Welcome to the Property Markets Founder Series. I'm Ed Elson. The global space economy is projected to reach $1.8 trillion by 2035. What was once an industry dominated by governments is rapidly becoming one of the most important commercial markets in the world, shaping everything from national security and communications to scientific discovery and defense. My next guest has built one of the leading companies at the center of that transformation. What began as a company focused on lowering the cost and increasing the frequency of small satellite launches has evolved into a full-scale space systems business. Today, the company designs satellites, builds spacecraft components, and provides launch services that are helping shape the future of the commercial space industry. With more than $200 million in revenue last quarter and a backlog that has grown to roughly $2.2 billion, the company has emerged as one of the biggest players in the future of space. This is my conversation with Sir Peter Beck, the founder and CEO of Rocket Lab. Peter, thank you so much for joining us on the show. I think what would be helpful to get started here is an explanation of what Rocket Lab actually does. Clearly, you're in the business of space, but there are lots of different things that are involved in the space industry. So, what is Rocket Lab doing? What services are you providing?
Well, thanks very much, Ed. I think you did a fantastic introduction, by the way. There's not much more to be said, but...
Cut it there. Done. Interview over.
Yeah. Yeah. Done. Yeah, we're good to go. No, I mean, so what we're really trying to build here is an end-to-end space company. So what that means is that you know, providing services directly from space and everything below that. You mentioned launch obviously. Launcher is, you know, the keys to space and the ride to space, and then satellites are obviously, you know, the systems that provide the services. And then, you know, ultimately if you go up one level higher, it's actually the services from space. And our thesis here is that, you know, if you can build the satellites and, you know, vertically integrate all of your own components and then vertically integrate your own launch, then your ability to provide services from space is obviously an advantage to somebody who has to go and buy all that stuff either from you or others. So, you know, that's kind of the end goal for the company and we're sort of methodically, you know, step after step pushing towards that. And, you know, as you mentioned, we are one of the largest component suppliers in the space industry. I think something like 30% of everything that went to space last year had a Rocket Lab logo on it somewhere. And, you know, we build the satellites and the spacecraft and the rockets and everything in between.
Just some more context for the space virgins listening to this podcast. What kinds of companies are buying your products? Like what kind of company would buy a rocket component or a satellite? Who are those clients?
They range from the full end of the spectrum. So on the launch side we have launched a little CubeSat for a bunch of Californian high schools and then we also, with the same product, launch the most important national security missions where lives are dependent on it. So, you know, that's kind of the beauty of the business and of the space industry is that it really does cover a tremendous swath of different applications. But I would say that, you know, more generally, 50% of our business is commercial and 50% of our business is government. And, you know, on the commercial side it's earth observation and communications, and then on the government side it's national security missions and then also civil stuff. So, you know, we built a couple of spacecraft just recently and they're on their way to Mars for NASA. So, all sorts of interesting things.
It's helpful, I think, to sort of separate the different categories in this business. We usually just think of space as space, but it seems that there are so many different applications and so many different businesses that are accomplishing very different things. If it would be, I'd love if you could just sort of lay out what some of those businesses are. I mean, on the one hand we've discussed satellites and of course satellites are essential for telecommunications and also government work. We want to go explore planets and you need someone to go lift that stuff into space and get that stuff out there. What are some of the most important businesses in the space industry right now?
Maybe we start a little bit higher up in the fact that space is just infrastructure really, and it's slightly unusual infrastructure in the fact that it's completely hidden. And, you know, you often talk to folks and, you know, they'll say, wow, this space stuff, you know, it's all sci-fi, it doesn't affect me. And then, you know, they'll go home and order a pizza and the pizza turns up at their house magically. And, you know, they don't realize that in ordering that pizza they may have interfaced with, you know, space to make their communication. But certainly they've kind of interfaced with space because the guy delivering their pizza has used GPS to get there. And so there's a whole bunch of infrastructure in orbit, whether it be, you know, GPS or communications or observations, that everybody uses in their everyday lives but just sort of doesn't realize it. And, you know, I think if you want to break it down into the simplest forms, you have earth observation and that can cover all different spectrums, whether it's visible light or non-visible light or RF. And those are, you know, for mom and dad at home, that's like weather. So, how do I get, you know, satellite weather? It's an obvious one. And then communications, you know, GPS falls under that. And then, you know, probably, I'm sitting down here in New Zealand now. You're somewhere else around the world and there's probably some of that link is done through space. So, you know, communications is obviously a huge element. But what I would say is that, you know, the biggest thing to be thought of and done in space, I believe, hasn't even been thought of yet. And if you just roll the clock back a couple of years and someone said that you're going to put data centers in orbit, I think most people would say, well, that doesn't sound feasible. But yet, you know, there's a huge push there. And then you go back a few more years and you would say, well, you know, internet from space in the form of like a Starlink or an Amazon LEO would be fictitious. And then now it's like everybody's using that. Same with direct-to-mobile devices from space. So, you know, it's constantly redefining itself and as more use cases arrive, then, you know, that's one of the reasons why the space industry is just growing so rapidly.
Yeah. The pace of the growth in recent years especially is really striking. I just look at the stock price of your company, Rocket Lab. It's up 400% in the past year. Other space stocks are going crazy. AST SpaceMobile up more than 200%. Firefly up 600%. I mean, this is like space's moment. It's a little confusing though because, you know, you point out, Peter, when you order a pizza, you're interacting with space equipment and companies such as yours are the companies that were responsible for getting that kind of equipment out there. But people have been ordering pizzas from a mobile phone for a very long time. Which leads me to my question, which is like, why is it now? Why now are these companies so exciting? What has happened in the past one or two years where suddenly everyone is realizing and waking up that there is this massive commercial opportunity in the space industry?
Well, I think the answer to that is that space has been dominated by governments and government sectors. And what you've witnessed in the last sort of decade, I would say, is the complete democratization of space. So, let's just use the GPS example. So, you know, all those GPS satellites currently up in orbit are government assets, right? I mean, they were originally designed as defense assets. Now, I think if you were to take all of those assets out of the sky and start afresh, it wouldn't be governments putting them back up. It would 100% be commercial entities putting them back up. And I'll just give you another example, you know, of our ESCAPADE mission to Mars for NASA. So, you know, those are spacecraft. NASA gave us a spec and said, look, we want to do this at Mars. We went away and designed and built, you know, not one but two spacecraft that are currently on their way to Mars to complete NASA's mission. Prior to that, that would have been a NASA internal project and, you know, it wouldn't have been a commercial thing. So even stuff like, you know, deep space interplanetary missions are now being outsourced commercially. And, you know, some of that is that the commercial market has established itself, but also, you know, the skills and expertise have been distributed and capital has been allocated so that commercial companies can actually go and do those sorts of things.
Well, I think this kind of gets to the heart of why we want to talk to you. And it's a lot about your story. I mean, you started this company in 2006. For those who haven't recognized it yet, you are from New Zealand. And I mean, you essentially decided to build a company where there didn't seem to be much commercial opportunity at all. And yet here we are and you're generating hundreds of millions of dollars in revenue and you're a publicly traded company. So why did you start this company and why did you believe that this would actually be a real commercially viable business?
Well, I mean, firstly NASA wouldn't employ me, so I didn't really have too many options. So the only viable option open to me was to start my own company and I just happened to live in New Zealand. Now, Rocket Lab these days is a global company. In fact, the vast majority of the company is not in New Zealand. There's still, you know, an element here for sure, but, you know, the vast majority is everywhere else. But I mean, in simple forms, you know, I started building rockets when I was a kid, right? So it was always something I wanted to go and do. And I went on a bit of a rocket pilgrimage one year to the United States and I learned a couple of really important things. One, NASA wouldn't employ me.
Why is that? Sorry, if I could just ask, why wouldn't they employ you? Because you weren't a citizen or you applied and they didn't accept the application? What happened?
I'm a foreign national with no university degree. Like, it's hardly the top of the list, is it? So, you know, but the other thing I learned is I went around and visited a bunch of the little startup companies in the Mojave Desert and whatnot and looked at what they were doing. And what they were doing was absolutely no different to what I was doing here at home. So, I'm like, hang on a minute. So there's not a massive gulf between what I'm doing and what everybody else is doing. So maybe I should just do it.
I think the question we're all asking is how did a young man end up deciding to build rockets and how do you even do that? If we could hear more about how that ended up happening.
Some of my youngest memories are standing outside with my father and, you know, he was an avid enthusiast in astronomy as well. And I remember him pointing out to me that, you know, all those stars in the sky that you can see, most of them have planets around them and on one of those planets there could be somebody standing there looking back at you. And that moment for me was like, right, this space thing is bigger than anything. So this is what I want to do. And, you know, I had a natural propensity to engineering. So you mix those two things together and, you know, what else are you going to build but rockets? I mean, that's the obvious outcome.
At what age did you start actually building rockets?
So I was at school when it sort of got a little bit more serious. So because the metalwork teacher would let me use the metalwork room at lunchtime and the weekends. So, you know, that would have been probably 15, 14.
And so you're working at school at lunch breaks, the guy's letting you use the metalworks. And then at what point do you start to really operationalize this? At what point does this go from a kid using the DT workshop at lunchtime to actually building a company?
There's a little bit of a, you know, a story in between there. So, you know, I left school and pursued a tool and die making apprenticeship and, you know, the plan was to go to university but I, you know, in New Zealand there's no aerospace courses or anything like that and I always felt that, you know, I can learn a tremendous amount by building things and having those hand skills to build the things that I wanted to build is really important. So I did an apprenticeship in tool and die making and it was at a company called Fisher & Paykel, which is an appliance, a whitegoods manufacturer. And then, you know, no sooner I finished my apprenticeship I went into the design office and did production machinery design and designed, you know, machines and robots and then into product design and then into analysis. And then I went and worked at a superyacht company where I was a project engineer responsible for a 120-foot superyacht. And that was really, you know, a formative part of my career because in the morning, you know, you had to work and communicate effectively with, you know, some guys on the shop floor who were in some cases illiterate. And then in the afternoon, you know, the owner of the yacht would fly in in his helicopter and, you know, you have to be able to communicate effectively with him as well. And so that was super informative. And then I went to a New Zealand national lab. So it's kind of, you know, a government research lab where I did advanced materials and superconductors. And that's where I learned a lot about composites and we did a lot of composites work for America's Cup boats and all those sorts of things. And it was during my time there at this research institute that I went over to the States and did my rocket pilgrimage and came back and quit my job and put a sign up on the door and that was the beginning of Rocket Lab.
We'll be right back.
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We're back with Peter Beck. So what does it take to actually build a company at that point that is actually building rockets? Like what does the recruitment process look like? What does the fundraising process look like? Like how do you convince an investor that they're going to get their money back by giving you money to build rockets into space?
It's less trivial. So, look, we started with a small amount of investment and really bootstrapped the company and we launched our first rocket to space. Not to orbit, just a little rocket to space in 2009. And then following that, I went and visited, you know, a lot of folks in the United States who were very enamored with what we had done on such a short time frame. And we ended up sort of bootstrapping the company a little bit longer. And we, you know, we worked for Lockheed Martin and DARPA defense agencies and did lots of kind of really advanced technology kind of work. And it wasn't until 2013 where I really felt that I had the credibility and the capability to go and build an orbital class vehicle. So, you know, I got on a plane and went to Silicon Valley and gave myself three weeks to come home with a check or be run out of town. And at the end of those three weeks, we had our first Series A round in the bag from Coastal Ventures.
When you make that pitch to these Silicon Valley investors, I mean, obviously they're trying to figure out how this becomes profitable. What does that pitch look like? Are you kind of describing the need for space equipment today or is it more of a pitch about something, you know, hundreds of years in the future? Like what does that pitch at that point actually look like?
You know, nobody's interested in anything 100 years in the future, especially if you're a venture capitalist. But no, I mean, I think I was able to communicate effectively the opportunity and, you know, the scale of that. And also, you know, it was at this time where, you know, small investments were being made into space companies. So, you know, Vinod at Coastal Ventures had invested in a company called Skybox, which, you know, later Google bought for half a billion dollars. So, you know, the Coastal Ventures guys knew the pain of launch because they had to buy an old ICBM out of Russia and, you know, it was very, very painful to launch. And, you know, it's funny though because I look at today and then I look back then and, you know, our Series A round was $5 million and that was considered, you know, a lot of money back then for a rocket company. And then, you know, I saw a rocket company just the other day raise $200 million on a $2.2 billion valuation and they built nothing. And it's like, wow, this is how times have changed. But anyway, so we raised that Series A and I've always, you know, run a company and I'm pretty straightforward and just do what you say you're going to do and everything's fine. And we did that and we were able to quickly raise a B round and a C round and, you know, before you knew it we had a rocket on the pad and, you know, we're in orbit and flying customers and away we went.
You mentioned some of these insane valuations and these Series A rounds, $2.2 billion valuation for a company that hasn't actually built anything.
Which is crazy. But then also you look at the valuations and the pricing on the companies that actually are building things and the valuations are pretty stunning. The multiples are pretty stunning including on your company.
And one thing that is I think notable about the space industry is we haven't really seen it be proven as a profitable business yet. So your company isn't profitable. It's expected to, analysts say it'll be profitable in 2028. But I'm interested to know what the prize is from a business perspective for a lot of these investors because clearly there's something out there. There's some prize that's going to be so great that will warrant these unbelievable valuations that we are seeing. What is that prize and what would this business look like say 10 or 20 years down the line?
Yeah. Well, I think it's a little bit mean to say that space businesses aren't really profitable. I mean, you can look back through history and sure there's been plenty of bankruptcies as well. But there's also been plenty of profitability in a number of space businesses, you know, to address the valuation kind of element. And look, I completely agree there's some valuations that are completely untethered to reality. But I think, you know, with respect to us, right now there are two companies on this planet that have successfully scaled launch to any level of frequency and reliability and, you know, that's SpaceX and us. So, you know, access to orbit on a regular and reliable basis is rare. It's like extremely, extremely rare. So, you know, it's... and, you know, when I started Rocket Lab and, you know, when I started developing the Electron class vehicle, at one point we were tracking 142 companies trying to do exactly the same thing. 142 companies and where are the 142 companies? That kind of gives you a sense of just how ridiculously difficult it is. I wish it was way easier. That would make my life way easier. But it is insanely difficult. And when we were raising capital for Electron, there was, you know, the big show in town was Virgin Orbit and, you know, Richard Branson had funded that business to the tune of $1.2 billion to do exactly the same thing that, you know, Electron does today. And it wasn't successful. It's not even like if you just pay enough money you'll be successful. It is like there are so many elements that have to be absolutely perfect and lined up to make a successful, you know, launch business in particular that it's just incredibly rare. And, you know, anything that's rare attracts a certain value. But, you know, as we think about going forward, yes, the space industry is seeing tremendous excitement and tremendous growth right now. And, you know, is all of it justified? Probably not. But nevertheless, there is, you know, a huge, huge commercial opportunity. And my belief is that there's going to be a small handful of companies and these companies are going to be end-to-end companies meaning that they have their own rocket, they have their own spacecraft and they're providing services from space and they'll take out the majority of the prize.
Just to go back to the profitability point, and just so we're clear, I mean I am a huge fan of space. I read about science fiction all the time. I'm so excited about it. I want these companies to build these...
Rockets, and I want us to go to Mars, and I want us to explore space. I'm like pro. So I didn't mean for it to sound mean on the profitability point.
No, not at all. My understanding, which I'd like to understand more about, is that so far it is a business that doesn't make money. So I guess I'd love some clarity on that.
Yeah. Oh, I mean, you know, you can go back and look at a bunch of businesses like, you know, Digital Globe is an example. You know, they're probably the dominating Earth observation company in the industry right now. And so I mean, you know, historically there's, yes, there's been a number of businesses that have failed, but I think, you know, there's a tremendous number of them have been successful as well. Space is a geopolitical topic in a lot of ways, and I mean this is how space really ramped up. It became a fight or a race between the US and the Soviet Union.
I'd be interested to hear your thoughts on the extent to which that is still a dynamic in the space industry. I mean, now it seems to be kind of like a race against China. China's of course ramping up their space programs. What are your thoughts on the US versus China versus any nation? To what extent is this kind of a geopolitical race?
Well, I mean, space is the ultimate high ground. So, from a national security and defense standpoint, it is the ultimate high ground. So, space superiority means land, sea, and, you know, air superiority. So, you know, that is always true. So, you know, and I think what you're referring to there is like the Apollo program, where, you know, that is an example of kind of, I think everybody thinks it was, you know, a wonderful, you know, philanthropic mission, but it was a Cold War mission to demonstrate to Russia that the US had absolute supremacy and was very successful in doing that. And, you know, I think could we be up for another moon race with China? I think that's highly possible, too. But I think, you know, make no mistake that space is the ultimate high ground for national security.
Could you explain more how it is the high ground? I mean, one thing that I've been starting to hear more about is, you know, whoever gets to the moon and establishes a base on the moon or on Mars, they can sort of claim it. And now we're hearing more about sort of space wars. I mean, it seems that this is like really the next frontier in terms of power conflict. I mean,
I'm not so sure about that. I think at the end of the day, you know, everybody wants to be first and everybody wants to show supremacy. So, you know, the US has already been to the moon. So, job done. And the next logical step for the US is to put, you know, some sustaining presence, a moon base on there, and, you know, that has to be either economically viable or geopolitically, you know, a requirement. One of those two things has to be true. So, you know, however that shapes out, but I don't, and I'm not sure that there's, you know, there's a whole bunch of, you know, flag planting and property, you know, gaining there to be done.
Why do you think that wouldn't happen? Why is that something that we shouldn't worry too much about?
It's kind of like nuclear war in the sense that if you mess it all up, then it's no good for anybody. So, you know, if you're in low Earth orbit and start blowing satellites up, then you just create, you know, large debris fields, and then your own satellites get kind of consumed by that debris field, and all of your own industries suffer. So, you know, I very much see it in that sense, and so I think, you know, everybody is likely to be pretty responsible there.
So something you mentioned earlier, Peter, is the idea of data centers in space, and this is something that a lot of people have been talking about. Elon Musk has been talking about it a lot. Are you excited about this as an industry? Do you think this is something that'll work? Do you think that this is the next step in terms of the space industry?
Yeah, look, I think absolutely space data centers will exist. Probably not necessarily for the reasons that everybody else thinks. But for me, you know, from a strategic and national security and defense rationale, that makes tremendous sense to air gap something like that and have that as an important asset. So I think they absolutely will exist. Now, will all compute leave the Earth? I guess I'm slightly less optimistic about that. But nevertheless, I think, you know, some of those strategic assets will absolutely go to orbit.
