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.