Peter Beck and why it’s hard to get a startup off the ground
A couple of days ago, Rocket Lab suffered the failure of its 41st mission and the loss of the Earth-observation satellite its Electron rocket was carrying to orbit for its client, Capella Space. Its share price immediately fell around 7% in late trading on the US’s NASDAQ market. NZ Herald reporter, Chris Keall, posted on X (formerly Twitter) that “the stakes are about to get a lot higher. Rocket Lab charges around US$7.5 million for an Electron launch. Its much larger Neutron, on track for its first launch next year, will cost US$50 million to US$55 million per launch – and carry much larger, much more valuable payloads”. Yes, “space” is a serious game, the stakes are high and the costs are enormous. But the wins from succeeding are clearly much, much greater which aside from an inquisitive interest to do something different or better, were clearly motivating forces behind Peter Beck establishing the company. Rocket Lab Founder and CEO, Peter Beck himself posted to X: “Tough day. My deepest apologies to our mission partners Capella Space. Team is already working on root cause. We’ll find it, fix it and be back on the pad quickly.” ie learn, focus, stay determined and on point and deliver.
As chance would have it, we were lucky enough to have Peter Beck in our offices last week to speak in front of 180 clients and friends. He spoke most about life-lessons, motivation and the steps taken and hurdles overcome to get Rocket Lab to be what it is today, and now with the benefit of hindsight, some valuable insight in how to deal with events such as that of a couple of days ago. I thought it would be useful to summarise parts of his discussion when thinking about start-up companies and ventures and how hard it really is to get these off the ground (get it?). From Beck’s perspective, it would seem that science, vision, commitment and hard work are all of paramount importance.
As an example of the importance of science learning, Beck pointed out that the US’s National Aeronautics and Space Administration, most commonly known as NASA, in its mission to put rockets, satellites, and people into space and even on to other planets, must ensure it has a steady inflow of talent to do all the necessary work to achieve its objectives. As such it has a huge marketing machine promoting to and encouraging children to get involved and learn STEM (Science, Technology, Engineering, and Mathematics) subjects. Makes sense to me. Beck himself helps with this big-picture talent drive in speaking at various functions and promotions and recalls many cases where young people who might initially be looking at more traditional career pathways, learn of the opportunities in the rocket space then change tack and spend more of their education years wearing lab coats and carrying clipboards.
Beck complemented his comments regarding science / STEM learning with the values of hard work and practical learning: be in the field, fail, learn things by trial and error – at university it’s mostly theory – there is less risk and rigour around what you’re doing. Get on with it. Prior to establishing Rocket Lab, he used to work two shifts with Fisher & Paykel. He recalled an occasion where he demonstrated his new invention, the rocket-powered bike, to the directors of the Board and was grateful for the opportunity.
He was told not to go to Silicon Valley to seek venture funding in the early days of Rocket Lab as “that’s where the sharks are”. But he did, and he had an amazing experience obtaining the right backers and associated capital. An important lesson for VC people here: contrary to what some would consider conventional wisdom, Beck said no to his first offer from a venture capitalist, even though he was happy with it! Fortunately, they returned to the table half an hour later with even better terms, and the rest is history. The lesson here was self-respect and self-belief, knowing the value of what he brought to the table and believing accordingly that the first offer should never be taken.
The challenges down-under when setting up the company here, is that New Zealand obviously lacks the aerospace-military ecosystem that exists in the US, Europe and Asia necessary to facilitate and accommodate start-up aerospace entities. Rocket Lab is that company that literally had to build everything itself. With Rocket Lab needing to build it all, it is now looking to vertically integrate up and down the value chain. This vertical integration includes the most elementary but fundamental component, the launchpad. The importance of operating the world’s only private orbital launch pad is significant as it enables Rocket Lab to be able to guarantee its customers a launch slot without being at the whims of entities like NASA. In Beck’s view, one of the key factors that defines a successful space/rocket company is the quality of its launchpad. Without an exceptional launchpad, a space company has no chance. Again, makes sense.
In closing, he asked how many people knew that New Zealand went to the moon last year – two hands went up. Yes, Rocket Lab sent a rocket there for NASA last June as a pre-test for returning to the days of sending people to the moon. He mentioned he has recently sold some of his shares in Rocket Lab in order to support venture projects down under, showing his passion and support for Kiwi startups. The VC cycle in full swing…
To thank Peter Beck for his time we gifted him an unwrapped, vinyl record of the classic ‘Space Oddity’ by David Bowie. When asked if he had a turntable, Beck said “no” but we’re sure he could make one!