5 Dollars And 2 Hours

by • July 6, 2013 • Entrepreneurship, StoriesComments (0)1919

What would you do if you were given $5 and a two hour time frame to make as much money as possible?

This is the task I read about recently that was assigned to a group of Stanford business students taking a class in entrepreneurship.

Here’s the breakdown:

Each group was given a sealed envelope with $5 in it. They were given time to plan what they would do, but once they opened the envelope they only had 2 hours to make as much money as possible. Each group would come back later in the week and present their results from the experiment to the class, with the highest earning group being the winner.

Now, if you posed this question and gave this scenario to most people on the street you’d probably get pretty standard responses.

Start a lemonade stand. Have a car wash on a busy corner. Buy a case of cheap case of bottled water and go to somewhere that people are active to sell the individual bottles. Maybe not those exact ideas, but probably something along those lines.

Since these were entrepreneurial minded students at one of the top universities in the country, their ideas were of a little more “outside the box” type of thinking. They realized that focusing on the money actually framed the problem too tightly. They understood that five dollars is essentially nothing and decided to reinterpret the problem more broadly: What can we do to make money if we start with absolutely nothing?

Here is what the top 3 teams came up with to make the most profit in the time available.

Team 3

This group identified a problem common in a lot of college towns—the frustratingly long lines at popular restaurants on Saturday night. The team decided to help those people who didn’t want to wait in line. They paired off and booked reservations at several restaurants. As the times for their reservations approached, they sold each reservation for up to twenty dollars to customers who were happy to avoid a long wait.

As the evening wore on, they made several interesting observations. First, they realized that the female students were better at selling the reservations than the male students, probably because customers were more comfortable being approached by the young women. They adjusted their plan so that the male students ran around town making reservations at different restaurants while the female students sold those places in line. They also learned that the entire operation worked best at restaurants that use vibrating pagers to alert customers when their table is ready. Physically swapping pagers made customers feel as though they were receiving something tangible for their money. They were more comfortable handing over their money and pager in exchange for the new pager. This had an additional bonus—teams could then sell the newly acquired pager as the later reservation time grew nearer.

Team 2

This team set up a stand in front of the student union where they offered to measure bicycle tire pressure for free. If the tires needed filling, they added air for one dollar. At first they thought they were taking advantage of their fellow students, who could easily go to a nearby gas station to have their tires filled. But after their first few customers, the students realized that the bicyclists were incredibly grateful. Even though the cyclists could get their tires filled for free nearby, and the task was easy for the students to perform, they soon realized that they were providing a convenient and valuable service. In fact, halfway through the two hour period, the team stopped asking for a specific payment and requested donations instead. Their income soared. They made much more when their customers were reciprocating for a free service than when asked to pay a fixed price.

For this team, as well as for the team making restaurant reservations, experimenting along the way paid off.

The Winning Team

Although the other teams had good ideas and made a few hundred dollars in their 2 hour window, the winning team looked at the resources at their disposal through completely different lenses, and made $650. These students determined that the most valuable asset they had was neither the five dollars nor the two hours. Instead, their insight was that their most precious resource was their three-minute presentation time on Monday. They decided to sell it to a company that wanted to recruit the students in the class. The team created a three-minute “commercial” for that company and showed it to the students during the time they would have presented what they had done the prior week. This was brilliant. They recognized that they had a fabulously valuable asset—that others didn’t even notice—just waiting to be mined.

This experiment should serve as an example that the only real constraints on pursuing something are usually self imposed. By thinking outside the norm, you can overcome a lack of starting capital, realize that even tiny problems can use a solution, and hopefully see that sometimes all you really need to do is re-frame a scenario to have the greatest success.

So if you were put in the same situation, what would you do?

Given your current situation and goals, what WILL you do?

 

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