from https://imsl.unibocconi.it/play/ # SpaceX: From Mars Theory to Space Travel Business ## Background (2001) - Elon Musk, successful entrepreneur (Zip2, PayPal), seeks a more ambitious project - Goal: Ensure long-term viability of human life by making humans an interplanetary species ### Mars Theory (Initial Vision) - Plan: Land a greenhouse on Mars - Strategy: Revamp public interest in space missions to leverage NASA technology and funding - Outcome: Musk's belief weakens after unsuccessful attempts to buy rockets in Russia (2001) ### Space Travel Theory (Evolved Vision) - Three-stage evolution for SpaceX: 1. Short-term: Transform satellite industry by reducing transportation costs 2. Mid-term: Address emerging space tourism/adventure market 3. Long-term: Build interplanetary travel industry --- ## Space Travel Business Model (Focus on Stage 2) #### Attributes and Causal Links: | Attribute | Description | Possible Values | |-----------|-------------|-----------------| | Space Travel Business | Probability of achieving a successful space travel business | {Yes, No} | | Space Tourism Demand | Size of the market for space tourism/adventure | {Large, Small} | | Mission Cost Reduction | Significant decrease in cost per mission (launch and unitary loading cost) | {Yes, No} | | Reusable Technology | Ability to design and produce reusable rockets and spaceships | {Yes, No} | | Vertical Integration | Degree of in-house design and production | {High, Low} | #### Causal Relationships: 1. Higher vertical integration increases the likelihood of developing reusable technology 2. Reusable technology leads to mission cost reduction 3. Mission cost reduction increases space tourism demand 4. Larger space tourism demand improves the probability of a successful space travel business 5. Higher vertical integration directly contributes to mission cost reduction ## Strategy Implementation - Focus on designing and producing reusable spaceships and rockets internally - Aim to significantly decrease space travel costs - Target the emerging space tourism/adventure market - Ultimate goal: Profitably grow SpaceX in the space travel industry This model represents Musk's beliefs about the potential outcomes and the causal links between different factors in the space travel industry. The subjective probabilities associated with each attribute and their relationships form the basis of SpaceX's strategy. --- ## Experiment and Theory Testing Elon Musk has two theories and future state spaces at hand: the "Greenhouse on Mars" and the "Space Travel". He has calculated beliefs on each of them, represented as the expected probability weighted by his prior that the theory is true. The strength of these beliefs differs, with the stronger belief indicating a more plausible future state and corresponding theory. ### Testing the Theories 1. "Greenhouse on Mars Theory": - Experiment: Test the current belief that rockets/spaceships are purchasable. 2. "Space Travel Theory": - Experiment: Test the current belief that SpaceX can design and produce reusable spaceships and rockets. - Hypothesis: If successful, space travel cost would significantly decrease in terms of both missile launch cost and unitary loading cost. ### Experimental Process - Musk aims to make a more informed decision about which theory to choose. - He decides to collect additional information by conducting one experiment on one of the two theories. - The experiment can involve both conceptual and physical tests. - Based on the information provided by the experiment, Musk can update the expected probability of the theory and his prior that the theory is true. - After the experiment, he can choose which theory is most plausible. This experimental approach demonstrates Musk's scientific method in business strategy, allowing him to refine and validate his theories based on empirical evidence. It showcases the iterative nature of SpaceX's development process, where theories are continuously tested and updated based on new information and experimental results. ![[Pasted image 20241016193848.png|300]]