[[Home|🏠]] <span style="color: LightSlateGray">></span> [[Interviews]] <span style="color: LightSlateGray">></span> October 11 2024 **Insider**: [[Adam Spice]] **Source**: [Bloomberg Technology](https://www.youtube.com/watch?v=Rc6Lq5MKLfI) **Date**: October 11 2024  🔗 Backup Link: https://www.youtube.com/watch?v=Rc6Lq5MKLfI ## 🎙️ Transcript >[!hint] Transcript may contain errors or inaccuracies. **Interviewer:** Let's start with the basics for the audience that might just be tuning in for the first time wondering where we are. Rocket Lab is an end-to-end space provider, space launch services systems provider. Bring us up to speed on what that means. **Adam Spice:** Yeah, you know, we think that the space companies of the future are ones that aren't just a launch company or just a satellite company or just an operator of satellites. It's really all about providing an end-to-end service. So what you're seeing here in Long Beach is really our headquarters. We make a lot of the rocket components here, the rocket engines, the avionics and so forth. So we have a pretty big footprint here in Southern California. But we've since expanded that, and of course, the company got started in New Zealand, but then expanded to the US and started to expand further throughout the United States, including locations in places like Denver and Albuquerque and Stennis, Mississippi and Wallops Springs, Maryland, and of course, the launch site in Wallops Island, Virginia, and a facility in Toronto, Canada as well. So we've established ourselves a very broad footprint, doing much more than just launch, with an HQ here in SoCal. **Interviewer:** Which fits exactly what we're talking about—two launch systems, what are they and what are the differences? **Adam Spice:** Right. So the vehicle you see behind you is Electron. And Electron is the second most frequently launched vehicle in the United States. It's launched 53 times. So we've got a very significant lead in the small, dedicated launch market. And we're developing a second vehicle, which is called Neutron, which will address the larger medium class launch market. ### Where are we with Neutron **Interviewer:** Can we dig into the practicalities and how difficult space engineering is? Where are we with Neutron and what are some of the issues in the steps of getting it up and running? **Adam Spice:** Yeah, well, we're quite a ways along the path of Neutron, so we've been at it now for a little over three years. We announced the program when we came public in August of 2021. You know, it's amazing to see a rocket program come together. I hadn't come from a space background before joining the company about six and a half years ago. And just to see what it takes to pull together and pull off a rocket development program is absolutely staggering—the complexity, you know, not just from—it's literally rocket science. I'm grateful every day that there are people who have dedicated their lives to developing these complex systems that are absolutely amazing. So it's a very detailed, very arduous task to get there. And I think that's what's so exciting from a business perspective is the fact that if you can do it, you're one of the few number of organizations in the history to have actually pulled it off. And so it creates a very defensible position because, again, space is very, very hard. And we have to—I would say the challenge of waking up every morning and doing battle with physics, but also doing battle with some of the most fierce competitors on the planet, including SpaceX. And so we look around our industry and we see bodies everywhere that we have to step over. And, you know, it kind of makes you wake up every morning and kind of like, "Okay, this is a serious business. We got to make sure that we make all the right decisions, be very efficient with our capital and very, very focused on execution." ### Revenue Run Rate **Interviewer:** I mean, you are the numbers guy. Let's just talk about capital efficiency. You have to spend an extraordinary amount of money. You took this company public. You're having to answer to a whole host of retail investors and, more increasingly, institutional investors. What's the revenue run rate and where is the money coming from? **Adam Spice:** And we're very fortunate that we've been able to get now to a scale. So Q2, we generated over $100 million in revenue. So we really kind of now crossed that threshold of scalability. We've shown that a model can scale. I think it's very important that we've done it not just on launch because launch represents about 30% of our revenues. Space systems actually represent 70%. **Interviewer:** And just on that, when you say space systems is 70% of revenue, just in layman's terms, what are you talking about? **Adam Spice:** So we sell a variety of solutions. So we sell subsystems into the merchant market. So we sell things like solar solutions for spacecraft. We sell radios and battery systems and composites and so forth. So we really are very serious in materials merchant subsystem market. And then we also build full spacecraft solutions. So for example, we built a full spacecraft for NASA. In fact, we built a couple spacecraft that could be orbiting Mars in the not too distant future. ### Recent News **Interviewer:** This is big news for you recently. **Adam Spice:** Very big, because you originally—you weren't on that list and now you are. **Interviewer:** Well, that's actually for the Mars Sample Return. **Adam Spice:** Sample self return. Yeah, that's—and you're right, we were not included in the first, but we were ultimately added to that program. So that's very exciting. But when you look at all the different programs that we're across, we get not just subsystems, but we're actually making full satellites for including the Defense Department in the Space Development Agency. We won a contract to be the prime contractor for an over $500 million contract. So it's actually the one thing that's most exciting for me is how quickly we've come from a very organic base to now building a very significant size revenue and getting again past that $100 million threshold per quarter. ### Rocket Lab Cadence **Interviewer:** And you talk about the Electron behind us, 53 already put into space. How many launches are we looking at in terms of the next year? What sort of cadence are you trying to live up to? **Adam Spice:** Well, you know, we've indicated 15 to 18 launches this year. We've launched 11 times so far. So we've got a big Q4 coming up. And then when you look at that kind of rate going to next year, we see growth off of that. And a lot of it's really not dependent on how many rockets we can build. We can build a lot of rockets—we could build— **Interviewer:** 3D printing—we're 3D printing a lot of stuff here. We could—is the limiting factor? **Adam Spice:** It's really the market at this point. It's really the market. We could build as many rockets as the market demands, but it's a new market. It's a nascent market. And I think, you know, it just takes time for these markets. ### The Business of Space **Interviewer:** And I want to get into this—the business of space and just bear with me. Elon Musk—I bear with you a lot—has a big gap right over you, a big sort of lead with SpaceX. And he talks about this idea that the business of sending payload to orbit tops out for them at $3 billion. Now that's a scale that you're not near yet, but it makes it seem like there's a cap, there's a ceiling on how much money you can ever make in this business. What do you make of that? **Adam Spice:** I think it depends on how you define "this business," right. I think even as we've seen with SpaceX, I don't think they stopped at just launch. So launch is a very critical part of the ecosystem, but it's not the biggest piece of the ecosystem. So the applications and creating that ongoing revenue stream from applications or having a constellation on orbit—that is really what people are shooting for, as far as where the real scale for this industry comes from. And that's exactly what we're oriented around. We're all about being an end-to-end space company where we can design the spacecraft, we can build the spacecraft in a very vertically integrated way with our own subsystems. We can launch them on a variety of rockets, and we can operate those on orbit. So it's a very, very important thing to think about yourself as an end-to-end player, because, again, if you're a bespoke kind of one-solution provider, it's probably not the path to survivability. ### How the Market Scales Up **Interviewer:** For those institutional investors that are watching, and indeed retail investors who are excited about putting money into rockets—so I said, tell us about how the market scales up. What is needed? You're saying you can get these—you can build these as quickly as a market wants, but what gets the market to the next iteration, to the size that you want to be able to serve it at? **Adam Spice:** I think the most exciting thing about what's going on in this market right now is that, you know, you think about what typically drives the hockey stick growth kind of characteristic of an industry—that's usually commercial. But I think we're in a really interesting period where we're actually seeing the hockey stick being derived not only from commercial opportunities. Everyone's seen what SpaceX is doing with Starlink. So that's kind of old news to a certain extent. But then you see Amazon Kuiper, you see Telesat Lightspeed, you see the OneWeb constellation. So you're actually seeing a combination of government and commercial all presenting hockey stick opportunities. And that's really—you're not—it's not a one-bit kind of situation right now. There's lots of different players you can put your fire at, and there's so much more to come. ### SpaceX **Interviewer:** As you know, in this hour. But before we let you go, a word for SpaceX, what they enabled your company to do, particularly here in California. **Adam Spice:** Like I think you have to give them, you know, amazing credit for what they've accomplished. They really kind of are, I would say, kind of an inspiration and an aspirational target as well. Like we've seen—we've seen what can be done. Right. I think that's the one thing is we don't—we wake up every morning understanding the challenge that faces us, but we're not intimidated by it. We've never—that's one thing that this company does not ever get, is intimidated by competition, whether it's SpaceX or anybody else. So we're up for the challenge, it's exciting, and there's a tremendous amount of opportunity, and I think we're in a great position to exploit it.