Did it take less than 2 hours to create the booth, the signs, and perform the services? Unlikely.

What, you're saying that a team of college students, on a college campus, which presumably has a fully stocked stationery store within five minutes' walk, can't throw up some hand-scrawled signs in less than (say) 15 minutes for under five bucks?

Yeah, they probably had to already have the tire pump and gauge. I presume that "what do we have in our closets" was an important part of the process of choosing this business plan. ;) And I don't seem to recall anything in the "constraints" about not being allowed to beg or borrow anything, nor any rules about not being allowed to use stuff you already own. This isn't accounting class.

did they make the reservations at 6pm and then sell them before 8pm?

Why not? Remember: They're doing this in parallel, using multiple team members and multiple restaurants. And, given the anecdote ("this works better for restaurants that hand out little buzzers") we're not talking about the sort of reservation that needs to be obtained hours in advance. We're talking about people paying for the privilege of jumping the line and turning a 40-minute wait into a 4-minute wait. You can get through quite a few cycles of that in two hours.

What if "stuff you already own" includes a bank account with 2 million bucks in it? I also thought the solution was a bit dishonest, but then the whole thing should not be taken that serious from the start.

The reservations solution seems even worse, though I am not sure how exactly it works (would it piss off restaurants in the long run, or is it really a valuable service?).

Selling the presentation time seems to be the only valid solution.

You can easily be in a similar situation in real life. You can get a mortgage on your house, or sell your car, or pawn family heirloom, etc. You can extend your runway (and hopefully increase the possibility or size of success), while ensuring deeper fall if you do fall.

So back to the class, if one group did spend invest their $100 along with the initial $5 seed funding, they'd have to earn more than the other groups to have a comparable return.

If a student weren't allowed to sacrifice their entire life and all of their resources to excel at this one stupid class exercise, it wouldn't be a very good simulation of the entrepreneurial experience, would it?

You know what would have made for a great class? If one of the students had invested $2 million out of pocket to create an additional $100k in two hours. They would have presented that to the class. Everyone would have to agree that, objectively speaking, in dollars and cents, they would have "won". The next question to ask them is: do you feel successful? Have you accomplished whatever it is that you wanted to accomplish, when you signed up for a class on entrepreneurship? And does that make you happy?

Whatever their answer was, it would probably be educational.

For me, a take-home lesson from Startup School was that a lot of extremely talented and successful entrepreneurs are still searching for their answer to this question. They've invented something great, or they've made N millions of dollars, or both, and yet the question persists.

The first scenario is one a lot of Jiffy Lube-type garages and auto parts stores like Pep Boys do all the time (although typically with more than just tire pressure, e.g. transmission fluid).

The latter -- asking for donations and letting people pay what they want -- is something the Boy Scouts in my hometown used to do all the time. Free air for your tires, free coffee by the side of the Interstate ... I saw them doing free brake light replacement once. In theory they'd do it for free if someone really couldn't afford it, but in practice people pay what they think the service is worth (or whatever of that they happen to have on hand), so it's a sort of self-defined "sliding scale."

I don't see any misrepresentation there so I don't see how it's inherently dishonest.

Edit: really, though, what is the actual experiment here? If all external aids are allowed, the only lesson left seems to be to think outside of the box.

It's a valid point how the artificial constraints are the envelope and the time, because the way she listed the rules was, clock starts when you open the envelope - it's almost a a ploy, or a method of trying to distract someone. Imagine, if you were handed an envelope and were told "there's money inside there", wouldn't you immediately start to wonder "how much?" and you would immediately want to open it. She restricted this thought by applying a 2 hour time constraint, from the time you open the envelope, which almost forced the students to think twice about jumping to the money. Instead, all the groups achieved something without ever really having to open the envelope. I think it was interesting, and a job well done.

You answered your own question -- to the customer, it's annoying.

... and to the restaurant owner, it discourages walk-in traffic.

It's immoral in that it's dishonest (We have a word for reserving space at the restaurant by claiming to be a party of two, but not being one -- it's called lying). If you wanted to do this in the moral clear, you need to speak to the restaurant owner first, and see if they'll pre-allocate you tables.

It's scalping. It raises the cost of a dinner in the restaurant without additional gains for them. Obviously restaurants would not go this.

It raises the monetary costs of dinner for people, who want to pay to avoid waiting. For the normal-waiting patrons the strategy feels like increased congestion. (And they bear the costs.)

Why do restaurants have queues anyway? Why don't they just raise their prizes until supply meets demand? There's more than one scholarly article about this question.

Because you're fucking up the social contract that restaurants have with their customers.

It doesn't take much to see that 2 team-hours is a much bigger asset than the $5, so you're better searching for the best way to use 2 hours, and maybe even ignoring the money.

It took a bit more insight to realize that hard to tap advertising space(and other opportuities) in a university town is a much bigger asset than the team-hours and the money.

Team 1 were arguably entirely within the rules and made $200, Team 2 went a little outside (unless they were handed the envelope at 6pm) and made a little more, Team 3 ignored the 2-hour stipulation entirely and made $650.

Fundamentally, you're not rewarding creativity at money-making, you're rewarding creativity at rule-breaking.

And there's your insight. If what you want is money, and lots of it, finding creative ways to game the system is how it's done.

I am not lauding that, just pointing it out.

And a good way to end a up crook or in jail. Business should be about creating value for both parties involved.

Presumably, there were much less creative solutions that also failed to entirely obey all stipulations. It was an exercise, not a contest.

But that's very important. People are constantly working under ... and handing out ... artificial constraints. Getting outside the box is one of the most important lessons. Who could possibly want to communicate but be limited to only 140 characters?

The US spent a million dollars to develop a pen that could write in no-gravity. The Russians used a pencil.

"In the province of the mind, what one believes to be true is true or becomes true, within certain limits to be found experientially and experimentally."

Using $10 instead of $5 is not thinking outside the box.

False: http://www.snopes.com/business/genius/spacepen.asp

The real world (read Wall Street) has plenty of constraints and people are always gaming the system to make a buck. So in this sense, it's a valid exercise.

Edit: In terms of "gaming the system" I'd like to think of this as leveraging opportunities in the system for a particular gain, not "cheating" the system.

On another note, Breaking rules isn't what caused the recent wall street collapse it was a lack of looking ahead at consequences of actions.

Not really. All the people who caused the problem are still employed and still rich. So for those entrepreneurs, they are still succeeding. It is the USA public who are failing at being entrepreneurs, not Wall Street.

I'm starting to think there should be a "Godwin's Law" corollary -- as any discussion thread grows, the probability of comparisons to Wall Street approaches 1.

The constraint here is (your current resources + $5 + 2 hours), not just the $5 and 2 hours. And the point is to get profitable. It's an entrepreneurship puzzle, not programming puzzle.

The problem was not 'you are given X amount of seed money and two hours to make as much money as possible; however, you must use, and only use, that money while buying the materials you are going to require.'

The problem was not designed to make students money but to show them that there are lots of possibilities in the world for success with hard entrepreneurial thought (they were given four days to think of a plan).

I can be wrong, but I am pretty sure that the rules did not even matter (in the strictest sense). They could spend six dollars on buying signs and a bike pump to make their project a success because the goal of the "problem" was to open the minds of the young entrepreneurs.

If each person did not come up with a brilliant idea, then there would be no harm. However, in mind of the problem, the students were supposed to hear what the other students did to achieve success because the path to achievement is the path to success. -> And that is why people take the class. They want to discover the path to success.

To me the three examples (even though they were kind of hokey) didn't so much turn the constraints on their heads as they did make them totally irrelevant... They made it less an issue of the constraints of certain explicit rules, and more about the implicit absence of others.

You could use the "idle time" for other stuff.

They executed the advertising opportunity, now they have nothing. The other two, issues with their business practices aside, have set up businesses that could continue to operate, grow and scale.

To me that deserves more recognition than a flash-in-the-pan idea.