00:10:47 · Eric Romo
So Rocket Lab will go anywhere in low earth orbit you wanna go. It's not all one thing. There's a bunch of different ways you can be in low earth orbit. They'll go anywhere you wanna go, kinda anytime you wanna go there. SpaceX, you're taking the bus. So you go on the bus schedule and you go to the bus stop. Right? So, but the price for an electron for those 200 kilograms is way higher, it's like $8,000,000 than the price for that equivalent transporter slot is like $2,000,000 maybe, something like that. So there's a big spread between, you know, eight and two, but in theory, you're paying for, I get to go exactly where I wanna go and I get to go exactly when I wanna go to. Okay. So the pitch for orbital transfer vehicles at that time in the commercial market was with that, you know, difference between eight and two, can I add an orbital transfer vehicle? Can I add the launch costs so it'd send that up as well and still save the customer money on that eight? And the answer when we looked at the economics was, yeah, actually, you can maybe save like a million, maybe a little bit more than a million dollars for that customer. Maybe you end up charging them 7 or something all in instead of $8,000,000, pretty meaningful. The challenge with that market is that, number one, it's not that big. Rocket Lab does something like 30 launches a year, and you're basically pitching that you're gonna steal share from them. Right? So how many are you really gonna steal? Problem number two is that in order to make that math work there, the economics for the orbital transfer vehicle, the margins are pretty skinny. So like a 20% gross margin, something like that, just not great in hardware. And the killer was, in order to serve those customers well, I needed to go out and buy a bunch of launches from SpaceX. If I had to do 20 of those a year, I gotta buy 20 launches a year, which means I need two years' worth of launches. I need 40 launches, which means I need, I don't know, like $50.70000000 tied up in launch costs for a company that had only raised $30,000,000 at a time. So when you stack those things together, dubious economic, small market, and bad working capital dynamics, it just didn't really pencil. So here we are, and we just launched this first Miura and we thought that had this commercial market. We kind of realizing, oh, actually that market's DOA. So what do we do?
00:13:00 · Eric Romo
So Tom and I have this conversation and he said, well, you know, maybe MIRA is our Falcon one. You know, Falcon one and SpaceX was the thing launched a few times to get to the bigger one. We launch MIRA once or twice. We show we can build the space spacecraft. We show we can operate on orbit. And then we'll move on to the bigger thing, Helios. Because Helios, the unit economics working capital dynamics, all that's really good. Market's not that big, but that's a different discussion. But anyway, so we move on to the bigger thing that we know kind of works. So we launch MIRA, first mission, you know, kinda by the skin of our teeth goes well. And all of a sudden our conversations with Space Force kind of shifted in tenet really quickly. It went from, hey, there's all these sorts of things maybe we can work on together to, we now know exactly what we can work on together with you and we wanna talk about it. And so we went from, not knowing if we had a space defense business, not knowing what it could be to laser focused on kind of this high, thrust, high delta V business force, base force. And they kind of, to some extent, led us by the hand to say, here, here's where we think the market could be for vehicles like Miura. Here's how we think you need to change it, because it went from a first version of Miura to a second version of Miura to get that market. And that is a big thing that changed, was all of a sudden, the defense market unlocked for us on the Miura side. And that's gone on to now we're increasingly a trusted partner with them. And so it's something that we can work on more and more stuff with Space Force. So this is kinda big The big shift from the initial founding of the company was, hey, we think maybe there's this commercial angle to now we not only have a commercial angle with Helios, but also have this defense angle with Miura and eventual cousins of Miura. And then we we really hope to be be a big part of NASA as well.
00:14:49 · Molly O'Shea
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00:16:19 · Molly O'Shea
[00:16:19] S0: So I know we talked about this in our New York Stock Exchange Space Summit hot takes. The breakdown of the products, Mira, Helios, and Caravan, and then the customer sets within them. But to reiterate those, you went through it a bit. I'd love for you to break down where they fit in the market a little bit more and how you're helping your customers out.
00:16:41 · Eric Romo
[00:16:41] S1: Yeah, let's start with commercial and Helios and Teraban are our products for the commercial market. Right now, commercial space is largely comms and comms is kinda divided in a really blunt way, like between Starlink, which operates in low earth orbit, and traditional legacy comms operators operate in geosynchronous orbit. So, and geo is, for references, about a 100 times further away than LEO. Really far away, really hard to get to. But that's where, you know, the SES as one of our customers, Astronus is another of our customers. That's where they operate their spacecraft is out in GEO. You get you get GEO, you get to park over one spot on earth. You get park over LA and I just stay there. Whereas in LEO, if you wanna serve LA, you need, you know, hundreds, if not thousands, because your spacecraft are orbiting all the time. Right? So GEO super far away, hard to get there. The way a typical geo comsat operator will get there right now is they'll launch on a Falcon nine, or presumably another launch, Google, but basically on Falcon nine. They'll launch to a transfer orbit. So it's what they call GTO, geostationary transfer orbit. And they'll take somewhere between six and ten months to finally reach their destination. So they launch on day one and then on day, I don't know, whatever it is, 300 or something, they finally get to where they're trying to go. And during that time between, you know, day one and day 300, they don't make any money. They're not actually revenue producing at that point. They're not in service. They burn something like 4 to $6,000,000 worth of, like, expensive gas to do that raise to get there. They go through these intense radiation belts where they get the spacecraft gets pounded by radiation over and over again, which means they need to design the spacecraft to overcome that. And they have to operate on the ground. They have to walk the spacecraft, not cost a bunch of money to do the operations around that orbit race. So they spend, you know, in hard costs, they spend millions of dollars. And then in their time, they spend probably tens of billions of dollars, depending on the spacecraft. So the, alternative to this is you go direct to GEO. And so the the main spacecraft the main launch vehicle that goes direct to GEO right now is Falcon Heavy.
00:18:44 · Eric Romo
Though Falcon Heavy will launch you get to to GEO the same day you launch, eight hours later or something like that. But the thing is Falcon Heavy is extremely expensive, in part because it's it's three Falcon Nine strapped together, and it's part because, SpaceX has been clear they don't would prefer kind of not to fly that vehicle. And it makes sense because every time they fly one of those, they have to shut down the pad for longer than they would for a Falcon Nine. So when you look at how much time does it take to launch one Falcon Heavy and how many Falcon 9s they could have launched during that time, it's actually economically better for them to launch Falcon 9s. But they have to launch Falcon Heavy because they've got big contracts with the Space Force. Our government really needs it. NASA really needs it. But in the commercial market, those launches don't happen very often. There was just one a month ago when this comes out, but there haven't been many in the last two years. So commercial customers basically don't go direct. They only go through the transfer orbit. That transfer orbit takes a super long amount of time. If they had an option to go directly and it was economical, they would take it. And that's our product Helios. So Helios gets them to their same same place they wanna go, same day they'll launch, eight hours later. And it's cheaper than a Falcon Heavy, more expensive than Falcon Nine, obviously, because they need to pay that and the Helios. But the economics tend to work out really well for them. And that's why you've seen us get a lot of traction in that market. In addition to that, what a big trend that's happening in the commercial market right now for GEO is moving to smaller and smaller spacecraft. So here, Astronis is a really good example of this or kind of bellwether of this change, where it used to be that in GEO, you have these monolithic mega spacecraft. They're, you know, four tons and up. Cost hundreds and hundreds of millions of dollars. What's interesting is that the the trend that you saw in LEO, where LEO spacecraft also used to be really expensive, and then you had folks like Planet Labs and then eventually Starlink really, iterate on taking commercial components and making spacecraft smaller and kind of the shoebox satellite type thing, that never happened in GEO until now.