Stanford University's $5 Challenge

How much money could you earn if you were given $5 and two hours? That was the challenge put forth to Tina Seelig's students at the Stanford Technology Ventures Program. She divided her students into 14 teams, gave each team an envelope with $5 in "seed funding," and told them to come up with a plan. During the weekend, they had two hours to put their plan into action.

Seelig says when she presents groups with this "$5 challenge," the immediate responses usually involve gambling (high risk, high return) and lemonade stands (low risk, low return). But after students get together in teams and brainstorm for a while, the usually come up with much better plans. And what they learn is this: The $5 is red herring. The teams that are most successful usually don't even use the money.

In her most recent class, one team made money by standing in lines of popular restaurants in Palo Alto on a busy Saturday. They were able to sell their place in line for $20 to hungry customers. Another team went on campus and offered to measure bike tire pressure for free, and then asked for a donation to pump up underinflated tires. (Was it okay for them to use a tire pressure gauge and bike pump, or should they have only used equipment that they could buy with the $5 seed money? Share your opinion in the comments section.) The winner of the challenge made $650 by selling their 3-minute presentation slot in class on the following Monday to a company that wanted to recruit the students. Seelig deemed their solution "brilliant," and I agree.

The results of the challenge is a good reminder that people have the potential to achieve financial security by being creative, by having time to plan, and by collaborating with other people. Having money is not always a necessary component.

Mark Frauenfelder – Editor-in-chief of MAKE magazine and the founder of the popular Boing Boing weblog, Mark was an editor at Wired from 1993-1998 and is the founding editor of Wired Online.