[[Home|🏠]] <span style="color: LightSlateGray">></span> [[Interviews]] <span style="color: LightSlateGray">></span> June 23 2024 **Insider**: [[Peter Beck]] **Source**: [Markets with Madison](https://www.youtube.com/watch?v=svTrm37OdK0) **Date**: June 23 2024  🔗 Backup Link: https://www.youtube.com/watch?v=svTrm37OdK0 ## 🎙️ Transcript >[!hint] Transcript may contain errors or inaccuracies. **Madison:** Sir Peter, thank you for having us in today. Always amazing to be here. **Peter Beck:** Thanks very much. **Madison:** Have you got used to that yet? **Peter Beck:** Still feels very odd, very odd indeed. **Madison:** I was going to curtsy when you came in. **Peter Beck:** Please do not. I don't think I'd be very good at it. **Madison:** 50 launches - congratulations! It's not just a number though, is it Peter? Electron is the fastest commercial developed rocket ever, even beating SpaceX to it. But take us behind that number into the operation. What has actually been required from you as a leader of this company, your team, and the engineering innovation that's gone on to achieve it? **Peter Beck:** Everybody sees the rocket, but as you allude to, there's just so much behind it. The one thing I would say is that the very first rocket that we put on the pad—if you sat the first and the 50th beside each other, they look the same. I think that's key to the success here. We didn't put a minimum viable product on the pad for some promotion. We put something there that was going to be the enduring thing that was going to work. That's been very successful for us, and we've been able to scale it very successfully. But I think what a lot of people underestimate is the real hard thing here is not building one rocket—it's actually building many, many, over and over again and making sure they launch reliably. That is just immensely difficult to describe. The product is very complicated, but all of the stuff—I'm calling it boring stuff because it's not—all of the supply chain and logistics and work instructions and ERP/MRP systems... there's just so much that goes in behind all of that to make a number like 50. **Madison:** Does any of it get easier by 50? **Peter Beck:** Some gets easier, some gets harder. By the time you're at 50, there are some processes that are very well-developed and some things that are very well controlled. But launch day is just the same as number one—launch day is just as stressful as the very first rocket. ### Launch Day Nerves **Madison:** Do you have a ritual on launch day that keeps you calm? **Peter Beck:** I struggle on launch day, generally—still at 50, absolutely. Because customers are relying on you just so much. Whether it's a commercial customer, their business could be on the line; whether it's a national security customer, people's lives could be on the line. So launches are never a low-stakes game. It is always incredibly important. ### Continuing to Scale **Madison:** I know you will continue to scale though, and you will be thinking about the next 50, probably the next 50 after that. So in your long-term mindset, where does 50 launches sit? Is it still the infancy of everything that Rocket Lab has ahead of it? **Peter Beck:** Absolutely. We'll continue to scale, and we want to keep that graph line pointing skywards. I would say that part of Electron also is providing a new capability, so the market has to scale with us. This year we sold the most amount of rockets we've ever sold, and next year is shaping up to be the same. So there's "can you produce them fast enough?" but also "does the market growth continue to keep pace with you?" ### How Electron Succeeded **Madison:** Last time we spoke, you called this "an assault on physics every single day." We know that so many other small launch vehicle operators have failed. So why specifically has the Electron succeeded? **Peter Beck:** I think there's a number of reasons: One, we built a product that the customer wanted, which sounds obvious but it's not always in the space industry. Two, we built a product that was scalable from day one. The engineering decisions that we made were made around how can we produce this over and over again, how can we make sure this is the most reliable thing. Then I would say, don't underestimate being the underdog. We were never the pre-ordained winner of the small launch race. We went up against folks that were immensely more well-funded than us and more well-resourced than us, and sometimes that's a great thing. The team here at Rocket Lab is incredible, and I can put my hand on my heart now and say they are the best in the world because we have the statistics to prove it. But honestly, it's the team and the pure grit and determination of everybody that makes it through. **Madison:** Did you ever doubt it throughout that journey? Doubt that we would be this globally successful and hit 50? **Peter Beck:** I think as an entrepreneur, if you have those doubts then you quit. So no, not trying to be arrogant or anything, but we're playing to win here. We're not playing to kind of fudge around the edges. We're looking to win. ### Access to Space **Madison:** Electron's known for having democratized space, for putting pressure on the price to access space. Do you have any figures on just how much that price is reduced in the smaller space? **Peter Beck:** Absolutely. When we started with the Electron launch vehicle, the price to get a small payload, say 200 kg payload to orbit, was somewhere between $35 and $50 million—more generally sort of in that $50 million range. The average sticker price for an Electron rocket is $7.5 million. So there's a massive change and massive shift, and of course, that creates totally new opportunities in space. ### Electron Missions **Madison:** It's not just about democratization though, is it? What Electron has also enabled is advances in other things like science, defense, and other technology. Can you talk me through what you've seen and what you're proud of in there? **Peter Beck:** The last two missions that we just launched more than a few days and a week ago were two really important climate change missions for NASA—measuring the heat rejection out of the poles to understand how the ice caps are melting and sea level rises. You saw it on the sign when you walked in here: "We go to space to improve life on Earth." And we do that every day. That one mission alone should be enough, but we have 50 of those missions—well, 49 of those missions—that all have massive impact. **Madison:** Do you have a favorite? Or is that like asking you to pick a favorite child? **Peter Beck:** The favorite for me is very personal in the fact that my dream as a kid in Invercargill was to go and work for NASA. When we got to fly the first NASA mission, the first NASA payload for the VCLS contract that we won, that was very special because it was like, I didn't get to work for NASA, but I got to fly their stuff. A little bit better, yeah. So that one was very, very personal in that respect, because it was—very rarely do you have these moments where you go, "Didn't expect that." ### Space as a Service **Madison:** I kind of view this all as the new 'as a service' model. We hear a lot about software as a service, but this is space as a service. You have not only NASA but governments coming to you more so now for end-to-end missions. Look at the VICTUS NOCTIS mission, for example. Tell me about the change in the desires and demand that you've witnessed across 50 launches in the industry and how that's ultimately benefiting Rocket Lab. **Peter Beck:** We were always of the view that an end-to-end space company was the logical end. The very second Electron that ever flew had a kick-stage that had recesses for solar panels to turn it into a satellite. So the plan here was always: build rockets first—you need the keys to space first; then you need the tools once you get to space, so you need the satellites; but ultimately, you need the service. That's where we're trying to go—build this end-to-end service. It's become really obvious, I would say, in the last year or two. Starlink is a good example: if you're in the commercial telecoms business from space, you're in a very difficult spot right now because it's impossible to keep up with someone who can build their own rocket and launch it whenever they need to launch it and deploy that service. That's just consistent across all services in space. Our view here is that the very large space companies of the future are going to look exactly like Rocket Lab. They're going to be end-to-end: you can build whatever satellite you want to build, you can launch whatever you want to launch, and then you can provide that service. ### Space Systems **Madison:** Two-thirds of this business is Space Systems, and while we're celebrating launch and rockets, that's actually only one-third of your business and your revenue, correct? We can't celebrate as much of the Space Systems success because a lot of it is confidential and customers wouldn't want you to, but can you give us some insight into what's actually been achieved in the bigger part of the business while 50 launches have been happening? **Peter Beck:** We acquired four companies within six months of becoming public—don't recommend that, but it needed to be done and it was a very unique time in the industry to consolidate. We really built a repertoire of all of the basic key elements to build whatever spacecraft we need to build. This year we'll see two spacecraft designed and built exclusively by Rocket Lab go to Mars, and when they get to Mars, 20% of everything in orbit around Mars will have a Rocket Lab logo on it. So we get to play in these really important and fun missions. As you say, the Space Systems part of the business represents over two-thirds of the revenue. Once Neutron comes online, that'll probably shift a little bit, and then things will move around a little bit, but it is a really important element to the business. ### Rocket Lab's Credibility **Madison:** What this feels like is a real celebration of not Rocket Lab's success so much as it is its credibility and what it's achieved there as well. You're now getting funding from governments—it seems like every week there's a new announcement. You just had more funding in the US CHIPS Act and also some from the state of New Mexico. Talk to me about the ramp-up and credibility, and where you think Rocket Lab has sort of achieved and hit its highest credibility, and perhaps where in other markets it still has more space to run. **Peter Beck:** Depending on where you sit in the industry in the world, generally we are accepted as the number two to SpaceX in that sense. Credibility comes with execution. You can have all the fancy videos you want and proclamations of things you're going to do, but at the end of the day, you actually have to just do it and do it well. It's almost like a logarithmic curve in some respects because the bigger you get, the more missions you can do; the more missions you do, the more credibility you get, and so on. It feels like any overnight success, right? You just slave away for years and years and years, and then you reach this point where you start to get on the hockey stick, and that's where we are now. We have a critical mass, we have a couple of thousand people, and a critical mass of projects and expertise and, quite frankly, reputation. Reputation is earned, especially in the space industry—it's earned with blood, sweat, and tears. ### Neutron Update **Madison:** Is that curve a signal of what's to come with Neutron—the same speed to 50? **Peter Beck:** We certainly hope so. That is the plan, and we're following the exact same methodology as we did with Electron. You may have seen the Archimedes rocket engine go on the test stand, and that wasn't a tech demo of a rocket engine—that came off a production line. That's kind of how we roll. We're following the same song sheet as we did with Electron, and that's been very successful for us. **Madison:** Give us an update on Neutron. We know that you've pushed it out for first launch to 2025, but Archimedes is about to be tested. What are you still left to do before we can see it on a launch pad? **Peter Beck:** Here's the thing with a rocket program: everybody focuses on the rocket, and I would say the rocket is like 20% of the program. There's the launch site, all the launch infrastructure, the factories, the engine test facilities, and all the productionizing of all of that stuff. It's not that sexy, and it's all kind of hidden in the background, but there's a tremendous amount of work that's gone on in there. The really exciting milestones obviously for Neutron that everybody's following is obviously Archimedes engine, big structures rolling out, and the big integrated tests. But it's really frustrating—it's like you're baking a cake, and all the ingredients in themselves are completely uninteresting. When it's all mixed up in a goo, it kind of doesn't look that attractive either, but actually when you bring it out of the oven, it's done. **Madison:** We want to eat the cake. We want to see launch. **Peter Beck:** But there's just so much work and preparation that's gone in before you pull it out of the oven, and that's kind of the same deal. **Madison:** And there's no room for error, is there? Not in this industry. **Peter Beck:** When we designed Electron, we constantly think of every failure mode possible. Could there be a failure in this area? Could there be a failure in that area? We're constantly looking to try and mitigate those failures before they occur. We don't kind of blindly move forward on a design without considering every little possible element. ### Retire Electron? **Madison:** With Neutron, you effectively get to start over on a new rocket. You're probably doing a lot of things with Neutron that you wish you could have or knew how to do with Electron at the very beginning. You're now having to build those on secondarily with Electron, like reusability. We know that Neutron has far better unit economics because its mass to orbit and its load is much higher. Does that mean that once Neutron is consistently in play, you would look to retire Electron? **Peter Beck:** No. Electron is serving a really important market need, and it's a great product, and that market continues to grow. It's true, Electron has been a wonderful training environment, if you will, for Neutron in a lot of respects, and so much of Electron ports directly across over to Neutron. But Electron is an amazing product—it enables so many other businesses and so many other capabilities. So absolutely not, it is a critical part of the space industry right now. **Madison:** And you're targeting a similar margin on Electron that you are on Neutron—50%? **Peter Beck:** Absolutely. We think that's the real sweet spot, and the biggest lever to pull there is really cadence. Launch cadence allows us to amortize all of the infrastructure that's required to launch anything. ### Launch Cadence **Madison:** What's the dream on cadence? What would you love to at least see Electron get to per year? **Peter Beck:** If we're launching twice a month, the economics are exactly where they need to be. That's kind of the super sweet spot for us. But also, as we launch more, we get better at building them, and the cost goes down. The cadence doesn't need to be some crazy number to be a really great business, which is great. ### Competition (SpaceX) **Madison:** Let's just finish on competition. I know you're a very busy man, and you probably don't pay too much attention to it because you're hustling in here—you've got a lot to do being chief engineer at this company. But SpaceX just had its fourth Starship test flight. The splashdown was pretty successful. How much attention do you pay to that? And if any at all, how does that kind of up the ante for you and for the team in here? **Peter Beck:** It was a great flight. I think everybody was surprised how far that mission got through, so I think it's great. With respect to how does that affect what we're doing, it's not really. Starship is designed for a very specific purpose, and that is to put humans on Mars, which I think is wonderful. We have our own purpose and mission, and Electron and Neutron and all the Space Systems and everything we do feeds into that directly. The space industry is kind of a crazy place in that respect. You have very flamboyant characters and missions on their own journey. Jeff Bezos has his own journey as well. But from a Rocket Lab perspective, what we're really focused on is trying to build a large, multi-generational space company that really does focus on delivering services and good to the Earth, as opposed to other planets. **Madison:** When I was in here last, you kind of laughed off the idea of space tourism like what Jeff Bezos is doing. You said you didn't want to go to Mars. Have you changed your view on any of those? **Peter Beck:** Absolutely not. **Madison:** Why? **Peter Beck:** I love Earth. Earth is the best planet in our solar system. Going to stay here for a while yet. ### Conclusion **Madison:** Stay here. Hey, thank you so much, and again, congratulations on 50 Electron launches. **Peter Beck:** Thanks Madison. Cheers. *Thanks for watching Markets with Madison. If you enjoyed this interview, please hit the like and subscribe buttons below. I do all of the research for these episodes myself, so your support means a lot. I always love to hear your feedback and ideas, so please drop any thoughts in the comments below. Now go put your money to work.*