{"id":45965,"date":"2023-08-23T01:09:47","date_gmt":"2023-08-22T17:09:47","guid":{"rendered":"https:\/\/wp-productionenv-bjg9h2g2bgg5b8aa.southeastasia-01.azurewebsites.net\/news\/chris-kemp-unplugged-astras-ceo-dishes-on-the-space-companys-struggles\/"},"modified":"2023-08-23T01:09:47","modified_gmt":"2023-08-22T17:09:47","slug":"chris-kemp-unplugged-astras-ceo-dishes-on-the-space-companys-struggles","status":"publish","type":"post","link":"https:\/\/starpath.global\/news\/chris-kemp-unplugged-astras-ceo-dishes-on-the-space-companys-struggles\/","title":{"rendered":"Chris Kemp unplugged\u2014Astra\u2019s CEO dishes on the space company\u2019s struggles"},"content":{"rendered":"

Tuesday at 10 a.m. EDT update: <\/strong>Updated to clarify Kemp\u2019s statements about cash and revenue.<\/p>\n

Chris Kemp is a fighter. That\u2019s the price of admission if you want to compete in the brutal small launch industry. He is the co-founder, chairman, and CEO of Astra, founded in 2016 with a goal of essentially commoditizing small satellite launch services, or at least getting a lot closer to that than anyone else.<\/p>\n

But there are a lot pressure points for Astra in 2023. The company abandoned its first orbital rocket design, called Rocket 3, last year after a string of failures. With higher interest rates, raising money in 2023 isn\u2019t as easy as it was a few years ago. And calling Astra\u2019s competition stiff is definitely an understatement.<\/p>\n

Kemp argues that Astra finds itself in a different position than, say, Virgin Orbit, a small satellite launch company that went bankrupt earlier this year. Astra has diversified and can lean on a separate source of revenue in a promising business building electric thrusters for small satellites. This business, which Astra calls spacecraft engines, was made possible by the acquisition of a company called Apollo Fusion in 2021.<\/p>\n

SpaceX is achieving great success in aggregating large numbers of small satellites onto its Falcon 9 rocket, significantly bigger than vehicles like Rocket Lab\u2019s Electron launcher or anything on Astra\u2019s drawing board.<\/p>\n

That has pushed Rocket Lab and Relativity Space to prioritize developing larger rockets\u2014the Neutron and Terran R\u2014that are partially reusable to better compete with SpaceX\u2019s Falcon 9. Astra, on the other hand, is still betting that an inexpensive, mass-produced, expendable small rocket can be successful in winning business to haul lightweight satellites into orbit, either one at a time or in small groups. The argument there is that a small rocket can deliver payloads to optimal orbits, instead of releasing them at an undesirable altitude or inclination.<\/p>\n

,<\/p>\n

Whether or not that\u2019s the right business strategy, the predicament in which Astra currently finds itself is that the first iteration of its small launch vehicle, Rocket 3, failed to become a reliable option for customers. In seven orbital launch attempts, Rocket 3 failed five times. To be fair, Kemp points out that some of these launches were test flights without functioning satellites on board. Astra moved on from Rocket 3 after a launch failure in June 2022 destroyed two NASA hurricane research satellites.<\/p>\n

Ars published a story last week about the headwinds facing Astra, which recently announced layoffs of about 25 percent of its workforce. It is now staffed at between 200 and 250 employees\u2014quite a lean operation compared to peers in the small launch industry. Around 50 of those employees were shifted from working on Astra\u2019s new rocket, called Rocket 4, to devote their time to satellite propulsion systems.<\/p>\n

Astra has a big challenge ahead, but it\u2019s obvious Kemp isn\u2019t ready to throw in the towel. He spoke with Ars on Friday from Astra\u2019s rocket factory in Alameda, California. Here are some highlights.<\/p>\n

Is it fair to say Astra is in a fight for survival?<\/h2>\n

Chris Kemp: <\/strong>It is a little unfair \u2026 We have a very profitable source of income, which is our spacecraft engine. We\u2019ve sold hundreds of them at great margins.<\/p>\n

This is our rocket facility. This is a quarter of a million square feet. You can see the rocket production line behind me. There are people down there making rocket stuff. It\u2019s real. That\u2019s a Rocket 4 stage on the production line \u2026 I could characterize the launch business at Astra as fighting for its survival, but I wouldn\u2019t characterize Astra as fighting for its survival. Astra has always had the option of just stopping the launch business. The reason why we haven\u2019t is we have already largely completed the development and the capex [capital expenditures] required to manufacture the vehicles. We started the Rocket 4 program two years ago, hundreds of millions of dollars ago, and now we have upper stage engines and stages and a giant $100 million production line. We\u2019ve now done so much work toward this program that the next step is just testing things and going out and doing some test flights. Then the Space Force has a flight. We have some NASA flights. We have a backlog of launch contracts. In the case of the Space Force contract, that\u2019s an $11.5 million contract, millions of dollars of cash comes in, in advance of launch, because of the milestones we\u2019re achieving.<\/p>\n

,<\/p>\n

So I look at it and I say, well, if I were not to do launch, we simply wouldn\u2019t be able to bill the Space Force for these milestones. So what does it cost me to continue running launch versus what would it cost me to shut down launch? It\u2019s kind of a wash, honestly, if we continue to get contracts and government support for launch, and the government has said that they really want to support it. I mean, there are three (private or venture-backed) companies right now operating that have put satellites in orbit\u2014SpaceX, Rocket Lab, and Astra\u2014full stop. Firefly\u2019s stuff deorbited in a few days. ABL blew up everything, Relativity failed and scrubbed the program and won\u2019t fly again until 2027 [Relativity says Terran R\u2019s first flight is scheduled for 2026].<\/p>\n

\n

\"\"<\/p>\n

Astra revealed a prototype of its Rocket 4 launch vehicle in May.<\/p>\n

Credit:
\n Astra<\/p>\n<\/figure>\n

The way I look at it is there are three launch companies that can point to the sky and say we\u2019ve put satellites in orbit, and we\u2019re one of them. And we\u2019re the only one of them that has already invested hundreds of millions of dollars in a production line. We\u2019re the only one of them that has a mobile system that we have already demonstrated. We can go to Cape Canaveral and set up in under a week. We have some Space Force people here right now walking the production line \u2026 We have folks that view what Astra has built and demonstrated, and they say, \u201cThis has value to us, you guys have a mission control with two people in it, you guys have a system that last year deployed at Cape Canaveral in six days.\u201d<\/p>\n

It\u2019s only going to get better from here with a 600-kilogram class vehicle (Rocket 4\u2019s planned payload capacity to low-Earth orbit), and I think that puts Astra in a position where just killing launch, given we have customers and cash coming into that business, isn\u2019t an obvious choice for us. It\u2019s a risky choice for us.<\/p>\n

,<\/p>\n

But we\u2019ve got this public company now with stock trading at 25 cents per share. That makes it nearly impossible for us to raise any meaningful amount of capital in public markets. So that basically means that we need to take the cash coming in from our spacecraft engines business, and whatever cash comes in from our launch business, and kind of make it work.<\/p>\n

What has the last year been like for Astra?<\/h2>\n

Kemp: <\/strong>I can tell you that the market is tough out there. You saw Virgin tried to raise some capital for a long time, and they were not successful, and then no one bought them either.<\/p>\n

We had four payload flights, and two of them did not work, objectively. They got damn close, but close doesn\u2019t cut it, especially that NASA flight [with the TROPICS hurricane research satellites]. We had a very, very detailed root cause analysis\u2026 There was a missing fleck of thermal protection barrier coating on the inside of the upper stage engine [that] caused a small fuel leak \u2026 Had it worked, we might have flown more flights. We might have flown out the TROPICS flights successfully [NASA had two more launches for the TROPICS mission reserved with Astra, then switched them to Rocket Lab after the first one failed].<\/p>\n

We had the rockets [for TROPICS] ready to go. We were shipping the next rocket out the door. It\u2019s now in a museum. It\u2019s just so interesting how close that would have been \u2026 I was very happy that those flights [with Rocket Lab] were successful, and the remainder of those satellites were delivered. The constellation was over-provisioned. So they only needed two out of the three flights to work. I was very disappointed, obviously, that ours was the one that didn\u2019t, but I was very happy that the mission was accomplished for NASA, and the constellation was deployed, and the science that NASA wanted to do is being done. I was watching those flights hoping that they would succeed.<\/p>\n

,<\/p>\n

This new rocket now throws 600 kilograms. Its cost came down, and we\u2019ve dramatically reduced the number of operators required, both in mission control and in the field. If you look at this rocket, we\u2019ll sell it for $5 million to people to do multiple launches. With 600 kilograms (of payload), that\u2019s $8,300 per kilogram. That\u2019s a vehicle that I know will have 50 percent gross margins. That\u2019s crazy. SpaceX\u2019s rideshare is $7,500 per kilogram [SpaceX lists its rideshare launch costs at $5,500 per kilogram, but only after purchasing a 50-kilogram payload allotment for $275,000]. Rocket Lab is $30,000 per kilogram. We have a production line that can crank out one [rocket] per day.<\/p>\n

This is impressive. If you were to come here, like the Space Force, NASA, and all of our customers, you would walk the production, and you\u2019d be, like, holy shit. You put coils of aluminum in one side of the building and stages come out the other side of the building, and we\u2019ve already made that investment, whereas Rocket Lab is kind of at the beginning of their Neutron program, and they\u2019re spending $50 million per quarter or whatever, and they will do that for the next couple of years. We\u2019re at the end of this Launch System 2 program. We need a few test flights to work, and then we\u2019ve got contracts. And we\u2019ve got contracts that we\u2019ll have 50 percent gross margins on.<\/p>\n

\n

\"\"<\/p>\n

Chris Kemp, founder and chief executive officer of Astra, right, during South By Southwest festival in Austin, Texas, in 2022.<\/p>\n

Credit:
\n Matthew Busch\/Bloomberg via Getty Images<\/p>\n<\/figure>\n

I\u2019m a public company, I can\u2019t make this shit up. We are disclosing our gross margins. We are disclosing the amount of inventory we have. SpaceX isn\u2019t. Rocket Lab is, and they\u2019re losing $50 million per quarter. I think the problem is there\u2019s a lot of nuance here, so I think that unless reporters really dig in deeply, it\u2019s hard to tell the story.<\/p>\n

,<\/p>\n

The Astra spacecraft engines business \u2026 that\u2019s a great high-margin product. Rocket Lab bought SolAero [a solar array supplier for satellites]. Most of their revenue is a very low margin contribution for a very difficult to scale business, whereas a very high margin business is easy to scale, yet they\u2019re at a $3 billion valuation and we\u2019re at a $50 million, or whatever it is today.<\/p>\n

That\u2019s because Rocket Lab is flying?<\/h2>\n

Kemp: <\/strong>They\u2019re flying, yeah. Making a rocket work and actually deploying satellites in orbit is extremely hard. There are hundreds of companies that have tried. Many don\u2019t get beyond PowerPoint. Many build vehicles that never fly. A few fly vehicles that never work. We\u2019ve had several vehicles work. Getting a vehicle that works, to getting a vehicle that works reliably at scale, is a whole different ballgame \u2026 The amount of work to go from a few launches per year to 50 to 100 launches per year, that gap is in the work required to ensure that a completely different set of people can actually be on a production line building the vehicles, a completely different set of people can test the vehicles as they\u2019re rolling off the production line, and then a completely different set of people can go out into the field and operate the vehicles, not the engineers that designed it.<\/p>\n

I would argue that only SpaceX has really made that leap of operating reliably at scale. We aspire to, and have not. Rocket 3 aspired to, and did not. What we tried to do is hand the vehicle that was designed off to a completely different production team, a completely different test team, and a completely different operations team, and things were missed. What we realized is we have to dramatically increase the investment that we make in mission assurance. There is a huge shift internally at Astra, in the investments we\u2019ve made in CT scanners, X-ray machines, and an entire mission assurance organization. Reliability is a core value. There are 40 different things that we internally did as a result of that NASA failure that have been playing out over the last year.<\/p>\n

,<\/p>\n

\n

\"\"<\/p>\n

Astra\u2019s Rocket 3 vehicle lifts off from Alaska in November 2021. This was the company\u2019s first successful orbital flight.<\/p>\n

Credit:
\n Astra\/Brady Kenniston<\/p>\n<\/figure>\n

At this point, there are two ways for the launch business at Astra to fail. We can either have a launch failure again, or we can fail to launch. They\u2019re both measured in threading a needle. If we have a bunch of cash in the bank and we have a launch failure, we did not thread the needle correctly. At the same time, if we run out of cash before launching again, we have not threaded that needle correctly.<\/p>\n

What we\u2019re trying to do is take the cash coming in from our spacecraft engine business, the cash we can raise from whatever our current valuation is, whatever cash we can raise through debt or other kinds of hybrid vehicles, and ensure that we deliver for our customers in spacecraft engines, first and foremost, and then secondarily, we come back to the pad with a vehicle that demonstrates whatever we need to demonstrate on our first test flight and our second test flight, then a successful commercial flight. If we do that, we are a force to be contended with, so don\u2019t write us off just yet.<\/p>\n

Where is Rocket 4 in development?<\/h2>\n

Kemp: <\/strong>We took a lot of the components and we integrated them for our Space Tech Day a couple of months ago. What you saw there was a combination of qualified flight hardware and qualification articles [test units]. So the upper stage engine is actually fully flight qualified. That\u2019s been running for a long time. We have the first-stage engines. Those are actual flight engines that are in the process of qualification, but those were [engines] that we will fly on the first flight with the final hardware. So we\u2019re in the qualification of the first-stage engine. That engine will have a ton of Astra hardware on it. It\u2019s got an Astra computer, it\u2019s got Astra software on it. It has gimbals. It has valves that are all new valves. So it\u2019s almost entirely our engine at this point. Those engines are in final qualification.<\/p>\n

,<\/p>\n

We have the first stage primary structure and tank that we\u2019re finishing all of the weld qualifications, and then there will be a burst test of that. Then we\u2019ll start to do stage-level integration and testing. So you\u2019ll see the first stage static tests, the upper stage static tests, and that will kind of lead into integrating the whole thing. The whole software stack that deploys all the GNC [guidance, navigation, and control] and all the embedded software and all the electronics and everything, that\u2019s working quite nicely. Effectively, you bring it all together and you start testing everything as increasingly integrated subsystems, and we\u2019re just at the end of the pre-stage level integrated test phase of the program.<\/p>\n

\n

\"\"<\/p>\n

A look inside Astra\u2019s factory in Alameda, California.<\/p>\n

Credit:
\n Astra<\/p>\n<\/figure>\n

This is something where it might appear to the outside world that we\u2019ve slowed down, but what we\u2019ve achieved with flying colors is our first milestone [with our Space Force launch contract for Rocket 4].<\/p>\n

Are you using Firefly\u2019s Reaver engine on Rocket 4?<\/h2>\n

Kemp: <\/strong>They\u2019re definitely not Reaver engines at this point. I am unable to comment on any contractual relationship that may or may not exist between Astra and Firefly. However, what I will say is that our team has spent a tremendous amount of energy working on an engine and putting in a lot of Astra parts and Astra engineering and Astra testing. The Reaver engine only has one gimbaling axis [for steering]. So obviously this is not a Reaver engine. The Reaver engine does not have the ability to vary its thrust and mixture ratio. The Reaver engine has a very different qualification and testing regime.<\/p>\n

\n

\"\"<\/p>\n

A test-firing of a first-stage engine for Astra\u2019s Rocket 4 vehicle.<\/p>\n

Credit:
\n Astra<\/p>\n<\/figure>\n

I can tell you this: We are not buying Reaver engines and putting them on this rocket. I can tell you several years ago, we started with something that has turned into something which is very much an Astra engine (Astra calls this engine the Chiron). How Firefly has or has not contributed to that effort, I really can\u2019t comment on.<\/p>\n

,<\/p>\n

Where do you plan to launch Rocket 4 first?<\/h2>\n

Kemp: <\/strong>We\u2019re still making the trades. It could be Vandenberg [Space Force Base] as well. Our intent is to launch it out of Kodiak right now. We were trying to get some test flights out before the end of this year. This will slip. We\u2019ve got a whole group of people here who are just busting their asses and working like hell to make sure that the Space Force checks over everything. I\u2019m personally very proud. The team has worked for two years on this. We built a production facility to manufacture it. We\u2019re doing everything in our power to ensure that these test flights really demonstrate to the world that we have made that real jump between doing it once\u2014making a rocket that can put things in orbit\u2014to making a rocket that can be produced at scale and can reliably operate at scale. I think that would put us somewhere between Rocket Lab and SpaceX.<\/p>\n","protected":false},"excerpt":{"rendered":"

Tuesday at 10 a.m. EDT update: Updated to clarify Kemp\u2019s statements about cash and revenue. Chris Kemp is a fighter. That\u2019s the price of admission if you want to compete in the brutal small launch industry. He is the co-founder, chairman, and CEO of Astra, founded in 2016 with a goal of essentially commoditizing small satellite […]<\/p>\n","protected":false},"author":1,"featured_media":45968,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[1941,2138,25,8676],"class_list":["post-45965","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-astra","tag-chris-kemp","tag-launch","tag-rocket-4"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/45965"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=45965"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/45965\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media\/45968"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=45965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=45965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=45965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}