Transcript
A (0:05)
It is a raging cauldron of hell and conflict sometimes in my head because I'm half entrepreneur who wants to take extreme risk and then half engineer who by nature is extremely conservative.
B (0:21)
That was Rocket Lab founder and CEO Peter Beck. I'm Motley fool producer Matt Grier. Now Rocket Lab is an aerospace company with a launch business and a space space systems business. And it has become a big business. Motley fool co founder and CEO Tom Gardner and Motley fool analyst Seth Jason recently talked with Peter Beck about the business of Rocket Lab.
C (0:45)
We're so pleased to be spending this time with Sir Peter Beck, the founder and CEO of Rocket Lab. Before going into our conversation, I'll just share. I don't know how familiar you are with the Motley fool, but when we recommend companies and often put our own skin in the game with our members, we do so with a five year minimum holding period generally and ideally multi decade holding period. So we like to assess the long term vision initiation strategy and performance of the business. And obviously we don't want to put you in a position where you're having to give any forward looking statements. So just deny any of our long term questions that you can answer. But just letting you know that we really are most interested in very long term and our greatest investments, which is not unusual for people throughout their lives, are the ones that they held for the longest period of time. Now I love my low cost basis of $25 a share right around there for Rocket Lab. But Seth Jason, who's here, and Lou Whiteman, who can't be here today, have both recommended the stock and owned the stock since it was below $5 a share. So a lot of our Motley fool members have gotten in some early low positions with the business. But I think, Peter, we love to hear you just outline the main components of Rocket Lab, maybe beginning with Space Systems, since it's easy to overlook the segment or many may view Rocket Lab as a launch company. Can you just a walking tour of the business, please?
A (2:03)
Yeah, totally. Well, I mean, I always like to talk about Rocket Lab as an end to end space company because you know, it's sort of almost sort of bisected into two parts. Like there's Launch, which is, you know, the big roaring stick in the sky which everybody gets excited about. And then the space systems, which is kind of less visually glamorous, but of course a huge part of the business. But both of these elements are necessary to deliver on kind of the key goal here and the key mission of being end to end and I think ultimately deploying infrastructure or services on orbit. And if you're talking about the long term, it's my view that the biggest space companies in the future is, it's going to be a little bit blurry about are they a space company or are they something else? And just take our friends over at SpaceX, are they a space company or are they a telecommunications company at this point? So it gets a little bit blurry. But I think what is absolutely true is that if you have unfettered, rapid and reliable access to space and you can build whatever spacecraft you want to build, there's then your ability to deploy infrastructure or services from orbit is going to be way better than somebody else who doesn't have those capabilities. So we're just sort of methodically going about making sure we have all those elements to ultimately deliver on that end to end space company goal. So I know you want to talk about Space Systems, but I think it's always good to kind of wrap it in the context of why space Systems even exists. And Space Systems was really started very early on in the company's life. And I often hear people saying, well, launch wasn't big enough, so Rocket Lab pivoted to building spacecraft. And that's just simply not true. In fact, the second electron vehicle that we ever flew had all of the recesses pre cut into the kick stage for solar panels to turn that into a photon. So it's been part of the plan from day one. But the thing is the most difficult thing thing to do and the most transformational thing you can do is have access to orbit. That's the biggest problem you have to solve in all of this. You know, spacecraft are difficult, but not nearly as difficult as, you know, gaining access to orbit. That's the real disruptor here. It's not anything else. So that's kind of where we started. And then as we started to build our own satellites internally, you know, we placed some orders for some components and you know, the lead times associated with them and the cost associated with them really, really took us back. And we're like, well, how can anybody be disruptive in this industry when it takes 12 months to get a star tracker, Just a simple star tracker. So not surprisingly that led our first acquisition of Sinclair Interplanetary. And we sort of never looked back from that point. And the best way to describe what we've done there is literally lay a spacecraft out or a satellite out on the boardroom table and, and then just systematically point to all the bits that really suck and then Go after each one of those and either build that technology internally or we'll go and buy the best company that currently makes that technology. And not just stopping there, but actually doing it at scale. So that kind of gives us a really healthy ability to just think of it like a storeroom of parts that you can just go and pull off the shelf to build almost anything you want. And then the next leg of space systems, I mean, well, there's really three kind of internal mandates that I set forward when we started space systems officially, and that was one. Everything that goes to space should have a rocket lab logo on it. Don't care if we built it, don't care if we launched it, but everything that goes to space should have a rocket lab logo on it. Preferably the biggest logo that you can fit on the component. And then secondly, we want to build spacecraft, but not interested in just building boring spacecraft that lead nowhere. They have to be very strategic spacecraft that ultimately fulfil the end vision. And then the third one is like building applications or infrastructure in orbit that kind of feeds into. So the components bit we're well in hand right now. I mean we're the largest supplier in the world of some things. Like I think we're the largest space grade solar cell provider and panel provider in the world now. And I don't know if we're the largest reaction wheel provider, but we must be getting up there. And we just keep scaling these businesses. And then on the spacecraft side, you know, our first spacecraft was the spacecraft called First Light, which was a little Photon. And then we sort of skipped about a decade and went straight to the moon with the next Photon. And then, you know, because we were able to successfully build that spacecraft for NASA to go to the moon, we won the escapade missions to Mars which are about to launch. And then because we executed those really well, we were able to secure a contract with MDA Global Star on a, on a quite a big comms platform. And then we're able to win as a prime contractor to SDA, a whole bunch of national security spacecraft. And then along the way, interesting stuff that's very strategic, like the VARDA reentry spacecraft and LOCKSAT and a whole bunch of other stuff that all feeds into the kind of end goal here. And a few years later, there you go, you kind of that space systems.