The $5 Challenge (#2)

Dr. Tina Seelig a professor at Stanford University performed an interesting experiment on her students as part of the Stanford Technology Ventures Program.

The class was divided into 14 teams. Each team received an envelope with five dollars of “seed funding” and was told they could spend as much time as they wanted planning. However, once they cracked open the envelope, they had two hours to generate as much money as possible.

Their goal is to make as much money as possible within two hours and then give a three-minute presentation to the class about what they achieved. They were encouraged to be entrepreneurial by identifying opportunities, challenging assumptions, leveraging the limited resources they had, and by being creative.

If you were a student in the class, what would you do?

Typical answers range from using the five dollars to buy start-up materials for a makeshift car wash or lemonade stand, to buying a lottery ticket or putting the five dollars on red at the roulette table and many teams did that.

However, the teams that followed these typical paths did not earn much.

The teams that made the most money don’t use the five dollars at all.

They realize the five dollars is a distracting, and essentially worthless, resource.

So they ignored it. Instead, they go back to principles and start from scratch. They reframe the problem more broadly as “What can we do to make money if we start with absolutely nothing?” One particularly successful team ended up making reservations at popular local restaurants and then selling the reservation times to those who wanted to skip the wait. These students generated an impressive few hundred dollars in just two hours.

But the team that made the most money approached the problem differently. They realized that both the $5 funding and the 2-hour period weren’t the most valuable assets at their disposal. Rather, the most valuable resource was the three-minute presentation time they had in front of a captivated Stanford class.

They sold their three-minute slot to a company interested in recruiting Stanford students and walked away with $650. They recognized that they had a fabulously valuable asset that others didn’t even notice just waiting to be mined.

It is important to remember that just because a $5 bill is sitting in front of you doesn’t mean it’s the right tool for the job.

Tools, “can be the subtlest of traps.” When we’re blinded by tools, we stop seeing other possibilities in the peripheries.

Aristotle popularized?the concept of a?first principle: which means establishing a fundamental fact or conclusion you?know?is true,?deconstructing?it down to its core elements, and?working up?from there.?

In the case of the $5 project, that meant ignoring assumptions and determining the most valuable asset. At first glance,?the $5 seemed like their only asset. Some teams fell for that mental trap.?Nor was the?students'?collective two hours, even though that was?a better use of their resources.?

Three?minutes in front of the perfect audience??That?was the most valuable thing they possessed.

The $5 experiment has some interesting lessons for us in our life.

- What are the $5 things that we are fixated on in our life?

- Are we focusing too much on the $5 and forgetting the other resources?

- How can we ignore it and find the 2-hour window?

- Or even better, How do we find the most valuable three minutes in our arsenal?

From the Book?- What I Wish I Knew When I Was 20: A Crash Course on Making Your Place in the World by Tina Seelig Ph.D