On the back of new data revealing the economy shrank in the second quarter and the Reserve Bank slashing interest rates, an Auckland-founded company has reached an impressive milestone. On October 14, Rocket Lab shares listed on the tech-focused Nasdaq exchange in New York closed trading at US$68, up 165% for the year and giving Rocket Lab a market capitalisation of about NZ$57 billion.
That meant it became more valuable than the combined value of Fisher & Paykel Healthcare, Meridian, Auckland Airport and Spark, titans of our sharemarket, the NZX. Only the accounting software company Xero, founded by tech entrepreneur Rod Drury and now listed on the Australian Stock Exchange, comes close in value, with a market valuation of around NZ$30b.
Sir Peter Beck, who in 2006 was a 29-year-old engineer working in the government-owned labs at Industrial Research Ltd, decided to start Rocket Lab because he couldn’t see a place for himself in the US aerospace industry.
Speaking via video from Rocket Lab’s headquarters in Long Beach, California, a few weeks ago, Beck is having none of my pessimism about the state of New Zealand’s economy, which, apart from healthy commodity prices for our dairy and meat exports, stutters along in sharp contrast to his company’s success.
“I wouldn’t get too down in the dumps,” he says. “I can tell you, there are a few Rocket Labs coming.”
He quickly mentions Halter, the start-up founded by former Rocket Lab engineer Craig Piggott, which makes smart collars for cows, allowing farmers to herd their cows remotely and monitor their health. Beck was an early investor and Halter in June raised $165 million in a new venture capital funding round, giving it “unicorn” status (valued at US$1b or more). “You know, there’s another billion-dollar unicorn created, so there’s hope.”
The late physicist Sir Paul Callaghan urged us to “get off the grass” and build more high-tech companies that can export knowledge-based goods and services, pay high salaries, and offer career paths for tech-savvy graduates.
Beck has followed that very path and sees high-growth tech companies as key to reviving the economy. In a speech at Parliament in June, Beck said the global space industry was expected to be worth US$2.3 trillion in 10 years and New Zealand – with a cluster of emerging companies, including space plane developer Dawn Aerospace, satellite component supplier Zenno Astronautics and Tauranga drone maker Syos, which recently won a $66.8 million deal with the UK Ministry of Defence – should aim to capture 10% of that market: $230b.
A murmur of laughter spread through the room as Prime Minister Christopher Luxon, and Space Minister Judith Collins watched on. They’ve set a target to double the size of our space and advanced aviation sectors, valued at $2.68b in 2024, by the end of the decade. “New Zealand[ers] are great executioners,” Beck told them. “We can build stuff that works, we’re really, really good at it, but we’re just a bit shy in aspiration.
“If I was talking in the same room in America, nobody would giggle that we wanted to take 10% of the space industry … this is the thing that holds New Zealand back,” he added, his words booming across Parliament’s silent Banquet Hall.
Raising the bar
Beck burns with aspiration. The company was officially registered as Rocket Lab in June 2006 but was sketched out on an Air New Zealand napkin during a flight from Los Angeles to Auckland that January. Back then, Beck visited his icons, Nasa, in Florida, and the Jet Propulsion Laboratory (JPL) in California, titans of rocketry and space exploration he had hoovered up books about as a child in Invercargill. But he came away disillusioned by the clearly bureaucratic state of the once great innovators. Without an engineering degree (he left school at 17 to become a toolmaking apprentice at Fisher and Paykel), his chances of securing a job in the US aerospace sector were remote anyway, so, like numerous Kiwi entrepreneurs before him, he chose to take the do-it-yourself path.
In its nearly 20 years, his company has evolved from a small New Zealand startup into a global space powerhouse. As of mid-October, it had completed 73 orbital and suborbital launches of its Electron rocket, deploying more than 200 satellites into orbit for a mix of commercial, scientific and defence clients.
Its launch record, one of the most reliable in the industry, includes missions for Nasa, the US Space Force and major commercial operators such as HawkEye 360 and Varda Space Industries. Electron’s ability to precisely deliver satellites into orbit, and innovative rocket and spacecraft designs, have given Rocket Lab a reputation as the gold standard for small-satellite launches. In November last year, it completed two launches in less than 24 hours, from different launchpads in different countries – a record turnaround for any non-government launcher.
Beyond launching rockets, Rocket Lab’s space systems division is the largely unsung powerhouse of the company, delivering 70% of its revenue. A series of shrewd acquisitions of space systems companies has positioned Rocket Lab as a critical defence and technology contractor, supplying satellite buses, solar cells and components for flagship missions like Nasa’s Capstone lunar mission and the Ingenuity Mars helicopter.
Talent spotter
While researching and writing The Launch of Rocket Lab, which traverses the first 20 years of the company’s achievements, it became clear to me that Beck runs Rocket Lab today with the same intensity he brought to the job in those early days, when the self-taught engineer and rocket enthusiast built a small team around him to design and build what would become Ātea-1, a small, sub-orbital rocket that had its maiden launch on Great Mercury Island, off the coast of the Coromandel, in 2009.
If there’s one overriding factor critical to Rocket Lab’s success, it is Beck’s ability to identify talent, including Shaun O’Donnell, his colleague at Industrial Research who joined him in 2006 at Rocket Lab and now serves as chief engineer, special projects. Many of Beck’s early hires came to Rocket Lab with relatively little aerospace expertise. He wasn’t allowed to recruit from the US industry, so aerospace veterans were largely off-limits. Many of them are still with the company, among the 150 staff who became millionaires when Rocket Lab listed, thanks to their share packages.
The company now employs about 2100 people, 800 in its Auckland manufacturing facility and remote launch pad on the Mahia Peninsula. It’s reputed to be a tough place to work; staff endure gruelling hours to meet tight deadlines and launch schedules that can change at the last minute due to bad weather. “You have to be very resilient to work at Rocket Lab,” Beck admits. But they stay because they want to “build beautiful hardware that works”.
“If you turn up at Rocket Lab and you’ve built something that looks ugly or is not well engineered, it gets called out really quickly. We’ve assembled a group of people here who have tremendous passion and pride in what they do.”
They aren’t necessarily the most experienced engineers or technicians when they arrive at Rocket Lab, but they need to embrace the company’s philosophy of doing more with less. As Nelson-born Nobel Prize winner Sir Ernest Rutherford put it, “We haven’t the money, so we’ve got to think.” Nine Rutherford engines now power every Electron rocket into space, Beck’s hat-tip to our renowned atom-splitter.
The early years of Rocket Lab were characterised by a scramble for government grants and small contracts. The money was never more than a few months from running out.
Ātea-1, a sounding rocket designed to carry a 2kg payload to an altitude of 100-120km, was the first privately built rocket in the Southern Hemisphere to reach space. It put Rocket Lab on the radar of US defence agencies, including the Defense Advanced Research Projects Agency’s Tactical Technology Office, which awarded it more than US$500,000 in contracts in 2010 and 2011 for high-risk rocket propulsion research with military applications.
When Beck did the rounds of venture capital firms in Silicon Valley, it was his unconventional background and track record of delivering a lot for little that appealed to Vinod Khosla, the investor who had co-founded computing giant Sun Microsystems in the 1980s and went on to start his own investment firm, Khosla Ventures. Khosla liked the fact Rocket Lab wasn’t stacked with aerospace experts.
“I only focus on people who are inexperienced,” he told me. “Experts extrapolate the past to predict the future. What Pete has done is invent the future he wanted, instead of relying on experts to do incremental thinking.”
The lack of Nasa and JPL veterams also meant Rocket Lab wouldn’t burn through the US$5m Khosla Ventures invested in it in October 2013 quite as fast. It was an amount Beck viewed as “infinite” in comparison to the resources available to Rocket Lab previously, which included early funding from Warehouse founder Sir Stephen Tindall’s K1W1 investment firm.
Khosla’s cash injection allowed the small team of engineers to accelerate development of key technologies that would prove integral to the success of the flagship Electron rocket. Beck was determined to construct Electron from carbon fibre, harnessing the lightweight construction and strength that had underpinned the success of Team New Zealand’s America’s Cup racing yachts.
He also wanted to use pioneering 3D printing methods to build Rutherford engines. “We were the first company to put a carbon composite rocket into orbit, the first to do electric turbo pumps, the first to put a 3D printed engine in space, let alone orbit,” Beck says.
Today, these technologies are industry standard. In 2017, when the maiden Electron flight took place from Mahia, they were unproven in the commercial rocket industry. “We were leaning forward on the technology,” says Beck. “If we can see a payoff, we’re early adopters.”
Rocket Lab’s technology powers missions ranging from manufacturing pharmaceuticals in space to providing solar cells for the James Webb Telescope. Among its most ambitious engineering highlights is Nasa’s Capstone lunar mission (see page 30).
“It was the most ridiculous mission we ever did,” Beck recalls. “We used Electron and a Photon satellite bus to send a small spacecraft for Nasa to the moon. The engineering margins had to be so incredibly tight, we were measuring in grams.”
The mission’s success recalibrated global expectations for small rockets and marked Rocket Lab as a serious player in lunar and interplanetary missions. Mars and even Venus are now on the schedule for visits by satellites built by Rocket Lab.
The Mahia Peninsula site remains “the best launch site in the world, hands down,” says Beck, as it offers a flight path into quiet airspace and an ideal inclination for efficient access to orbit where constellations of satellites now offer everything from sensors monitoring shipping traffic and land use to high-speed internet and phone access to rural dwellers.
Defence contracts
Rocket Lab’s next chapter will be defined by the Neutron rocket, a reusable, medium-class lift vehicle aiming to challenge the space industry’s dominant player when it comes to rocket launches – Elon Musk’s SpaceX.
“Having some competition in the market for that, I think, is very important,” says Beck. “It’s a 13,000kg orbit vehicle with a reusable first stage. It looks very different to every other rocket that’s been built to date.”
The company’s successful track record with Electron launches and strong book of future launch orders has buoyed its share price. But anticipation for Neutron is what has sent it sky high. Neutron has the heft to deploy constellations more quickly. But it will also cement Rocket Lab’s value as a launch partner for the US defence industry.
With the Trump Administration pursuing its Golden Dome defence shield to detect and fend off incoming missile attacks, that’s a big opportunity for Rocket Lab to share lucrative launch and spacecraft contracts with SpaceX and other industry players.
Beck has always been clear that defence contracts are key to the sustainability of Rocket Lab’s business. The company wouldn’t have survived without them. He argues the company doesn’t enable offensive capabilities, certainly not in New Zealand, where the Ministry of Business, Innovation & Employment is responsible for approving rocket payloads.
Nevertheless, the company’s defence ties have made it a target of local criticism, most recently at the annual Aerospace Summit in Christchurch, where protesters opposed to the militarisation of space temporarily blocked access to delegates entering the Te Pae Convention Centre.
Neutron’s launchpad in Virginia, on the US east coast, is ready for business and defence payloads will likely be onboard before long.
Rocket Lab has pledged to make its maiden flight before the end of the year, a tight deadline. Interest from investors, including the 30,000 New Zealanders owning stakes in the company via the Sharesies share trading platform alone, is intense. Beck says the team is hard at work on the launch preparations, but Neutron won’t be cleared for launch until the team is confident of success.
“Peter sets aggressive goals,” says Khosla. “Usually people who are methodical are not ambitious.”
There’s a lot riding on a successful launch. Beck sees the last 20 years as just the first phase of what will be a long company history. His outlook remains ever-ambitious, backed with an obsessive focus on engineering excellence.
“You’ve got to go big,” he says of Neutron and the company’s roadmap for the future.
“The industry is growing tremendously quickly. There’s no reason New Zealand can’t have a bigger piece, and it’s my job to make sure we have the biggest piece of that pie possible.”
Go here for an extract from Peter Griffin’s The Launch of Rocket Lab.