Legendary Stanford professor Tina Seelig posed the following assignment to teams of students in one of her classes: How profitably can a team run a (very) short-term business with $5 in seed money?
The team could spend as much time as they wanted in the planning stage, but could actually “operate” the business for a total of just two hours. They had from Wednesday afternoon until Sunday evening to complete the project because by Sunday night Seelig expected one slide from each team detailing what they had come up with.
At Monday’s class, each team had three minutes to present their project to the class.
After you read the question in bold, I want you to stop and close your eyes to consider your response: What would YOU do to make money with five bucks, two hours, and three minutes? (Go ahead. Close your eyes and think creatively. I’ll be right here when you get back.)
If we’re being cognitively lazy, we might say to use the $5 to buy lottery tickets and hope for the best. (The older we are it seems the easier it is to jump on the first answer that comes to us.) Seelig says another common response when she poses the question to adult audiences is, “Set up a lemonade stand.” But how much lemonade could you sell in two hours? There’s not much profit there.
The creative responses from her students will blow you away.
One group, recognizing the frustratingly long wait at college town restaurants on Saturday nights, booked early reservations for two at a number of the restaurants. As their expected arrival time got close, they’d approach couples at the end of the line and sell their reservation for $20 each. If the restaurant had handed out pagers to the folks in line, the team now had another spot to sell to people who were farther back in line. Within the two hour period, this team generated a few hundred dollars.
Knowing how many bicycles are used on campus, another team bought a tire pressure and a pump for air. Setting up in front of the student union, they offered to check bicycle tire pressure for free, and if it was low, charged $1 for adding air. Then when they saw how grateful students were to have this service so handy, they asked for donations instead. They too made a few hundred dollars in the two hours.
The highest profit generated by one team was $650. Before this team did anything, they evaluated what resources were available to them: five bucks, two hours, and three minutes. They determined that the $5 and the two hours would restrict them; both are very limiting. The students recognized that the most precious asset in their hands was the three-minute timeslot.
They “sold” the three-minute slot to a company that wanted to recruit the students and created an infomercial for that company. That is what they played during their three-minute presentation time.
Seelig says she used this exercise to demonstrate what you can do with an entrepreneurial mindset. But she wanted to make sure her students learned that financial reward isn’t necessarily the primary value over everything else. So the next time she ran the exercise, instead of $5, the students received ten paperclips. (She had been inspired by the story of Kyle MacDonald, link below.)
If you want to read how her students assigned amazing value to paperclips, you’ll just have to buy Seelig’s 2009 book What I Wish I Knew When I Was 20.