Speaker 1: Hi there, Welcome to Shared Lunch. My name's Later Robertson,
Speaker 1: the co founder and co CEO at Shareses. We've got
Speaker 1: a really exciting episode for you today because I'm on
Speaker 1: site in Auckland at rocket Lab with Sir Peter Beck.
Speaker 1: But as always, before we get started, here's some important information.
Speaker 2: Investing involves risk you might lose the money you start with.
Speaker 2: We recommend talking to a licensed financial advisor. We also
Speaker 2: recommend reading product disclosure documents before deciding to invest. Everything
Speaker 2: you're about to see and here is current at the
Speaker 2: time of recording.
Speaker 1: Well, thanks so much for joining us again, Peter, always
Speaker 1: a pleasure, fantastic to be here in your space as well.
Speaker 1: It's probably the coolest place that I've ever filmed a
Speaker 1: podcast for, that's for sure. Firstly, though, it's the first
Speaker 1: time we've spoken to you, that Sir Peter beank, So
Speaker 1: how does that feel? And is it being the official
Speaker 1: ceremony you had the sword on the shoulder?
Speaker 3: Oh no, that that's to come very unusual old.
Speaker 4: Yeah, I mean I'm just just a Southern board trying
Speaker 4: to build some rockets.
Speaker 1: So it's yeah, it's very cool and congratulations and it's
Speaker 1: great to have someone in our entrepreneurial community, in particular
Speaker 1: with the profile and just doing these podcasts as well.
Speaker 1: Over the last couple days, I've been watching a bunch
Speaker 1: and I see how many you've been doing with some
Speaker 1: quite random people. Actually they're invest in the retail network.
Speaker 1: Is that a real focus of yours or something that
Speaker 1: you're really quite deliberate about.
Speaker 4: Yeah, I mean, so we have a wide investor base
Speaker 4: and we have a reasonable sized retail base as well.
Speaker 4: So you know, we do a lot of views with
Speaker 4: analysts and you know, your normal kind of Wall Street folks,
Speaker 4: but no, I like, I think it's important, you know, to.
Speaker 3: Talk to all investors.
Speaker 1: Yeah, fantastic. So you've just had the biggest quarter in
Speaker 1: company history, Q two twenty twenty four. Can you give
Speaker 1: us a little bit of an outline of those earnings?
Speaker 4: Yeah, so, I mean i'll convert it on the fly
Speaker 4: to New Zealand dollars being a usentity, But so about
Speaker 4: one hundred and seventy million New Zealand dollars quarter, which,
Speaker 4: as you point out, it's our biggest quarter you know,
Speaker 4: to date, and you know that that represents, you know,
Speaker 4: on a year to date kind of basis of seventy
Speaker 4: one percent year over year and increase in revenue, which
Speaker 4: is which which we're very happy about, and you know,
Speaker 4: in about a fifteen percent increased quarter on quarter, so
Speaker 4: you know, really really good solid earnings and great to
Speaker 4: you know, tack over one hundred million us D mark
Speaker 4: per quarter.
Speaker 1: Yeah, fantastic, some really big numbers there. What's driving that
Speaker 1: year on your growth?
Speaker 4: Primarily it's across all sectors, so it's not just you know,
Speaker 4: launches standout or Space systems a standouts, it's everything.
Speaker 3: Really.
Speaker 4: You know, our backlog is also increased, and you know,
Speaker 4: we're sitting at round about one point six billion mzd
Speaker 4: in backlog and the majority of that backlog sits in
Speaker 4: our Space System's division. But you know, both launch and
Speaker 4: space Systems has just been growing really really strongly.
Speaker 1: Great. And then the other one I noted was certainly
Speaker 1: that gap between the revenue and the lost number are
Speaker 1: starting to get much closer. And is that a focus
Speaker 1: and what's the sort of plan introductory from there?
Speaker 4: Yeah, so that'll move around because obviously we're investing a
Speaker 4: tremendous amount of Neutron. I mean, new Neutron is our
Speaker 4: large rocket and you know it is it's consuming, you know,
Speaker 4: it is the big consumer of cash for the business.
Speaker 4: Absent that, then you know, the business looks very profitable.
Speaker 4: But you know, we're strategically investing in that for the future.
Speaker 4: You know, what we're trying to build here is an
Speaker 4: end to end space company. And what that really means
Speaker 4: is like customers can come to us or governments can
Speaker 4: come to us, and we just provide the entire solution.
Speaker 1: Yeah. Nice, Well that sort of brings me nicely into
Speaker 1: the question because the earnings report did focus a bit
Speaker 1: on that and interesting how that looks like, particularly that
Speaker 1: the data and services and stuff, and how a miniment
Speaker 1: I suppose and that strategy is for Rockabed to be
Speaker 1: moving into that.
Speaker 4: Yeah, I think if you look at all of the
Speaker 4: large space companies of the future, they're not going to
Speaker 4: look like a launch company. They're not going to look
Speaker 4: like a satellite company. They're going to look like an
Speaker 4: infrastructure company. And you know, we're accelerating as fast as
Speaker 4: we can to get to that point. And really the
Speaker 4: last piece in that puzzle for us is Neutron having
Speaker 4: you know, a multi ton capability to lift orbit is
Speaker 4: really the only piece of the puzzle that's missing.
Speaker 1: Yeah, nice and multi ton How many tons are we talking?
Speaker 1: This can be a thirteen thirteen yeah.
Speaker 4: Right, And it's always good to put that in context.
Speaker 4: You know, Electron our current rocket lifvets three hundred and
Speaker 4: twenty kgs, so you know, you're lifting thirteen thousand cage and.
Speaker 1: I'm looking at those out behind us and they're still
Speaker 1: very big.
Speaker 3: You know, it's huge. Yeah, it's absolutely huge.
Speaker 4: And in fact, you know, we just we're just announced
Speaker 4: today and put out some details of our large automatic
Speaker 4: five placement machine, which is a technical way of saying
Speaker 4: like the world's biggest carbon composite three D printer, you know,
Speaker 4: is massive machine, seventy five ton machine that makes the tanks.
Speaker 1: Yeah, credible, And that's that you mentioned. Is the going
Speaker 1: to be the competitor for the Falcon the SpaceX Yeah.
Speaker 4: Yeah, yeah, So, I mean there is kind of unashamably
Speaker 4: a kind of monopoly and medium launch right now, and
Speaker 4: you know, our friends over at spaces have done very
Speaker 4: well with the Falcon nine, but there does need to
Speaker 4: be some balance restored in that market with a competitor.
Speaker 3: So that's the intention with Neutron.
Speaker 1: Yeah. Great, So I mean, where are we at with
Speaker 1: Neutron then it was i think originally targeted for the
Speaker 1: end of this year now into twenty twenty five, with
Speaker 1: how's the progress going on there?
Speaker 4: Yeah, So I mean we always kind of at any
Speaker 4: launch date with it's a rocket program, and you know,
Speaker 4: I think if you looked at some of the earnings
Speaker 4: and you look at the development timelines of our vehicles,
Speaker 4: crazy short compared to any other launch vehicle. I mean,
Speaker 4: Electron was brought to market from announcement in like two
Speaker 4: point eight years. Contrasts that with more traditional programs and
Speaker 4: they're measured in eight to ten.
Speaker 3: Years or more.
Speaker 4: So you know, Neutron is on task to be delivered
Speaker 4: in sort of four and a half years, which is
Speaker 4: faster than anybody's ever delivered a medium launch viewvehicle. So
Speaker 4: so yeah, the plans to try and get this to
Speaker 4: the pad by Miller next year and get the first
Speaker 4: run away. But you know, it is a rocket program,
Speaker 4: and you know it is there's there's just a huge
Speaker 4: amount of things that all have to come together.
Speaker 1: Yeah, And just like on that coming back to that
Speaker 1: competitors space, the sort of cost per kilo aiming for
Speaker 1: still on track for that as well.
Speaker 4: Yeah so, so cost pequilo is is a is a
Speaker 4: lovely metric that everybody can understand, but it's absolutely useless
Speaker 4: because nobody ever buys a rocket on a cost perkilo
Speaker 4: basis by those electrons behind us. A customer will come
Speaker 4: to us, and one customer might have a one hundred
Speaker 4: kg payload, one customer might have a two hundred and
Speaker 4: fifty kg payload.
Speaker 3: The price is no different.
Speaker 4: You buy the rocket at the fixed price of buying
Speaker 4: the rocket. So a cost pekilo metric is a nice
Speaker 4: metric that's easily can kind of consumable, but it's not
Speaker 4: how rockets are sold. But nevertheless on a cost pekillo
Speaker 4: gram basis, yes, of course it's it's competitive with with
Speaker 4: the the other options out there.
Speaker 1: Yeah. Great, So between now and Neutron, the electron remains
Speaker 1: the main revenue stream for.
Speaker 3: The launch it does.
Speaker 4: Yeah so, space systems accounts for over two thirds of
Speaker 4: the revenue for the company, but you know, for launch here,
Speaker 4: electron remains.
Speaker 1: Can you break down some of those other revenue streams
Speaker 1: just quickly that two thirds?
Speaker 4: Yeah, so, you know, we don't know typically break down
Speaker 4: into into various categories. Of space systems, but you know
Speaker 4: it's spread across our components businesses, so you know, we
Speaker 4: sell a tremendous amount of components into other people's platforms.
Speaker 4: In fact, last year, thirty eight percent of everything that
Speaker 4: went to orbit had a Rocket Lab blogo on it globally,
Speaker 4: so you.
Speaker 3: Know, whether it's a reaction.
Speaker 4: We're a solar panel, you know, we sell a lot
Speaker 4: of those components in and then and then spacecraft as well,
Speaker 4: so you know we have over forty five spacecraft and
Speaker 4: backlog representing over seven hundred million US dollars of revenue
Speaker 4: in the future. So so yeah, it's we cover a
Speaker 4: wide spectrum of spacecraft.
Speaker 1: Yeah, so you collect the majority of cash on there,
Speaker 1: so ninety percent I think.
Speaker 4: Before launch for yeah, so on the launch business model,
Speaker 4: you know, everybody always focuses on how many launches did
Speaker 4: you get off in the quarter, which is yeah, you know,
Speaker 4: it's a good metric to track, but actually from a
Speaker 4: cash collection standpoint.
Speaker 3: It's totally irrelevant.
Speaker 4: So you know, as you kind of point out, when
Speaker 4: it comes to launch day, we have collected ninety percent
Speaker 4: of all of the contract value. So you know, our
Speaker 4: business model with Electron is our customers fly with us
Speaker 4: because we can tailor the mission and we can tailor
Speaker 4: the timelines. So it's not uncommon for a customer to
Speaker 4: delay a launch because their spacecraft isn't ready or they
Speaker 4: want to optimize their orbit or those kinds of things.
Speaker 4: And of course that can play havoc with our quarters
Speaker 4: because you know, it shifts a launch from one quarter
Speaker 4: to the other. And I guess what we're trying to
Speaker 4: try to explain to people there is that, well, don't
Speaker 4: get too worried. It doesn't actually matter because we would
Speaker 4: have probably elected up to ninety percent of the cash
Speaker 4: collections against that contract. And the contracts never go away,
Speaker 4: they just sort of move around in the quarters. And
Speaker 4: that's actually a value proposition. That's why people come fly
Speaker 4: with us. So one one side of the equation, you know,
Speaker 4: we don't want to be penalized by the street for
Speaker 4: moving a thing between quarters because that's actually their business model.
Speaker 1: And I mean, what happens if the if something goes
Speaker 1: wrong with the launch, if you already clicked the ninety
Speaker 1: percent weeks.
Speaker 4: Now, that is that is that is the way launch
Speaker 4: contracts are written. So you know, once we intention intentionally
Speaker 4: ignite the engines. That is one hundred percent of the
Speaker 4: contract complete. Generally, occasionally there is there's some some kind
Speaker 4: of extra extra things on the contract, but that's the
Speaker 4: vast majority of all launch contracts on intentional ignition, all
Speaker 4: the you are your service is complete.
Speaker 1: I mentioned that I was chatting with you to my
Speaker 1: overdriver yesterday when I say, driving to the airport, any
Speaker 1: one of his question for you or through me, it
Speaker 1: was how you insure rockets and which is sort of
Speaker 1: quite relevant after that, and I said, I'm not sure
Speaker 1: if that would be if if as many insurance companies
Speaker 1: lighting up, but I said, I got the opportunity I'd
Speaker 1: ask you.
Speaker 4: So absolutely, there is no there's a whole there's a
Speaker 4: whole insurance market. Yep, there's absolutely a whole insurance market.
Speaker 4: And you know, customers ensure their spacecraft for the replacement
Speaker 4: of their spacecraft, they can insure them for the replacement
Speaker 4: of the spacecraft and another launch. They can even insure
Speaker 4: them for those things. Plus if it does blow up
Speaker 4: a loss in revenue in the future.
Speaker 3: And there was a.
Speaker 4: Quite a famous you know, insurance claim a few years
Speaker 4: ago from I think it was like a UAE satellite
Speaker 4: where it was lost in a launch failure, and they
Speaker 4: made an insurance claim that actually for the future generation
Speaker 4: of the revenue off that spacecraft, and it was the
Speaker 4: largest insurance claim in the space industry's history. Insurance got
Speaker 4: a lot more expensive after that one, But no, there's
Speaker 4: a there's a vibrant insurance market for it.
Speaker 1: I think if there's many other businesses where revenue is
Speaker 1: you know, contract is delivered at ignite point, you know
Speaker 1: that's that. I don't know, it's be quite unique, I think,
Speaker 1: but it makes complete sense.
Speaker 4: Well, I mean, this is this is the reality of
Speaker 4: the businesses. It's is extraordinarily difficult, and you know that
Speaker 4: that that.
Speaker 3: Is It's just it's just the nature of the business.
Speaker 1: Correct. Maybe just the overall'd be really interesting in your
Speaker 1: view on the overall health of the space industry at
Speaker 1: the moment. It's been a huge amount of check. We
Speaker 1: were just talking about one before. After I've watched the
Speaker 1: documentary World Wilde Space, which was fantastic Rock Lab. I thought, so,
Speaker 1: what's your feeling of the space industry at the moment
Speaker 1: and where it's heading.
Speaker 4: So the space industry is generally relatively insulated from kind
Speaker 4: of macroeconomic things in a general sense only because a
Speaker 4: lot of the space programs or the space infrastructure programs
Speaker 4: are measured in five or more years of you know,
Speaker 4: of deployment. So if you're going to put a constellation
Speaker 4: of Earth observation spacecraft on all, but it could be
Speaker 4: something like a five to seven year timeline, so you
Speaker 4: can have a whole economic cycle during that, and generally
Speaker 4: these programs are funded for that duration, so in some respects,
Speaker 4: on the large programs, they're relatively insulated from any kind
Speaker 4: of major environmental or economic and things. And sometimes some
Speaker 4: really perverse things happened. I think there was there was
Speaker 4: a bit of a boom in the space industry during
Speaker 4: some of the some of the other downturns, simply because
Speaker 4: there's a whole lot of unemployed people at home watching
Speaker 4: TV and they were all their TV was coming through satellites,
Speaker 4: so they had to launch a whole lot more satellites
Speaker 4: to you to actually suffice that demand. So sometimes there's
Speaker 4: some perverse outcomes. But I would say that definitely though
Speaker 4: from an entrepreneurial standpoint, the space industry was at its
Speaker 4: frothiest in sort of twenty twenty twenty twenty one.
Speaker 3: There was crazy world.
Speaker 4: Probably, Yeah, much of the world like just crazy stuff
Speaker 4: done and large amounts of capital put it work into
Speaker 4: some pretty suspect business models, and you're seeing that kind
Speaker 4: of thrash out now and you're seeing, you know, who
Speaker 4: are the real people in this industry and who are
Speaker 4: the less real people in this industry.
Speaker 1: Perhaps a little bit of consolidation happening after that, but.
Speaker 4: Well that consolidation creates opportunities too, because you know, for us,
Speaker 4: we're able to pick up, you know, a competitor that
Speaker 4: failed Virgin Orbit and we're able to pick up you know,
Speaker 4: all of their assets for sixteen cents on the dollar,
Speaker 4: which are now hard at work producing neutron engines.
Speaker 1: Topical at the moment. But the Boeing situation that's happening
Speaker 1: currently astronauts stuck on the International Space Station due to
Speaker 1: some technical issues. So it's just worrying if you had
Speaker 1: any thoughts or views on that happening or sorry on
Speaker 1: what's happening with that.
Speaker 4: Yeah, well I think it highlights the fact that it's
Speaker 4: always good to have too, right, and you know, kind
Speaker 4: of to our point with neutron as well, it's like
Speaker 4: you can't have one dominant or just one x one
Speaker 4: kind of primary access to space. You need multiple So
Speaker 4: you know, the space industry is super hard. This is
Speaker 4: not easy stuff. So you know, I think it really
Speaker 4: speaks to the importance of having more than one supply.
Speaker 1: You recently built two spacecraft heading to Mars, the Blue
Speaker 1: and Gold. Is any more developments in that space.
Speaker 4: Yeah, so they're actually shipping as we as we speak
Speaker 4: to head to Cape Canaveral to be launched. So, you know,
Speaker 4: super exciting mission. It's not very often you get to
Speaker 4: work on a planetary mission, and you know, it's just
Speaker 4: super cool for the team. And I would say the
Speaker 4: unique thing about that though, is that typically if you
Speaker 4: look at the logos that are orbiting Mars right now,
Speaker 4: they're all the logos that you would expect from the
Speaker 4: very large defense in space primes. When those two spacecraft
Speaker 4: from rocket LABL arrive, twenty percent of everything orbiting Mars
Speaker 4: will have a Rocket Lab logo on it. And so
Speaker 4: that's cool in its own right. But the thing is
Speaker 4: that generally those programs have a billion dollar price tag
Speaker 4: attached to it, and you know a decade of time
Speaker 4: attached to it. I mean, we built two spacecraft in
Speaker 4: three and a half years for tens of millions of dollars.
Speaker 4: So I mean that that, to me is a bigger
Speaker 4: accomplishment than actually even going to Mars. And why that's
Speaker 4: important is that that that is that is incredibly disruptive
Speaker 4: to the space industry, incredibly disruptive to interplanetary science. But
Speaker 4: I think people are looking at that and thinking, well,
Speaker 4: you know, if you can go to Mars for some
Speaker 4: tens of millions of dollars, then that totally changes the
Speaker 4: paradigm of interplanetary research and interplanetary work.
Speaker 1: How long is the journey there?
Speaker 4: Yeah, it's a multi multi year mission, so you know,
Speaker 4: the journey to get to Mars is quite long. I
Speaker 4: mean there's a transit window to Mars that happens every
Speaker 4: couple of years, so I know that that that the
Speaker 4: ends and sort of the end of September or thereabouts,
Speaker 4: and you know, and then then they spend in a
Speaker 4: long time in a cruise state. The spacecraft themselves have
Speaker 4: tremendous amount of propulsion on board. The mission is very
Speaker 4: very difficult. It's not you know, we don't just put
Speaker 4: the spacecraft to sleep for a couple of years and
Speaker 4: arrive at Mars where there's active maneuvering all the way,
Speaker 4: and then when they get there, we have to capture
Speaker 4: Mars's gravitational field and go into orbit. And then once
Speaker 4: we're in orbit, we have to do a whole bunch
Speaker 4: of maneuvers for the science. So very difficult mission not
Speaker 4: certainly no respects.
Speaker 1: And that maneuvering is still largely human driven. It's sort
Speaker 1: of not set beforehand.
Speaker 4: With there's certainly nobody's on a joystick because there's like
Speaker 4: a twenty minute delay, but there's all pre pre programmed.
Speaker 1: Maneuvers and speaking into planetary a couple of years ago,
Speaker 1: maybe I think it's first sort of mentioned the idea
Speaker 1: of finding aliens in venus. What's any progress there or thoughts?
Speaker 4: Yeah, yeah, so you know that is that is the
Speaker 4: nights and a weekend's kind of you know, philanthropic project.
Speaker 4: Nobody's paying for that, so you know, we just kind
Speaker 4: of take orbits and put them together and do stuff
Speaker 4: and nights and weekends.
Speaker 3: So you know, the probe is coming on really well.
Speaker 3: So the probe probe.
Speaker 4: Manufacturing is almost complete, the instrument manufacturing is complete, and
Speaker 4: you know we're just we're just waiting for the right
Speaker 4: time to get that away. We're too busy with real
Speaker 4: work right back.
Speaker 1: Yeah, what a cool sideline project day Venus A bit
Speaker 1: closer to home, there's been some speculation I've been read
Speaker 1: about the Internet that SpaceX might end up with a
Speaker 1: spot in Australia. I don't know how true that is,
Speaker 1: but if that word happens, that impact rocket lappen anyway
Speaker 1: or no.
Speaker 4: I mean, they're going to need spots all around the
Speaker 4: world because with the fully reusable orbital kind of concept
Speaker 4: is you know you're in orbit and the Earth is
Speaker 4: processing processing under underneath you.
Speaker 3: So you can't just take off and.
Speaker 4: Land back where you started because you know it's processed
Speaker 4: and you're you're in a different spot now. So they're
Speaker 4: going to have to land in different countries and then
Speaker 4: you know, once you land.
Speaker 3: In Australia, you have to then ship the vehicle back
Speaker 3: to the United States and all the rest of it.
Speaker 4: And I guess, you know, some of that is what
Speaker 4: drove us when if you look at the architecture of Neutron,
Speaker 4: there's there's kind of two schools here, right like fully
Speaker 4: reusable or like largely reusable. If you look at a rocket,
Speaker 4: the first stage represents seventy percent of all of the
Speaker 4: cost of the rocket traditionally. Now if you can make
Speaker 4: that seventy percent, eighty or ninety percent, then the kind
Speaker 4: of expendable upper stage equation from a business standpoint makes
Speaker 4: great sense, and that's.
Speaker 3: What we've really focused on.
Speaker 4: If you look at the upper stage of Neutron, you know,
Speaker 4: it's a giant carbon composite tank, but it's just it's
Speaker 4: wayfer thin. I mean that whole tank. It's five meters
Speaker 4: in diame and a five meters tall weighs the same
Speaker 4: as a Harley Davidson motorcycle. So if it doesn't weigh much,
Speaker 4: you're not using much material, it doesn't cost much. So
Speaker 4: if you look at the architecture of Neutron, it is
Speaker 4: you know, it's it's a giantly outsized first stage for
Speaker 4: a tiny little second stage.
Speaker 3: But the first stage is the bit that we keep
Speaker 3: back and we keep reusing again and again.
Speaker 4: So the economics become a little bit blurry when you've
Speaker 4: got to, you know, ship giant rockets all around the
Speaker 4: world and all the rest of it, and you know,
Speaker 4: who knows what they end up turning up actually being.
Speaker 4: But you know, we are for sure certain in the
Speaker 4: economics of the neutron approach.
Speaker 1: Anyway, just going to move into the world Wild Space
Speaker 1: movie that we touched on before. I'm not sure if
Speaker 1: you're at the point of sick of hearing it at
Speaker 1: year or not. But like I said, did I learned
Speaker 1: a lot in it? I think, but Rocket Lab came
Speaker 1: out really glowing, has to do and it I'm just
Speaker 1: interested if there's any takeaways for you in that process
Speaker 1: or anything that you learned in the film that came
Speaker 1: out or was it sort of all just things that
Speaker 1: you're in your on screen in the end.
Speaker 4: But well, I mean, I look, I was a reluctant
Speaker 4: participant so in that whole thing, and you know, compared
Speaker 4: to the excess that that others gave the you know,
Speaker 4: the documentary makers, you know, we we didn't. We didn't
Speaker 4: provide as much access. It's you know, it's not it
Speaker 4: wasn't wasn't as critical for us as perhaps others. But
Speaker 4: I think what you see on the documentary is is
Speaker 4: what it is. I mean, that's that's how we operate,
Speaker 4: and you know, we we take what we.
Speaker 3: Do very seriously.
Speaker 4: And what I think it highlights is that you know,
Speaker 4: in the space industry, there is there is a tremendous number.
Speaker 3: Of folks trying to do great stuff.
Speaker 4: And one the one great thing about the space industry
Speaker 4: is you can have a very grand idea and you
Speaker 4: can go and raise a lot of money less so now,
Speaker 4: but you used to be able to go and raise
Speaker 4: a lot of money against a grand idea, and you know,
Speaker 4: that was a wonderful thing about the space industry. But
Speaker 4: it's also kind of the downside of the space industry
Speaker 4: because you know, if you're a good salesman, you've got
Speaker 4: a way out idea, you can go and raise some
Speaker 4: money and then you know, quickly literally set fire to
Speaker 4: it all. And a lot of people in the space
Speaker 4: industry have a cool idea and then try and build
Speaker 4: a business around a cool idea. And that's just never
Speaker 4: been our go I mean, we look for honest to god,
Speaker 4: real holes in the market that we can plug then
Speaker 4: and then build a product to meet those. And you know,
Speaker 4: as we're talking before, like twenty twenty, twenty twenty one,
Speaker 4: it was like peak frothiness within the industry and there
Speaker 4: was just just cubic dollars got put at work and
Speaker 4: kubic dollars got lost, and that's kind of part of
Speaker 4: the challenge for us, is that a lot of investors
Speaker 4: put a lot of money into the space industry and
Speaker 4: it wasn't successful. And you know, we kind of Adam Spiced,
Speaker 4: my CFO and I often joke together it's like we've
Speaker 4: got the best house in a really bad neighborhood because
Speaker 4: everybody burned their house down and there's dead cars on
Speaker 4: the lawn. So but you know, these the markets are
Speaker 4: very efficient and in time these things, these things.
Speaker 3: Kind of correct.
Speaker 4: But certainly the space industry is you know, in that
Speaker 4: frosty period did a lot of capital.
Speaker 1: I was thinking while you were talking there, because one
Speaker 1: of the quotes I think you made in the early
Speaker 1: on in that documentary was about you need to understand
Speaker 1: what the business is behind it. It's not just building rockets,
Speaker 1: it's people. And I'm wondering at what point in your
Speaker 1: journey you started to really observe some of those business
Speaker 1: opportunities and how you continue to evolve that thinking.
Speaker 4: Yeah, well, look, we're hustlers, so we're always looking for,
Speaker 4: you know, the next opportunity that we think we can
Speaker 4: either disrupt or displace.
Speaker 3: Or compete.
Speaker 4: And you know, you've seen we're not a static company.
Speaker 4: You know, we bought the Electron product to market and
Speaker 4: it is the permanent leader in small launch. Electron alone
Speaker 4: accounts for sixty four percent of all United States launch,
Speaker 4: third most frequently launched rocket in the world now, So
Speaker 4: so you.
Speaker 3: Know, market opportunity plugged it.
Speaker 4: Likewise with Space Systems, as we saw a real opportunity there,
Speaker 4: you know, to you know, to scale and provide different alternatives,
Speaker 4: and you know, we bought a whole bunch of businesses
Speaker 4: and then we scale the heck.
Speaker 3: Out of them.
Speaker 4: And you know, as we talked about before, now we're
Speaker 4: a big supply there. And then same with Neutron is
Speaker 4: like there is a huge launch kind of demand that's
Speaker 4: not being met by one provider. So and you even
Speaker 4: you just can't have one provider. So we made the
Speaker 4: big call and it was a big call to go
Speaker 4: and invest in Neutron. But the one thing that I
Speaker 4: would say is that you know, we're all kind of
Speaker 4: engineers here, so we're all pretty conservative folks. So you
Speaker 4: never see Rocket Lab kind of push all the chips
Speaker 4: into the center of the table on one particular idea
Speaker 4: or opportunity. We're always very methodical in the way that
Speaker 4: we build the business.
Speaker 1: At what point, like, you know, ten years a decade ago,
Speaker 1: did you realize that did you realize then that it
Speaker 1: would be the almost an infrastructure play that you were
Speaker 1: building or the how's that evolved?
Speaker 2: Yes?
Speaker 3: Yeah, So we often asked this question.
Speaker 4: It's like rocket Lab pivoted into building satellites as well
Speaker 4: as rockets are like, no, we never pivoted. I mean
Speaker 4: this second Neutron electrons sorry, rocket that we ever launched
Speaker 4: on the kickstage, which is the top of the rocket
Speaker 4: that goes into orbit, had recesses all round that keckstage
Speaker 4: for solar panels to turn that into a satellite that
Speaker 4: was on flight two. So but once again going back
Speaker 4: to the point, I'm never going to push all the
Speaker 4: chips into the center. We needed to establish Electron as
Speaker 4: a market leader first, and I like to finish one
Speaker 4: thing before I start the next. And you know, once
Speaker 4: Electron was kind of dialed, and then then we announced
Speaker 4: our space system's programmed and then started to grow that
Speaker 4: and grow that, and then you know, when the right
Speaker 4: time to bring Neutron into the mix, we did that
Speaker 4: as well. So you know, once space system is established
Speaker 4: and everything, we bring neutron into them.
Speaker 1: That's such a familiar entrepreneurial sort of tail all that
Speaker 1: stuff that the entrepreneurial drug where that comes in because
Speaker 1: we've got a case that cheesy at the moments, well,
Speaker 1: we're sort of doing a lot more in the B
Speaker 1: to B space and quite weird to set our sharehold.
Speaker 1: I mean, one of the common questions are you pivoting
Speaker 1: into businesses more? It's like, no, if you rewind seven
Speaker 1: years ago to where one of our first pitch decks
Speaker 1: this this was yah, Yeah, that's right. That wasn't That
Speaker 1: was a bit that wasn't captured in the story, you know, But.
Speaker 4: And you find that that, you know, all companies have
Speaker 4: a larger vision and and you just have to keep
Speaker 4: working towards that vision. And sometimes you know the direction
Speaker 4: changes a bit or how you get there, but but
Speaker 4: you know, there is there is always a grander, grander goal.
Speaker 1: Yeah. One of the other things that the documentary showcased
Speaker 1: was the pressure around that launch. And I think you
Speaker 1: said it was your least favorite time of it. But
Speaker 1: I was wondering if if there's any particularly enjoyable ones
Speaker 1: that you have reflected on or particularly challenging ones.
Speaker 2: Yeah.
Speaker 4: I mean for me personally, one of the one of
Speaker 4: the most satisfying ones was you know, a first flight
Speaker 4: for for NASA, because when I before I started rocket Lab,
Speaker 4: you know, my plan at school was was always to
Speaker 4: go and work Vanasa. That was the goal, right, And
Speaker 4: I quickly found out that you know, a foreign national
Speaker 4: with no Universe degree is very challenging to go and
Speaker 4: work for FANASA. So not not you know, not to
Speaker 4: be not to be outdone with that is the easiest
Speaker 4: solution was just to go and start rocket Lab and
Speaker 4: you know, launching, I think it's like four launching. You know,
Speaker 4: it's dedicated group of payloads. Fanasa just felt you.
Speaker 3: Know, full circle. Of course, in Heed at the moment,
Speaker 3: you're never think any of this.
Speaker 4: But it's often that, you know, the drive home after
Speaker 4: a successful launcher go huh that actually happened and that
Speaker 4: was that was super cool.
Speaker 1: Yeah. Yeah, that's one of the things I have to ask.
Speaker 1: But how relevant is the countdown these days? It seems
Speaker 1: like it's been in movies forever, it's still happening in
Speaker 1: all of them. But it just seems to me that
Speaker 1: surely there's a computer bitter place, but not for the
Speaker 1: overall drama of it, but.
Speaker 4: Well so, so you know, the computer actually takes control
Speaker 4: of not only the launch vehicle but also the launch
Speaker 4: site and all the infrastructure at t minus ten minutes.
Speaker 4: So when we enter auto sequence, that's when we hand
Speaker 4: over control to the rocketing.
Speaker 3: You know, the rocket is also controlling the.
Speaker 4: Ground systems and it's and it's just you know, we
Speaker 4: can interrupt that auto sequence, but from that point onwards
Speaker 4: until the spacecraft is deployed, it's all on the rocket.
Speaker 4: But the countdown is you know, it's it's kind of
Speaker 4: important because you want to know when stuff is supposed
Speaker 4: to happen, and you know that it's going to have
Speaker 4: would be pretty weird to just sort of sit there
Speaker 4: and just watch a rocket launch.
Speaker 1: Without I absolutely love watching that. It's just yeah, just
Speaker 1: watching that thing, just that the stress in those moments
Speaker 1: as you're about to ignite something that could literally blow up.
Speaker 3: But well, it's it's it's the bizarrest thing to say.
Speaker 4: But for the first few launches, I was doing the
Speaker 4: team count rights, doing the final countdown, and there's so
Speaker 4: much going on and you're concentrating so much that it's
Speaker 4: actually really hard to count.
Speaker 3: Backwards, right.
Speaker 4: You wouldn't you wouldn't think it, right, But you're sitting
Speaker 4: there and you have to actually go in your head, well,
Speaker 4: jeap like seven is before.
Speaker 1: Eight, and.
Speaker 4: There's just so much going on that you think there
Speaker 4: were be a super easy task, but actually it's more difficult.
Speaker 3: Than you think.
Speaker 1: You mentioned that, you know, you didn't have the degree,
Speaker 1: and what's of stuff? What's the plausibility of someone being
Speaker 1: able to work at rocket Lab, for example, without having
Speaker 1: that degree and getting a job here now.
Speaker 4: I mean, you know, look, you get a CV and
Speaker 4: they all look the same, and I don't know who's
Speaker 4: telling you know, which careers advisor university telling people to
Speaker 4: write cvs, but they're all the same, and it's impossible
Speaker 4: to distinguish, you know, the kind of Rocket Lab person
Speaker 4: that we like. So the first question we ask is, okay,
Speaker 4: this is great, put it to one side. Tell me
Speaker 4: what you actually do in your own spare time, Tell
Speaker 4: me what you built. And those are the people that
Speaker 4: we actually want. The people that do well here are
Speaker 4: people who are like in an engineering sense, are born engineers.
Speaker 4: So they'll go to university and they'll do an engineering
Speaker 4: degree or not. But then after that they'll go home
Speaker 4: and they'll be working on their car, or they'll be
Speaker 4: building a quad copter, or they'll be there'll be you know,
Speaker 4: the whole life revolves around engineering, and those are the
Speaker 4: people that you really really want.
Speaker 1: I remember maybe it was an earlier podcast we talked
Speaker 1: about you mentioned that you would never go into space yourself.
Speaker 1: You don't see that as a thing, but I have
Speaker 1: noticed on another YouTube thing or something else watching where
Speaker 1: you did used to ride your early rockets. Is that
Speaker 1: just is it the space factor or is it like
Speaker 1: or is you just your risk appetite changed in general.
Speaker 3: No, I've got a fairly healthy risk appetite.
Speaker 4: No, It's just one of those things that the more
Speaker 4: you know about something, the more you know, the more
Speaker 4: you realize you don't know. And also, you know, look,
Speaker 4: I have I have all of the all of the
Speaker 4: engineering insight, but in that sense, none of the courage
Speaker 4: to climb on board a rocket because I understand all
Speaker 4: of the things that have to go right too well.
Speaker 4: And I have tremendous admiration for an astronaut because a
Speaker 4: lot of those guys are engineers as well, and they
Speaker 4: have a full understanding as well, And I think it
Speaker 4: just takes a special kind of person to do that.
Speaker 4: And you know, I think I think i'm maybe if
Speaker 4: if I'm kind of old and and you know, all
Speaker 4: your kids are grown up and all those kinds of
Speaker 4: but if you've actually got responsibilities to to to people
Speaker 4: and to other things, I think it's it's a pretty
Speaker 4: tough thing to do to take that level of risk.
Speaker 1: Yeah, you mentioned the healthy ep type for risk, right,
Speaker 1: Where where is that line?
Speaker 2: Then?
Speaker 1: What is what are the things that you like doing that?
Speaker 3: Yeah?
Speaker 4: So I think I think I'm paid to take relatively
Speaker 4: large amount of risk and then mitigrate, mitigate it to
Speaker 4: an extreme level such that it doesn't occur. That's that's
Speaker 4: that is basically the definition.
Speaker 3: Of a rocket CEO.
Speaker 4: So you know, heavy to heavy to take take risk.
Speaker 4: But but you can't take risk unless you fully understand
Speaker 4: you all the consequences and how you mitigate them. So
Speaker 4: I think there's a big difference between perceived risk and
Speaker 4: actual risk.
Speaker 3: You brought up the rocket.
Speaker 4: Bike, right, So if someone standing on the outside putting
Speaker 4: a leg either side of a rocket bike probably looks
Speaker 4: very very risky, but the actual risk of that is
Speaker 4: you know, the particular engine on that was was incredibly robust.
Speaker 4: The chances of that thing, you know, detonating almost zero,
Speaker 4: and you know, the stability of the vehicle was really
Speaker 4: really solid, and I had heaps of safety gear on
Speaker 4: and all the rest of it. So worst case scenario
Speaker 4: probably skid along the ground, No big deal. So the difference,
Speaker 4: the difference there is like, yes, there is there is.
Speaker 4: There is actual risk if you didn't mitigate it through
Speaker 4: through kind of making things safe. And there's a lot
Speaker 4: of perceived risk that that isn't actually even there.
Speaker 1: Just maybe outside of rocket layer. I know, you do,
Speaker 1: you do invest in a few companies. What are the
Speaker 1: things that you're normally looking for when you're selecting companies.
Speaker 4: Yeah, so it's kind of like, you know, as being
Speaker 4: CEO of a publicly traded company, there's you know, you
Speaker 4: lose some of that kind of entrepreneurial kind of you
Speaker 4: know abilities. So I need to get my hit and
Speaker 4: I get my hat through you know, supporting other early
Speaker 4: stage companies. And you know, I sit on an investment
Speaker 4: committee for outseet and invest in companies as you point out,
Speaker 4: and I guess the things that I'm invested in all
Speaker 4: things that I think could be billion dollar entities in
Speaker 4: New Zealand. Those are the things that I get really
Speaker 4: excited about. I've always viewed that it's the same amount
Speaker 4: of work to build a ten million dollar company as
Speaker 4: a ten billion dollar company, So why would you bother
Speaker 4: building a ten million dollar company. I mean, there's nothing
Speaker 4: the matter with a ten million dollar Then it's great.
Speaker 4: There's lots of those, and it's super important. But for me,
Speaker 4: if I'm going to use my time on this planet,
Speaker 4: I want to have the maximum impact possible. So those
Speaker 4: are the companies that I look to, you know, to
Speaker 4: kind of support and help in New Zealand. And you
Speaker 4: know there's a bunch of those, which is super exciting.
Speaker 1: Well, that's great note to finish on. Thanks so much
Speaker 1: for again giving your time to our shareholders and chess
Speaker 1: so and you know, look forward to see what happens
Speaker 1: over the next year and hopefully checking again soon. And yeah,
Speaker 1: this is a very cool new aspirations for cheesies off us.
Speaker 1: Thanks for joining us today. Everyone. If you want to
Speaker 1: see more of us on Shared Lunch, then check us
Speaker 1: out on YouTube or wherever you get your podcasts. And
Speaker 1: today we've got a special giveaway. Rocket Lamb were giving
Speaker 1: us some bottles and if you want to enter the
Speaker 1: drawer then check it out and the link below with
Speaker 1: some instructions. Otherwise, have a fantastic.
Speaker 4: Day, Italian summer, buying a house, new granny flat, whatever
Speaker 4: your aspirations, we can help you get there, not just
Speaker 4: with investing, but now with a high interest, flexible savings
Speaker 4: account and a key we save a scheme too, SHARE's
Speaker 4: ease for the money you've got big plans for