For some aspiring young entrepreneurs, their first taste of being their own boss is running a lemonade stand or operating a lawn mowing service.
Others don’t get it until college when their professor hands them a ridiculously small amount of “startup capital” and tells them to start a profitable business – NOW!
This “thrown into the deep end” approach has been gaining favor with entrepreneurship educators who believe there is no substitute for hands-on experience, even within the constraints of a college course.
Tyler Wry, assistant professor of management at The Wharton School of the University of Pennsylvania, is one of those. He gives $20 to each team of undergrads in his introductory entrepreneurship class and tells them to come up with a micro-venture that can turn a profit in a little more than a month. (Any profits are donated to charity after Wry gets his $20 back.)
“It’s a tough assignment and it really forces the students to be nimble,” he said. “When they realize how tough it is to do this, some students drop the class.”
Wry also requires the teams to include each week’s lessons into their micro-ventures.
Typically, teams fail, not because their ideas are bad, but because they are too ambitious and underestimate how much time and capital their plans require. For example, Wry said, one team wanted to create an online campus dating service, but couldn’t get it off the ground in such a short time.
By contrast, another successful team photographed alumni events, displayed the shots immediately afterward on an iPad and sold the digital images to those in the picture. “I thought they should have kept that going,” Wry said.
The most successful teams keep it simple, like Selfie Straws did. Earlier this year, a team got the idea to sell drinking straws molded into the names of fraternities, sororities and other campus organizations. After trying and failing to negotiate with a manufacturer for a discount, the group simply took orders and money from groups, then placed the orders through a retailer’s website, took delivery of the customized straws and gave them to the customers.
“We thought selling the straws was more unique than T-shirts and hats, which everyone already had,” said team member Peter Bittar, now in medical school at Duke University.
Team members created a Facebook page and marketed to the organizations to which they belonged, said Adrienne Leff, a senior studying entrepreneurship. They also encouraged customers to spread the word by taking selfies with their Selfie Straws.
The team, which never had to use Wry’s $20 startup money, sold 273 straws at an average price of $7.12 and turned a profit of $808.30.
It worked, Wry said, because the Selfie Straws team found an existing product that people liked, one that required no startup capital, and was able to act as middleman between customers and the supplier. The team was responsible only for marketing and delivery and did not have to worry about design, manufacturing or inventory.
And what did team members learn (besides that college students will pay as much as $10 for a fancy drinking straw)?
“I think the most important lesson I took from the class is that the only way to really know if you have an idea worth pursing is to put yourself out there, open your thoughts to scrutiny and go for it,” Bittar said.
“What I learned was the importance of having a team that really works well together and where everyone is competent,” Leff said.
Wry said he intends to continue capitalizing the lessons. “I’ve always gotten my money back,” he said.