This GPS maker wants to find you in a building, valued at $1.2 billion

Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman speak with NextNav Chairman and XM Satellite Radio Founder, Gary Parsons, about NextNav’s SPAC deal, and outlook for 3D GPS technology.

Video transcript


BRIAN SOZZI: Next-generation GPS maker NextNav plans to be a public company before year end after saying it will combine in a new SPAC transaction. Founded in 2007, NextNav is being valued at $1.2 billion. The company's technology is believed to help locate a device's specific indoor positioning. Let's welcome in NextNav chairman Gary Parsons. It should also be noted Gary is also the founder of XM satellite radio. Gary, good to see you this morning. So not a new company, unlike a lot of the other SPACs that have come to market. You've been around since 2007. How much business will you do this year, and where is it coming from?

GARY PARSONS: Well, it's interesting. Yes, we're not a new company. We've been developing this technology for over a decade. Frankly, we put together the spectrum asset that we're building this next-generational GPS capability off of back even further than a decade. But we've had to roll it out, get it accepted as an international standard for GPS or a terrestrial-based GPS system.

And the advantage of that, obviously, is that it goes deep inside buildings. It's not as weak. It can't be jammed easily. It can't be spoofed to make it appear you're in some different location. So it overcomes all of the frailties that GPS has historically had. That's where it's coming from.

Our initial customer, our initial partner is AT&T and the FirstNet Authority, the National Broadband technology for first responders. And your graphic leading into this was tracking people inside buildings, but actually, first responders and SWAT team needs to know where their people are, situational awareness. So that's one of the first market opportunities. And obviously, gaming very much utilizes knowing exactly where you are-- a "Pokemon Go," but also vertical so it can go different places within cities. Advertising, the mobile advertising the data analytics, the ability to determine foot traffic for a particular shop in a mall where there's a very different retail outlet on the first floor, second floor, third floor-- so all of those are positive aspects.

The often-overlooked aspect that was one of the things that got me involved in wanting to do it for public safety and actually national security issue is the fact that it provides a GPS-like backup timing. And if you're familiar with it, most critical infrastructure in the United States-- all the cellular networks, the power grid, financial transactions-- they all actually get their timing or clocking off of the GPS system. So it, not only from a consumer's standpoint or for first responders, allows you to know exactly where you're located within a building in an emergency situation.

But it also allows, in the event of hostile actions to damage the GPS system, or frankly, even a massive solar flare or something that disrupts the satellite systems, you've got so much commerce in the United States today. It's estimated by the US government over $700 billion of economic activity is keyed to GPS-- some of that to its location aspects, some of to its timing aspects.

But for the last 10 years, we've been developing the product, rolling out the network with our partner, AT&T and FirstNet, to get it in the hands of the first-responder community to save lives and give situational awareness to the first responders.

JULIE HYMAN: Hi, Gary. It's Julie here. So you've talked a lot about the potential for this. And of course, we showed some of your revenue projections on the screen. But I guess I'm curious, where is it actually being used today, or do you know, by the end of the year, who signed contracts with you to put this into use and to see some of those use cases that you've talked about come to fruition?

GARY PARSONS: Julie, it's probably good to separate it into two discrete separate products. One-- our Pinnacle product is actually the element that adds the vertical location to existing horizontal location networks, so whether it's a Wi-Fi network or a GPS network. Now the blue dot, instead of just moving horizontally, can go up in a building. We only introduced that product commercially just a couple of months ago.

So as you can imagine, it is the earliest stages of adoption. AT&T and FirstNet, as we indicated, are our first customers. It's being used by first responders today for their own situational awareness. But we also have signed agreements with Gimbal, who does-- I guess, supports 1,800 different apps and applications-- Panera Bread app, things like this. They do in-stadium apps to help you find the location where you go to get your nearest beer. And by doing this, they can-- using our precise location capabilities, they're able to give you the best direction.

The second product that is probably two more years away from widespread adoption is the one that provides the GPS backup capability for critical infrastructure. But that's also what provides the certainty and resilience of a signal for GPS for autonomous vehicles-- eVTOLs, UAVs, drones, all of those things that have to have a secure location capability. It can't be blocked by a building as soon as you get into a city or jammed by a signal. So that's our first customers today. Unity and the Unreal Engine from Epic Games are two of the biggest gaming groups that have signed agreements with us so that you can now provide 3D and augmented reality capabilities to all of their gaming capabilities as well.

BRIAN SOZZI: Gary, before we let you go, SPACs have gotten really a bad rub in recent months, and in many respects, rightfully so. What type of financial rigor have you brought to the company and have you built into the company?

GARY PARSONS: Well, the first thing to kind of understand is, both, it was a different SPAC that we engaged with-- we didn't go through some SPAC off just to get the maximum valuation. We wanted people that knew the industry, that we knew them, they knew us. I go back decades with some of those investors.

And then secondly, we've put over $250 million into this company over the last 10 years, from Goldman Sachs, NEA, Oak, Future Fund, Columbia Capital, some of the biggest names and strongest long-term players in the venture capital world. So we've always had a view for the long term on this. And we think that's an important element to have that stability. But now as we're beginning to finalize rolling out the TerraPoiNT network to provide that critical GPS capability-- and I would mention, by the way, Brian, we don't have any money in our plan from federal government support.

But clearly, this is a huge activity at Congress. It's actually one of the few bipartisan things you're ever going to find. To have Ted Cruz and Ed Markey as the lead sponsor on this, who are about as diametrically opposed as you can get, but they all recognize the vulnerability for national security. And so we think infrastructure bill-wise, we're likely to get some support out of that as well too.

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