[[Home|🏠]] <span style="color: LightSlateGray">></span> [[Interviews]] <span style="color: LightSlateGray">></span> May 6 2012 **Insider**: [[Peter Beck]] **Source**: [Spark Speaker Video](https://www.youtube.com/watch?v=8ZMSG386dQw) **Date**: May 6 2012  🔗 Backup Link: https://www.youtube.com/watch?v=8ZMSG386dQw ## 🎙️ Transcript >[!hint] Transcript may contain errors or inaccuracies. **CEO:** Firstly, thanks very much for the opportunity to talk to everybody here today. How many people know what Rocket Lab does? Anybody? A few? Okay. So basically, we're a company that builds rockets, unsurprisingly enough. But more focused, we're an ideas house, and we back it with in-house capability, credibility, and partnerships. One of the things about doing this sort of business in New Zealand is there is nobody else. There is no Boeing, there is no Northrop Grumman, there's no ATK down the road to get you to build a rocket nozzle, to get you to do some avionics, to get you to do anything. And trying to buy that stuff from the United States into New Zealand is impossible because of the international trades and arms restrictions. So basically, we're forced to be a complete one-stop shop. We do absolutely everything, from electronics and avionics through to launch vehicles, through to propulsion systems, through to launching—you name it, we do it. That gives us a really interesting niche within the industry because in the United States, if you're a rocket company, you specialize in propulsion, or you specialize in flight dynamics, or you specialize in rocket nozzles, and then there's more specialist fields even in that. So it's really rare to have all of those things under one roof, and that gives us quite a lot of competitive advantages. ### Customers and Partnerships **Interviewer:** Who are your customers? **CEO:** We work with a number of companies and organizations within the United States. We're basically a 100% export company. We don't really do much in New Zealand. **Interviewer:** Who knows what DARPA is? **CEO:** Excellent! Great, must be engineers. For those who don't know who DARPA is, they were basically formed when the Russians put Sputnik into space, and they're tasked directly by Congress in the United States to make sure the United States never lags behind in any technology field ever again. That's their job. You may be aware of some of their work—the internet, GPS. They only fund game-changing technologies. If you go to DARPA and say "I've got a widget which gives you a 2% improvement," they'll tell you to go away. If you go to DARPA and say "I've got this concept, I have no idea whether it'll work, but if it works, it's a game changer," they're interested. They're basically our biggest customer. **Interviewer:** That's primarily their focus? **CEO:** Yeah, they're tasked by Congress to keep United States at the head of technology, head of the race. **Interviewer:** Who do you work with? **CEO:** You might be familiar with ORS (Operation Responsive Space). These guys, once again, are tasked directly by Congress to get stuff into orbit cheap. That's their job. So we work with those guys as well. ### Core Business and Programs Our core business, if you break down what we actually do, is: - Propulsion—a lot of propulsion engineering, modeling, all the things you need to be able to do propulsion and launch vehicles - Electronic systems, so avionics, guidance control, that sort of stuff This ultimately results in us being able to produce space and defense products. We're a company of firsts. We've done some stuff. We've got three current programs running within the company at the moment: 1. VLM, which is a new propulsion system (stands for Viscous Liquid Monopropellant) 2. Instant Eyes, which is a rapid-deployed, hand-launched UAV system. Basically, you hold onto a tube which has got a rocket in it and you launch it. 3. Our orbital program, because we're going orbital. ### Entrepreneurship Philosophy **Interviewer:** What is an entrepreneur? **CEO:** Personally, I don't class myself as an entrepreneur. I think people who call themselves entrepreneurs actually aren't. I'm just trying to get a job done, and it just happens to be a bit of fun along the way. But I guess what is needed: - You need some ideas - You can't be risk-averse, which sort of leads to the next one... - You definitely need balls, and the bigger the idea, the bigger balls you need - You need to be absolutely and completely passionate and motivated - You've got to be ready for some hard work - You've got to create your credibility - Most importantly, you've got to deliver, because if you don't deliver, then you're out of business These are my opinions. They could be right, they could be wrong—you choose, but I'll give you my opinions anyway, with respect to Rocket Lab. ## Key Elements for Success ### First Thing You Need: A Good Idea My idea was building rockets and going to space. In New Zealand, that is considered nutty—absolutely nutty. If you're in the United States, it's not nutty; it's just part of commerce. You just go to space; it's just a business. That's part of the challenge that Rocket Lab has always faced. I remember when we had our big official company opening. We contacted central government to let them know that somebody in New Zealand was going to send some stuff to space, and they ought to know about it. They thought it was a great joke, and I ended up getting invited to one of the Minister's offices to have a talk. Turns out he told me later that he just thought this was a great joke, and he wanted to see what nutty person was actually going to do this. But once we explained exactly what we're doing and how we're doing it and the opportunities, he became a strong supporter. So the first thing you need is a good idea, and a really bloody good one, because if it's not, then you're not going to go anywhere. But the trick is that a lot of people will tell you that your idea is crap. In my case, just about everybody that you could talk to said, "Well, that's a stupid idea. How can New Zealand compete with the United States? How can a little company on the other side of the world compete with Boeing, Lockheed Martin, and all those sorts of things?" So a lot of people tell you that your idea is crap, but you've got to have a bit of belief in yourself along the way. **Interviewer:** As time goes by, the technology gets more refined and easier to do? **CEO:** Absolutely. It goes with any technology. I mean, to launch a rocket into space 20 years ago was a lot more difficult than it is now. That's a fact. ### Take Risk You've got to be prepared to take risk, and that risk can mean a lot of things. It can mean engineering risk, it can mean credibility risk, it can mean financial risk—usually it means all of those things. The risk for Rocket Lab when we started: if we went over to the United States and said "We're a rocket company, we're going to build rockets, we're going to launch stuff into space" and essentially be a PowerPoint company like a lot of other companies (especially in the United States), we'd get absolutely nowhere. Throw into the mix that we're a small island nation in the middle of nowhere, we're not the United States—we wouldn't have gotten anywhere. For example, if we'd rocked up to DARPA and said "Look, we've got these ideas" without having credibly done anything, there's absolutely no way that they would have talked to us. So our internal strategy was: we're going to build a launch vehicle, we're going to go to space, and we're going to prove that we can actually do what we say we're going to do, rather than try and turn up with a PowerPoint. And not only were we going to do that, we were going to do it in a way that is really industry-controversial. We could have built a launch vehicle, the RT-1. We could have built it with old, solid, real traditional technology, done nothing special at all, and just gone to space. That's a good achievement. But what we needed to do was really stamp a mark. So we built an all-hybrid vehicle. We did things that are talked about in the industry, like wireless safe arm and fire devices, but nobody ever really does because it's all unproven technology—a whole lot of stuff that within the industry, you just don't do, but it would be nice to do. So the launch vehicle itself was really quite special. We got a bit of flack in the media about how small our rocket was, and that's an indication of how people don't understand. A rocket on the pad weighed 65 kg, which is absolutely nothing, and it launched 2 kg to about 120 km altitude. You might think, "Well, that's not a very spectacular rocket; it's only 65 kg." But our competition, using the same propulsion technology, was 620 kg in mass to do the same job. When we launched, everybody in New Zealand said, "Man, that's a small rocket. Stink." Everyone in the United States said, "How the hell did you make that thing so small?" That's just the difference in knowledge bases. Cutting to the chase, we took a huge risk with that rocket. On the launch pad, that rocket had a safety factor of 1.1 to 1.2 on just about every component. That means that the pressure vessel held 1,000 PSI, and at 1,100 PSI it would fail. Every little piece on that vehicle had a safety factor that was ridiculously small. We pushed the limits as far as you possibly could, and we did that because we wanted to build a vehicle that weighed 65 kg, not 620 kg. The point is, if that rocket blew up on the pad, we wouldn't have been in business. That would have been the end of Rocket Lab right there and then. So we took a huge risk, both technically and financially, but we knew that if we could pull it off, we would get to talk to people like DARPA, we would get to work with people like NASA, because suddenly people would ask, "How did you do that?" ### Courage Like I was saying before, a lot of people will tell you that your idea is really crap, and the bigger the idea, the more people will tell you it's crap. But you've just got to push through it. I mean, chances are your idea probably is crap, and it probably will fail, but if you don't push through it, then you could miss out on something quite spectacular. So don't be afraid to put your balls on the line. ### Passion and Motivation You need to be absolutely passionate about your idea, about your business, and you need to be highly motivated. If it's just sort of a fun thing that you'd like to try, don't even bother. Don't waste your time. If you're not an extremely motivated person by nature—if you're a person who comes home, sits on the couch, watches a bit of TV, goes to bed—don't bother. You've got to be absolutely motivated in whatever you do. If you're the kind of guy who comes home, sits down, watches television for 5 minutes, gets bored as hell with it, and goes and does your sport or whatever you do in your spare time, then it's for you. But if you're not motivated, just don't waste your time. ### Hard Work You've got to be prepared for massive amounts of hard work. You might think, "Oh yeah, this looks a bit easy, doesn't look too bad," but the reality is, it's just enormously hard work. You get out what you put in—not all the time; sometimes you'll put in heaps and fail miserably, but that's just the way it is. Be prepared to lose all your sleep, that's for sure. ### Credibility With Rocket Lab, we took a huge risk and built that rocket, and way we went. You can apply that theory to whatever product you've got. For example, this cup—you can make a PowerPoint of that cup, you can talk about it, but if you actually go out there and make it, prove that it works, and gain some credibility with it, then you're in a much more forward position. You see a theme here: a lot of people talk about doing it, but actually just going out there and physically creating something is, for me, the key. ### Deliver Once you've done what you're going to do—you've created your cup—then you've got to deliver. It's all very good and well to raise some capital, go out there, make your product, but actually, the hard work is after you've done all that. If you think for Rocket Lab launching that rocket was the hardest thing—absolutely not at all. The hardest thing after that is growing the company, staying in business, and moving forward. That's my opinion anyway. ### Q&A Session **Interviewer:** What do you mean by "we"? I mean, who, apart from you, is your team? **CEO:** Well, there's 10 of us there and a couple of PhDs. In the beginning, there was just two of us. But that's who was employed at Rocket Lab. I mean, in the wider team, we've got relationships with lots of different organizations and universities, and if you want to count them as part of the team, then do that as well. **Interviewer:** What's your goal? **CEO:** I'm putting something in orbit. That's what I'm doing. Whether that's—I've got to achieve that before I die, and it just so happens that there's a really, really good commercial model there to do that. If you look at what's happening within our industry at the moment, Space Shuttle's out, government-funded programs are old hat, it's all about commercial space now. You look at SpaceX and the Falcon 9—it's all going commercial. New Zealand and Rocket Lab in particular is really nicely poised to capture a particular niche market of very small satellites, for a number of reasons. So we want to be launching something to orbit every month as the goal. **Interviewer:** Is there anything about that that makes New Zealand special? **CEO:** Yes, there is. There's lots, and I'll explain some of the good things and some of the bad things. The great thing is that it's never been done before in New Zealand. That covers both thinking from an engineering perspective, business regulatory environment, all of that sort of stuff—it's never been done before. One of the reasons some organizations like working with us: if they've got a problem, they'll give a problem to half a dozen United States universities to solve, and they'll all go back to their textbooks, back to their lecturers, back to their manuals and their Boeings, and they'll all come back with the same piece of 50-year-old heritage hardware, the way it's taught: "This is how you do it," and there it is. They come to Rocket Lab—we don't have any of that. We don't know what can't be done, and we'll look at the problem and go, "Well, we'll just do it this way." And the solution is just orders of magnitude different from what the traditional industry would do. So that's a great thing about being in New Zealand—the regulatory environment, the lack of knowledge, and the lack of constraints. But the bad thing is the converse, because we learn hard lessons too. We don't have that experience, and I think probably our motor explosion rate is higher than some of the others in the industry, for sure. But we also don't know what boundaries exist, so we tend to push them where other people say, "Well, you don't do that because it didn't work 50 years ago." But we'll give it a go now. So there are pluses and minuses. ### Propulsion Technology **Interviewer:** What fuel are you using? Because I know some of the fuels have been used in the past... **CEO:** That's another thing about our propulsion. In the industry, it's polarized—there are liquids or solids, there are only two. When I say liquid fuels, a liquid fuel rocket motor is where you've got two liquids: a liquid oxidizer and liquid fuel, and you inject them with turbo pumps into the combustion chamber, and away you go. A solid fuel rocket is all solid, and it's like a firecracker, like a skyrocket. You light it, and it burns and doesn't stop burning until it's depleted its propellant. In the United States especially, there are two industries. If you're a "liquids guy," you go, "Solids—yucky old solids, toxic, horrible solids." If you're a "solids guy," you go, "Liquids—for drinking? Who would do that?" So it's really, really polarized in the United States. We do liquids, solids, hybrids, and VLM, which is something in between, and we seamlessly cross over all of those disciplines. That's what makes us a little bit special in the propulsion side of things as well—we don't necessarily have a preference for solids or have a preference for liquids or anything like that. So to your question: we do liquids, we do hybrids. Propellant for liquids—I mean, huge list, but typically liquid oxygen and kerosene. Hybrids: nitrous oxide and HTPB. Solids: HTPB. And then Viscous Liquid Monopropellant—can't tell you. **Interviewer:** Something called unmetric di...? **CEO:** Oh, you don't want to go near that stuff. Major environmental problems in the old days... it still does. The trouble with hydrazine is it's a really good fuel; it's just toxic as hell. Parts per million and you're dead. **Interviewer:** That's what the Russian space program liked about it? **CEO:** Because it's a problem... Yeah, it killed a lot of people. **Interviewer:** But hydrogen's not... **CEO:** That's right. You're trying to avoid some of the... We would never touch hydrogen. No way. It's always the way though—anything that's really, really good is really, really dangerous and really bad. It's just the way it is. ### Business Model and Funding **Interviewer:** Was it a commercial venture from the start? **CEO:** Absolutely commercial from day one. In the very early days, we secured some venture capital, some angel investment, and you know, you don't do that with a dream. It's got to be commercial. **Interviewer:** Are there products that you're offering? Is there competition? **CEO:** No, we're still pretty much the only company in the Southern Hemisphere doing this stuff. **Interviewer:** Can you tell us about some of your products and technology in a little more detail? **CEO:** Sure. So going back to our three programs: 1. **VLM (Viscous Liquid Monopropellant)** - It's not a solid, it's not a liquid, it's sort of a funky fluid-solid in between those. That's funded directly by DARPA, and that's all I can say about that. 2. **Instant Eyes** - That product there. Basically, kind of a long story short: I was watching Discovery Channel one night, and there was one of those "Future Weapons" shows where they were showcasing this new UAV system. There was a soldier who was hunkered behind a wall getting shot at, and they were saying, "This is great. He's pulling out this UAV out of his backpack, he's assembling this UAV, and then he's flying it, getting intelligence to find out who's shooting at him." And they were saying, "Isn't this great?" Not only do you have to assemble this thing, you've got to become a pilot. It takes 5 minutes, and I thought, "That is just crap. There's got to be a better way of getting intelligence." So I'm a great fan of rockets, as you saw. So basically, the concept was: it's packaged in a tube about that high, 50mm round, weighs 500g. This tube just sits in a soldier's backpack, and when he's hunkered down and someone's shooting at him, he pulls out this tube, pushes the button—pop—and this thing, within 13 seconds, is at 2,000-12,000 ft, relaying ultra-high definition video with GPS-referenced and compass-referenced data to his mobile device, whether it be a military Rover or an iPhone or an iPad. He can decide within 15-20 seconds if he's going to run or hide. Is there a tank there? Yes, I'm out of here. Is there somebody there? Yeah. So that's basically that system. We took the concept to a US company and formed a joint venture called Instant Eyes Corporation, funny enough. That's the product. We just finished it a few months ago, and it's currently at some defense organizations being tested. **Interviewer:** So the camera's at the apogee, and the camera's right at the nose? **CEO:** Yes, sensor at apogee, and the camera's right at the nose. It's a funky little vehicle. It pulls 30 Gs out of the launch tube, spins up from 0 to 6,000 RPM in 0.8 of a second, and then reaches apogee, as I say, at around about 13 seconds. Then it deploys its parachute, stabilizes itself, takes images, and GPS references them and all that sort of stuff. Now, that entire project from concept to testing was about 10 months. 3. **Orbital Program** - We've got a team working on that with the ultimate goal to send around about 25-50 kg into LEO, which is sort of a sweet spot for small satellites. **Interviewer:** But there's not a space station? **CEO:** No, not geostationary orbit. ### Rocket Size and Efficiency **Interviewer:** So RT-1 is 65kg. We're sitting at about 5 tons for your orbital vehicle? **CEO:** Yes, about 5 tons for that vehicle. **Interviewer:** In terms of cost per kilogram of payload, what's the most economical size of rocket to use? **CEO:** It's a tricky one. Generally, the bigger the better. However, that's not always the case. The thing with satellites in the satellite industry at the moment is it's all going small. Electronics have miniaturized, propulsion systems are miniaturized, everything's miniaturized. So the need for these 5-ton behemoths in orbit, costing a billion dollars and 10 years to put up there, is fast decreasing. What everybody wants is a real cheap satellite, a real cheap launch, put it into orbit. If your orbit decays fast and you only get two years out of it, it's so cheap, and chances are you want to retask the satellite anyway, so just send up another one. That's the way the industry is moving. So in terms of energy efficiency, the bigger the better, but in terms of the time it takes to design a small rocket versus a big one... **Interviewer:** If a big rocket goes up, like if a big rocket has a failure, I should say... **CEO:** You've lost a billion dollars or more and 10 years of work. If a little rocket has a failure, next week you put another one up. **Interviewer:** Why 10 years? **CEO:** Well, typically that's how long it takes to go from concept inception through the funding cycle through the development. **Interviewer:** If it fails, it means there's something wrong with the design, taking time... **CEO:** No, rockets fail all the time. I mean, rockets with 30-40 year heritages fail because it's just the nature of the business. It only takes one tiny little thing to not work 100%. ### Industry Trends **Interviewer:** Is this for space tourism? **CEO:** Yeah, pretty much. I mean, this space tourism and all that sort of stuff—at the end of the day, the space industry is driven by two things: defense and commercial industry, such as communications satellites and all that sort of stuff. **Interviewer:** What about resource gathering in space industry right now? **CEO:** Oh, there's talk about it. I mean, DARPA have got a program where they're trying to research a satellite to send up to another satellite that's out of life and has empty propellant tanks, to give it another 10-15 years. There's stuff like that going on. But as far as mineral extraction and stuff like that, it still doesn't make commercial sense. **Interviewer:** Has efficiency increased significantly, or has it been a concern? **CEO:** Not really. I mean, at the end of the day, what is efficiency? You can build a ginormous rocket that carries, like I say, a 5-ton payload that might stay up there for 5-10 years. If you look at the resources required from the entire holistic picture of the resources required to put that one satellite up, is that a better use of the Earth's resources than 5 or 10 little satellites on little rockets that do the same job? And the answer is yes, it is, and that's why the industry is gravitating that way. It costs less too. I've got no desire to build these big rockets. Some people think "big is better" and all that. The little stuff is efficient. ### Funding Model **Interviewer:** How are you funded? **CEO:** So initially, it was through an angel investor, and then basically, we're funded through the programs that we do for our customers. It's a lovely, lovely business model because they fund us, and we own the intellectual property at the end of it. It doesn't get much better than that. Whereas if you're going out to the Venture Capital Market, then all of a sudden you start diluting equity. ### Personal Background **Interviewer:** Going back to the beginning, can you tell us how you conceptualized this? Were you always just a rocket guy? **CEO:** Yeah, always, since about 2001. I've always liked rockets. I mean, like every teenager, I started off messing around with cars. I built up a Mini, and then I turbocharged it, and it just seemed such a pathetic way of making power, you know, the internal combustion engine. So then I started to mess around with stuff that had a bit more energy density. So yeah, it was right from day one. ### Technical Questions **Interviewer:** For some reason, I thought rockets were only energy efficient when they approach the speed of sound. **CEO:** No, that's when they're least efficient. That's the transonic region—that's the least efficient. **Interviewer:** Can you have an airplane rocket? **CEO:** Well, you can, but with a rocket, you're carrying your oxidizer. A gas turbine—the oxidizer is there for free in the atmosphere. **Interviewer:** So can you have a rocket that's efficient at, say, car driving speed—100 km/h? **CEO:** You could, but where rockets really excel is packing a whole lot of energy into a really small space and releasing it really fast. That's where rockets shine. Could you get reasonable efficiency at only 100 km/h? No. Put it this way: in this bottle of wine, I could probably fit around about 1,000 horsepower. So one medium-sized rocket can produce a megawatt of mechanical power. It might only be for half a second, but I'll fit 1,000 horsepower in there. **Interviewer:** But it only gets efficient...? **CEO:** We're talking about two different things here—one's propulsion, one's vehicle dynamics. ### Current Business Status **Interviewer:** Can you get a business like—how much funding would you require for it at the moment, or are you still in consultancy? **CEO:** We're still—we're kind of like a consultancy business, if you want to look at that sort of model. So we require projects to sustain ourselves. I mean, we have products, as you know, with Instant Eyes, and that's transitioning to become our bread and butter, if you will. But most US companies are funded that way—risk-based companies. If you look at the amount of investment that the big giants make in R&D, it's like 1% of their budget. Even though they've got a 10% R&D budget, 9% of that is funded by their governments.