Deal Radar 2010: Slooh

Deal Radar heads into outer space with Slooh, which is both a Web-based platform that turns a computer into a telescope and an online astronomy community. Through Slooh’s SpaceCamera, members can access and even control telescopes that the company has positioned in both hemispheres to observe objects in space, including the moon, planets, and other galaxies.

Slooh was founded in March 2003 by Michael Paolucci and Matt BenDaniel. Both were entrepreneurs and amateur astronomers with a particular focus on astrophotography who saw Slooh as an opportunity to move first into a market by offering affordable consumer price points to allow people to enjoy an otherwise expensive hobby — a mid-end telescope can cost $2,000.

Paolucci is the company’s chairman. Since 1993, he has founded and raised financing for startups in the New York area, including Interactive Imaginations, Inc., and 24/7 Real Media, Inc. (TFSM), which was sold to WPP Group in 2007, Solvate, and StartupExchange. BenDaniel is an active astrophotographer whose work has been published in Sky&Telescope, the Farmer’s Almanac, and Night Sky Magazine.

Slooh’s initial target segment was and is the amateur astronomer — the subscribers of Astronomy and Sky&Telescopemagazines, and, in the United States, the hosts and attendees of “star parties.” It gained early traction among this audience through magazine and online advertising, and, when the company believed this mature market had been fully reached, expanded to the grades 3-8 educational markets, targeting teachers and curriculum advisors, along with parents. Slooh plans to strengthen its presence in school systems, grade school through university level, by offering educators the ability to construct and assemble their own mission-packs to match their curricula. The company also works with science museums and planetariums with co-marketed, co-branded packaged mission-cards and plans to deepen its relationships with such institutions as part of its growth strategy.

Slooh’s competitive positioning combines price points and variety of experience. The company offers multiple sites on three types of telescope (all-sky, wide-field and high-magnification) at each dome. There are different kinds of missions, or viewing sessions, for users of varying interest and skill levels. Automated mission-packs hosted by an animated dog named Otto guide children through space, noted astronomers and personalities such as Bob Berman narrate other missions, and serious amateur astronomers can reserve telescope-control to coordinate missions. The company believes that the quality of the images members can see and record from these missions and the sense of community that is formed from sharing discoveries and discussing astronomy form its value proposition. Slooh’s business model is based on online attraction with conversion to subscribers and packaged retail (mission cards) via distribution partners including Toys-R-Us, Barnes & Noble, Discovery, Target, and Amazon.

Slooh estimates that is total addressable market consists of 1.4 million households in the United States (these are households where the company believes there are reachable education-minded, science-savvy, aspirational parents and science-concentrated children and teenagers). The company estimates annual revenue of $25 for telescope time, individual mission packs, or both for each such household, creating a target of $35 million in annual revenue potential in the United States.

Slooh continues to look to grow outside the United States and reach into the EU and Asian markets, which it believes could yield similar annual revenue, making for an annual TAM of $100 million worldwide.

When Slooh was founded, the market was sparsely populated — Harvard University and the Bradford Robotic Telescopeon Tenerife have been operating for many years. LightBuckets.comhas entered the market at a higher price point than Slooh, which also has telescopes on Tenerife. Slooh believes that the market is still under-developed in terms of consumer and even institutional awareness.

Slooh’s no-limits-on-time membership costs $49.95 a year and is also available on a monthly basis for $5.95; mission-packs for Slooh Kids are $4.95 each, narrated by Otto. Retail products with activity books range from $16.95 to $29.95. The company will introduce a free membership tier later this month.

Slooh did not give revenue figures, but it did say that it has a steady revenue stream and attracts 60,000-70,000 unique visits with a growth rate of 2.4% per month. According to compete.com, there were just over 41,500 unique visitors in October 2009, the most in any month of that year. Slooh ships approximately 2,000 units per month through retail, and the conversion/activation rates on those items is just under 20%.

The company has remained privately funded since its founding, and as it seeks to reach beyond the amateur astronomer and education markets, it will assess whether outside funding could help it to grow faster.

As I look at Slooh, I cannot help thinking about Albert Einstein’s anxiety almost a hundred years ago as astrophotographers tried to photograph solar eclipses to prove or disprove his theory of relativity. Of particular interest is British astrophysicist Arthur Stanley Eddington, who set out to confirm and explain Einstein’s theory to the English-speaking public in his book, “Mathematical Theory of Relativity,” and many other papers, lectures, interviews, and radio broadcasts. As companies such as Slooh show, the technology used to observe space has become accessible to a much wider audience than at the time of the astrophysicist’s death in 1944. But the questions Eddington poses about space, the nature of our universe, and the relationship between physics and religion are no less relevant today. Not all of Eddington’s work is easily available, but readers may want to watch the docudrama “Einstein and Eddington,” which aired on the BBC and HBO in 2008.

This segment is a part in the series : Deal Radar 2010