[[Home|🏠]] <span style="color: LightSlateGray">></span> [[Interviews]] <span style="color: LightSlateGray">></span> January 13 2015 **Insider**: [[Peter Beck]] **Source**: [Auckland Startup & Tech Meetup 2014](https://www.youtube.com/watch?v=EKMpO_ngX_k) **Date**: January 13 2015  🔗 Backup Link: https://www.youtube.com/watch?v=EKMpO_ngX_k ## 🎙️ Transcript >[!hint] Transcript may contain errors or inaccuracies. **Michelle:** Now I'd like to introduce our next speaker who I'm very excited about. You can all know that I'm like a space nut. Our next speaker is Peter Beck from Rocket Lab. He's CEO and technical director of Rocket Lab, which is New Zealand's rocket technology company which he founded back in 2006. In 2009, Peter led Rocket Lab to accomplish its first major goal of building and launching its first rocket, a Tier 1, to reach space. If you haven't seen the video of this on YouTube, please go watch it because it's freaking awesome. Like, literally the excitement—I was there and you do the countdown, right? And I'm down... it was just so exciting. You realize that we've just made this huge amazing rocket go to space from something Peter just, you know, what seemed to be made in his backyard. Now Rocket Lab has advanced a lot since then obviously, and this year Rocket Lab has announced Electron, the 18-meter, 10-ton carbon composite launch vehicle which will allow the launch of satellite constellations at a fraction of the cost. Before forming Rocket Lab, Peter's already prestigious career included working with IRL on my favorite levitating material, high temperature superconductors. Peter has been awarded the Royal Society Cooper Medal for the best single account of research in physics and engineering, as well as the Meritorious Medal from the Royal Aeronautical Society for services of an exceptional nature leading to major advances in New Zealand aviation. Peter was one of these kids who grew up in a techie family surrounded by engineers and workshops. He was the kid apparently who just had lots of tools and bashed stuff, and apparently nothing's changed since then apart from he went to get an advanced trade in Precision Engineering, giving him the practical foundation needed to develop Rocket Lab's unique propulsion technology. Peter is known throughout New Zealand as "Rocket Man" and when asked what he would tell his younger startup self, he said: "Don't mess around with the small fry, just go straight for the big fish." And with that, I'd like to introduce Peter Beck. ### Peter Beck's Talk **Peter Beck:** Thanks very much, Michelle. I think you've pretty much taken over about half my talk there. So just kind of briefly, New Zealand's not known for its space prowess, and really how I started Rocket Lab is I was in America and I was visiting all the companies that I'd been corresponding with for years and years. I sort of realized that actually I don't want to be a tiny gear in a giant machine of Lockheed Martin or one of those big space contractors. Really, even if I made it big time in those contractors, they're really not going to do what I want to do and make a real difference. Pretty much Michelle's said everything that needs to be said there, apart from the fact that we've done a lot with organizations like D [unclear] and ultimately Lockheed Martin and various other space companies in the US. Last year we knuckled down and decided we were going to do the Electron launch vehicle, and so we went over to Silicon Valley and raised our first A round. For me it was really important to get the right kind of capital. We probably could have raised the A round in New Zealand, but what we're looking to do is basically hit Control+Alt+Delete on the space industry. If you're going to do that, you know you have the potential to piss a lot of people off. So we really wanted to make sure we had the right sort of capital behind us and the right sort of horsepower to go and actually execute on doing what we want to do. ### Why Electron Launch Vehicle Matters Just really quickly, just to sort of give you some context to why the Electron launch vehicle is important, what we're trying to do is important—some fun facts: Last year America went to space 19 times. The average cost of the mission was $132 million. So if you're a startup with a small satellite and looking to do something pretty significant in space or anything in space for that matter, it's a massive barrier to the market. The way I kind of liken it is: if you imagine a freight train going across America 12 times a year at an enormously expensive cost, then the whole country grinds to a halt. And then along comes FedEx, and things start to move along. So we're kind of FedEx for space in a lot of respects. That comes down to the two main things that actually we need to change with space to really open that market up: 1. Cost - but not necessarily cost per kilogram, but how much capital do I need to go and raise to get my asset into orbit to generate revenue 2. Launch frequency - actually a service that goes there more than a dozen times a year So we created the Electron launch vehicle. Instead of $132 million, it's $4.9 million, and we lift 100 kg satellite to 500 km sun-synchronous orbit, which is—if you're a space geek—like a Sky Box class satellite. ### Designing for Frequency and Manufacturability The real difference, I guess, is we started off with a clean sheet of paper and we said, "Okay, we want to open space up—how are we going to do that?" The first thing we did is we looked at our launch sites and we pulled out 20 years of weather and we said, "Okie dokie, these are the weather conditions that we're going to have to deal with," because we want to launch at least once a week instead of once a month or a few times a year—at least once a week. So we pulled out years of weather data, and that's what drove the design of the vehicle. That's what sized the vehicle, that's what sized the structural margins—being able to launch at least once a week in any weather condition, just about. The other thing we did is designed it for manufacture. So every decision we take there is about: How can we mass produce this? How can we reduce cost and increase manufacturability? Which in the space industry is generally nine or ten down the priority list. ### Why Launch from New Zealand? But I guess the biggest thing for us is actually launching this out of New Zealand. It might sound kind of strange—you know, why do this in New Zealand in the first place? Surely America or Europe is the place to go to actually change the space industry. But it's kind of an interesting little thing. We went over to America and spoke to all the launch rangers over there and said, "Okay, we want to launch once a week." And as much as they'd like to do that, they all kind of laughed at us because there's just so much stuff there—there's so many aircraft movements, so much shipping movement, so many people that even though they wanted to, there was just no way of launching more than once a month really. I mean, to launch multiple times in a week was just an absurd proposition. So along comes little New Zealand here. We're a small island nation in the middle of nowhere, and basically I've got nothing to hit until Chile, so I'm good to go. And there's no aircraft movements really, and there's no marine shipping, and we can go sun-synchronous right out to 46-degree Space Station orbit out of the one site. So it's really, really the ideal place to do this. And you know, we all speak English and we're not corrupt, and we get on with the US—it's all perfect. ### Lessons Learned So that's kind of the background there, but I'll just go through some real quick lessons that I've learned along my journey: #### 1. Get on a Plane That sort of goes back to the previous comment about talking to your customers intimately. I think Kiwis are sometimes a little bit afraid to just get on a plane and get over there, get over to America, wherever your market is, immerse yourself in it, and just go and talk to your customers and go and really understand your industry. #### 2. Don't Mess Around with Small Fry That's probably the one thing that I've learned from seven years of Rocket Lab—don't bother with the little companies. If you're trying to do strategic partnerships, just go straight for the big stuff. And that's the same for our capital raise as well. Let's not mess around with small tiers. Let's go to the tier one, the big guys and the deep pockets, and just go. #### 3. Only Talk to the Deciders If you're going over to the Valley or anywhere for that matter, or any part of your business, only talk to the deciders. The way I kind of do this, and it works particularly well in America, is if I'm going to go and talk to someone, say within Lockheed Martin, I'll just go straight to the chief scientist. Sometimes you've got to bluff your way in there. The ironic thing is there's much more of a protocol or a diplomatic protocol in America, I've found. You don't just go and approach the chief scientist—usually you would approach his juniors and work your way up. But you can use that to advantage because if you approach that chief scientist, he kind of thinks that you've already gone through the process of going up through all your juniors. But you haven't, but you go straight to him, he assumes that you have. You've got to have something really good to sell—you can't just ask them what the weather's doing. It's got to be something really, really good. And if you've got something really, really good, then it just takes care of itself from there onwards because now the chief scientist likes what you're doing, and everyone below him assumes that the chief scientist wants this, so it must happen. So it permeates a top-down approach, and that works really well, especially I think for Kiwis. #### 4. Don't Disclose Who You're Talking To With investors especially, make sure you've got as best you can everybody segregated, and just don't disclose who you're talking to. Your job is to leverage your valuation, so you don't want people talking and colluding and trying to do deals alongside you. #### 5. Have Hardware If you're a software company, still have hardware. I believe you need something physical that somebody can touch, and it can't just be rotten hardware—it has to be just beautiful work of art hardware. That's what you have to have with you. I found that makes a huge difference. I traveled to America with a rocket engine and a stack of paperwork this high. But nevertheless, to America with a rocket engine. And there's nothing that gets someone more excited than just putting a rocket engine on the table and having a discussion. It works really well. #### 6. Use Deadlines This is great for Kiwis, especially once again if you're raising capital or doing anything in America or anywhere else in the world. For example, have deadlines and use them because things can—people get excited, but excited is not a deal. You've got to progress things and use deadlines to make things happen. It's really easy when you're a Kiwi up in the US. You're up there and look, "I'm only here for a week." You don't sort of disclose that you could easily stay another week, but you're only here for the week. And people will move schedules to talk to you. So really use that one to your advantage. #### 7. Make Your Pitch Tell a Story When you're pitching to try and raise capital, it really needs to tell a story. It's really got to be very passionate, and I kind of liken it to theater almost. I mean, you're trying to tell your story, you're trying to get across your idea or what's going to change the world and why it's important to you and everybody else. If you put up a pitch deck with a whole lot of details and graphs and bar into details and numbers, which may be exciting to you as an engineer or whatever you're doing, the venture capital guy is just not interested. They want to hear the story about everything. So really focus on that. ### Why Base Your Business in New Zealand? The other one I want to talk about is why base your business in New Zealand. There's a lot of New Zealand startups, and the community is sort of starting to grow and all the rest of it, but I take a kind of different approach to this, and might not be particularly popular. Really, only base your business in New Zealand if there's a good geographical advantage. If you're a software company that's going to do something that bolts right up into Apple, then you need to be in the Valley. Just don't bother trying to do it in New Zealand—just get on a plane and go to where you need to go to get the job done. This is about your idea, you're building your business, you're doing something for humanity—it's not about "I want to live in New Zealand." It's much bigger than that. So only stay in New Zealand if there's a geographic advantage. If you make it big, you're coming home with loads of cash, so it's all good. ### Building a Billion-Dollar Company The other thing I want to talk about is a billion-dollar company in New Zealand. For me, when I started Rocket Lab, I wasn't interested in building a $100 million company. I wasn't interested in building a medium or large, small-to-medium company. I'm in this to build a big, billion-dollar company. I'm in it to change the space industry—that's the prime driver. But I'm also in it to build—we're going to do it, you know, let's do it properly and let's build a billion-dollar company. The thing that I've found is that Kiwis generally don't sit there and aim to build a billion-dollar company. They want to build an idea and build a little company and end up with a bach and a boat and a BMW—the 3Bs. But they don't really think, "Well, how can I take this global? How can I make this a billion-dollar company or multi-billion-dollar company? How can this be as big as Apple?" I think that's something that Kiwis really need to work on because, in my experience, the ideas are billion-dollar ideas. Some of the people I've bumped into in America, a lot of them in high levels are often Kiwis, and they're doing great things. But New Zealand needs to build billion-dollar companies if we want to really grow as a country and go after the really big problems. I mean, we're trying to change the space industry—that's a decent enough problem. But there are other problems there that are really big that New Zealand can go after and solve. So that's kind of my advice on that one. If you've got a big idea and you're looking to build a billion-dollar company, then go after the big capital. Don't mess around with the little Mom and Dad investors—just get on a plane, get over to the Valley or wherever you've got to go, and go big. That's kind of the last point—go big or go home. I mean, if you're going to slog your life away for the next five or ten years building a startup, it may as well be a billion-dollar one. You may as well aim to have a billion-dollar one and a roadmap to get to a billion-dollar one than a $100 million one. ### Final Experiment The last thing I want to try is just this little experiment. I don't generally do a lot of these kind of talks, but I like to try and find time to do it to these kind of communities because I think it's really important. But generally, what I try and do is get people to put their hands up, but that never works because the Kiwis are too shy. So I want everybody to start by putting their hands up this time. We're going to try something different, right? Very good. So I want everyone to put their hands down who is an investor or currently runs a company. Anybody who currently runs a company or invests? Okay, cool. I want people to put their hands down if they're not contemplating creating a startup. So in theory here, we should only have people's hands up who are looking at creating a startup. Very good, right. So I want you to put your hands down if you're on your deathbed and you're sitting there and you're thinking, "I've had a good life, I've got a lovely wife, I've had good children, I've got a nice car, I've built a nice company, and everything's been great." So put your hands down if you would be happy to die like that. Wow. So Scott and Sam from Founders Fund and various—these are the people that you should be investing in because I guarantee if you ask these people, you know, why is your hand still up? The answer is probably: "Well, that's actually not good enough for me. I want to actually make a difference in the world. I want to do something significant with my life." And you know, you get one chance on planet Earth, you get one right around, so you know, you really need to make it count. So go take note who's got their hands up, guys, and go and talk to those guys. So that's me. Thanks very much.