Billings, Ramsey Group Inc. Neither company is concerned that the fate of Iridium, the mobile phone company using similar technology that filed for bankruptcy protection last month, could discourage investors. Iridium serves the mobile-phone market, which is entirely separate from the data-messaging market, analysts say.
A Look at ...
Equity: Privately held by about 40 investors, family, friends and former co-workers of Nader Modanlo, chairman and president, and Mike Ahan, executive vice president.
Revenues: Almost $10 million last year
Major competitor: Dulles-based Orbcomm, a company jointly owned by Orbital Sciences Corp. in Dulles and Teleglobe Inc. in Canada.