Author Topic: Comparing Astra and Rocket Lab business models  (Read 13682 times)

Offline TrevorMonty

Re: Comparing Astra and Rocket Lab business models
« Reply #20 on: 05/15/2022 03:59 pm »
Large constellations can absorb odd launch failure without problem. Small constellations and one offs are lot less tolerant of failure.

When they is failure its not just cost of replacing HW but also lost revenue stream caused by delay. For startup it could be case of going back to investors for more money and dilute existing shareholders holdings or worst still nail in coffin for business.




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Re: Comparing Astra and Rocket Lab business models
« Reply #21 on: 05/15/2022 06:04 pm »
I'm not a fan of ELVs but I think it's worth mentioning Astra seems to be going more in the "fail fast, fail often, fail early" mode. Unless they intentionally want to fail, the reliability of their LVs will undoubtedly go up, potentially surpassing that of Electron if they can in fact launch as much as they want to. If we're praising the methodology of the SpaceX approach, I think that Astra deserves the same, no?

It seems like a decent strategy to me, although time will tell.

Offline xyv

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Re: Comparing Astra and Rocket Lab business models
« Reply #22 on: 05/15/2022 09:16 pm »
Yes but Astra is currently failing fast with customer payloads.  SpaceX is using the fail fast methodology to perfect a rocket, a GSE complex and the "right sized" factory without risking customers payloads.  The fact that they can launch there own Starlink 2 on the first orbital attempt is just gravy.

I will say for Astra that they get manufacturing.  Their director of ops (Bryce(?) - see the NSF tour video that just got reposted in the main Astra thread) clearly has worked around automotive single piece flow and hybrid manufacturing models. Whether they can sustain a business with their revenue structure remains to be seen but that guy is the real deal when it comes to manufacturing.
« Last Edit: 05/15/2022 09:19 pm by xyv »

Offline M.E.T.

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Re: Comparing Astra and Rocket Lab business models
« Reply #23 on: 05/16/2022 01:48 am »
$4m for 300kg to orbit. That’s the number that matters when assessing Astra. $13000/kg.

Which constellations are going to make use of that on a large scale, rather than launching their satellites on larger rockets at half the cost?

And large scale is critical to their business plan. The odd one-off launch for unusual reasons isn’t going to give them the daily launch cadence they need to sustain their operating model.

RL has realised this. Their solution is a Hail Mary reusable medium rocket program. But at least they’ve acknowledged the problem.

« Last Edit: 05/16/2022 11:10 pm by M.E.T. »

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Re: Comparing Astra and Rocket Lab business models
« Reply #24 on: 05/16/2022 01:53 am »


Yes but Astra is currently failing fast with customer payloads.


True, but if the customers are okay with accepting the extra risk (at least at first, and I'm not sure if this is the case), it's not that much different really. They should be collecting lots of data each time for a much more reliable LV in the future.

Offline trimeta

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Re: Comparing Astra and Rocket Lab business models
« Reply #25 on: 05/16/2022 04:07 pm »
My biggest question with Astra's business case is to what extent their quoted prices depend on their high flight rates. Can they really sell Rocket 4 launches for $4M each if they only launch monthly, or do the efficiencies of their manufacturing really only kick in once they're launching weekly or more? This is where I think Rocket Lab's reusability makes more sense, since they don't need to ramp up production rates (and therefore risk having too much factory given the actual demand).

Of course, if they can get Rocket 4 to consistently underprice Electron, that's a problem for Rocket Lab, since Rocket 4 and Electron have effectively the same payload capacity. But perhaps that sort of price pressure would force Rocket Lab to lower launch prices for reused Electrons -- I'm sure they have that capability internally, they've just said "this is about increasing launch rates, not lowering costs" to set expectations (and because there's no reason to lower prices until forced).

Offline XRZ.YZ

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Re: Comparing Astra and Rocket Lab business models
« Reply #26 on: 05/16/2022 08:42 pm »
You could expect all SLV companies are selling launch below the operating cost. (and you still have R&D, marketing and Admin cost)

Even Rocket Lab is still in this stage.

So, the price is more about how deep your pocket is than anything related to cost.
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Offline trimeta

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Re: Comparing Astra and Rocket Lab business models
« Reply #27 on: 05/17/2022 05:42 pm »
I decided to check each company's Q1 2022 SEC filings to determine how close they are to selling above operating cost. Astra launched twice, LV0008 and LV0009, with a revenue of $3.9M and a cost of revenues of $5.5M (gross margin of -41%). Rocket Lab on the other hand launched once, The Owls Night Continues, with a revenue of $6.6M and a cost of revenue of $7.3M (gross margin of -12%). That said, Astra is earlier in their development process, so it's not surprising their gross margin is lower: in 2021, Rocket Lab launched six times (with one failure) with a revenue of $39M but a cost of revenue of $54M, for a gross margin of -38%.

I guess this reframes my original question as whether and how quickly Electron launches can move into profitability, and if Astra's trajectory to the same state is faster and can proceed without depending on extremely high cadence. But that doesn't entirely counter XRZ.YZ's point that Astra can continue launching unprofitably as long as they've got cash reserves, and possibly tank Rocket Lab in the process (even if not actually moving towards profitability themselves).

Offline high road

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Re: Comparing Astra and Rocket Lab business models
« Reply #28 on: 05/18/2022 11:15 am »
I decided to check each company's Q1 2022 SEC filings to determine how close they are to selling above operating cost. Astra launched twice, LV0008 and LV0009, with a revenue of $3.9M and a cost of revenues of $5.5M (gross margin of -41%). Rocket Lab on the other hand launched once, The Owls Night Continues, with a revenue of $6.6M and a cost of revenue of $7.3M (gross margin of -12%). That said, Astra is earlier in their development process, so it's not surprising their gross margin is lower: in 2021, Rocket Lab launched six times (with one failure) with a revenue of $39M but a cost of revenue of $54M, for a gross margin of -38%.

I guess this reframes my original question as whether and how quickly Electron launches can move into profitability, and if Astra's trajectory to the same state is faster and can proceed without depending on extremely high cadence. But that doesn't entirely counter XRZ.YZ's point that Astra can continue launching unprofitably as long as they've got cash reserves, and possibly tank Rocket Lab in the process (even if not actually moving towards profitability themselves).

with both companies getting an increasing part of their revenues from non-launch activities, selling launches under cost is not going to make the competition go away. And with two years worth of runway, Astra would be/is on the clock

Offline Robotbeat

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Re: Comparing Astra and Rocket Lab business models
« Reply #29 on: 05/18/2022 01:25 pm »
The biggest competitor to both is SpaceX. They’ll run out of money before trying to subsidize their own launches below SpaceX’s prices.
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Offline M.E.T.

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Re: Comparing Astra and Rocket Lab business models
« Reply #30 on: 05/18/2022 02:00 pm »
The biggest competitor to both is SpaceX. They’ll run out of money before trying to subsidize their own launches below SpaceX’s prices.

It increasingly feels like the launch businesses of these companies are merely the marketing arms for their ACTUAL revenue generation divisions, which are intended to be space systems and/or satellite operations.
« Last Edit: 05/18/2022 02:02 pm by M.E.T. »

Offline Robotbeat

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Re: Comparing Astra and Rocket Lab business models
« Reply #31 on: 05/18/2022 02:17 pm »
The biggest competitor to both is SpaceX. They’ll run out of money before trying to subsidize their own launches below SpaceX’s prices.

It increasingly feels like the launch businesses of these companies are merely the marketing arms for their ACTUAL revenue generation divisions, which are intended to be space systems and/or satellite operations.
I mean, yeah, that’s the only way this makes any sense. Launch is always a tiny fraction of satellite and especially satellite services revenue.

Although Astra’s mass-expendable concept also would work well for munitions. A micro-ICBM for Global strike (non-nuclear) for less cost than a Tomahawk cruise missile. (Note they haven’t actually achieved the $100,000 or whatever price point they had been hoping for a while ago.)
« Last Edit: 05/18/2022 02:18 pm by Robotbeat »
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Offline JayWee

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Re: Comparing Astra and Rocket Lab business models
« Reply #32 on: 05/18/2022 02:21 pm »
Although Astra’s mass-expendable concept also would work well for munitions. A micro-ICBM for Global strike (non-nuclear) for less cost than a Tomahawk cruise missile. (Note they haven’t actually achieved the $100,000 or whatever price point they had been hoping for a while ago.)
Careful, it'd be hard to distinguish between nuclear and non-nuclear ones. Similar to how the Navy does NOT want nuclear missiless on their ships - enemy would then treat all ships as nuclear ones.

Offline M.E.T.

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Re: Comparing Astra and Rocket Lab business models
« Reply #33 on: 05/18/2022 02:33 pm »
The biggest competitor to both is SpaceX. They’ll run out of money before trying to subsidize their own launches below SpaceX’s prices.

It increasingly feels like the launch businesses of these companies are merely the marketing arms for their ACTUAL revenue generation divisions, which are intended to be space systems and/or satellite operations.
I mean, yeah, that’s the only way this makes any sense. Launch is always a tiny fraction of satellite and especially satellite services revenue.

It’s more than that general truism, however.

What I mean is - in the case of SpaceX, Starlink cannot work without F9 and eventually Starship. So launch is a necessity to access that larger revenue pie. A mandatory development cost.

The same is not true for these smaller newcomers. They attract 95% of their general attention for their launch efforts, despite it being largely superfluous, of dubious financial viability - and even completely unnecessary as a revenue generation mechanism if in space services will be their greatest opportunity.

Hence my conclusion is they use launch to generate hype and public interest. So it is largely a marketing activity.
« Last Edit: 05/18/2022 02:36 pm by M.E.T. »

Offline edzieba

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Re: Comparing Astra and Rocket Lab business models
« Reply #34 on: 05/18/2022 02:51 pm »
The biggest competitor to both is SpaceX. They’ll run out of money before trying to subsidize their own launches below SpaceX’s prices.

It increasingly feels like the launch businesses of these companies are merely the marketing arms for their ACTUAL revenue generation divisions, which are intended to be space systems and/or satellite operations.
I mean, yeah, that’s the only way this makes any sense. Launch is always a tiny fraction of satellite and especially satellite services revenue.

It’s more than that general truism, however.

What I mean is - in the case of SpaceX, Starlink cannot work without F9 and eventually Starship. So launch is a necessity to access that larger revenue pie. A mandatory development cost.

The same is not true for these smaller newcomers. They attract 95% of their general attention for their launch efforts, despite it being largely superfluous, of dubious financial viability - and even completely unnecessary as a revenue generation mechanism if in space services will be their greatest opportunity.

Hence my conclusion is they use launch to generate hype and public interest. So it is largely a marketing activity.
Photon would not exist without Electron. You can see how much difficulty other companies trying to develop rideshare tugs have had in a) trying to get funding in the first place, and b) actually being able to launch and test those tugs successfully. Rocketlab on the other hand have launched 23 kick stages, of which 2 (3 if you count the pathfinder) have had the extra solar cells for long duration operation in addition to the avionics. And as far as has been reported, with no failures.
The key offering of Rocketlab (and others aiming to mimic their business model) is not "satellite components" - of which there are many suppliers - but the service of giving one company your payload and them getting it to orbit and operating it there. Considering the "getting there" as a marketing ploy misses the point entirely.
It's the difference between a website host offering a one-stop hosting service for your website; and a server component supplier, OS vendor, web server application vender, COLO site, ISP, etc. Both may have the end result of your website running on a server hosted in a datacentre connected to the internet, but one involves "here's my website, make it do the thing", and the other involves learning how to do a bunch of ancillary work and corralling multiple suppliers, contractors and subcontractors, and taking on the burden of ongoing operations and support yourself.

Offline M.E.T.

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Re: Comparing Astra and Rocket Lab business models
« Reply #35 on: 05/18/2022 03:00 pm »
The biggest competitor to both is SpaceX. They’ll run out of money before trying to subsidize their own launches below SpaceX’s prices.

It increasingly feels like the launch businesses of these companies are merely the marketing arms for their ACTUAL revenue generation divisions, which are intended to be space systems and/or satellite operations.
I mean, yeah, that’s the only way this makes any sense. Launch is always a tiny fraction of satellite and especially satellite services revenue.

It’s more than that general truism, however.

What I mean is - in the case of SpaceX, Starlink cannot work without F9 and eventually Starship. So launch is a necessity to access that larger revenue pie. A mandatory development cost.

The same is not true for these smaller newcomers. They attract 95% of their general attention for their launch efforts, despite it being largely superfluous, of dubious financial viability - and even completely unnecessary as a revenue generation mechanism if in space services will be their greatest opportunity.

Hence my conclusion is they use launch to generate hype and public interest. So it is largely a marketing activity.
Photon would not exist without Electron. You can see how much difficulty other companies trying to develop rideshare tugs have had in a) trying to get funding in the first place, and b) actually being able to launch and test those tugs successfully. Rocketlab on the other hand have launched 23 kick stages, of which 2 (3 if you count the pathfinder) have had the extra solar cells for long duration operation in addition to the avionics. And as far as has been reported, with no failures.
The key offering of Rocketlab (and others aiming to mimic their business model) is not "satellite components" - of which there are many suppliers - but the service of giving one company your payload and them getting it to orbit and operating it there. Considering the "getting there" as a marketing ploy misses the point entirely.
It's the difference between a website host offering a one-stop hosting service for your website; and a server component supplier, OS vendor, web server application vender, COLO site, ISP, etc. Both may have the end result of your website running on a server hosted in a datacentre connected to the internet, but one involves "here's my website, make it do the thing", and the other involves learning how to do a bunch of ancillary work and corralling multiple suppliers, contractors and subcontractors, and taking on the burden of ongoing operations and support yourself.

Why could Photon not launch as a payload on F9- saving RL hundreds of millions in development cost, saving them the need to build and operate launchpads, and launching more cheaply than it could on Electron on top of it all?

They do not need to be launch providers to build their space systems/services business.

Offline edzieba

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Re: Comparing Astra and Rocket Lab business models
« Reply #36 on: 05/18/2022 03:22 pm »
Why could Photon not launch as a payload on F9- saving RL hundreds of millions in development cost
Would it? Much of the development cost of an long-duration-satellite-bus-come-upper-stage is learning how to build space vehicles, and a good way to do that is to learning how to build a space vehicle. Skipping that and just trying to build the bus on its own has been attempted by others, who have not seen Rocketlab's degree of success (e.g. thus far, SHERPA have launched one ion-propelled dispenser, and Momentus have not launched yet).
It would also mean Rocketlab would not be able to directly provide a "payload to exactly this orbit" service, but instead they (and their customers) would need to deal with rideshare scheduling and additional transport from that rideshare orbit to the target orbit, which may either be expensive or impossible depending on the plane change needed. It means Rocketlab can offer capabilities like CAPSTONE or the Venus probe, which are not matched by any other single provider thus far.
Insourcing critical services is not just for saving the overhead costs of outsourcing, it also means you gain internal capabilities that can be applied to other aspects of the business, and allows for independence from a single critical contractor.
« Last Edit: 05/18/2022 03:26 pm by edzieba »

Offline Pueo

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Re: Comparing Astra and Rocket Lab business models
« Reply #37 on: 05/18/2022 10:50 pm »
Although Astra’s mass-expendable concept also would work well for munitions. A micro-ICBM for Global strike (non-nuclear) for less cost than a Tomahawk cruise missile. (Note they haven’t actually achieved the $100,000 or whatever price point they had been hoping for a while ago.)
Careful, it'd be hard to distinguish between nuclear and non-nuclear ones. Similar to how the Navy does NOT want nuclear missiless on their ships - enemy would then treat all ships as nuclear ones.
The discrimination problem with conventionally armed or low yield ballistic missiles is well argued and warned about, but it hasn't stopped the DoD from deploying the low yield W76-2 SLBM, nor has it stopped generals from pushing the development of prompt global strike capability.  If Astra can develop their vehicle to provide PGS capability in the realm of $2-3 million dollars the DoD will likely be willing to purchase it no matter how bad of an idea it might be from the point view of strategic stability.
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Offline M.E.T.

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Re: Comparing Astra and Rocket Lab business models
« Reply #38 on: 05/19/2022 01:44 am »
Why could Photon not launch as a payload on F9- saving RL hundreds of millions in development cost
Would it? Much of the development cost of an long-duration-satellite-bus-come-upper-stage is learning how to build space vehicles, and a good way to do that is to learning how to build a space vehicle. Skipping that and just trying to build the bus on its own has been attempted by others, who have not seen Rocketlab's degree of success (e.g. thus far, SHERPA have launched one ion-propelled dispenser, and Momentus have not launched yet).
It would also mean Rocketlab would not be able to directly provide a "payload to exactly this orbit" service, but instead they (and their customers) would need to deal with rideshare scheduling and additional transport from that rideshare orbit to the target orbit, which may either be expensive or impossible depending on the plane change needed. It means Rocketlab can offer capabilities like CAPSTONE or the Venus probe, which are not matched by any other single provider thus far.
Insourcing critical services is not just for saving the overhead costs of outsourcing, it also means you gain internal capabilities that can be applied to other aspects of the business, and allows for independence from a single critical contractor.

How will this “dedicated launch offering” work when Neutron replaces Electron? Seems to me the Neutron program is an acknowledgment that the business case for smallsat dedicated launch does not close.

Yes, you can point to a few examples where such missions were contracted, but a dozen such launches a year does not justify the expense of keeping a separate Electron program alive.

So, if they’re going to move to rideshare launches on Neutron anyway, well, they could do that on existing cheap launchers without the risk, expense and delay of developing a new rocket.

Which brings me back to the benefit that Electron DOES give them - which is credibility as an orbital launch provider. So, publicity and marketing, in other words.
« Last Edit: 05/19/2022 01:45 am by M.E.T. »

Offline Robotbeat

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Re: Comparing Astra and Rocket Lab business models
« Reply #39 on: 05/19/2022 02:32 am »
Although Astra’s mass-expendable concept also would work well for munitions. A micro-ICBM for Global strike (non-nuclear) for less cost than a Tomahawk cruise missile. (Note they haven’t actually achieved the $100,000 or whatever price point they had been hoping for a while ago.)
Careful, it'd be hard to distinguish between nuclear and non-nuclear ones. Similar to how the Navy does NOT want nuclear missiless on their ships - enemy would then treat all ships as nuclear ones.
I'm not advocating for it. It's one of the reasons I'm not hugely in favor of the mass-expendable approach.
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