The difference being is that you can make bad decisions for a longer period of time if you have billions of dollars to put in behind it. But I think we're proof that it doesn't take billions. It just takes the right decisions at the right time.
Peter Beck, hello. Congrats. So, congrats on your company, by the way, Ashley.
Thank you. Congratulations on your company.
You've had one for much longer than I have. But thank you. Thanks, Pete. Yeah, it's been an adventure.
Thanks for making time for us, Pete.
Gosh, where to begin? We haven't chatted in a little while. I realized I think it's been about 10 years since we've known each other just about.
Yeah, it probably is. Yeah.
Yeah. To give people a little background, I mean, I went to New Zealand I think for the first time in 2016 and I had heard these rumors about this crazy engineer who had actually... this was like 2016 was a weird time. There were rocket startups appearing everywhere and most of them you could tell were not real just by the website and the language they used. But I kept all my friends in the business kept telling me there was this real human in New Zealand who actually knew what he was doing. But I was skeptical the first time I went down to visit you. And then I was blown away when I saw three Electron bodies right there on the floor. Amazing. I can't believe how far you guys have come.
Yeah. 10 years is... it feels like a very long time. I think you've aged better than me though, actually, to be honest.
No. Sadly, I must say I think Chris Kemp has aged better than any of us. He always looks youthful. Well, Pete, there's a million questions I have for you. You guys just reported some earnings and gave some updates. Why don't you, in your own words, give us the latest and greatest Rocket Lab news, and keep in mind this isn't like a full space audience.
Yeah. Look, the big sucking sound of all resource, time, and cash in the company is Neutron. So we're plowing towards getting that vehicle on the pad and launched. So a lot of the earnings we spent a lot of time covering that. The company continues to grow. I think this quarter we're 32% over last quarter this period last year. So yeah, it's just continued growth and the team now is knocking on sort of 2,600, I think, or more. And we have like 40 spacecraft in backlog. It was a big quarter for Electron. So we flew five and booked eight. So that product continues to grow in demand. So no, it was a good quarter.
And to give some people context who might not be space buffs, Electron is your smaller rocket that's been the workhorse of the company. When you guys started, there were dozens quite literally companies trying to make small rockets. You guys are like basically the only game. You're the only ones who figured it out and nailed that and have launched what like 60 something times.
Yeah. 63 times and yeah, it's been a great success.
Yeah. And then you've been working on this larger rocket Neutron which looks a little more like a direct competitor to something like the Falcon 9, a much larger system. And like you said, all resources and hands on deck behind that. And then for people who don't pay attention to the space industry, when I first started covering this, you were either a rocket company or you were a satellite company or you made solar panels or some part of this whole equation. You guys have been one of only a couple companies that have tried to master all of these things. In the big picture, space rocket companies have changed over the last few years or the ones that want to be successful, I suppose.
Yeah. Well, I think look, the rocket business is an incredibly hard business both technically and from a business standpoint, but it is the keys to space and if you have the keys to space, you can do almost anything and of course you have more options available to you. It becomes very powerful when you also can build all the infrastructure in space. So as a company, that's kind of where we're going. Two-thirds of our revenue comes from all of our satellites and spacecraft components and all the rest of it and one-third from launch. But what it means is, I think, it's fair to say we're about the only company in the world where someone can turn up and say, 'Hey, I want to do this thing in space.' And we can design the spacecraft, architect it, build it, use all of our components, launch it, and then operate it. So it really is an end-to-end kind of thing we're trying to create here, which is pretty unique.
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Especially because I guess SpaceX is so kind of serving itself all the time, right? It's making satellites for itself. It does some ride share for other companies, but you're even though you do some of that, you also, like you mentioned, I mean, you have all these companies now coming to you. It used to be you had to handcraft every part of your own satellite. And now Rocket Lab is making huge chunks of that and people can kind of focus just on what they're good at, bring their specific sensor or communication system to you guys. And so yeah, it's just crazy to see how this has evolved. It in some ways went like faster than I thought and then obviously space sometimes goes too slow for me. It's going way slower than I thought.
I mean to me it's a logical end point, right? Like everything in a rocket is a giant engineering compromise. Everything on a spacecraft is a giant engineering compromise. If you can mash those two together, then you make less compromises, as simple as that. So you know it's just obvious that the big space companies in the future at least to me will always have the ability to launch stuff and the ability to build whatever platform they need. And then if you want to take that one step further, it will become very very blurry about what is a space company and what is a services company. And I think you could say that with Starlink right now is like, you know, is it a space company or is it a communications company? And I think that will only continue to shape up like that.
Okay. I'm going to get like I don't know. I've known you for a long time. I kind of would like to make this more just want to know a little more about Peter Beck's day-to-day life.
This is where you start asking about my feelings again.
This is you love it when I do this. You love it. No, I you know, I just as you mentioned, the company's gotten huge. What? So, this is a Saturday for you, I think, while we're doing this. And you're in the office on a Saturday.
Well, it's really Friday because and then if I'm down in New Zealand, Monday is like Sunday. So this is fine.
Okay. So, you know, when I first met you, you were already CEO running a pretty big company and having to do all the CEO things, but I know you still liked working on the engineering side. How do you split your time now? And are you at all able to do the things that I know that you love to do the most?
No, no, I definitely do. So, you know, Neutron, I'm deep in that program and I get to do some cool stuff. If I ever need some kind of mental therapy, I just go to Stennis, our engine test site, and swing a wrench with those guys for a couple of days. So no, I still get to do all the things that I really enjoy. And I would say that if I'm good at anything it's kind of understanding complex engineering systems as a complete system. So understanding the rocket from tip to toe and how everything interacts with each other and the compromises that you can make. So I still think I'm useful. Maybe the engineers think I'm no longer useful but I still think I'm useful. And certainly enjoy as much time as I can spend on that.
And how do you split your time? I mean, you must be going back and forth. It changes. Absolutely.
Yeah, it just changes. It depends what's happening. So, if we've got a big engine test campaign or a tank test campaign or something, then it just all moves around and yeah, if we've got to earn earnings like the last few days, it's just been 100% focused on that. So, you know, and I always I really enjoy the business part of business as well. Whether it's the kind of entrepreneurial or the thrill of the chase or all those kinds of elements of the business thing or also it's like building a business is not that dissimilar to building a rocket. You have to make the right decisions and apply the right resources and at the end of the day, whether it's rocket building or company building, it's good fun.
I mean there's something kind of funny which is like when you first started this was a billionaire thing and you stood out as the non-billionaire trying to compete and then we had this period of all these IPOs and venture-backed rocket companies. Most of those have sort of either gone away or are struggling except for you guys. And now you're kind of back at this billionaire thing because Blue Origin has started to launch a bit more. Eric Schmidt has just taken over Relativity. I was thinking about this the other day. But it's like you come so far that you end up back in this spot where you're basically against three guys with near limitless resources again. I don't know. Do you find humor in any of this?
No. Look, if money was the solution or the key enabler to this industry, then Virgin Orbit would have been successful. I mean, Richard Branson put $1.2 billion dollars into a small launch company. Relativity would have been successful in its first incarnation. The good thing about this industry is yes, you can have billions, but it doesn't guarantee success at all. So the rocket gods are the ultimate levelers of these kinds of things. You still have to make the right decisions. The difference being is that you can make bad decisions for a longer period of time if you have billions of dollars to put in behind it. But I think we're proof that it doesn't take billions. It just takes the right decisions at the right time. And you can also be successful.
What did you make when you saw Eric go all-in on Relativity?
Well, I'm not I haven't really followed. I mean, I saw that he kind of took it over. So, I'm not really sure what the plans are there. But you know, I mean, certainly I think there need to be some significant changes within architecture and company and all of that to be successful. Which, you know, I'm sure Eric's smart enough to see.
Yeah, I mean that was a bold move. We will see how it plays out. You know, you talked about you can have all this money and just continue to make bad decisions. Like when I was reporting my book and doing the movie, I mean, I talk about this in the book and I think you and I have talked about it. It's kind of the question that stays with me the most I think from doing all this reporting is that there were all these rocket companies that I was following and you know SpaceX was doing very well and then obviously like we talked about you guys have done really well. You're in New Zealand. Most of the people on your team in the early days had never launched a rocket before. It was a bunch of 25-year-olds, mostly from New Zealand, Australia, a bit of Europe. It's like one of these situations where your American rivals seem to have kind of like everything on their side. And yet you were the ones that succeeded. And I bring SpaceX into this, too, in that these seem to be the only two cultures that have figured this out. And I've never been able to put my finger fully on why this is and you guys were always the one that didn't make sense. I don't know like when you look at hindsight and you're able to reflect a bit. Do you have any sense as to why you guys figured this out when everybody else couldn't?
Yeah, it's a good question. Look, it's not like one thing. I think that's what makes it hard. It's not like one thing that would be an easy thing to point to. I think it's a collection of a whole bunch of different stuff. I think in a lot of respects the cultures between SpaceX and Rocket Lab are similar but different. You know, the one thing that we really drive home here is hustle. And that means different things to different people. But in the Rocket Lab context it means like when there is an issue you don't just sort of stop and accept as an issue. You just find a million different ways around that issue. And I think a lot of people get to a problem and they just sort of go, well, you know, we can't get this valve so they just okay it's going to be 9 months till we get this valve. So we'll just have to wait 9 months for the valve. And maybe it's a boldness or an arrogance or just a sheer willingness to survive. We just would never accept that and we would just go and make a valve and just make it work. So I think that's part of it. I think we are an engineering company first and everything else is second. And so all kind of decisions are kind of an engineering-based approach, methodical kind of approach. And if you look right throughout our leadership right up throughout our corporate structure, everybody's deeply technical. I mean as Adam Spice, our CFO, you can have as deep technical conversation about a rocket engine as you want with him. So, you know, I think having that right across the business is important.
And like I mean I imagine as with any adventure that you go on, you learn things along the way, but how did you kind of figure this out? I mean, it's just engineering. It's just engineering at the end of the day.
And this kind of came But what about the leadership side? I mean, you don't strike me as some maybe you do. I don't Do you read like a ton of business books? I don't know. Where did you pull your No, I've never read a business book or any of that self-help crap in my life. No, no.
Yeah. No, no, no. I mean, everybody's got their own style and you know, I lead differently to other people in this industry and other companies and they lead differently to me and I think it's whatever kind of works.
Not no, not really. I think the thing I spend the most amount of time on is making sure things don't change. Making sure that we know we don't you know our culture doesn't evolve as we get larger. Particularly difficult when you go and acquire companies with your own distinct cultures and making sure that you infiltrate their culture with your culture. So I think you know I spend more time and worry about you know the magic of Rocket Lab being diluted than more than changing anything for a different system.
Yeah. And along those lines I imagine you have to be polite on these things because you're working with NASA and government customers and things like that. But look when you guys were building your launchpad in New Zealand you went at this ridiculous pace. As you've built your third launchpad in the United States, there's a reality to this that there's bureaucracy surrounding this just by nature of where it is. What because I know this culture that you set up in New Zealand and in Southern California, but so what has that experience been like? I have to suspect you cannot always go as fast as you would like to.
No. But there's always two approaches to this, right? Like there's one approach where you get up into everybody's junk and just get angry and you know publicly shame and all those sorts of things. And then there's the other approach where you try and you know convert the people to your way of thinking and bring them along on the journey. And you know I would say that genuinely the vast majority of the time that's the approach we've always taken as a company. Whether it be with the FAA or anybody else, we've always tried that approach. On occasion you just have to call it out and take a different approach but I guess that's one thing that's a little bit different so yes you know we had to deal with a lot more bureaucracy than we normally had to deal with but you know the Electron pad at LC2 at Wallops Island let's not forget we built that in 9 months so you know we built it quick now we couldn't launch off it quick because of an autonomous flight termination system that was quagmired in regulatory but and Neutron's pad is the same like you know that is a big pad and it has been built in record time so within a couple of years that pad is has been built along with its assembly buildings. So, yeah. Sure, there are certain things that bureaucracy certainly slows you down and gets in the way, but we've been pretty successful at converting that bureaucracy into supporters, and it not being much of a drag.
When you started building the pad in the US, you took a big chunk of the team that had done that work in New Zealand, right? And brought them to the US.
Yeah. But there was also a big team from the Wallops crew as well. You know so yeah I mean we took the guys that built one pad because it makes sense so we don't have to learn or make mistakes again but a lot of the work was also done by the local people at the pad and also the surrounding areas. So and same with Neutron. Exactly the same with Neutron.
Yeah. No, I was just curious if you take someone like Sean DeLo and transport them to the US to try to instill some of the culture, you know, that you guys had spent all these years setting up in New Zealand.
Yeah. Well, I mean, and that's exactly what we do. I mean, you can go to just about any site and you'll see a crazy Kiwi there. And we do that strategically, right? Like as I mentioned before is you know part of my job is to make sure that the magic never dies and we make sure that we put the right personalities in the right areas to reinforce and grow it.
Do you think it's interesting we had, we talked about this a bunch already, this whole first wave of rocket startups and then bunch cleared out. Now there's kind of like a new wave of a couple companies coming and I don't know. I mean, do you think it's interesting how this is divided up? I mean, you guys just own the small rocket business pretty much completely and then now we have quite a bit of competition on the larger rockets. Do you feel like this is a solved problem or do you think we keep iterating on there's only so much you can do to some extent because of the physics? I'm just curious if you think we had this first wave and then somebody actually figures something new out as we go on a new way to tackle this problem.
I mean, it's totally a solved problem. You know at this point like there's one Electron rolling off the line every 15 days which is by far the harder thing to do than just putting one on the pad. But I think the reason why you see these continual waves is that really you have to build a small rocket before you can build a big rocket. And it's a few things. One, you know the lessons you learn are a much smaller scale. If you screw up a stage one tank, it might, you know, cost you a couple hundred thousand dollars versus, you know, 20 million. So, you kind of have to do that. And also, you know, these are all entrepreneurial companies, so they're raising capital. I mean, it's pretty hard to go, I've never built a rocket before. This team's never built a rocket before. Give me like a billion dollars. And we'll go and build a rocket before. And that experiment has been run and I think anybody by anybody's measure it was a pretty colossal failure. So it's kind of by necessity you have to start off small with small amounts of capital and if you've got small amounts of capital really you can only build a small rocket. So it's literally like a graduation once you build your small rocket and you figured it out and you have enough credibility that you can do that over and over again that you can go and raise the capital to go and build a much larger rocket and I think that's probably what where the billionaires come in is they can skip that step because they don't have to raise capital.
Have you ever been out to Longshot Space in Oakland?
Longshot. No. What do they do?
They're in I guess there's probably like maybe three kinetic launches. They're doing a big Yeah. Like spin launch those guys. Yeah. Yeah. Longshot's not doing a centrifuge. They're doing 10 km long space.
Yeah. I don't I was curious if any of the kinetic stuff at least intrigued you.
Um, a little bit. So we have like skunk works here at Rocket Lab and we actually studied alternative launch for about 2 and a half years. I had two physicists looking at it and the reason why I'm talking about this is because actually we published the paper so somebody can go and find the paper now and we published the paper because it didn't work but I think it was probably one of the most complete studies of beamed energy where you have ground stations and either microwave or laser and you beam energy to heat a heat exchanger and dislocate some hydrogen. It gives you really high ISP and it's one of those beautiful things like space elevators and things like that that in theory look really good on paper. So we studied that for quite some time and things like laser blooming in atmosphere and it went into some really good details and you know basically at the end of 2 and a half years we concluded that it was just not a good idea. But I think it's great that people are looking for alternative launch means because you know I think we all want to travel around the solar system but rocket propulsion as exists today it just hasn't changed since the end of the 50s right like we've reached 98% C-star combustion efficiency very early we understand all the propellants that you can mix to make the highest performance and it's hydrogen, oxygen. So we've already kind of maxed out chemical propulsion many many decades ago. So the only thing that is left to do is just to build bigger and bigger rockets. And they just become comically large at some point. So unless you can solve this ISP or this performance problem then it's very difficult to put any meaningful mass in orbit which is the solution to explore the solar system because humans are incredibly fragile. So we take a lot of crap around us to keep us going for any period of time which translates into a lot of mass in orbit. So until that problem's really solved we're not going very far at all. And so it was a super interesting program because you had thousands of seconds of ISP versus hundreds. But we basically concluded that didn't work. So it's a long way of answering your question but I think it's important that people study different ways of doing it. Now we were studying it for different reasons. Human exploration of our solar system. But kinetic would be a bit tough for that. That would be an unpleasant journey.
Yes. Yeah. Especially, you wouldn't want to be the test pilot on that. So, but what are you saying? You're saying you kind of studied this in different ways and come to the conclusion not worth pursuing, but you're also happy people are trying. I don't know. It doesn't sound like a huge vote of confidence for the folks that are trying.
Well, I mean, G is a problem, right? Like G is always a problem. And you know the spin launch guys, same issue, right? I mean at the end of the day, materials and systems are relatively fragile. So if you're got hundreds and hundreds of G, then that's just problematic. And by the very nature of spacecraft you know every kilogram is precious. So everything is as light and as flimsy as possible. So kinetically if you're launching bricks or things like that into orbit that may be great. And there might be a use case or a business for that. But if you're looking kind of in the more immediate term of spacecraft and bits and pieces then it's not clear to me that it makes much sense. But I could be completely wrong too at the same time.
Okay. Since day one, the Core Memory podcast has been supported by the fine people at E1 Ventures. They are a young and ambitious VC firm in Silicon Valley investing in young and ambitious companies and people. Thank you so much to E1 Ventures for all your support. There is no hindsight here really because you're all in. You know, when I talk to people sometimes, look, they're huge fans of everything you've done. They still some people will say to me, you know, Neutron, you were talking about big rockets. I mean they said Neutron should have been bigger especially with Starship coming and yeah I mean you kind of got to take these things in stages and you're committed but I don't know you must have battled with that question obviously how big to go and just the way the market has gone where small satellites haven't been quite as popular I think as people thought and I don't know yeah do you have any I'm sure you're going to admit all your Neutron regrets right now.
Well, I mean, look, and historically we've been okay at this, right? So, you know, we were building Electron when other people were building one-ton vehicles, which one has been more successful? And you know, if you're a small satellite, we understood very clearly that if you could ride on a ride share, you obviously would because it's much cheaper. So the only people that ride on Electron, for example, are people that require dedicated launch. If you look at the kind of dedicated launch satellite masses, like the 95th percentile is like 150-200 kgs. Electrons designed to take up to 300 kgs. So, you know, there's very few satellites that we can't launch on it. And then of course it's perfectly sized for that particular payload.
And represents the lowest cost. Now, with a one-ton vehicle, you're kind of in that no man's land where you're now too large. Like if you turn up with a 250-300 kilogram satellite on a one-ton rocket, well, guess what? You don't get a discount for not using the 700 kilograms of the capacity of that vehicle, but all the costs and everything still remain. So, instead of an $8.5 million launch, it's a $19 million launch. And then from a ride share perspective, you're too small to be economically competitive on ride shares—you can't get enough on to be economic. So, you know, we don't kind of just pull this stuff out of the sky and we studied it very, very deeply. And when we were looking for Neutron, we studied that very, very deeply as well. And on a Falcon 9, if you just ignore Starlink, the average launch mass of a Falcon 9 is 5 tons. So when we're thinking about it—every kilogram of spare capacity on a rocket costs money. And like I said before, nobody—you know, you can't give anybody a discount for not using the full capacity of the launch vehicle.
So no, I think we've—and history will prove me right or wrong here—but I think we've selected a throw mass that we think is going to be extremely commercial. And if we're wrong, actually, because the diameter of Neutron is so huge, if we need to increase payload capacity, a tank stretch becomes really pretty academic. So we reserve the right to be right and wrong, but we can also do something about it pretty easily if we are wrong. But history would say we've been pretty good at this.
Indeed. Yes. It's like the question I get all the time. While I was writing the book and after the book, it's that it's weird, right? The things we use all these satellites for, for the most part right now, are communications and imaging. I think you could make a pretty good case that—I think when I was first starting out writing my book, people were pretty skeptical that things like Starlink would work, that we'd even see this first wave of like 10,000 satellites or 20,000. To me, even with comms and imaging alone, I can see a pretty clear case to, I don't know, 40, 50, 60,000 satellites. There is still some frustration—at least for me—it's always like, well, what's next? What else can we actually do in space? And I don't know, you guys—and I haven't talked about this in a long time—what are, who comes up with what that like increases even more demand for these launches?
Yeah, I mean, it's a good question. And I think everybody needs to understand also that we're pretty much at the beginning of this. Right? I mean, if we're honest, it's really only sort of five years since launch cadence and costs have dramatically changed, both on the medium class and on the smalls size class. Before Electron, you had to buy a Pegasus if you wanted a dedicated small rocket, at $50 million. So, we're really at the beginning of this kind of evolution. And costs are only going to go down—it's only getting less expensive here. And as the scale of spacecraft go up, the cost of all the components and everything in them continues to go down and down and down. So, a whole bunch of things that just wouldn't have been economically viable, all of a sudden become very economically viable. I'm not going to try and pontificate what might be next, because I know well enough that the biggest thing yet to be done in space hasn't even been thought of yet. So, I think we're very early in this journey.
I mean, I've always felt the same way. I think I kind of argued parts of that. I don't know if I'm surprised. I would have thought somebody kind of would have cracked the nut on one other one or two other big things already. I know you said you won't pontificate, but if there's nothing on the list of—whether it's like what Varda is doing with trying to get manufacturing going, or I do hear the AI people talking about the data center in space stuff all the time. I don't know, any of those jump out at you as possibly more realistic than others?
Yeah, I mean, as I said, once the economics drive to different—keep driving to different places, I think a lot of those things become much more viable and feasible. I think one thing that will be interesting is the evolution of the commercial space station. And I think that will drive a new human exploration solution and requirement. So I think space stations have been government assets, run like government assets, and just like rockets were government assets, now we're going to have commercial space stations. So I think that will be very, very interesting to see how that plays out, because if the ability to build a space station and operate it dramatically reduces in cost, the ability to get there dramatically reduces in cost, then all of a sudden—it's not just tourism I'm talking about. I think it's much more useful than that. But all of a sudden, accessing low Earth orbit in a human sense is going to become much more viable, and then all the stuff that you can do with that.
So like when you say more useful than tourism, you're talking about what, like some kind of manufacturing, more science?
Exactly. All of the above. Yeah. And just the ability to build more stuff as well. It's sort of a circular reference and self-feeding—that if you can get up there and you can build this stuff easily, then you'll build more and more of it, and as you build more and more of it, then it continues to grow.
You guys just announced a point-to-point transport deal with—was it with the Air Force? Which branch of—
AFL, yeah, Air Force Research Laboratory.
And that's scheduled, I think, for 2026.
No sooner than 2026. Yeah.
Okay. And the idea there is like some kind of proof of concept of taking—
Taking some cargo from one point on Earth through space to another place.
Yeah. And look, everybody's very early in this concept, but at least technically that's feasible. And if you can get your launch costs down far enough, then obviously they're going to be super high-value cargos, but there's plenty of examples of those. So I think it could be pretty interesting. Yeah.
Yeah, but like I've heard—I mean, this has been a fantasy of sci-fi people and space people for years and years and years. So what, it just took us to this point of like cost, reusability, all these things to start actually being able to run these tests?
