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In March 2011 Bas Lansdorp together with Arno A. Wielders founded Mars One. Mars One is a private, apolitical organization with objective to establish a human settlement on the planet Mars in 2023. They hope to make a huge media spectacle to help them fund their endeavor and create a reality TV show that would transmit live the life on Mars.
The project has been completely self funded in last 18 months and has just recently received minor sponsorship. The funding mostly came from Bas Lansdopr's last venture Ampyx (a company working on developing a novel wind energy technology) when he sold his majority interest and Arno A. Wielders savings. The company has of lately been exposed to limited media attention and made its presence known online via www.mars-one.com website (an informational portal on Mars One mission and progress, as well as an online shop for Mars One memorabilia that helps fund Mars One objective). Mars One has gathered a team of various industry experts and attracted numerous advisors (including a Nobel Prize laurite) and ambassadors.
Mars One plans to accomplish its mission through the integration of existing technologies developed by private aerospace corporations that have demonstrated expertise in space travel. They do not wish to relay on technologies in development and have no desire to do R&D or manufacturing themselves. They have already contacted major aero space suppliers and revived letters of interest. For each component necessary to make this project a reality they have found at least one potential supplier.
Mars One has developed a business plan and conducted a feasibility study that predicts costs of 6 billion dollars. They hope to reach this sum by raising enough capital to fund a reality TV show that would start in mid 2013 and would follow the entire process from training potential colonists to a successful landing on Mars (their business model focuses on marketing revenue, one comparable to that of the Olympic games - this has not been disclosed to students; Appendices A). The mission to Mars cost estimate of 6 billion dollars comes with a perquisite - a one way trip. In other words astronauts sent to Mars would potentially stay there for an indefinite amount of time (Returning the astronaut to Earth with using currently available means is unfeasible in terms of financial, technological and medical reasons). This notion has already triggered severe controversies about viability and sensibility of Mars One project.
The first round of pre investing is underway and the gathered funds are going to be directed in conceptual design studies by candidate suppliers. Every technical milestone will further increase the feasibility of the Mars One mission and will be used to generate additional media exposure (In return generating more interest from potential investors and marketing revenue).
It is now the time for Bas Lansdorp and Mars One team to observe how the situation unfolds and try to secure further financing for their project. At the same time it is crucial that they have created a sound strategy plan that will ensure their success.
The case study is meant to spark the entrepreneurial spirit of the students and open them for creative thinking. At the same time it tells a story of brave new venture and shows in a clear way that entrepreneurship is a driving force in shaping our world. On top of that students will be introduced to importance of strategic planning and will have to use creative thinking in deciding how to utilize the company's strengths and opportunities to overcome one of the key issues of Mars One - financing the project. The case study might at moments seem to focus on rather technological problems, however the key concerns are of entrepreneurial nature.
At the end of this exercise the students should have gotten the chance to employ creative thinking and acquire better understanding of the following topics:
Importance of strategic planning and analysis of business ventures strategy. Topics of relevance include SWOT analysis and use of SWOT strategies.
Employing creative thinking in finding innovative ways to finance a venture and using external financing options (being introduced to different sources of external financing). Topics to discus are external financing, finding new means-ends relationships, utilizing resources at hand.
Observing Schumpeterian innovation in the making and being motivated and encouraged by entrepreneurial force behind Mars One.
This case is appropriate for bachelor and Masters Students in entrepreneurship or business administration in general and is best suited for a classroom of 20-35 students. The overall duration is planned for 80 minutes, given that the students have already read the case. The class is structured in 5 parts.
Introduction (5 min.)
Team preparation of the case (30 min.)
Presentation of each group's ideas (20 min.)
General discussion and analysis (20 min.)
Conclusion (5 min.)
Introduction (5 min.)
There are landmarks in the history of the humanity that change the way we conceive the world and push the boundaries of the human knowledge and capabilities. The arrival of the first humans to a different planet is going to be without any doubt one of the greatest moments for the mankind's history. Adventurers and entrepreneurs from every age facing these kind of endeavors have been called crazy, dreamers, over-optimistic; and raised doubts among the people about their real intentions, being treated as scammers and unscrupulous. Although most of the times these prejudices have proven to be correct and the venture fails to accomplish its claimed outcome, sometimes it is the case that the person is able to accomplish what was proposed and change forever the course of the history. Alexander trying to conquer the Persian Empire, Columbus intending to go to India by going to the west, Charles Lindberg crossing the Atlantic by plane for the first time; and like them, many other great adventurers have accomplished huge feats in spite of impossible odds, having been told that it was not possible, and considered crazy.
So instead of doubting the possibility of Bas Lansdorp's plan to create a human colony on Mars by 2023, this case study is focused on how to achieve the goals of this very rare kind of entrepreneurship. Students will be asked to assume that the plan is attainable, reasonable, and rational. Another assumption that will have to be made is that the Mars One project is not a hoax. Regardless of the fact that there is a slim possibility that the true intent of the Mars One team could be to earn money by creating a media spectacle and frenzy, while never actually sending persons to Mars (as this scenario lacks any academic value for the field that is treated in this case -entrepreneurship).
So based on the premises that the plan is truthful and that it is really feasible, the students will be asked to place themselves in Mars One's shoes. Try to achieve one of the greatest accomplishments for the human exploration, by employing their entrepreneurial spirit.
Team preparation of the case (30 min.)
The students will be divided in 5-6 groups to analyze the case and come up with different alternatives.
Each group will be given a 2 set of questions to guide them through the discussion, they will have enough time to talk and summarize all the main points for the questions.
First set of Questions:
Evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats in Mars One business venture and fill in the SWOT matrix. Look in to Mars One objective and try to identify the internal and external factors that are considered favorable as well as unfavorable for achieving that objective.
Strengths - Characteristics of Mars One business or Mars One team that will provide them with advantage over others (Think in terms of industry knowledge, experience, financial capital, networks, management and leadership skills, employee skills, flexibility, etc.)
Weaknesses/Limitations - Characteristics that place the team or Mars One business at a disadvantage relative to others (Think in terms of high costs, high risk, lack of innovation, week brand name, cash flow problems, skill shortage, de-motivated staff, undifferentiated products, etc.)
Opportunities - External prospect to improve performance in the environment (Think in terms of technological innovation, change in government policy, deregulation of the market, new demand, market growth, social or lifestyle change, etc.)
Threats - External elements in the environment that could hinder or prevent the business from achieving its objectives (Think in terms new market entrants, change in customer tastes or needs, new regulations, economic downturn, higher input prices, etc.)
After evaluation the Strengths, Weaknesses, Opportunities, and Threats of Mars One business venture determine whether the objective is attainable. Explain your decision. If it's been concluded that the objective is not attainable, propose a different objective or approach and deliberate. (Appendix B: SWOT Analysis and SWOT Matrix)
Second set of Questions:
Based on the strengths and weaknesses found, does Mars One have a profitable business model to attract possible investors? If not, describe very briefly the business model for Mars one (where would the revenues come from? Can the investors expect returns and when? How will the company get the money to finance the successive missions after sending the first astronauts?). How would you propose to make revenues? Use the W-O Strategies.
Who are the key players in the case that can help Mars One to develop its business plan, and gather the money needed for the mission? How can they contribute? Use your Opportunities Analysis.
Use your opportunities and threats analysis to evaluate: Who from the potential investors would you try to approach? How would you convince them to invest in your project? Who wouldn't you even try to contact? Why?
You might find useful this list of potential external financing parties:
Bank loans, Angel Investors, Venture capital investors, Crowd funding Hedge Funds, and Alternative Asset Management.
The project will start to consume large amount of money from the year 2013. It is required to construct the training facilities in the desert, there has to be a process of selection for the potential astronauts and in 2016. non-manned trips to Mars are scheduled to prepare the arrival of the astronauts, etc. Is there any way that the company can start making revenues from an early stage of the project to help fund all of the mentioned developments? Brainstorm some ideas and describe them.
What value dose Mars One brings, in relation to humanity, founders and investors?
Presentation of each group's ideas (20 min.)
After the groups have debated and answered all the questions, they will be asked to choose a person to present their answers to the rest of the group. The presentation should be very short (3-4 min max.) and they can use visual aids like slides or a cardboard if they want to.(To present their SWOT matrix)
The teacher or moderator should start a chart with the answers the students have given to every question. At the end, the chart should include every possible answer expressed by the students.
General discussion and analysis (20 min.)
Having a comprehensive summary of all the ideas presented by the groups, the students will form a round table discussion for each point.
Firstly, the group by general agreement will choose the most suitable ideas for the topics discussed, narrowing the alternatives to 4-5 per question. The moderator will ask them to make a short SWOT analysis of the alternatives chosen. At the end the group should determine a route to follow for Mars One in order to reach Mars One objective.
The teacher will summarize the main issues developed in the whole process and give the students insights and feedback about their choices. If time permits he or she will share with the students the actual plan of Mars One described as follows.
Mars one intends to generate revenues from the earliest stages of the project in several ways: Through the sale of merchandise of Mars One (coffee-mugs, t-shirts, hats, etc.). Make a global reality TV show during the whole process of the project. The show will include the process of selection of the prospective astronauts that will come from all the different regions and cultures of Earth; the training process will be broadcasted to a global audience. The revenues from the reality show are going to help fund the costs of the mission.
Bas Lansdorp is contacting very affluent people that want to contribute with Mars One project; there are some that are willing to donate voluntarily certain amounts of money to subsidy the project.
Tips for resolving the case
The instructor should visit each group of students and help them with the debate giving them tips for resolving the questions and come up with feasible alternatives. The conceptual framework to be used is the SWOT analysis, from the first set of questions (the SWOT analysis of the company) the students should be able to come with innovative solutions for the second set of questions that are related with the case problem. The teacher might use the SWOT conceptual framework that is described on the appendixes of these teaching notes.
This case is about creative thinking and Schumpeterian innovation, 2 of the main characteristics of successful entrepreneurs; therefore, no idea should be disregarded from the very beginning for being considered too difficult or too original. The case per se is about a very difficult and unconventional task that might require new and innovative approaches. Nevertheless, the teacher has to encourage the students to analyze the alternatives they presented and the implications they entail.
Some hints the teacher can give to solve the second set of questions for the group debate:
Make a list of possible sources of revenues. Make a rough scheme of the cash flow of the project.
Identify the possible partnerships.
Evaluate the possible outcome of going to the given groups of possible investors. Banks, Angel Investors, Venture capital investors, Crowd funding, Hedge Funds, and Alternative Asset Management.
Try to generate new ideas of people that might want to invest in this project.
These are the possible investors.
Angel Investor: An investor who provides financial backing for small startups or entrepreneurs. Angel investors are usually found among an entrepreneur's family and friends. The capital they provide can be a one-time injection of seed money or ongoing support to carry the company through difficult times. Angel investors give more favorable terms than other lenders, as they are usually investing in the person rather than the viability of the business. They are focused on helping the business succeed, rather than reaping a huge profit from their investment. Angel investors are essentially the exact opposite of a venture capitalist.
Venture capital funds (VC): An investment fund that manages money from investors seeking private equity stakes in startup and small- and medium-size enterprises with strong growth potential. These investments are generally characterized as high-risk/high-return opportunities.
Crowd funding: The use of small amounts of capital from a large number of individuals to finance a new business venture. Crowd funding makes use of the easy accessibility of vast networks of friends, family and colleagues through social media websites like Facebook, Twitter and LinkedIn to get the word out about a new business and attract investors. Crowd funding has the potential to increase entrepreneurship by expanding the pool of investors from whom funds can be raised beyond the traditional circle of owners, relatives and venture capitalists. In the United States, crowd funding is restricted by regulations on who is allowed to fund a new business and how much they are allowed to contribute. Similar to the restrictions on hedge fund investing, these regulations are supposed to protect unsophisticated and/or non-wealthy investors from putting too much of their savings at risk. Because so many new businesses fail, their investors face a high risk of losing their principal.
Hedge fund: An aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark). Legally, hedge funds are most often set up as private investment partnerships that are open to a limited number of investors and require a very large initial minimum investment. Investments in hedge funds are illiquid as they often require investors to keep their money in the fund for at least one year.
For the most part, hedge funds (unlike mutual funds) are unregulated because they cater to sophisticated investors. In the U.S., laws require that the majority of investors in the fund be accredited. That is, they must earn a minimum amount of money annually and have a net worth of more than $1 million, along with a significant amount of investment knowledge.
Alternative Asset: Any non-traditional asset with potential economic value that would not be found in a standard investment portfolio. Due to the unconventional nature of alternative assets, valuation of some of these assets can be difficult. Alternative assets tend to be less liquid than traditional investments. Thus, investors who favor alternative assets may have to consider a longer investment horizon.
Presentation and round table:
After the group work the teacher will let the students to present their ideas without intervening to not generate biases.
In the round table debate the teacher will act as a moderator. By the end of this stage he might define the group's approach to the case by consensus or by voting. And after that he should give the students feedback about the alternatives they chose (Are they achievable? Are they enough? What Mars One team is actually doing, etc.)