Low Cost Business Ideas from Stanford’s Best
There is a saying amongst marine mammal trainers, “the only thing black and white in marine mammal training are the Killer Whales.” The best killer whale trainers know that thinking outside the box is crucial for successful training. The best were constantly experimenting with new training techniques and refused to be confined to traditional training methods. In this post we will explore how Stanford Students were able to bring new meaning to low cost business ideas through experimenting and thinking outside the box and why you should be doing the same thing.
The Challenge
Tina Seeling, Executive of the Stanford Technology Ventures Program and author of the book, “What I Wish I Knew When I Was 20,” understands the necessity for entrepreneurs to work outside of accepted norms. Stanford University asked Seeling to teach a one-week class on entrepreneurship. Instead of covering the boring basics of entrepreneurship, Seeling decided to teach her class a priceless lesson.
The Challenge: To make as much money as possible in two-hours.
Seeling split the class into teams. Each team received an envelope that contained $5.
The teams could strategize for as long as they like. The $5 could be used however the team saw fit. However, when they opened the envelope they would have only two hours to make as much money as possible.
Each team would complete a 3-minute presentation to Seeling and the class showcasing their results.
Before we go any further, what would you do? If you were in this same scenario, what would you do? Spend a moment and think about it.
What did the teams do?
Team One
Team One set up a stand in a busy section of the student union and offered free air checks on bike tires. If the tire needed air, customers could purchase air for $1.
At first, Team One worried they were wrongly taking advantage of their fellow students. Why would someone pay for a service that was free at a nearby gas station? Turns out that the convenience of the service was worth the $1.
After they realized students would pay for this service, they scrapped the $1 price tag and asked for a donation instead. Their profits skyrocketed! Customers gave much more than a $1 when prompted to make an unspecified donation!
Total Profit: $200
What did they learn?
Perhaps the largest lesson here is that they improved their business by experimenting. Many entrepreneurs spend days and months writing business plans and researching competition. While important, at the end of the day, all of that is really just a best guess. If you used the same time to experiment and interact with real consumers you would learn much more. Team One learned that the convenience of their service added value where value was previously thought not to exist and that asking for donations was more profitable than charging $1. All of this was learned within their first hour of business.
Often times, teams of killer whale trainers would be assigned to train one whale a new trick. Guess which teams trained the whale the fastest? The teams that did more training and less talking. Marine mammal trainers waste so much time talking about what may or may not work. You can learn so much more about what works for the whale when you stop talking, and start doing. The same is true for your customers. Stop talking about what they may or may not want – and start offering! You’ll learn a lot more, a lot quicker.
Team Two
Team Two discovered that on Saturday night the wait-time at restaurants were very long. They made reservations at all the major restaurants and sold those reservations to parties who didn’t want to wait.
Team Two quickly learned that the female students sold more than the male students and restaurant’s that had buzzers resulted in more sales. People were less threatened when approached by a female and therefore more open for discussion and buying. Buzzers allowed the students to give something tangible to the customer – making the customer feel safer because they were getting a physical item in exchange for their money. The other added benefit with the buzzers is upon the sale, the team would then receive the customer’s old buzzer and sell that reservation later on in the evening.
Total Profit: $400
What did they learn?
Like Team One, Team Two was able to quickly test many different variables (female vs male salespeople and buzzers vs non-buzzers) and act accordingly. By diving in head first they were able to improve their business much quicker than if they sat around a table and guessed at what would work.
What did we learn from both teams?
Both teams understood that the $5 was irrelevant to their success. In fact, when trying to come up with ideas that incorporated the $5, Teams One and Two found that it limited their brainstorming. The presence of money was keeping them from optimal success. Most people believe that lack of money is what is keeping them from success.
Killer Whale Training with No Fish
A trainer once told me that it was impossible to train an animal without using food. They argued that because the animal was hungry it was willing to learn. I adamantly disagreed with this and our argument ended with a challenge; train a sea lion with no food. I accepted.
Without food I had to start getting creative. I knew this particular sea lion loved fish – but since that was off the table I had to find something else. Instead, I used a ball. Each time the sea lion made progress I would get out the ball and play fetch with him. If the sea lion was not making progress – no ball. In a few short weeks I had trained the sea lion without the use of fish. From then on I used that ball in training and looked elsewhere for ways to reward animals. Taking fish off the table made me learn that training could be more than just feeding for good behavior.
No Money, No Problem!
Most new entrepreneurs think that lack of money keeps them from starting or succeeding. “If I just had enough money to buy my supplies! Or “If I could just buy this machine then I would be able to start making some real money!” are all thoughts of a trapped and doomed entrepreneur.
When you take money out of the equation – you start to think outside the box and create true value for your consumers. Creating true value will always breed success.
There was a third team that understood this concept.
The Winning Team: Team Three
Team Three knew that neither their $5 nor their two-hour time frame were their most valuable assets. They realized their most valuable asset was the three-minute slide presentation. They sold that slide as ad space to a company that wanted to recruit students in that class. Brilliant!
Total Profit: $650
What did they learn?
They learned that truly “thinking outside the box” will result in optimal return.
Do not get “boxed in” by focusing on one or two components of your start-up, your business, or a problem. Look at the big picture! Try and find the “3-minute slide” in your business. By doing this you will create an outcome worth celebrating!
Boring Whale Tricks
When I would train killer whales I rarely focused on the “big” and “impressive” tricks. A really big front flip looks awesome, but everyone was training that. Instead I focused on the tricks nobody was working on. I would train multiple whales to move slowly in unison, or I would take tricks they already knew and add to them. For example, maybe the whale already knew how to do a front flip – but did not know how to do a front flip while squirting water out of its’ mouth. This type training added value to our show but first, required thinking outside the box.
This case study has many lessons and “thinking outside the box” is only one. For those letting money stand in the way of you and your start-up – stop.
For a moment, pretend that even if you had the money – you couldn’t use it. On top of that, pretend that your life depends on your business’s success. Now, how are you going to do it?
Change the way you think – it can surprise you.
