THE FULL ROCKET LAB INTERVIEW | Sir Peter Beck and Adam Spice | $RKLB

All right, well I guess I'll just go ahead and start here then. Everyone ready? Yeah, so I figured I'd just say congratulations on a great quarter and performance on the stock price, and perhaps more importantly the progress on Neutron and the overall business. I am curious though, when it comes to the stock price, it seems like publicly traded space companies they seem more often targets of these meme trades and short squeezes and volatility. Is that something you ever worry about or think about much with your own company?

Yeah, I mean, I'll take an answer then throw it over to Adam as well. But I mean, but of course, you know, what we're looking for is to build a good solid institutional base within the stock and not, you know, I don't think it's helpful to be, you know, a meme stock. And you know, it for sure space seems to attract some of that. You know, some of those businesses don't have very strong fundamentals. But yeah, no, I think it's something we keep an eye on. But if you look at our shareholder makeup, you know, it's improving over time.

And then maybe just staying on the stock price a little bit, given the rise, has that changed your calculus at all on how you think about acquisitions, or maybe using some stock going more aggressive, or is that completely irrelevant?

Yeah, I mean, look, we always keep a healthy pipeline of acquisitions, and as you know, we did that convert to put gas in the tank, you know, for something interesting. But the fundamental driver for us to do these acquisitions, you know, they have to be things that we really need or really believe in, or things that we think are going to significantly grow the business. So irrespective of what the stock price is doing, those fundamentals have to be there. Sure, with a more valuable stock they're less dilutive things to do, but I don't think it materially changes our calculus. We're not going to go out just because we've got a high stock price, we're not going to go out and do a whole bunch of janky deals. You know, the fundamentals always have to be there for us to want to do stuff.

Sure, I can hop in with a fun question. So Peter Beck, what's it like to become a billionaire?

I mean, if my sole driver in life was to become a billionaire, I'm absolutely confident there are easier ways to do it than this. So, you know, look, I think the thing that's most gratifying is seeing everybody else do well as well. You know, shareholders that have been in for the long ride, like you guys, and so I think that brings me more joy than a number on a piece of paper, if I'm honest.

Yeah, and I'd like to add to that, I definitely think it's the byproduct of everybody that you're working with. And we congratulate you guys on this continued success. And it's really fun watching you guys for the past three years since I've been a shareholder. And it'll be much more fun as we get Neutron and start to compete up with SpaceX a little bit more directly. And just huge kudos to you guys, it's so much fun and I'm sure you guys are having a blast as well. So it's just a byproduct of all the great work that you guys are doing. So I know I asked the question in jest, but yeah.

Yeah, yeah, no, thanks. As you point out, it's a huge effort from the team, and you know, a lot of trust and faith from the shareholders. I'm kind of inter—oh, sorry, go ahead Vince, go ahead. Oh, you go ahead, you go ahead.

Okay, it kind of ties to what we're talking about indirectly. It's kind of related to stock-based compensation. Five years out, when Rocket Lab is kind of like a—you know—has Neutron going, is at a bit more of a mature stage, what can we expect in terms of headcount compared to the 2,000 that we have currently?

Well, I'll let Pete take a fundamental, then I can kind of view my views.

Yeah, yeah, well, I mean, look, we're not a company that kind of looks at a headcount metric as a real advantage or a real metric to be proud of. I mean personally, I want the least amount of heads to execute what we want to execute on as possible. So, you know, there's definitely a different team from developing a rocket to producing a rocket. But we haven't seen huge staff growth, as you know, as we've moved Electron into development as well. So I mean, look, from my perspective, the less headcount possible—it's not a metric that I think we plant a flag on, strive to employ as many people as possible. But no doubt there'll be reasonable growth as we scale that product.

Cool, cool. And to kind of tie that into the stock-based compensation, would we expect the stock-based compensation to increase in tandem with headcount, or is that something that's more closely tied with revenue, or maybe something else entirely different?

Cool, cool, thank you. I'll pass it back to Vince then.

All right, I want to go over to Neutron and Archimedes. I have a question that is for non-rocket engineers, because as you know, a lot of people love your company and follow it, and perhaps follow it a bit too closely, and we are not rocket engineers. And you know, I thought that when you do a hot fire test, it's like one month you start it and then the month is over, and then there's no more testing because everything is validated. And then some geniuses see that you are still testing the Archimedes engine, and then they come up with answers that this must be because the engine blew up, or you didn't do a full test. So could you explain, so non-rocket people understand, like what goes on with the hot fire test, how long is it, and if you're still hot fire testing, like what are you trying to get out of it now?

Yeah, great question. So you know, a hot fire campaign or an engine qualification campaign runs for years, and you're always improving the engine. Right now, you know, we have our Archimedes block one, we already have our Archimedes block two on the design table. And naturally, as you learn and you learn as you run the engine more and more, you want to simplify the engine and continue to improve it, reduce cost, reduce time to build, increase reliability. And you know, an engine is just like this living, breathing, fluid thing, and you're continually tweaking on it. I mean, if I think about Rutherford, you know, we've—we don't know how many revisions of Rutherford we went through, probably about three or four. You know, fundamentally it doesn't look any different, but slight tweaks to injectors to improve, you know, specific impulse or ISP efficiencies, slight tweaks to pumps to lower the tank pressures, and you're continually tweaking these things. But for Archimedes, as it sits today, you know, it's an engine qualification program. So what that means is we're looking to explore—it's called a runbox—and we're looking to explore all of the idiosyncrasies of that engine, all of the operating conditions that it might see, plus margin. So for example, when we do a landing burn, the tank pressures are slightly lower than when we do ascending. So we have to condition the prop because the propellant is slightly warmer than when we took off from the ground, because it's had chance to mix with the ullage and warm up. So you have to bound all of these different operating conditions, and then test the engine at all these different operating conditions, and then add margin to them as well. And then you also go through a bit of a process of just finding limits. That's why nobody should be shocked or too worried if we blow an engine up. I mean, just to be clear, we haven't, but if we blow an engine up, that's also normal, because you want to find and prove the margin that you have. You know, if you think you have 1.2 times safety factor on pump rotational speed, then you want to take it up to 1.2. Obviously, but is it 1.21, is it 1.25? So some tests you deliberately might run it up to 1.4, and something might let go, because you want to actually sample those margins and actually determine where they truly are versus where you predict them to be. So, you know, an engine qualification program is a very long program. You know, the first engines that go on the vehicle will be qualified for flight, but that doesn't mean that's the end of the development program. We continue to refine and iterate and refine and iterate and improve the engine over the coming years. And you'll probably visually see as well, I think if anybody has been following the SpaceX Raptor engines, they started off looking very complicated and end up looking very, very simple, and that is just the iteration cycle. Some companies just stop and don't do that. That's not us, we'll continue to improve it. But you know, an engine program is a multi-year thing. It's not a put-it-on, hot-fire-it, and call-it-done. Not to say that you can't take the engine at any point of that program and go and fly it, but as engineers, we want to really refine that to be the most reliable, the lowest cost thing we can make.

Wow, I definitely didn't know that. So thank you for that answer. Another question that ties into Archimedes is, how many engines is there capacity for you guys to produce, and how is the scale-up of the engine production coming along?

Yeah, so we're tremendously lucky to be able to acquire the Virgin Orbit facility, and in that facility there was something like 42 CNC machines, I think they had like 2,000 hours on the spindles, so almost no time on the spindles, and a whole bunch of factory and equipment. So it really put us on a tear for bringing Archimedes into production. So you know, there's a really, really fast throughput of, you know, hardware-rich program where there's just stuff flying through the production line all the time. And to be honest with you, I've lost track of like serial numbers, because we might take serial number three engine's pump and marry it to the latest combustion chamber, and is that still serial number three or is that serial number four now? So it's that mad kind of iteration cycle. But suffice to say, there's like four bays of complete engine assembly, like four engine work cells, and those work cells have parts of engines or engines in them at all times, and we're just kind of cycling through as we go. But we made a lot of investment earlier in the program, things like big 3D printers and stuff like that. And we sort of—some of those things, you know, they're big capital expenditures, so we just bought one, then we proved that was going to work, and then we started to buy more and more of those. So that scale-up process continues. But I would say that if I look back at where we were with Electron, for example, and where we are with Archimedes in Neutron, it's just night and day. We have so much more facility and factory than we ever had in the past.

Wow. So supplying the—you know, the scaling of one Neutron, three Neutron, five Neutron—there's like no possibility that it's a bottleneck on Archimedes?

No, I don't—look, no. So the scaling, the one, three, five kind of scaling is not really driven by the stuff we can make. You know, there's parts from serial number three of Neutron's vehicle in manufacture, so it's not necessarily the parts that we can make in the timeframe. It's just acknowledging the iteration cycle, because we'll go and fly flight one, and then we'll learn a whole bunch of stuff. And if you couple yourself really closely to just full-rate production from flight one, then you lose the ability to iterate on the vehicle and make it way, way better. And my biggest fear is you'd end up stuck with a really compromised vehicle in full-rate production that you just deal with every day. So the one, three, five kind of scale is much about facilities as it is about making sure you can take the learnings and then roll them back into the next vehicle and iterate, such that when you reach high-volume manufacturing, you don't have a dog on your hands, you've got something you can produce at a reliable, steady rate.

That actually does tie into a question I was planning to ask. So I know we're kind of doing a hover landing in the ocean for the first Neutron. Have you thought about when you'll actually try to land on a barge, or is that maybe even the second one or further down?

Yeah, it depends on the results of the first flight. You know, if we come scorching into the earth and pummel it into the ocean, then that's not going to give us a huge amount of confidence to put a big, you know, expensive steel barge there. But if everything goes according to plan, then there would be no reason why we wouldn't slip a barge under the next one. So it really depends on that outcome. And then it's just more of the reason of setting expectations correctly around a flight cadence, because those two different outcomes could affect a flight rate. If you said you're going to come out of the chute and do one and then five and then 10, well, if you pummel one into the ocean, then you spend a bit of time sorting that out. So we like to be conservative on these sorts of things and give that kind of flight cadence, because that allows for these kinds of things to happen and learn from.

So is it safe to say that you're sacrificing short-term scaling up of the cadence to make sure that the vehicle is right to have a much higher cadence later on in the future?

I guess you could say like—I wouldn't say sacrificing, I would just say doing it properly. Like actually doing it properly, like proper long-term thinking.

I like it very much. Maybe just a quick follow-up then, just kind of curious, any plans to, you know, if the booster, the first one's in one piece, go fishing for it, pull it out of the water, or no need?

Oh no, I mean, if it's sitting there floating, I'm picking it up. Jeepers.

Okay, and I guess I had one other Neutron question here. So I think quite a while back you talked about once a Neutron is assembled, it's going to stay upright. Is that kind of still the plan, or will you need transporter erector to move things around?

No, I mean, that's absolutely the plan. From day one is, you know, I hate lifting ops, and especially those tilting ops with a big vehicle—they're a pain, and it just requires a lot of infrastructure, as you point out. I mean, the pad has no strongback, and it has no strongback because we want to land this thing vertically and should never need to break over. So yeah, that's definitely the plan. We'll see how that works out in practice and operations. It's no biggie to break it over if we have to, but it's just extra infrastructure and extra time and extra cost that we don't want to have to put in.

So deepening on that, and once we finalize the transport piece and the reusability piece, is there progress on the UTcom point-to-point cargo delivery study that you guys have been doing, or has that really been put on pause until you get the stick the landing, I guess?

No, no, we continue to work with those guys, and you know, we certainly continue to work with the customer.

And I guess follow-up to that, what time frame—knowing that that point-to-point piece would happen—what time frame would a Rocket Lab launch, to either HASTE, Electron, or Neutron, happen potentially outside of LC-1, 2, or 3 that you guys have currently in place?

Yeah, I'd have to get back to you on that to really understand where that project's at with the team. But we've got a couple of different interesting offerings there, as you point out. So obviously, you know, Electron, and with VITUS, we've been able to demonstrate, you know, we can stick a capsule in the Utah desert. So there's kind of a re-entry piece. And then of course Neutron, with the downrange landing, provides some kind of interesting things. So there's actually quite a few things, interesting things going on there to be working on.

I have one last Neutron question. I don't know if anybody else has—it's more like tempering expectations, because I suspect that soon you will have a Neutron on the pad, and then again, just to go ahead of conspiracy theories, I think that the non-rocket engineer people would think you put it on the pad and then two days later it will fly. And I'm guessing that there is going to be wet dress rehearsal, this test, that test. Could you temper or give us a pointer on, you know, we will see a Neutron standing and then it will take like three, four months probably before it can fly, and what goes on during this time?

Yeah, I mean, so you're kind of right. So each individual stage, firstly, there's a second stage test facility actually at the launch site, so there's a whole bunch of work that we'll be doing on the second stage alone. And then, yeah, just like Electron, you'll see a rocket go up and down and up and down and up and down. There's hold-downs to sequence and get right, a whole lot of propellant commissioning to get right. And then the rocket and the launch pad is a living beast, and it has its own idiosyncrasies. And you know, we have no strongback, so all of the internal piping to fill stage two actually runs up the side inside of the vehicle. And that's just to remove a whole bunch of complexity, of course, but also to make it rapidly reusable. You literally just plug in a second stage and it just couples up with the quick-connects and away you go. So there's a few new things in there that we'll spend a bit of time on. And sometimes they're not particularly sexy with respect to the rocket—you're just running propellant conditioning tests and stuff like that to really understand all the thermal gradient and geysering and all this kind of stuff. So you're right, you know, expect to see a rocket on the pad there for quite some time as we run through a barrage of tests and get to learn the system and get to learn the rocket.

Dave? You can—sure. I find the Mars sample return studies absolutely fascinating. So I was wondering if you could tell us a little bit about—well, first of all, I was very curious why Rocket Lab's proposal was added a little bit later, if there's anything you can say about that, or if it's more of a NASA question. And maybe just talk about what it would mean to the company if you did get that, beyond just obviously being a very big contract.

Yeah, so yes, no, we originally submitted a proposal and weren't selected, and I think that was the wrong decision. And then we were selected, so we're able to put together a proposal that we think is really compelling. And I think if you look at all of the key elements of that mission, we've kind of demonstrated many of them, if not most of them, in some way. So for us, we look at that, and we look at the 11 billion and 2040, and it's just like, man, this can be done way, way cheaper, way, way faster. And we have many of these elements. The hardest thing in that program, or one of the hardest things—everything's hard, but one of the hardest things—is launching from Mars. Right, nobody's launched from Mars before. But if you want to launch a little rocket off a little planet, and you picked up the phone book as an alien, who would you go and call? And I think we've proven that we can do that quite well. So I think that part of the mission element and architecture is a particularly strong point for us, as is—we've built a couple of Mars spacecraft before, and we've been involved in many, many missions in the past one way or the other. So there's a whole lot of elements there that we feel pretty confident on, and we think we can provide a solution to the US government and ultimately the taxpayer that provides the