End-to-End Space, with Peter Beck (CEO of Rocket Lab)

Yeah, great to be here, Mo.

Yeah, well, today's a big testing day here. I'm at one of our test complexes down in New Zealand. We've got a whole stage two Neutron tank here undergoing some flight-like testing. So, yep, my apologies for having to do this on the run, but the rocket always comes first, as you know.

I think it's actually pretty good news for the space industry. This administration feels and seems very pro-space, pro-defense, and pro-space. So I think for the space industry, this is going to be a good time.

Yeah, well, so I think it's kind of an interesting time in the space industry. If you think about the space industry in general, there's been a lot of space companies went public, right? And they haven't really executed. And the markets are pretty efficient, so they're very good at determining who are the performers and who are the non-performers. And we've just kind of had our head down and just solidly kept executing. And certainly that's when we meet with investors, that's the kind of narrative, is that, yeah, look, we said what we were going to do and we've just sort of gone about systematically doing it. And the market rewards people for doing what they say they're going to do.

Yeah, so we're aiming to have a vehicle on the pad middle of next year. I think as everybody knows, always cave at that with, you know, it's a rocket program, so there's always things that can take you by surprise. But actually, things are looking pretty good and there's lots of major tests occurring, one of which is today. So we're feeling pretty good. But you're always one bad test away from a delay. But at this point, no, I think we're pretty happy.

Yeah, we are. But we won't be trying to land down on a barge. We'll splash it down in the ocean. We'll try and do a soft landing in the ocean. But no, the intent is that the first flight, we want to learn and test as much as we can, for sure. Then as the program matures, this isn't our first rodeo, so we're pretty realistic about cadence. If we can get one away next year, and then the following year we'll get sort of three or more away, and then five plus away the following year, and then scale it like that. I think if somebody stands up and says we're going to launch one rocket and then do ten the next year, it's just craziness. So yeah, that's kind of the plan. I want to talk - we're going to come back. I apologize for walking, but I'm just heading down to one of the propulsion complexes, so I'm just making my way down there. So if the scenery is moving, my apologies.

Yeah, so the plan was always to move into spacecraft. And then as you may be aware, the bigger plan is to be the full end-to-end space company where we actually provide services as well. And I think all big space companies of the future are going to look exactly like that. But at the moment, the space systems part of the business represents about a third of our revenue. And from at least a market standpoint, that's quite nice because launch is just super lumpy. It's always super lumpy. We only get to recognize the revenue at the time of launch, so if the customer one day passes a quarter late, then that revenue slips out. But where we are right now is a really nice place, if launch slips, it's no big deal because there's plenty of heft in the space systems business to kind of smooth all that over. But it's really part two of a three-part story, the space systems business.

Yeah, yeah. So HASTE is a really important solution that we can provide to the US government. Hypersonics in general has been sorely lacking within the US and the test flight availability has been really, really low. So being able to bring a vehicle that you just have full freedom of trajectory and mission profile is a game changer. So no, it's super important to the Electron product line. We intend to see a lot of growth in that area. And in typical Rocket Lab fashion, we announced it then flew one. This is not some kind of long gestation period project. There's quite a backlog there of those HASTE missions now. And like I say, I think everybody's really excited because now there's a new capability within the nation to do things that have never been done before, for one, but also at a cadence and a price that's just like Christmas.

Yeah, no. So generally, we're always waiting on our customers. The market has continued to grow. I mean, yes, this year we had our biggest sort of demand, if you will, with 22 flights. But as everybody's seeing, what really constrains the cadence of Electron is their customers and their ability to deliver on time. And look, the service that we offer is a dedicated service for our customers when they need to, the orbit they need. So if they need to delay a month, a quarter, six months, then that's just part of the deal. That's the service that we offer. But it does make it difficult to predict cadence. But from a factory and an infrastructure standpoint, we're not constrained there. It's really when customers are available to fly.

Yeah, a lot of people ask this question. No, look, Electron does something that no other rocket can do, right? And it's filling a really, really important market niche. So just as Neutron doesn't make that go away, no other medium-class launch vehicle does either. If rideshare was the be-all and end-all, then there would be no demand for Electron. But that's just simply not the case. There's just a really important need that Electron fills.

Yeah, absolutely. Once again, that time frame was driven by external circumstances, licensing and things like that. So yeah, and it just goes to show that if a customer turns up, literally, we can pull a rocket out and put it on the pad and integrate and launch in a crazy short period of time.

Yeah, well, this is one of the engine test facilities that we operate here. So this is just a cryo farm for actually one of the Rutherford engine test facilities. So generally, this facility is running two to three engines a day, and these are just in a pure production sense. So we just basically pump the engines through here and the team do a trim run, then an acceptance run, and just, this place just pumps out engines day in, day out.

No, just Rutherford here. Archimedes is exclusively in the US site. This is just the Rutherford site. And we've got dual cells here. And like I say, the team's closed it down today because we've got, you might be able to see it in the distance, a full stage Neutron tank out there that we're doing major cryo tests on today. So the team has halted this facility for the day, which is an unusual thing in its own right.

So you think about Neutron divided into kind of like three pillars. One, you have infrastructure. Two, you have propulsion. And three, you kind of have tanks and structures. And all those things we kind of look and treat independently, but they all have to come together at the end. And on infrastructure, that includes like factories, test facilities, and of course launch pads and integration facilities and those kinds of things. Largely, think of it as steel and concrete in the ground, which I think a lot of people will be surprised to probably recognize that that's probably about two-thirds of the total investment of the rocket program is in fact that infrastructure, that steel and concrete in the ground. I mean, I joke with the team sometimes that we raise money and spend money to pour concrete, and that's kind of the reality.

Then the next big one is propulsion, obviously. So the Archimedes program's running super well, so I'm very, very happy with that. We took a bit of a different approach with our Archimedes, where typically you might start off with boilerplate chambers and some pump elements and some valve elements, and you slowly kind of integrate an engine together with a whole bunch of industrial items and all those kind of Frankenstein bits, because you want to test each sort of thing individually. We didn't do that. We built a production line. The first engine came off a production line, and the first engine that went on the cell had flight software, using flight avionics, and the whole engine, every valve, every bit of that engine was as we intended to fly. A little bit risky in the fact that if we had a major issue, it would take longer to go back and redesign everything. But we built a few engines now, a few hundred engines, so we kind of know what we're doing. When we put that engine on the cell, it's put us now in a really, really good spot because we're producing them off a production line. There's not some amorphous second piece of work that we have to do where we now have to scale production.

We may have originally talked about that, but no, we've been oxidizer-rich for quite some time. And the rationale for that is, normally you've got staged combustion because you're looking for every second of ISP. But for us, you make the trade, right? You either have super light tanks and a low-performance engine, or heavy structures and tanks and a super high-performance engine. And for us, we took the highest-performing cycle and dialed it right back. So our operating position for a staged combustion engine is super benign. It's really way down the bottom end of melting.

Yeah, absolutely. And I'd say that we've done a really pretty reasonable job of kind of picking the market and what kind of mass classes are useful. I mean, if we talk about Electron for a moment, there's a bunch of one-ton vehicles and other kind of mass models, but really for us, the two to three hundred kilograms in that vehicle is super obvious as the right place to be. And I think with Neutron, that sort of one to three-ton regime is a really nice place to be. So slightly less than a Falcon 9, not kind of appreciably, but what we think the market is really driving us to. And I guess we've had the luxury of working with a lot of customers over a long period of time to really inform that decision.

Yeah, I think I mentioned before, it's get the first test flight done. Look, there'll be a ton of learnings, as there always is. And then the following year, probably about three flights, maybe a little bit more, but about three flights. Following year, something like five flights, or maybe a little bit more. I mean, look, we'll just follow the playbook that we followed for Electron and just use that. It's a well-trodden path with respect to block upgrades. We'll also be introducing new things with reusability and whatnot. So you're not going to hear any kind of unrealistic projections from us on that.

Yep, yep, yep. We think that represents great value for our customers.

That's a good question and there's not like one simple answer. To your point, Electron versus probably the nearest competitor to Electron was Virgin Orbit's vehicle. Richard spent 1.1 billion more than we did getting our first rocket to the pad. So it's not like we haven't done this before. There is a certain magic here and I'd say it's across a bunch of things. A rocket program is about making the right engineering decisions, because where you blow a whole bunch of capital is going down dead ends and going down technology paths you have to reverse out of. And I always say to everybody that running a rocket company is like running through a maze in the middle of the night, and at every dead end there's somebody with a shotgun. So you have to run quickly, but you also have to poke your head around the corner and don't put yourself in a position where you're going to die. And that's pretty much it.

And then from a business perspective, it's building the product that people want rather than the product that you think is cool to build. I think the space industry is full of visionaries, which is awesome, but that's not enough. You have to be a visionary with a product that actually people want to buy. And I think that's super important. And then look, there's the Rocket Lab team. We're doing a big test here and half the team just turned up in camp vans and just worked into the middle of the night, spent the night, woke up this morning and we're into it. So this is not an eight-to-five kind of environment. This is a team that is super passionate and super dedicated, and it just takes that level of commitment to do these amazing things. And some companies worry about millions of dollars, we worry about cents. Everything is accounted for and really, really well controlled.

Yeah, yeah, yeah. Well, look, I think if you just look at the data, you have Rocket Lab and SpaceX, and if you look at what is consistent there, both CEOs of those companies are the chief engineers of the companies. Both CEOs of those companies, like me, I'm down at the engine, I'm at the tank test site, and we're doing real work. And the close coupling of the engineering decisions with the business decisions, I think is super, super critical. So maybe that's part of it. But the great thing about the space industry is that physics doesn't care about money. So you can have as much money and tip as much money as you want in, but at the end of the day, you still have to make the right decision and engineering execution is the ultimate leveler.

This is so funny. This is so funny. So I was literally, not yesterday, the day before, I was out at one of our other factories and we were working on the nose cone. And the original engineering nose cone for Neutron was very, very bulbous, and I complained bitterly that it just looked bad and it looked awful. It just did not look good. But of course it was structurally the optimum shape, because you have a trade-off between the aerodynamics and the mass of the structure, and you end up with this optimized shape. It just looked like ass, it looked terrible. So I did exactly the same thing, ironically. We changed the ogive to look much better. Yes, it's slightly heavier, it's slightly better aerodynamically, but it's slightly heavier. But sometimes those things matter.