Hi, today, I will share a little bit about what I found interesting about the entrepreneurial class taught long ago at Stanford University. Some of you may know the story already, but I hope to share my views and findings on this.
In 2009, Stanford professor Tina Seelig gave one of her classes an uncommon experiment. Each of the 14 teams received an envelope with $5 inside, and once they opened the envelope, they had only 2 hours to generate as much money as possible. She gave this assignment to her students from Wednesday to Sunday, and each group had to present their project to the class on Monday.
When I first read this, I had no idea what I would do if I was given the same challenge. I would probably set up an ice cream shop if it was during summer because I can quickly gather customers in boiling temperatures, but the initial cost would cost more than $5 – I got trapped to the idea of having given only 2 hours and $5 to complete this challenge.
According to the professor, however, most students moved beyond the standard responses, and one group operated far differently from the others.
One group booked reservations at several restaurants for busy times and sold each reservation to those who did not want to wait long for up to $20. This was a clever idea: they targeted relatively wealthy people who would not hesitate to give up dollars to enter restaurants without waiting in long lines.
Another group set up a stand in front of the campus student union and offered free checks on bicycle tire pressures. If tires needed fillings, they charged $1 for adding air. At first, it seemed this business would be unsuccessful in terms of price settings, but they later changed their operations. After realizing the value of their services and locations – people could choose to add air in tires at nearby places for free, but this group set up their business at a more convenient place – they assumed they could charge higher prices for their services. Halfway through their given 2 hours, they stopped charging $1 for adding air and instead asked for donations from their customers. This way, many customers chose to pay more than their original price of $1.
These two groups impressed me with their innovative ideas, but I now want to focus on the group that did not use $5 but gained $650 in the end. This group understood that $5 was close to nothing and limiting their working time to 2 hours by opening the envelope was a waste – they did not even open the envelope. They realized the 3-minute presentation about their projects on Monday was what they could utilize to earn money. Thus, they sold 3 minutes to a company that wanted to recruit intelligent Stanford students for advertising their recruitments. In return for giving 3 minutes and creating content for a commercial, this group received $650. Compared to the initial budget allowance of $5, $650 earning is grand. But to the company, $650 for a commercial was a worthwhile investment – if it gains skilled employees from Stanford with this commercial, the company can ultimately attain more profits. So this was entirely a win-win collaboration.
Many other groups contributed to this challenge in different ways. However, the group that did a commercial for one company was the most compelling.
What I found out by learning about this challenge is that opportunities are abundant – a concept needed for entrepreneurs. It is not always necessary to use all resources given, and problems could be perceived as a positive factor. As Steve Jobs say "think outside the box," I understood that the most significant element of entrepreneurship is to think diversely and be creative.