The fact that there's a LIDAR magazine is a statement in and of itself.
This interview with Angus Pacala(CEO) demonstrates his engineering ability as well as his ability to see the big picture equally well. As to his engineering skills they are good enough that he has his name on a patent(# 11956410). WRT his macro view he saw the use cases other than ADAS 5+ years ago and has established Ouster in what he calls the other 3 verticals - infrastructure(traffic), industrials, and robotics.
Ironic to me that he expresses an emphasis on the silicon and here on Silicon Investor there is very little appreciation of the company. That could change in the very near future.
lidarmag.com
It's lengthy but well worth it.
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Angus Pacala is CEO and co-founder of Ouster, a major lidar supplier based in San Francisco. The company made headlines in 2023 when it merged with arch-competitor Velodyne. Speaking from the company’s offices in Edinburgh, Scotland (home of Sense Photonics, an Ouster acquisition in 2021), Angus addresses the company’s technical developments and the status of its forthcoming L4 and Chronos solid-state components and their likely effect on the product portfolio. He explains how the company addresses the four verticals into which it has divided the market and where UAV-lidar fits in. Ouster’s software portfolio is covered too.
 
Episode Transcript
#22 – Angus Pacala
July 17th, 2025
{Music}
Announcer (00:10)
Announcer: Welcome to the LIDAR Magazine Podcast, bringing measurement, positioning and imaging technologies to light. This event was made possible thanks to the generous support of rapidlasso, producer of the LAStools software suite.
Stewart Walker (00:26)
Welcome to LIDAR Magazine and the LIDAR Magazine podcasts. My name is Stewart Walker. I’m the managing editor of LIDAR Magazine. My guest today is Angus Pacala, co-founder and CEO of Ouster. Angus, we’re absolutely delighted to have you on board. It’s a great pleasure to be talking to you. It’s been a little challenging to schedule this podcast and LIDAR Magazine is very grateful to you for finding the time.
Angus Pacala (00:53)
Thanks, Stewart. I’m happy to be here. I’m sitting in our office in Edinburgh, Scotland, hence the challenging scheduling, but glad that we made this happen.
Stewart Walker (01:02)
Thank you. Well, let me set the scene very quickly. Ouster is a leading lidar sensor supplier. It’s based in San Francisco, California. It’s been successful, I think, owing to remarkable technical innovations and to quite considerable business acumen. It’s been growing steadily for many years, but it hit the headlines on 10th February, 2023 with its merger with leading competitor Velodyne.
In September, 2021, about six months after Ouster had gone public through a merger with special purpose acquisition company, Colonnade Acquisition Corporation, I had a wonderful afternoon at Ouster San Francisco headquarters, including a 25-minute interview with Angus. The offices are within a rather charming and idiosyncratic building. Apparently, it used to be a factory that made t-shirts.
They’re predominantly open plan and Angus had a thing a bit like a UK telephone booth that he could go into to get some quiet for telephone calls. And later that year I submitted further questions so that he could talk about Ouster’s 2021 results and also about the acquisition in 2021 of Sense Photonics. And Angus is sitting in a Sense Photonics facility at the moment. All that was written up and published in the fall 2022 issue of the magazine.
So, Angus, for the benefit of listeners who have not been following Ouster, I would say that’s a pretty small number, could you please say a few words about yourself? Where were you born, brought up, educated? How did you get into lidar and how did your career progress to where you are now?
Angus Pacala (02:48)
I was born in Connecticut, grew up in Princeton, New Jersey, an academic town on the East Coast of the United States. My college at Stanford University, I got a degree in mechanical engineering undergrad and then I stayed for a master’s degree in a field called mechatronics, which is basically the intersection of mechanical engineering, electrical engineering and computer science. And it turns out that that set of education is really good for building things like lidar, complex electromagnetic, electro-mechanical systems that also require a huge amount of signal processing and programming acumen.
I originally got interested in lidar by actually watching a NOVA special, a public broadcasting special about autonomous vehicle competition in the United States called the DARPA Grand Challenge. This is back in 2006. I was actually just finishing high school and the US government put on a competition to have vehicles race across the desert in the United States fully autonomously. This is the first time it really had reached this kind of scale and sophistication as a technology set. And the winning teams basically all use some combination of radar, cameras, and lidar. And lidar at that point was kind of the most novel and interesting technology in the set and the one that I was unfamiliar with at the time.
I basically took that interest in lidar from literally watching this TV show back in the day and out of college was still living in the Bay Area and the Bay Area is where people start companies left and right and so there’s an opportunity, many opportunities to start your own companies and that ultimately led me to founding two lidar companies actually, one in 2012 called Quantigy Systems where I was the Director of Engineering and then Ouster in 2015 co-founding with a long-time friend of mine, Mark Frichtl that I actually met in undergrad at Stanford.
Mark and I have been working in lidar together since 2012. I think we’re the longest tenured kind of leadership team in all of lidar, at least all of a modern kind of 3D lidar. So, I’m, really happy how things have worked out, but it’s been a long time in the making. We’ve been working in this field for 15 years apiece.
Stewart Walker (05:07)
Yes, it’s certainly something that doesn’t happen overnight. I do remember the DARPA grand challenges. And I think about three years ago, there was a gentleman his last name was Neff, N-E-F-F, published a sort of history of lidar ? aimed more at the general market than specifically lidar experts. And it had a lot of material about that. And really it’s an interesting story.
Angus Pacala (05:32)
It’s a success of kind of these public-private ways of spring innovation. So, in this case, a literal competition with a million-dollar cash prize spurred all manner of universities, private research groups, private and public companies in the United States to go and compete in the desert. And actually the entire letter industry spawned out of that challenge. The original Velodyne founders, David Hall and his brother Bruce Hall, were one of the teams in the DARPA grand challenge, invented one of the first 3D lidars in that challenge. So that’s a pretty cool story ? and just an example of how you can spur innovation through something like a friendly competition.
Stewart Walker (06:13)
Yes indeed. Well, let me ask you a much simpler question. Can you see Edinburgh Castle out of your window?
Angus Pacala (06:19)
You know, I am actually sitting in one of those phone booths that you described taking this call. And unfortunately, I can’t from this phone booth, but we do have for people that are familiar with Edinburgh, we have an office on Prince’s Street and with a direct view of the castle. It’s a pretty terrific site. And we brought lidars out onto our deck and scanned the castle from across the street. So pretty cool location, definitely storied and also storied in silicon design.
And we do all of our semiconductor engineering out of this office. ? And the whole area is actually called “Silicon Glen”. So Silicon Valley in United States in the Bay Area, “ Silicon Glen” is kind of the area between Glasgow and Edinburgh, where the Scottish government invested in semiconductor education and engineering kind of from the 1980s onward. So great talent here and it’s great to be able to visit and work with a team on next generation products.
Stewart Walker (07:16)
I as a Scot hope that you enjoy your time in Edinburgh and your time in Scotland. But let me, since we’re there, let me ask about Sense Photonics. You acquired that company to help your sort of charge into the automotive sector. Did that plan work?
Angus Pacala (07:35)
So Sense Photonics we acquired in 2022, kind of six, eight months after we went public. And the majority of the Sense Photonics team out here at Edinburgh is still here, the core semiconductor engineering group. And the technology that we acquired was this digital flash technology, fully solid state technology is what Sense Photonics was working on. And that’s a technology that’s well positioned for the automotive market. So it’s low cost.
It’s robust, it’s simple in design, and really the complexity is all packed into a highly complex, solid-state lidar chip. So we call this the Chronos chip at Ouster. And so yeah, we’re continuing to develop that technology. We’re going to be bringing the DF to market in the next couple of years. And we’ve already managed to get our prototypes last year in a hands-on automotive customers. So definitely the DF sensors, the core technology from Sense Photonics, is still very much a part of Ouster’s product roadmap. The overall kind of automotive market has been slow to build in the Western world. And, you know, we’ll get into this probably how Ouster’s strategy has really been to focus on non-automotive markets or to focus on a broader set of markets because of all the delays and slow uptake of lidar technology in the West. But actually what’s been interesting is that the DF sensor technology is also very well suited to other emerging trends like the robotics revolution that’s going on. You know, very small form factor, power efficient devices that you put into all manner of robotics. So I’m really excited about DF. That’s one of the reasons I’m here is to talk about the Chronos chip with the team and make sure that we can continue making progress and get that to market.
Stewart Walker (09:22)
That’s great and I’m will certainly look forward to announcements about that soon let’s talk a little about your other technologies when I wrote the article back in 2021 I used the title “ Digital Lidar for Everything” although they may well be your words ? but could you say something about the core technologies at the center of your success the latest generation is called L3 that was announced at the end of 2022 but I imagine you’ve been working on that and incrementally developing it since it was announced.
Angus Pacala (09:55)
The statement I made, “digital lidar for everything”, is something that I continue to stand by. That is, I mean, that’s Ouster’s strategy in a nutshell. On the technology side, we have digital lidar, which is this idea of leveraging advanced silicon semiconductors to build better lidar sensors and to improve them exponentially over time. And then for everything is the diversification of our commercial strategy and our product strategy to serve all of these emerging use cases for robotic vision.
You know, lidar isn’t just about cars or just about industrial equipment or just about security. It’s all these things. And we’re seeing that kind of language actually reflected in people like Jensen Huang and NVIDIA talking about how everything that moves is going to be robotic. you know, broad statements about kind of the state of automation and the coming trends of general-purpose robotics. So absolutely, we’re continuing to invest in our digital lidar technology.
What that means is designing and developing new semiconductor architectures that go well beyond the L3 chip. So the L3 chip, that was our cutting-edge technology as of the revision seven product release that we did back in 2023. And what we’ve been for the last couple of years is developing two new chips really. It’s the Chronos chip on the DF side and the L4 chip on the OS or scanning sensor side of things.
And we really try to make sure that we’re developing these chips on a common kind of architecture. But ultimately what we’re doing is we’re taking advantage of advanced semiconductor processes, smaller digital nodes, improvements to the underlying photonic sensors, the things that sense the photons, and packing more signal processing and things like that onto a new chip architecture. So, in this case, the L4 chip will be the successor to the L3 chip, which is currently out in market.
We’re definitely not standing still. We’ve been hard at work for two years plus at this point and looking forward to kind of getting these chips out into product families in the coming year because they are transformational to Ouster. There’s nothing like silicon and semiconductors to put exponential improvements into physical hardware systems. There’s truly nothing like it. And it’s why Silicon Valley is named Silicon Valley, because the silicon has been transformational to so many of these technologies before lidar.
Stewart Walker (12:22)
Yeah, that’s a very good point. I think one associates the words Silicon Valley (now) with a sort of very clever people who do private equity and things like that. But the bottom line is it’s done with silicon.
Angus Pacala (12:34)
Yeah, I was laughing. I was talking with a coworker just explaining this. I think it was a coworker that was working in the software side of our business. And just explaining, you know, if you travel down to San Jose in Silicon Valley today, it’s just one company after another designing advanced silicon chips still, there’s still this core there. And it’s really the basis, the foundation of why our world is becoming more capable, more intelligent, more connected is because of all of these companies that are leveraging one technology set really, that’s silicon CMOS, which is still improving exponentially at the rate of Moore’s law.
You know, that’s the underpinning of why your software is getting faster in many cases or why your cell phone connection is now you’re able to connect to a satellite directly with your cell phone or connect more quickly and with higher data rate to a cell tower with your cell phone. All of this is because of silicon innovation, which still exists in Silicon Valley. Ouster is just another company in that mix, but we’re really the leading company doing it in the lidar space.
Stewart Walker (13:40)
Okay well going back to what you said about the the rev seven the hardware the scanning lidar you got four products OSDome, OS0, OS1 and OS2, would you like to give us a quick ? dime tour of these and i think you’ve already indicated what’s happening which is that the L4 chip will come into these quite soon.
Angus Pacala (14:03)
Yeah, so our product family, it’s the Dome, the zero, the one and the two. Basically, they change the field of view and the range that the product see. So some of them are short range wide field of view. And then the OS two on the other end of the spectrum is long range and narrower field of view. And you can really think of this just like your cell phone camera system. So most modern high-end cell phones have three or four cameras.
And you can select between the wide field of view selfie camera or the long range, the telephoto lens that you can zoom in on the bird in the tree or whatever. That’s exactly what’s going on in our lidar sensor product portfolio. We have these wide field of view sensors that are really good for close up work. We have lots of robotics companies that need to see really, really wide field of views in very near range to navigate around a warehouse or maybe a robotic arm that needs to pick up a package where you care about the first two meters far more than the meters 50 to 200. And then we have the customers that are driving very fast on the highway and they care much more about the 50 to 200 meter range. And that’s where you have a more constrained, that telephoto style lens set where you can see much further down the road and ? avoid obstacles like a tire sitting in the lane of traffic that you’re traveling in. And there you want to see long range with high resolution.
So you can make maneuvers with plenty of time. So you have a good writing experience. one of the things that Ouster has done really effectively is just, well, first acknowledge that there do need to be different types of lidar to serve this broad customer base. And that isn’t, I mean, it sounds obvious when I say that, but the reality is that most companies in the space do not build a full suite of products like Ouster does. And then the second is just to build an efficient technology set that can be flexible to those varying needs. And that’s the beauty of silicon. We can put one silicon chip behind new optics and get fundamentally different capability, much like your smartphone might have the exact same silicon camera sensor behind all three of those lenses. But yet, you get fundamentally different camera performance by putting new optics in front of one amazing piece of silicon technology.
Stewart Walker (16:20)
Okay, so that’s the hardware and all these sensors are complemented by three software products. Gemini, Blue City and Ouster Studio together with an SDK. What are the highlights of those and how important do you see software in your overall operation?
Angus Pacala (16:41)
Yeah, so, I mean, software is critical to Ouster even before we came out with the Blue City and Geminisoftware solutions, which apply to our smart infrastructure vertical. ? we’ve been investing in software for at least five years in the Ouster SDK and Ouster Studio. Ouster Studio is kind of a, a GUI based, ? you know, easy to use program for recording and viewing and manipulating data that’s coming straight from our sensors. And then the Aster SDK is a full software development kit that’s free cross platform that allows customers to their end software more easily because we’re providing all the building blocks and you it’s kind of, you want to give them high quality, easy to use, conceptually simple building blocks on the software side because literally every one of our customers is writing software in some way for lidar sensors. And so you want to make your hardware the simplest hardware in the entire space to use for your end customers. So the idea of building an SDK is not a new concept for hardware companies. And I think NVIDIA very famously invested early in their CUDA programming language that has made it much easier for their GPUs to be programmed for all these AI tasks than any other competitor.
And they were working on CUDA long before it became a big driver of their business. It takes years and now decades in their case to build the comprehensive capability and quality in an open source or in a freely available software development kit. And so that’s what Ouster is doing. We’re more than five years into investing in that SDK. Super important. We have hundreds of customers using it, but it’s all free and it’s all kind of behind the scenes. And then we have what we’ve done recently in the last two plus years is release some complete software solutions. And they really are the combination of software, lidar hardware and computer hardware and all the like other accessories that you need to have an end solution in specifically the smart infrastructure vertical. So those are things like, like they’re boring stuff like brackets, like how do you actually hold the lidar sensor on a pole at a traffic intersection, all the cabling.
And things like that matter if you want to sell a turnkey solution to an end customer, like a traffic integrator. So, so there we have these two, what we call software solutions, but again, it’s, it’s a turnkey solution. have Gemini, which is a security and crowd analytics product customers that for instance, want to secure a fence line at a critical facility like a nuclear power plant or a government national lab or a data center.
And then we have Blue City, which is a traffic management solution that we sell mostly to state and local governments to change the lights at their intersections more capably, more intelligently, and more safely than any technology that’s come before it. But in both cases, we’re bolting ladder sensors or installing ladder sensors onto fixed infrastructure and allowing those ladder sensors to observe the surrounding environment, which is usually the dynamic environment, the people, the cars, the animals, and then track them and give that intelligence to a higher level business system like usually a building security system, an alarm system, or the traffic light controller in the case of Blue City. And it turns out, you these are really interesting markets. They’re ripe for some disruption when talking about security or traffic infrastructure. And Blue City and Gemini have seen a lot of initial success.
We have over 700 sites that we’ve deployed with the technology in the first couple of years that we’ve come out with the technology. So I’m very bullish on this. I’m sure we’ll talk more about the software solutions, but definitely software is critical to Alistair at this point. And we’re going to continue to invest in it for years to come.
Stewart Walker (20:41)
Thank you. And now for a word from our sponsor, LAStools.
—
The LIDAR Magazine Podcast is brought to you by rapidlasso. Our LAStools software suite offers the fastest and most memory efficient solution for batch-scripted multi-core lidar processing. Watch as we turn billions of lidar points into useful products at blazing speeds with impossibly low memory requirements. For seamless processing of the largest datasets, we also offer our BLAST extension. Visit rapidlasso.de for details.
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Stewart Walker (21:18)
Angus clearly the merger with the other time made you a lot bigger how many people do you have now and where do you feel that you are in the ranks of lidar suppliers.
Angus Pacala (21:29)
Well, to answer that last part of the question first, mean, Ouster is definitely the largest Western supplier of this technology by a significant margin. If you just kind of look at the six or so other public and private Western lidar companies, by any estimate, we’re generating significantly more product revenue than any other competitor and potentially more product revenue than all other Western providers combined. Ouster is also a big player on the global scale.
And specifically a big player in the type of lidar that we sell today. And that’s really non-consumer automotive lidar. Like if you look up our portfolio, we don’t sell lidar that goes into the cars that you and I buy. So if you look at that, Mark and Oster is absolutely one of the leaders, if not a global leader in the non-ADAS non-consumer vehicle side of things. ? And we have over a thousand customers and have shipped over a hundred thousand lidars between Velodyne and Ouster in our histories. We shipped tens of thousands of lidars a year and we’re a growing company. So, from that perspective, yeah, we’re a major player, but on the other hand, we’re very much at the beginning of lidar deployment and lidar adoption.
And that’s why Ouster continues to be an exciting company and no company that I’m excited to come to work for every day is Ouster is at the beginning of these enormous changes in our economy, in what technology is brought to bear in verticals like industrial and smart infrastructure and automotive. ? And so the opportunity far exceeds what we’ve achieved to date. We did $111 million in revenue last year and shipped 17,000 plus sensors. So, you know, at some point I expect that we’ll be able to ship 10x, 100x, that kind of volume and scale. And certainly the tailwinds are are pushing us in that direction.
Stewart Walker (23:25)
Super, yes, I can feel the excitement when you’re talking it’s just great. So I see you made a recent announcement that your sensors are being used on Komatsu’s massive autonomous mining machines. Congratulations on that. And that means that they’re really really robust to work in that kind of environment. Are you especially proud of that?
Angus Pacala (23:47)
Yeah, so I appreciate you calling that out because robustness is easy to overlook: what it takes to build a product that can survive a mining environment, a construction environment, an agriculture environment. The goods that you and I buy, they’re consumer grade. And consumer grade means that they may last two years with minimal abuse, pulling your lawnmower out once a month, for instance or you use your laptop maybe for up to eight hours a day. But industrial equipment is built to a far higher standard, both from the abuse side of things, like how much it gets shocked and vibrated and the environments it’s exposed to, and also its lifetime expectations.
So a piece of industrial equipment, like a piece of mining equipment, these Komatsu mining haulers, might be expected to run 23 and a half hours out of every day and last for 10 years, maybe 15 years. mean, the longer the better, the more you can amortize your capital investment. So the duty cycle is almost 100 % versus a consumer good. And the lifetimes are potentially 10x longer than the expected lifetime for your consumer electronic. And it turns out that that’s not easy to achieve. And it takes a huge amount of investment behind the scenes for a company like Ouster to now have achieved that level of reliability, robustness and lifetime performance that a company like Komatsu can now use it in their biggest machines that they produce. So I’m definitely proud of it—it’s something that was easy to overlook when I was earlier in my career. And it’s only through kind of the years of hard effort and really getting into the details and redesigning every last component in these systems that we’ve, you know, we’ve achieved the standards that customers like Komatsu need.
Stewart Walker (25:45)
OK, well, let’s go back to Velodyne just for a moment, because that name is very well known to our readers and listeners. And I did once do a phone interview with a couple of the leadership from Velodyne, but most of them seem to have disappeared. Although I do know that Dr. Ted Tewksbury from Velodyne is chair of your board of directors. Do you still make the Velodyne sensors or if you don’t, do you offer any maintenance and support?
Angus Pacala (26:14)
Yeah, so we actually do still produce the VLP16 and the VLS128, but they are at their end of life. So we’ve announced that we are going to end production of those sensors this year. So it’s been a long run for the VLP16. I think it was introduced in 2012, if my memory serves me right. It had a great run. still kind of for a small customer set. It’s like the default. When you think lidar, they think VLP16.
And likewise, the BLS 128 has kind of existed at the top end of the market since its introduction. think that was somewhere around the time of 2018. ? It’s really cool kind of legacy technology. The devices are complex, but beautifully made. And it’s been a privilege to produce those for the last couple of years after the merger. And definitely it was an important part of the merger to continue to produce those products to give our customer set a graceful transition from the legacy Velodyne products to the Ouster lidar sensors. That’s been very important that we gave them time to re-engineer their end systems to adopt the Ouster lidar sensors, which have lots of benefits, but there still may be cost and time associated with a swap, which is why giving them time is important.
Stewart Walker (27:31)
Well, let’s then talk about you’ve mentioned yourself the verticals. I think you divide your market into automotive, industrial, robotics and smart infrastructure. So I’m interested in how you have to address these verticals in different ways and which one’s growing the fastest.
Angus Pacala (27:49)
Yeah, I mean, this has been constant learning. I mean, the good thing is that when Mark and I founded Ouster, our thesis was any industry that silicon effectively plays as a technology, it will consume all other technical approaches just because it’s improving exponentially and everything else doesn’t in hardware. So that was the thesis number one. And thesis number two was everything is going to be robotic, everything is going to need lidar because everything needs the superhuman eyesight to become an autonomous system. And this isn’t just an automotive play, this is a play across industries. And so let’s diversify early on and build hardware and products that can play across these verticals. But the thesis kind of ended there.
The strategy of how you go and serve these four different verticals, automotive, industrials, smart infrastructure and robotics are fundamentally different and are a constant learning process. And we’re still learning each and every day. So, you know, the customers in the industrial and automotive sector may just want to super high-quality long-term hardware supplier and quality, you know, in the industrial sector, you have to learn what your customers want first and foremost.
And so what they want may be fundamentally different in industrials versus in smart infrastructure where full solutions are much more attractive than just buying hardware. ? Likewise, robotics is potentially a lower ASP, higher volume, ? smaller form factor market if you think about humanoid robotics or last mile delivery. so customers might need a unique packaging or just, they have different considerations and potentially different buying cycles than our industrial customers. Our industrial customers generally go through a ? specific cadence of product development and release into production, and then steady volumes after production release. Whereas some of our robotics customers are successful but still small, know, cutting edge startups and small technology companies where they may need a different type of buying cycle, like spot buys or kind of peaky, peaky buying cycles because they’re learning about their end customer sets.
So it’s definitely a constant learning process. And one of the things that I’ve made sure of though is that ultimately, customer relationships matter hugely in this industry. There aren’t that many end suppliers of this technology. And so you want to make sure that we’re being a great partner. I want Ouster to be the best partner for lidar, aside from the products, which I very much want to make sure that our products are the best in the market, but also that we are the best supplier, we’re the best partner.
So I spend a huge amount of time with customers just hearing what they need from Ouster, whether it’s product or commercial relationship or any kind of support, because I think that’s hugely important in an industry like this, where the end applications are long in duration, like Komatsu 10-plus year kind of production cycles, and in many cases, safety critical, where mistakes or quality issues or something like that could be really, really detrimental to an end customer of spending time listening to them and being willing to have a different strategy and approach to a customer in one vertical versus another is something I’m very open to.
Something our commercial team has just done really well balancing. You kind of have to have multiple personalities to be a sales account manager at Ouster because you might be on a call with an industrial customer and then turn out and be on a call with a smart infrastructure customer and those two calls and you know, the considerations are just fundamentally different. So keeps things dynamic. But it’s also, it makes it so much more interesting to be involved in all of these cutting edge applications across verticals.
Stewart Walker (31:48)
So in addition to your San Francisco headquarters, you’ve got offices in 10 other countries. You’ve got 27 hardware distribution partners, 11 ITS solution distributors, 40 software and integration partners. I presume that means that you do sales both directly and indirectly. It’s a very complex structure.
Angus Pacala (32:09)
We definitely we do a lot of indirect sales, I would say our distributors are rarely just selling something with a zero-touch sale to their end customers. There’s a strong relationship between us and our distributors. In many cases, we call them integrators because distributor is the wrong word. They’re actually providing some value-add integration, engineering acumen and support that isn’t just, you know, selling the lidar sensor and taking the PO.
So, you know, these are not commoditized products in a sense where distributors, you know, serve just they’re kind of a middleman. It’s much more than that. but in terms of complexity, you know, maybe it’s complex when you zoom out and you list all the numbers and the many different parties involved. But when you zoom in on each vertical and the dynamics in each vertical, I think that things are much clearer. And the challenge has been to understand what the clear, simple playbook is.
for each one of our verticals that might have a different integration set or set of distributors than a different one. So like you mentioned, our regional distributors for the ITS, the traffic vertical, understanding how that market works, it’s just fundamentally different. The end customers or municipalities, they’re served by these regional integrators, provide a huge amount of value add, engineering and integration support, and bring decades of experience and relationship building to the table.
And so that market, I mean, it’s so unique and different and something you have to learn from scratch. But ultimately, I don’t think it’s too complicated. There’s a lot of common sense involved. And so I think you’d apply that. Like if you break it down and look and zoom in on each individual vertical and just understand that there are going to be different dynamics, then, you know, it’s not rocket science. It just takes an open mind to serve all these verticals.
Stewart Walker (34:04)
Okay, have the Velodyne people moved into your San Francisco facility is it big enough for everybody.
Angus Pacala (34:12)
Ouster as a company is not a giant company. We have a mix of Sense Photonics, Velodyne and Ouster employees at this point, but we’re a 300 person company globally. We have about 200 plus people in the United States. Our facility in San Francisco, it’s actually two buildings. It can easily fit all of our employees from the US whenever we’re flying people in. it’s a lean team. That’s kind of one of the core pillars that
When I talk to investors about becoming a profitable company, the cost controls and being a lean company with low optics is a really important pillar ? and part of our strategy. ? Basically, everyone at Ouster is a contributor, whether you’re a manager or not, you’re going to do some sort of individual contribution and that keeps us lean. ? So I wouldn’t say that we’re a giant company, but we’ve worked to integrate the Velodyne and before that, the Sense Photonics employees so that
You know, this question to me, it’s like, doesn’t even almost register or make sense because it’s we’re so far past the, Velodyne acquisition at this point over two years post acquisition that, you know, I, I don’t keep track of who is a former Velodyne employee versus a former Ouster employee at this point.
Stewart Walker (35:31)
Now, where do you carry out manufacturing?
Angus Pacala (35:34)
So we manufacture in two facilities in Thailand with our two contract manufacturing partners, Benchmark Electronics and Fabernet. And they’ve been great partners, both are long-term partners of Velodyne and Ouster. And it’s a close relationship where we have full-time employees based in Thailand ? sitting at those facilities each and every day. We actually have office space in those facilities carved out specifically for Ouster.
And it’s a very tight relationship show. So our employees, there’s engineers, there’s manufacturing operations, people supply chain. They work hand in hand with the employees from benchmark and Fabrinet to make this whole thing successful. And we’ve had to let weather, you know, a bunch of different storms, COVID being kind of the first one. then, and then the semiconductor shortage where, ? you just have like supply-chain shortages and extending lead times for parts and components.
And then also, Ouster adds the additional challenge of bringing out new products all the time. you we’re on our revision, our Rev7 product, which is literally our revision seven or seventh generation product, which meant we’ve had to ramp our product in manufacturing seven straight times. So all of that requires a huge amount of effort on the manufacturing side. And again, working hand in hand with our full-time employees that are boots on the ground at our manufacturers in combination with the manufacturers themselves. And then we actually do have one more manufacturing facility right in San Francisco.
Believe it or not, we have a class 100,000 clean room, just kind of a dirty clean room in the scale of clean rooms. it’s a humidity positive pressure control facility you have to get into your bunny suit to go in there. And we have buy American certified products that we build in San Francisco from this, a clean room facility that we built in the mission right in our facility where all the engineering and basically the whole company sits. So pretty cool. And it also gives us the opportunity to ramp our new products, do our new product introduction and manufacturing out of that facility. So I always encourage if anyone is ever visiting Ouster, give the manufacturing tour, which is, you know, it’s honest to God, same equipment, same technology, same line that we have out in Thailand, just fewer copies of the machines that run those lines.
Stewart Walker (38:01)
Well, I certainly hope to take advantage of that and see it. Now, lidar sensors such as yours have revolutionized the world of acquisition of geospatial data. Let’s just talk about that for just a minute. ? And the reason is because they’ve made it possible to create UAV-borne or drone-borne lidar systems at economical prices. Now, the magazine understands that that’s a really small market for you, but I was pleased to see that your OS1 lidar has been vetted and approved by the Department of Defense for use on UAVs. What are your thoughts on that niche market?
Angus Pacala (38:42)
Yeah, I mean, I wouldn’t call it a niche market for for Ouster or for lidar. Frankly, I think that lidar originally was developed one of the core uses of lidar technology going all the way back, I think to the 50s or 60s was altitude airborne surveying. And that’s still I mean, a huge market is just airborne surveying with very high grade, long range lidars. And so the need for that kind of wide geographic surveying at high fidelity and high accuracy, that’s ever present and growing, right? Like the capacity for end customers to actually ingest high resolution 3D data of, you know, entire state or metropolitan area is only increasing.
So there’s a big market there. And, you know, what I’ve seen is that there’s now, as you mentioned, there’s just cheaper and cheaper ways to collect some of that information by putting smaller, lighter weight lidar systems onto smaller, lighter weight, cheaper drones. And not requiring like, you know, a big Cessna with a trained pilot with a pilot’s license and a potentially million-dollar lidar system to do every last job. There’s still a need for that kind of work, but you can get a lot of the work done now with a modern drone and a modern lidar. So it’s definitely a growing use case for lidar in general, I wouldn’t call it a niche.
Actually, we folded into our robotics vertical, but I’m really excited about that vertical just because of the sheer quantity of these kind of small regional surveying groups that usually serve end customers with like, you know, these drones surveying payloads. So I was really, really happy to see that we got the approval for the OS1 on DoD payloads for drones for these surveying applications. It’s definitely an important step and just a good acknowledgement that the Ouster sensor suite is well positioned for that use case. I’d also mentioned that it’s not all drones like where this type of 3D surveying is done; as you know, terrestrial mobile surveying rigs are a huge business as well.
And there again, I mean, I think the use case is even clearer because generally you don’t need nearly the type of range requirement as these airborne systems. And so the type of lidar that we built a couple hundred meters of range capability is pretty comparable to some of the higher end systems that are out today. ? publicly we have ? Google Maps now adopting Ouster’s lidar sensors for street view vehicles. And that’s just like the perfect summary of what our customers look like in the terrestrial surveying market, which sits adjacent and sometimes has a pretty big overlap with the drone surveying market.
Overall, there’s a lot of innovation happening there and especially a lot of innovation on the data processing side. Data processing of all the surveying payloads is typically a big bottleneck and it’s nice to see all this AI technology being brought to bear to better classify and register point clouds and serve them to end customers.
Stewart Walker (41:48)
Yes, indeed. And I’m sure we could talk a lot more about AI in a future occasion. We’re running out of time really today. I would also like to spend some time talking a little bit about the finances, but we can put that off till another time too. But let me just ask about one thing, the stock price, your ticker symbol is OUST. And I don’t really understand this very well, but the stock fell from the heights that you enjoyed when you went public continue to drop. Then there was a blip about maybe the time of the Velodyne merger and then it fell. But this year the stock has gone up very rapidly. Could you explain that a little bit?
Angus Pacala (42:32)
Ways to look at it. I mean, there’s maybe a change in some macroeconomic sentiment that is playing in Ouster’s favor, which could be an answer to why right now or why this year is, has Ouster stock price done well, when Ouster has been actually performing quite well financially for the last couple of years, basically since the merger. But one of things that I tell our employees is that like, look, Ouster has executed incredibly well, second to none, potentially in the entire lidar industry in the last two and a half, three years. So we’re going on nine plus quarters of consecutive revenue growth, hitting strong gross margins in the high 30s to 40s and have maintained an OPEC structure that’s been basically steady for the last two and a half years, actually going on almost three years now.
And at some point, that success will be reflected in stock price appreciation. ? And sometimes it takes a combination of maybe a macroeconomic sentiment combined with this really strong track record of execution and performance for something like ? what’s happened with Ouster stock price in the last six months. So my job is to make sure that Ouster is executing in a way that when there is a convergence, the execution is the puzzle piece that proves that Ouster is a very investable and exciting company. I’ll also say that the entire trend in robotics and AI, the emergence of like broader physical AI ? industry is a tailwind and a way to tell Ouster’s story and show how Ouster is basically a core component of this broad global trend in transformative technology. And I think that is helping as well, because it’s true. We’re supplying one of the few core technologies needed for autonomous machines of the coming hundred years.
And we’re very well positioned there by being diversified, by having this established customer set, and by having the financial proof points to back it all up. So right place, right time, and great execution, I think, ultimately lead to stock price appreciation.
Stewart Walker (44:43)
Yes. And who am I to disagree with that? That’s a great story. Angus, you’ve shared a great deal with us today. I wonder if you’d like to bring things to a close by giving some clues. You’ve talked a little bit about Chronos and L4. Those are your goals for the immediate future. Have you thought about what comes after that?
Angus Pacala (45:04)
Absolutely. I mean, one of my roles and one of Mark and my roles (my co-founder Mark) is to always have a view of our product roadmap that goes out at least two generations. That’s kind of our goal. And so as we’re working on L4 and Chronos, which is the next step, that’s like the immediate step in the future. we want to make sure that we have the next next step because there is a long timeline to the development of this technology and specifically the silicon semiconductors.
And so you want to make sure that you’re seeing things coming, that you’re establishing partnerships and relationships well in advance of when you need to potentially take advantage of them. And so on the technology side of things. ? So we’re always doing that. I guess what I can say is that lidar technology is nowhere near its limit. And in that sense, we are still getting started as well.
As amazing and as capable lidar sensors are today, even our Rev7 products versus what they were 10 years ago, there’s easily that much transformation and expansion and capability that’s going to happen in the next 10 years. And that will start with the L4 and the Chronos based products that we’ll be releasing. I mean, I said in an earnings call that the products that we have that we’re working on in our roadmap are the most transformational products in Ouster’s history.
And that is absolutely a fact. excited about that. But at the same time, there’s so much more that can be done here. And I think generally these kinds of advanced technologies take roughly 30 years to fully mature. I that’s kind of what we’ve seen with digital camera technology coming out. We’re 25 years into potentially a 30-year maturation of CMOS digital cameras. I think there’s probably 20 odd years of further maturation in digital lidar sensors.
Stewart Walker (46:59)
Yeah, it’s probably been quite a while since Steve Jobs went on stage with the first iPhone come to think of it. Okay. We should close now. And so, Angus Pacala, thank you very much indeed. I really enjoyed this conversation. I’m very grateful that you were able to participate in the LIDAR magazine podcasts. You’ve given incredibly generously of your time to this magazine on two occasions now and provided a great deal of interesting material.
We’re very grateful for that. wish you well ? guiding both the business and the technology in the years to come. And we wish you well with enjoying Edinburgh and Scotland.
Angus Pacala (47:40)
Stewart, thanks for having me. This has been a pleasure.
Stewart Walker (47:43)
So I’m sure listeners will similarly have enjoyed your company and comments today. I also want to underline our gratitude to our sponsor, the popular LAStools lidar processing software. We hope you’ll join us for forthcoming podcasts. We’re expecting some guests whom we believe you’ll want to hear. If you want to ask about our podcasts or make comments, don’t hesitate to write to us. That’s podcasts at lidarmag.com.
Thank you for listening. Good day.
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