Peter Beck's Vision Of Rocket Lab Extends Beyond Himself
Rocket Lab CEO Peter Beck explains how the company is transitioning to a new phase of scaling up operations to get its new Neutron rockets in orbit, break launch supply bottlenecks, and become the world’s premier end-to-end space company.
September 26, 2023
Rocket Lab CEO Peter Beck remembers the exact moment 17 years ago when he realized his launch business was going to be successful and stay successful in the long-term. He was boarding a plane back to New Zealand after a month-long tour of spacecraft manufacturers and startups in the United States, during which he expected to draft a long list of things his company would have to do to reach parity with its U.S. contemporaries.
“What I discovered is that we were building the exact same things that these amazing companies and institutions like NASA JPL and MIT were building,” says Beck. “There wasn't this massive gulf of technology and knowledge that I expected. We were already there.”
Beck was also intrigued by what actually did set him apart from his American peers. They were building the same engines, but for different purposes. Beck was bullish on the commercial small satellite launch market, even back in 2006 when the U.S. and other global launch industries were still focused on larger broadcast satellites. “I thought that if nobody was going to address a potential shift to smallsats, then I was going to have a crack at it,” Beck says.
Prior to Rocket Lab’s existence, launching a 100 kilogram spacecraft to a specific orbit in a specific timeframe meant spending between $30 million and $50 million. Rocket Lab now offers its Electron rocket for a starting price of $7.5 million. While there have been setbacks in the journey, like the recent launch failure in September, Rocket Lab is the frontrunner to challenge SpaceX’s dominance in the launch market.
In this interview with Via Satellite, Beck explains how the company is transitioning to a new phase of scaling up operations to get its new Neutron rockets in orbit, break launch supply bottlenecks, and become the world’s premier end-to-end space company.
VIA SATELLITE: In an interview you did with New Zealand Herald back in Rocket Lab’s early days, you described how your fascination with rocket technology began in childhood and that you started super-charging bikes, cars, scooters with rockets as a hobby. Do you still have those rocket bikes? Do they actually work?
Beck: Of course! And yes, they all work. This is how I started off building engines. I worked on rocket bikes and rocket packs and rocket scooters and evaluated the performance of the engines. This was all before I became the CEO of a publicly traded company. I'm a little bit more risk averse these days.
VIA SATELLITE: Now as the leader of Rocket Lab, how are you continuing that exploration of launch technology with your Electron and Neutron rockets?
Beck: What makes us a successful rocket company is our extremely excruciating attention to detail, because a rocket is just a flying engineering compromise. We developed Electron with reliability and production in mind, but we weren't afraid to take on new technologies. I think being the first company to put a 3D-printed rocket engine – the Rutherford — into orbit made a big impact on the industry. I remember the reaction when we revealed the Rutherford rocket engine at Space Symposium back in 2015. Everyone told us it wouldn’t work. Of course, now everybody 3D prints at least some element of their rocket engine. It’s commonplace. We were also the first company to put a fully carbon composite rocket in orbit. These are extremely high-performance and lightweight structures that take all the pressure off other areas like engine performance. Between 2 percent and 5 percent of a rocket’s total mass is the payload you lift. If you can save half-a-percent in weight somewhere, like in the composites, it's a really big deal. The Neutron is a continuing evolution of the all-carbon composite concept in a large launch vehicle.
VIA SATELLITE: In recent years, rocket builders have achieved significant success by optimizing engine design – making them cheaper, more reliable, and more efficient. What’s the next step for propellant engine design? Can rockets become both more powerful and sustainable?
Beck: The unfortunate reality is that combustion efficiency — how effectively we burn propellants — hasn't really changed since the 1960s. We reached 98 percent C-star efficiency [combustion performance of a rocket engine independent of nozzle performance], which is like chemical equilibrium, back in the ‘60s. Every rocket engine since then is just tweaking around the edge — higher chamber pressures, lower mass of the engine, and so on, and so forth. The reality is we've reached the optimum that you can extract out of chemical propellants. If you want to put more payload on orbit, the only thing left to do is build bigger and bigger rockets. The same thing happened with steam engines and trains. Right now, we're at the point where we're building the biggest steam engines.
As I mentioned before, 2 percent to maybe 5 percent of the total mass of a rocket is actually the payload. So, that makes you 95 percent to 98 percent inefficient, which is just a function of the force of Earth's gravity field, and the physics of burning fuel. For space travel and for rocketry to truly evolve to the next level, there needs to be a fundamental breakthrough in propulsion, where we stop just burning stuff. We have to have something that is far more high performance. That solution is not just around the corner. That's really difficult stuff.
VIA SATELLITE: I can tell that you’re already thinking about what that next step will be.
Beck: Oh yeah, absolutely. Because there's got to be a better way than just burning stuff. I haven't come across anything that's obvious or that’s going to work. It drives me insane.
VIA SATELLITE: I’ll bet there’s a 9-year-old out there who has the schematic you’re looking for in a coloring book.
Beck: Oh, absolutely.
VIA SATELLITE: In addition to building rockets, you’re also running a rocket business. You launched nine missions last year with a 100 percent success rate, and you have both a deep space mission and your first launch from U.S. soil under your belt. This makes you the largest commercial launch market competitor to SpaceX. How do you compete with SpaceX now and in the future? Can you catch up to them in the market?
Beck: Maybe it's the Kiwi in me, but I don't like putting a target on something like that. Beating SpaceX isn’t my North Star. We’re running our own race here and Elon is running his own race there. He's got his own thesis, and we've got our own thesis, too. We’re trying to build an end-to-end space company. We think that’s the future. We have our Space Systems division. We not only build spacecraft; we also sell components into everybody's systems. I think we’re running in a different direction than SpaceX.
VIA SATELLITE: But you’re still competing with them to launch satellites for operators. Many of the operators are competing with SpaceX’s Starlink and other massive systems like Kuiper, which may also create launch supply and availability issues in the next few years. Is Rocket Lab set up to compete as a potential launch bottleneck breaker?
Beck: We certainly hope so. That is kind of the purpose. Neutron has two purposes for us. One is that we do see a big constraint of launch in the 2026 to 2030 timeframe. That needs to be solved. We think Neutron is the right vehicle to do that. Then ultimately, we'll put more infrastructure on orbit and we’ll need a launch vehicle that can do that. My view is that the large, successful space companies of the future are companies that have their own rocket, can build their own spacecraft, and deliver whatever service they need on orbit. If you have the keys to space, and the ability to build whatever you need to build, it’s very difficult to compete with that. That's the direction we're marching. And I would say that we're doing it in a very methodical way. We're selling all the picks and shovels to the miners on the way through. We really enjoy providing launch services, and we'll enjoy that with the Neutron rocket as well. But at some point, we aim to put something on orbit that we think provides a service to everybody down on the ground. That will come in due time.
VIA SATELLITE: Let’s talk about how Rocket Lab is scaling up to achieve these goals. You told investors on your last earnings call that you were surprised by how much value you got out of your recent purchase of Virgin Orbit’s California factory, calling it a “scaling enabler.” Can you go into detail about how it is a scaling enabler?
Beck: We knew that we needed to scale up our operations to start production on the Archimedes engine [for Neutron]. Acquiring the Virgin Orbit factory saved a ridiculous amount of capital and time in that process. It jumped us straight to that endpoint for $16.1 million, which is awesome. This isn’t what typically happens for us. It was a lucky find.
Our approach to scaling is a bit different to some in the industry. Quite often what you see is people go and raise a whole bunch of money and then build a giant building, then fill it with gear. And then, they'll actually start building the thing they promised to investors. Rocket Lab’s approach has always been crawl, then walk, then run. The facilities that we have to build Neutron are exactly what we need right now to get a couple of them to the pad. This is exactly what we did with Electron. We built a little hangar down at the launch site, bought just what we needed, then we started flying. As we flew, we reinvested that back in the business to build a bigger hangar when we needed it. And then we built another pad, and another. We add methodically and incrementally. We don't just blow capital on a giant factory full of machines that are only 10 percent utilized in a quest to figure out how to build a rocket.
VIA SATELLITE: So, in your internal battle between the engineer who wants to have fun building a dream factory and the CEO who needs to run a stable business, the CEO won?
Beck: I'm also a quarter German and a quarter Scottish. I'm both incredibly frugal and incredibly efficient.
VIA SATELLITE: How does the new Virginia-based launch complex ramp things up now that you’re settled in?
Beck: Things are moving along, now that Antares is flowing out. We have unrivaled access to the pad, with Neutron’s pad slightly to the side of that. It gives us new abilities to ramp up construction.
VIA SATELLITE: You’ve completed multiple acquisitions. Considering that legacy space companies have a history of losing clarity through multiple acquisitions and mergers, how do you decide whether an acquisition is “strategic” or “additional risk at a bargain price”?
Beck: We already knew all the people at all the companies we acquired, and we were already using this stuff. There were no surprises. If you take a satellite and disassemble it on the table, all of the components that often cause headaches are now in-house, within the Rocket Lab family.
For our first acquisition, [Toronto-based spacecraft hardware developer] Sinclair, we used Doug Sinclair's reaction wheels and star trackers in the satellites we built. Walt Holemans and Mike Whalen at Planetary Systems Corp. (PSC) would fly in so many of their separation systems on our rockets. We knew that they and their team were the best. We’re very, very fussy with the people we hire and were equally as fussy with the people that we acquire. We've turned down plenty of opportunities simply because we just don't think the cultural fit was going to work.
SolAero was the biggest acquisition we made. It’s a company with a 40-year history. The great thing about that acquisition was that Brad Clevenger and Jerry Winton and the team were itching to operate outside the private equity envelope and in the Rocket Lab way. All the acquisitions see themselves as part of the bigger vision and that makes them incredibly strategic.
VIA SATELLITE: Two years ago, you talked with Via Satellite about why Rocket Lab was going public through a SPAC. Rocket Lab has performed better than most space companies that took this route, but it’s still been a challenging transition for everyone. Do you still feel the SPAC merger was the right move? Is there anything you would have done differently?
Beck: We never struggled to raise financing for the company. That’s based on the fact that we always build what we say we are going to build and do what we say we’re going to do. At the same time, we always intended to become a public company. It was important for me to build a multi-generational, large space company here in New Zealand. I want the company to outlive me. The trouble with a lot of space companies is they're often so tied to the founder or the entrepreneur. When the entrepreneur leaves, those companies really struggle to survive. That’s not my definition of success. Space is a long-term project. Another problem I see with space companies is that a lot of them are purely passion-driven and they overlook the fact that new companies need to solve existing problems. There has to be a need.
Going public ensures Rocket Lab the right to build a company with rigor that focuses on making a return to both the shareholders and the world. It gives you lots of different options to raise capital and the horsepower to complete acquisitions. Going public raised a tremendous amount of capital and helped us execute the start of our Neutron program. It also allowed us to acquire three companies in six months after becoming public. Maybe it's just good luck or good measure, but it was obvious to us that the whole SPAC bubble was exactly the opportunity we needed to accomplish what we accomplished in that six-month timeframe. It put us in the position we are today.
VIA SATELLITE: Going public also gives us the chance to see how your business is growing and we’ve noticed that your Space Systems division has been gathering speed. Do you see Space Systems growing into its own separate business, or will it remain under the Rocket Lab umbrella?
Beck: We've made great traction with the Space Systems business. As Neutron comes online, you'll see more of a flip back probably the other way. The Space Systems business will always be fairly large, and the launch business will always be fairly lumpy. That’s kind of what we want. Our plan was always to earn two-thirds of our revenue from Space Systems. We thought it might take until 2026 to get there. We did it within one year. Launch is a great business, but it's an incredibly hard and lumpy business. It's very difficult to just be a launch company, because a customer can delay delivery of the satellite and completely blow up your fiscal quarter. A lot of launch revenue is “recognized” revenue. And the point of launch is to be a key access enabler to space. That commands a certain amount of valuation. That said, the development of Neutron alongside all of this is kind of delaying it a little bit. If we had Neutron now, it would look a little bit different.
VIA SATELLITE: How does the Photon spacecraft fit into this picture? You’re about to send it to the dense, gaseous firestorms of Venus for MIT, which is exciting!
Beck: Photon is a bit of a funny thing, because it started off as a kick-stage, or rocket-derived satellite. The original plan was to do a whole bunch of hosted payloads on Photon. But, as it turned out, hosted payloads is a very, very difficult business. We also created a little bit of confusion because we call everything Photon. We have two missions through to Mars for NASA that are called Photons, which look like a certain type of spacecraft. We also have MDA Globalstar buses, which are a half-ton minivan size spacecraft also called Photons. The Photon range breaks up into different areas. One is Electron-based. Another is kind of an explorer base, where we're doing interplanetary and deep space missions. And then a larger comms satellite, as well.
VIA SATELLITE: Finally – Rocket Lab’s mission names are entertaining. “They Go Up So Fast” is a favorite of mine. What’s the story behind the funny names?
Beck: When we were naming the first rocket, we had to give it a descriptor that would be shown on Space Force’s telemetry screens as they were tracking the rocket in Space Command. We could have just called it rocket one, or something like that. But we ran all the words together and just called it ‘It's a Test.’ Because we all figured that if someone was watching that on a radar screen, and it was going off sideways, they think — ‘Oh, it’s just a test.’ So it kind of makes sense. When we flew our second one, it was named ‘It’s Still Testing.’ Launching is such a serious game. There’s so much riding on every launch and people work so hard on each one. We thought that we could maybe lighten the mood a bit and have a little bit of fun. The team enjoys coming up with the names. We try to keep them appropriate.
VIA SATELLITE: Do the customers get a say in naming the missions?
Beck: Oh yeah. Everybody's into it. The two TROPICS missions that we flew for NASA were named by NASA. ‘Rocket Like a Hurricane’ and ‘Coming to a Storm Near You.’ Good names! The customers have fun with it, too. VS
Editor's note: This interview was conducted before the September launch failure.