Tracking more than Santa: The 3 Philly rocket science firms Paul Graziani didn’t sell are growing fast

In June, 30 years after Paul Graziani and a few colleagues quit General Electric’s satellite and missile center in King of Prussia to start their own software firm, U.S. Commerce Secretary Wilbur Ross visited them in the multiscreen “digital mission” room of the Exton company they built, Analytical Graphics Inc. (AGI). How much bigger could their 221-worker, $88 million-a-year (sales) company get? Ross wanted to know.

“$1 billion,” suggested Graziani. He noted that Ansys, another satellite-software supplier based near Pittsburgh, had topped that figure, and he expected AGI could, too, as more governments and private satellite operators pay AGI to help avoid collisions with other spacecraft and “space junk.”

Four months later, Graziani and his investors sold AGI to Ansys, for $700 million.

But he could still reach his $1 billion goal: Graziani kept three promising businesses separate from the deal.

They remain independent companies, all based in the Philadelphia area, and each with heady growth plans. They are:

Cesium has taken charge of a yearly promotion developed by AGI in the 1990s: The company tracks “Santa Claus’ sleigh” on its December gift rounds, showing images from NORAD, the U.S. air-defense system, that get more realistic over the years.

As with actual Cesium systems, the company plots data points provided by NORAD for Santa’s eastward journey around the world, showing his “route” as he passes various countries. It maps them on real locations — including, this year, on the orbiting International Space Station — which can be viewed on the screen using its software.

“We get up to 20 million people visiting its current iteration, NoradSanta.org, on Christmas Eve,” said Cesium engineer Hannah Pinkos, as Santa circles the globe.

Selling a business as Graziani did, while keeping profitable pieces to build (and maybe sell at a future markup), is an art. Successful practitioners include Conshohocken-based online retail mogul Michael Rubin, who sold GSI Commerce to eBay for $2.5 billion in 2011. But Rubin kept the Fanatics sports gear distribution network and two other digital businesses he continued to grow and has since attracted new capital, sales, and profits.

On Ross’ visit, Graziani spoke with disarming modesty. “We’re a bunch of engineers, and we’ve got a lot to learn on the business side,” he told the crowd of military and civilian visitors that accompanied Ross, a billionaire investor before he joined the Trump administration.

Graziani noted that much of the data his companies use are generated by the U.S. government, and made available for free. Users pay his companies to organize it for them so they can use it easily to learn about customers, markets, and physical environments, and automate services.

“The technology Paul’s groups have developed is where we are going in industry, commerce, the military, the Internet of Things,” says Charles Robins, head of the technology deals group at Fairmount Partners, a Philadelphia investment bank that advised AGI in the Ansys sale.

“It’s no longer possible to deploy motion technologies and expect them to perform properly as part of bigger systems on their own” without communicating, Robins added this month after Ansys closed the AGI sale. “They have to interoperate with everything else, securely, and not disrupt anything.”

It takes a lot of specialized software to put data to work in ways that are easy to track. One-quarter of AGI revenues were set aside last year for research and development, compared with a few percent at most U.S. manufacturers.

Graziani’s companies have attracted investors and are hiring engineers and business people rapidly, helping renew Philadelphia’s once-pioneering engineering sector, Robins concluded.

“All the pieces of the puzzle are coming together,” said Patrick Cozzi, the Bonner, Penn State, and Penn grad who in 2011 wrote the first lines of Cesium computer code. He later convinced Graziani and his managers to open-source the Cesium code to encourage developers in private industry to explore the service and help think up lucrative applications.

The staff numbered 12 when Graziani separated Cesium into a new company in June 2019, with Cozzi as CEO. He moved the company to Center City and has more than tripled the staff.

“We are hiring as fast as we can, in business as well as tech,” Cozzi says.

Clients and collaborators include construction equipment giant Komatsu and Bentley Systems, the suburban Philadelphia company whose initial public stock offering (IPO) valued the family-owned company at $9 billion earlier this year.

Cesium has also collaborated with Epic Games (which developed the hugely popular character-battle game Fortnite), Microsoft, and Nvidia to produce a game-like modeling simulation demo showcasing Cesium’s data presentations.

“Philadelphia is a hidden gem when it comes to these tech start-ups,” said Hannah Pinkos, the Cesium engineer who started as a Drexel intern at the company in 2013. “So much talent is coming out of Penn and Drexel.” A professional circus performer on the side, she started in fine arts at Drexel, but switched to computers when a course attracted her to “the problem-solving aspects.”

She compares Cesium to a “virtual 3D globe, run in a web browser.” While AGI developed “really complicated software for tracking satellite and route planning,” executives realized “there were many commercial applications, other than aerospace and defense. Let AGI stay focused on that. We work in smart construction, and we see opportunities in real estate, agriculture, so much more,” Pinkos said.