In rockets, size definitely matters. Rocket Lab’s rocket, Electron, is much, much smaller than SpaceX’s Falcon 9. Standing just 60 feet tall with a diameter of less than 4 feet, Electron can only carry a maximum of 660 pounds to orbit. By comparison, SpaceX’s workhorse Falcon 9 is 230 feet tall, 12 feet across, and capable of carrying up to 50,000 pounds to orbit. 

The small scale of the Electron means it can’t handle larger satellites, and it’s much too small for human flight. Falcon 9’s first stage booster is also reusable. By now, it’s almost impossible to avoid seeing those spectacular land- or ship-based landings. Each time SpaceX accomplishes one of these landings, the net cost of their boosters goes down. Over the years, they’ve cut prices to where a Falcon 9 flight is less than half the cost of similarly sized rockets.

Beck and his company made the bet 15 years ago that there was a market for a small launch vehicle that could handle most satellites in an era when satellites are consistently getting smaller. While bigger vehicles like the Falcon 9 can launch several small satellites in a single flight, waiting for one of these multisatellite missions means that launches get delayed and the orbit provided may not be optimal for any one customer. Rocket Lab has proven successful by providing what amounts to a bespoke ride on the timetable and to the orbit desired.

Almost from the moment the company was founded, Beck has been fielding the “When are you going to make a bigger rocket?” question. And every time, his reply has been the same: “Never.” In fact, Beck was so certain that Rocket Lab could make it without ever producing a bigger rocket that he told his employees that he would eat his hat if Rocket Labs ever tried to move to larger launch vehicles.

This year, Beck literally sat down and took a bite of his blended-to-shreds hat. That’s because he finally had to admit that, to remain competitive, Rocket Lab needs a larger vehicle. More than that, it needs a cheaper ticket to orbit. 

And with SpaceX working to create the larger, fully reusable Starship, Rocket Lab’s need for a new vehicle is only getting worse. Because Starship could cut the cost to space by another order of magnitude.

As of 2020, the cost of a Falcon 9 launch had dropped to $62 million. The cost of launching an Electron is $7.5 million. That sounds a lot cheaper, because it is.

However, when looked at in terms of a price for getting a pound to orbit, SpaceX is charging $1,240 a pound and Rocket Lab is running $11,363 a pound. For research scientists looking to loft a microsatellite, or startup companies trying to get their first system aloft, that represents a big difference. And after years of increasing flights, in 2021 Rocket Lab’s launch cadence dipped. Part of that is because in 2020 and 2021, Rocket Labs had one flight in each year that failed, taking down customers’ satellites in the process. Insurance is great, but customers don’t tend to like that. It’s one of those things that makes sitting around waiting for a cheaper, if not quite optimum, ride from SpaceX seem more attractive.

Electron is a very nice rocket, beautifully constructed from carbon fiber and wringing the most out of its cluster of small engines. But it’s in a tough market that’s getting tougher. If SpaceX can actually make Starship work—and that’s a very, very open question—the cost of launch could be down to the combination of fuel, maintenance, and overhead, because Starship is designed to be “fully reusable.” That is, both the booster and the orbital craft are meant to fly again and again.

Rocket Labs has been making plans to recover an Electron booster using a parachute and fly it again. That hasn’t happened yet, and it seems unlikely to happen with more than a fraction of Electron’s flights in the future. They desperately need a new design to stay competitive with where Falcon 9 already is, and where Starship is going. And what they came up with seems to be somewhere in the middle.

Neutron is not a fully reusable launch vehicle. The second stage that emerges from its “hungry, hungry hippo” fairings isn’t coming back. But with its blunt, tapering design, Rocket Lab has made it possible for that second stage to be absolutely skeletal—little more than an engine and fuel tanks. They’ve designed the high-tech, carbon fiber first stage of Neutron to land over and over. They’ve skipped the use of drone ships like those employed by SpaceX in favor of landing back on the pad. And they’ve eliminated most of the cost of the launch facility in terms of a dedicated launch tower and other support. 

In short, Rocket Lab hasn’t made a fully recoverable vehicle, but they’ve gotten much closer. At the same time, they’ve turned an accountant’s eye to everything happening back on Earth to minimize their costs on what SpaceX refers to as “Stage 0.”

The extent to which SpaceX has upset the entire space industry can be seen in the actions of its competitors. Everyone, it seems, is struggling to build a vehicle that’s at least partially recoverable. When SpaceX first started attempting to land the booster stage of a Falcon 9, the whole industry was skeptical of their ability to make it work, and even when they did, there were a lot of industry insiders claiming it wouldn’t make flights cheaper. Those insiders were wrong.

Everyone is now playing catchup. But in that game, Rocket Lab has demonstrated that they have a commitment to using advanced materials and innovative design. Match that with their effort to seek and destroy sources of unnecessary costs, and it wouldn’t be surprising if customers were already lining up for slots on the Neutron.