Main Engine Cut Off - T+31: ULA’s RocketBuilder

Episode Date: December 1, 2016

Tory Bruno took to the stage to announce RocketBuilder, their new way to market and sell Atlas V launch services. I discuss my initial thoughts about it and what the announcement means for ULA going forward in the commercial market. Initial Thoughts on RocketBuilder - Main Engine Cut Off Introducing RocketBuilder - YouTube Press Conference: ULA Unveils Website to Transform How Launch Services are Selected - YouTube T+24: ULA’s RapidLaunch and Commercial Market Competitiveness - Main Engine Cut Off ULA Branding Their Emptying Manifest - Main Engine Cut Off Email feedback to [e-mail] Follow @WeHaveMECO Subscribe on iTunes, Overcast, or elsewhere Subcribe to Main Engine Cut Off Weekly Support Main Engine Cut Off on Patreon

Welcome to Main Engine Cutoff, I am Anthony Colangelo, and you might notice that this episode is a day later than my episodes typically are. I normally record on Tuesdays for release on Wednesday. This week I've pushed it all back a day to be able to talk about United Launch Alliance's new Rocket Builder. Rocket Builder is a website that Tory Bruno announced this morning on stage down in Washington, D.C. that lets someone, a person trying to buy a launch or a company trying to buy a launch for their satellite, lets them customize an Atlas V to their needs, see how all the different configurations work out,

work with all the different variants of an Atlas V, different orbits you could enter to figure out how much an Atlas V would cost for you and if it's the right fit for your mission. This is another step in the direction of ULA entering the commercial launch services industry in full-hearted glory. They've definitely been heading this way over the past few years.

Tory Bruno, the head of ULA, he's said multiple times that ULA needs to enter the commercial launch services industry if they want to survive in the next era. Military launches are getting less and less frequent. They don't want to be dependent on that. They've no longer have a monopoly on military launches here in the US. So they need to reinvent their business. And that is why Tory Bruno was put in charge at ULA. He was brought in for this exact purpose,

to make ULA a competitive member of the commercial launch services industry. I've talked extensively on the podcast about this momentum they've had in that direction. Specifically, episode 24, just a few weeks ago, I spent a lot of time talking about this when they announced Rapid Launch. Rapid Launch is one of the legs of this strategy to enter the commercial market in full force. And that is the thing that lets someone book a launch as little as three months in advance. So quicker booking to get up and flying sooner. Obviously, the target there was if you're encountering delays with your launch provider, you can switch over to an Atlas 5 and

potentially fly in three months. So when they announced that, I had done a whole episode about ULA's push into the commercial market and how that was going to play out. So I'm not going to recap all of that here. If you haven't heard that episode, I recommend going back, checking that out and giving it a listen before you continue this one, because I think it sets the stage really nicely for what Rocket Builder does for ULA. But if it's been a while since you heard that episode or you don't want to go listen right now for whatever reason, I'll give you a quick recap of this strategy. ULA is the expensive option in the commercial market. Arianespace does split payloads. They are an expensive rocket, but you're typically splitting the payload capacity to be somewhere around $80 to $100 million, plus a little bit

here and there based on what you're getting. SpaceX markets their rockets around $60 million. And for government launches, it's obviously more than that, as it is with everybody that we've been hearing about lately. There's a lot of hubbub around how much SpaceX is selling their launches to the government for. The commercial side is a little murkier. We don't have 100% visibility into what the prices are for Falcon 9, but you can generally say it's somewhere in the ballpark of $60 million, which they advertise as their list price. ULA has traditionally been $160 million for the base level Atlas V. That's the price figure we had for a while for the past few years, because, again, we didn't have that much visibility into their prices.

The Rocket Builder announcement today includes the price that the base Atlas V 401 configuration is $109 million before you add anything on top of that. Now, we kind of knew that ballpark of price because Tory Bruno has said that they've been doing a lot of work on their supply chain side, on their production side, to really cut costs on these rockets. And he said so far that they've cut, you know, pretty big percentages out of that. So it's not that surprising that the updated price we have for a base level Atlas V is $110 million versus $160 million. That fits the ballpark that we were working in previously. So ULA is the expensive option. If you're out there looking for launches, they are known as the expensive option. Their rockets are traditionally more expensive, and that is why there's been a big push to use SpaceX,

Arianespace, different providers like that that have a lower cost. If you're a private company, you don't have government levels of money to spend, you want the cheaper option typically. What ULA has been trying to do of late is market themselves as the reliable yet expensive option. So if you really need to get to orbit, you can depend on ULA to get you there. They've been marketing this in a few ways. One saying your payload will get on orbit quicker and start making you money faster. That will make up for the more expensive launch. The other is that you know you're going to launch on time.

for the more expensive launch. The other is that you know you're going to launch on time. Tory Bruno said today, they launch within two weeks of your booking date. When you book and pick out a date, they're going to be within two weeks of that, after you get through all negotiations and things like that. They hit their targets pretty tight, and the industry average, as he said, is about four and a half months. ULA is known for schedule certainty. They are known for reliability. They have, I think it was 113 launches in a row successful. They had a couple of partial failures in there, but they're tracked as successes because the payloads did get to orbit, though maybe not the intended orbit. But for all intents and purposes, they have over 100 launches in a row of a pure success rate. So the marketing and the PR and the communications have been,

we are expensive, but we are reliable and we are dependable. You're going to get to orbit on time. You're going to be able to make your money when you say you are. You're not going to have these big delays. And that is why you pay the premium for an Atlas 5. And that is a strategy that works in other markets. There's always been expensive options on the market that people buy for reasons that aren't cost. Not everyone buys products based on cost alone. That is one of the factors. It's not the only factor. Most commonly for geeks like us, you out there listening to the show and me, myself, that's been seen a lot with Apple products in the last decade or two, or maybe even longer than that, that there was the Apple tax, the idea of the Apple tax, which is you're going to pay a premium because it's a

nicer product. You get things out of it that are really valuable, like the better software, the better hardware design, things that are a little bit intangible and they're not objectively worth more. They are subjectively worth more. ULA is taking that same approach here saying, yes, we are more expensive, but that's because we are a premium product that offers you something that the others can't, and that is schedule reliability, certainty, you know, dependability. In general, I think this is a great strategy for ULA because it really plays to their strengths. They are in transition right now from Atlas 5 to Vulcan, and that'll be a big cost savings when they get there, when they get all of these changes fully implemented. They are in transition out of the old days of launching Atlas and Delta rockets into the new days of launching Vulcan and beyond. They are a company in transition,

and this is a great strategy for the products they have at their disposal. There is a market for the higher price dependable launch service. There is a market for that. Obviously, the government loves it. There's other political things tied into that. But in general, the government looks for old dependable things and old dependable launch services. That's found a niche market there. Now, they announced rapid launch a few weeks ago to address the, you know, hey, you've

got a launch delay. You want to get up on orbit quicker to start making money, you can book an Atlas flight right away. That was the program for that side of their marketing. The other leg of their marketing is where Rocket Builder comes in. Because up until late, ULA's prices have been a bit of a mystery to people that aren't necessarily close to them to begin with. If you're a commercial company out there, you can find prices for SpaceX launches and Arianne launches, and you can find prices for launches. Atlas launches are a little bit harder to come by because ULA has not traditionally been very transparent because of the businesses that

they operate in and because they just haven't been marketing to the commercial side until now. So by becoming transparent like this and putting RocketBuilder out there, it lets private companies start to get a sense for what an Atlas V would cost, and it starts to bring you into the calculations they do when they need to figure out what launch provider to go with. So it's a great platform for ULA to say, here are our products, tell me what you need, and we'll tell you what you would fit on in terms of an Atlas V launch. Here's the different orbital parameters, here's the size of my payload, here's the payload fairing I need. You put that all in, and it tells you, here is the rocket you will fly on to get your payload to orbit. Then you can go in, and ULA has built in a tangible price to those intangibles that I was talking about before,

the schedule of reliability. You're going to get on orbit quicker. You're going to save money on insurance costs because insurance companies charge less for a launch on an Atlas because they know that there is a certain amount of reliability built in to the Atlas V that there necessarily isn't in other players. So as part of this interface, ULA has built in those intangible elements that until now have just kind of been fuzzy math that sound like

blank PR from the ULA side. They've built that in as a monetary figure into the interface. So you can say, here's how expensive my payload is, and that's how much money you'll save on insurance if you fly with Atlas V. Here's how quick you would get to orbit. Here's how slow you would get to orbit with the other provider. And this is how much money you can make in the meantime. And they do these calculations to show you what the value of launching with an Atlas 5 is. This is kind of their way to put a monetary value on why they are the premium product. And this is the way that they can convey to the person holding the purse string, the person signing these deals within a company. This is a thing that someone that is working on getting a launch

can take to that person and say, here's why we should go with ULA. So that kind of gives you a sense for what this is and what it isn't. The other thing that's kind of cool is that Tori Bruno said that it integrates with their manifest. So if there isn't a launch available in whatever quarter you're trying to book for, it won't show that to you. So it only shows you what quarters they have a launch available for. It's a pretty cool presentation. I'll put a link in the show notes to check it out. I would definitely recommend going and playing with this website a little bit because it is kind of fun to just customize an Atlas 5 and play around with different configurations and all that. So in all, strategy-wise, there wasn't

a lot to learn from the press conference. If you listened to that episode I did six weeks ago, eight weeks ago, whenever that episode was, if you listen to that again, a lot of what I said there still applies and is just as relevant today because the strategy is not something new. We didn't just find out about this entire strategy from ULA in this press conference. This is something we've been tracking over the past few months as they made inroads to the commercial side of the market. The rapid launch is nothing new. So we know that you can get an Atlas V pretty quickly these days. You know, we saw that with Orbital ATK booking a flight for Cygnus up to the ISS

within a quarter of when it will fly. That's technically the first rapid launch flight that we've seen booked. So that's a thing that's out there. So there's not a lot new in terms of breaking news or wild, amazing visions that we found out from this press conference. But that doesn't mean that this was a useless press conference to have. It doesn't mean that this was an inconsequential press conference to have. And that's what I want to get into here. Why is this announcement important to look at? But before I do that, I just want to say a quick thank you to all of those out there supporting Main Engine Cutoff over on Patreon. Patreon.com slash Miko is where you can go to help support the show, the blog, whatever else I'm doing with this thing. And thank you so

much to all those out there supporting already on Patreon. As little as $1 a month is really, really appreciated and helps me do this every week. And a special thanks to Pat, Matt, and one other anonymous executive producer. You are producing this episode of Managing Cutoff, and I am greatly thankful for your support. Patreon.com slash Miko if you want to help out the show. I am very, very thankful for all of those that do. If you want to help out Managing Cutoff in a non-monetary way, tweet out a link, post a link on Reddit,

send it to a friend who's also into spaceflight, spread the word a little bit, because that is also hugely appreciated, and I will thank you very, very much for doing that. So let's get into why Rocket Builder is an important announcement for ULA. And let's get into why ULA even made this an announcement. You know, why not just put this website up, tweet a link, post it on Facebook, spread the word through social media, the world is your oyster. Why make it a big thing where Tori Bruno comes out on stage on a podium down in Washington, D.C.? They webcast it live. They make all this hubbub about it. Why all the hubbub for a website?

Like I said, there wasn't new information they were sharing with us. There wasn't a new insight into their strategy that they were sharing with us. This is a step on the path they've been on already. But the fact that they had an announcement and the fact that they made all of this big splash about this, that is what is important because ULA is finding their groove when it comes to communications and spreading their message and marketing and finding the customers out there that might be willing to go with them for that premium price, they're getting their message to those people that need to hear it. SpaceX gets a lot of attention when they do things like landing rocket stages and, you know, doing flight tests and different things that make for great videos and great,

you know, tweets and things like that. Elon Musk loves to make a big thing about his presentations. You know, the IAC announcement was this big production. SpaceX loves that. They know how to talk to the people that they want to listen. ULA, until now, has been trying to find that groove. And this is an example of them finding the way to market themselves and the way to get their message out in the appropriate ways to get their message out. Because what they needed to do was not make fancy YouTube videos. That's not what

they need to market. They are the expensive, serious, business-like option in a lot of ways. That's the way that they've chosen to market themselves. And what's great for that is a tool that somebody who's trying to procure a launch service can work with and take to the people making the decision. Take to those higher ups and say, here's why we should go with ULA. Help them sell an Atlas 5 launch to their decision makers within the organization. That's a position that ULA needs to talk to if they want this to be a success. Do they have to woo, you know, Silicon Valley startups who want to fly with SpaceX or something like that? Do they have to woo the young techie types that tend to love SpaceX and what they do? No. What they need to do is cater to the three or

four organizations a year that would be able to fly with Atlas 5 and talk about why they are the best pick for them, why they are the best pick for a serious established business who's going to buy launch in the next year or two. Obviously, you've seen ULA following in the SpaceX footsteps of doing their own webcasts for launches with graphics and interviews and all those different things that they were kind of following on what SpaceX was doing. But this is a thing that is kind of going their own way because they're building a tool that is meant for the people that they need to talk to. And, you know, SpaceX loves to get things like the attention from the internet and

all the blog posts from tech sites and, you know, the science magazines and all that kind of stuff that people tend to give them flack for, ULA went a different route and said, you know what we're going to do? We're going to build an interface to sell it to the people we need to hear it. And that is something that should not be overlooked because it is very important that if they're going to survive in the commercial market space, that they are able to communicate to the people that can keep them alive in the commercial marketplace. And this is the market that will probably work for them because that is who they've been marketing to already. That is who their products are set up to support. And that is, for all intents and purposes, their target market in this case. Now, I'm obviously only singling out

SpaceX here because it's the most extreme example. And the people that Tory Bruno was taking some shots at on stage, you know, when he said that nobody wants their rocket to blow up or anything like that. So, but you can, you know, kind of put ULA head to head with any other commercial provider. Mostly it's just SpaceX and Arianespace. So you can kind of put them head to head however you want. But a lot of people are going to want to talk about SpaceX versus ULA in this case. And I think it's a good example to put these two head to head in this case. You know, I've said in the past that it's dumb to do that. But in this case, I think it makes sense because they are kind of the extremes of the market when you're talking about communications, when you're talking

about marketing and all this kind of stuff that we're talking about here. So I think it's a good example. And I'm going to just kind of put them head to head here for that context. But, you know, keep in mind that this is a conversation that we can have about how ULA markets and compare them to every other commercial player out there. So all in all, I think this is a good example of ULA finding their target market for commercial launches, building a tool that speaks to them that might help them sell launches to the commercial market, and really finding their niche that they're going to serve in the marketplace as the premium product that's reliable, that's stable, that you can plan a business around, you know, in the way that others plan businesses around shipping and logistics and things like that. They want to be that for space. And even in the press conference, if you get a chance to watch it again, there was

a really interesting part in the Q&A, actually, surprisingly, because Q&A typically kind of weird, but this seemed like a much better audience for Q&A than something like the SpaceX IEC announcement. Tory Bruno said that right now, this is the products they have. This is the way that they need to sell them to the commercial market. And if and when things change in the future, if their costs come down, if competitors' costs go down drastically, they'll have to find a new way to do it. And I really like that statement. It's somewhat obvious in a lot of cases, but I liked the fact that he was being honest and saying, you know, these are the products we have now to sell. This is the market that we can sell those to. So that's our plan here. But we're going to be nimble. We're going to be agile. We're going to respond to forces in the market. He seemed pretty earnest about that. And his sincerity there, I thought, spoke volumes that this is what we're going to do now, but we're going to change and keep up with the market if this goes well. So that's about it here for the show today.

I'm going to try to get these back down in duration since they've been creeping longer and longer over the past few weeks. But I want to hear from you about Rocket Builder, about ULA's strategy in general. Email me, anthony at mainenginecutoff.com. We'll do a little mailbag session sometime in the future. The next few weeks could be quiet as we head into December when things typically slow down in corporate America. That tends to be the case. So send me your thoughts on ULA's strategy as a whole, on, that tends to be the case. So send me

your thoughts on ULA strategy as a whole, on the announcement today, on the interface, all of that. I want to hear from you, anthony at mainenginecutoff.com. And once again, thank you very much to all of those out there supporting Main Engine Cutoff over on Patreon, patreon.com slash Miko. If you want to help out, I am hugely, hugely thankful for all of your support. Follow me over on Twitter at WeHaveMiko and talk to me on there if you have something that's shorter form than email. I would love to hear from you. Thank you very much for listening and I will talk to you next week. Thank you.