Thanks for the synopsis. I'm curious, though, what makes the solutions 'immoral' or dishonest? They seem perfectly legitimate to me.
1) The bike tire pressure check isn't bad, but seems to be cheating on the class solution by using outside materials. Once one can 'presume' a pressure gauge and a pump, why not presume further specialized equipment or further outside funding? As a business proposition I was happy with it when they were charging a set price, but I personally feel uneasy with the change to donations. This isn't clear cut, but it's guilt based and I wouldn't do it myself despite the effectiveness. Compare with the Hare Krishna technique of forcing free flowers and then asking for a donation: http://www.garyasanchez.com/what-hare-krishnas-can-teach-us-...
2) Selling restaurant reservations is probably fine within the context of the class, but is a violation of the expectations of the restaurant. If everyone were to follow their approach, the system would collapse and the restaurant would need to implement a policy of cancellation charges. My simple view would be that if the restaurant would change their system if you told them what you plan to do, it is immoral.
3) From the point of view of the class, the winning solution feels like a cheap trick. Yes, it makes money, but not under the rules that were officially given. From a business point of view, it takes advantage of a captive audience. What's really being sold is the time of a third party who does not benefit from the transaction, and yet due to social constraints is unable to leave. This strikes me as both immoral and dishonest.
I fear that my scruples here aren't entirely consistent, and I'm pretty certain that they reduce my ability to make easy money. But I enjoy being in a situation where I can make decisions based on the answer to "Would the world be a better place if everyone followed this advice?". And for me, on this criteria, the last two solutions fail, and the first is on the edge once the donation approach is taken.
The point of the exercise quite explicitly was to teach people to look past constraints that do not exist, like the $5 limitation you're getting stuck on. There was no restriction on using outside materials, that is a constraint you created on your own due to your interpretation of the presentation.
3) You're also assuming that the students didn't benefit from being introduced to the presenting company. Another poster mentions that it was Frog Design, and if that's the case then it was probably to the benefit of the students as well; Frog Design's a good company.
Well, that moral principle is not going to generalize well.
But let's resist the urge to play moral philosopher and consider the facts: Would the restaurants want to stop you from doing this?
I don't think it's obvious. If I pick up half a dozen extra reservations and then try to sell them, I don't really add to the workload of the greeter, unless I pick up substantially more than end up being used. (Obviously, if you try to get 100 reservations, sell five, and return the other 95, the restaurant is going to stop you. So, don't do that!)
What you're essentially doing is allowing people to buy a better position in line. That seems perfectly rational: An upcoming reservation, like a stock option, is a commodity, so one can put a price on it, right? And it's worth noting that restaurants do this all the time [1]:
http://news.ycombinator.com/item?id=318827
...it's called "bribing the maitre'd", and they don't advertise it, even though -- if it weren't for other considerations -- it's a good thing for the restaurant. A person who is willing to pay cash money to get in to your restaurant faster is probably someone with (a) more money to spend, so they're likely to order wine and dessert and all the good stuff that pads the profit margin, or (b) a big fan of your restaurant, such that they'll pay extra to come to your restaurant instead of the less-busy restaurant down the street, or (c) about to become a big fan of your restaurant, because they can always get a seat there right away; it's just a matter of a few bucks!
So the real mystery is why restaurants don't do this themselves. I suspect that the answer is social signaling: A restaurant doesn't want to be the entity that makes the majority of its customers feel poor. For every person whom you allow to publicly buy their way to the front of the line, you send a message to an entire line-full of other people that they're just too cheap or too poor to do the same thing. The point of a restaurant is to allow people to feel rich at a fixed rate, not to force them to feel poor at variable rates. So before long your restaurant will have a reputation as "that obnoxious place which caters to snooty rich people who want to show off all their money". Unless that's your business plan, that isn't a good idea.
(It is this, not the fear of breaking some non-existent law against overtipping maitre'ds, that keeps the practice of bribing maitre'ds below the radar. It's okay to spend money for better service; it's impolite for either party to call attention to it.)
The solution that these entrepreneurs have come up with is to create two queues: The queue run by the restaurant, and a separate queue containing the reservations owned by the entrepreneurs, which they will sell for a fee. The genius of this is that there's a strict limit to how many rich people can buy their way ahead of you: The entrepreneurs only have so many spots ahead of yours. Then the entrepreneurs can fix the fee to enter their queue, which will help prevent unsightly bidding wars from breaking out in front of the restaurant. And, because the whole scheme is run by a third party, the restaurant doesn't have to adjudicate disputes, or explain all this to everyone who shows up, or spoil their reputation as scrupulously fair egalitarians who would be shocked -- shocked! -- by the offering of a bribe.
So my guess is that restaurants might be okay with this, if it's done right. (i.e. The right number of "buyable" reservations vs the usual ones, the right fixed rate, no intimidation of customers, and of course no counterfeit reservations. I believe it is the latter two problems that have given rise to laws against ticket scalping.)
---
[1] How great is it that when trying to google this article the first thing I find is the HN link?
I agree it's a bit shady to sell reservations, and I would be uncomfortable to play any role in this (person in line, person buying, student selling, or restaurant employee), but how is it "dishonest"? That implies deception, and I see none.
Selling reservations definitely violates the egalitarian "first-come, first-served" nature of the restaurant queue. If I were a restaurant owner, I wouldn't let it happen out of fairness to the people in the queue who don't want to pay. Both choices send strong signals, certainly, but I think that's a choice on the restaurant's part.
Isn't it deceptive to make a reservation at the restaurant without any intentions to ever show up?
Call the restaurant and tell them "we would like to reserve 10 seats with the intention of selling them on the free market". If they give you the reservations, you have a honest business.
Omitting the truth is just as dishonest as lying. You don't try and parse technicalities with honesty, either you were acting in good faith or you weren't, not telling the restaurant that you intend to sell the reservations - something certainly outside their expectations - is deceptive and is most certainly dishonest.
Saying things like that makes me think you're a sophist.
See?
If the restaurant is all booked up, they turn people away. If some of those reservations are held by scalpers, and the scalpers don't find a buyer, the table will be empty when it may have been used if not for the actions of the scalpers.
What the students did was to break this unenforceable contract, and convert an agreement to make a transaction at some point in the future into a pure option on their part. That's stealing value.
If the restaurants want to do this, that's one thing. If the restaurant attempts to cultivate an image of being the hip spot to be seen, then it's in their interest to seat anyone dressed nice, or has money to throw around, or whatever, preferentially. But I would expect that they take this factor into account when setting the wages of the maitre d, just as they account for tips when setting the waiters' wages. Thus, the restaurant captures the value.
If this became prevalent, I would expected restaurants to move back to a model of calling names, or asking the name as if they can't tell from what number buzzer you had. Psychologically, buying a buzzer would seem okay to a lot of people who would not be comfortable if what you were selling is "listen for Charlie, party of 4, and say you're Charlie".
All the above applies equally to buzzers or waiting in an physical queue. If the queue is visibly large or if the host says it's a 45 minute wait rather than a 20 minute wait, some patrons will go elsewhere.
Most the teams decided to jump on the idea of selling advertising. Her team had the insight to realize they weren't just selling advertising on a taxi-bike but they were selling advertising on a national television show. Needless to say they won that round. This is what the third team sounds like to me. Legitimate.
But let's say you could convince restaurant owners that selling reservations is a dandy idea. Sure, restaurants have long known (the idea isn't new) that they could, for a very minimal cost, sell reservations to the highest bidder. Sure, almost all have decided to go with a system that is perceived as free, fair, and egalitarian (with some discretion for doing favors for VIPs and accommodating glamorous people.) Suppose you can convince them. Why wouldn't they do it themselves? Restaurants manage their image very carefully and would certainly prefer to be in complete control. They could just do it in a notebook until (as the phenomenon caught on) their reservation software offered support for it.
The only plausible way I could see the business surviving is by charging lots of money (fewer customers limits your visibility) and kicking some of the money back to maitre d's as bribes.
I'm not so sure that it does. It relies on filling the tables at the restaurants. The restaurants don't care if the people who come to fill your table aren't the same ones that originally booked the reservation. Nor do they care if a certain number of reservations are no-shows, if the number of no-shows is smaller than the number of people waiting at the door.
As I said above, you obviously can't take this all the way to the edge case or you'll have a company that buys up every single reservation, sells none of them, and then cancels them all at the last minute. Then that company will go out of business, either because the restaurant stops them or because the restaurant goes broke, taking the company with it. ;) So, don't do that! Just because your business plan fails on some edge case doesn't mean that it has to fail for you...
Like I said, the greatest proof that restaurants don't want their patrons paying for reservations is that they don't do it. They already have what they need: a way of recording reservations and a maitre d' with knowledge of their business and a triple-digit IQ. They know there's demand: many people already try to get a table on a busy night by slipping the maitre d' some cash. If they wanted in on it, they'd already be in on it, and you'd be stuck trying to convince a restaurant to hand over control of a simple, vital, near-zero-cost part of their business to a third party for no gain. I maintain that you could only survive as a parasite by avoiding notice and/or paying off the right people.
Restaurants are in the business of filling their tables by making customers happy -- those customers will return, tell their friends, and the tables stay full. By filling up available spaces (thus resulting in customers being told that a very long wait is to be expected) and providing a paid line-cut (who enjoys being cut in front of while waiting 60 minutes?), you're going to make a lot of the restaurant customers unhappy, both directly and indirectly.
If this was an ethical business, they would have told the restaurant what they were doing and received approval before they decided to lie to the restaurant to achieve their aims.
But anyway, as long as it's not illegal, I don't see what the problem is. The instructor didn't say how (or even whether) to spend the seed money.
Another way to look at it -- a good idea and good execution can overcome almost anything, even shortages of time and money.
Hackers have historically had very strong ideas of morality that extend way beyond illegal vs. legal. This is why some hackers advocate doing certain things they consider moral but illegal, and abhor other things that they consider immoral but legal.
It's thinking like that that makes most people not like Wall Street and businessmen in general. Legal and illegal and right and wrong and not the same thing. Being ethical doesn't just mean following the law, it means following the spirit of the law and not doing things other would perceive as wrong, regardless of the law. It's wrong to cut in line, but it's not illegal, that doesn't mean you should do it. It's wrong to be rude and insulting for no reason to a stranger, but it's not illegal, that doesn't mean you should do it or that it's OK to do it.
Obviously the rules for doing business on Wall Street, where decisions can impact millions of people, and the rules for this business class assignment are going to be different.
I have to say, I'm even more amused by people's outrage at these winning tactics than by the tactics themselves. I begin to understand why it's necessary to have an entire class in entrepreneurship. Perhaps it is largely about training people not to be pinned, like hapless chess pieces, by the force of trivial preconceptions.
The people who got a reservation, maybe, but what about the people who didn't get one?
Maybe a good business idea would be to sell kidneys that one steals from traveling students. I am sure the customers would be happy, too.
But places in line? Everybody "gets one". The question is: Where is it, and how much would you pay to trade with the person ahead of you?
If I walked up to someone holding a buzzy coaster at a local restaurant and offered them $20 to trade coasters with me, would you be morally offended? Would they necessarily be unhappy?
Yes, I agree that if every place in line is for sale the whole thing gets tremendously painful for the people who arrive late and don't want to engage in a commodities-trading session before dinner. But what if only one in every 20 places is for sale?
If someone doesn't arrive -- no problem, everyone else moves up.
And, really, the kidney thing is unfair on several levels. For one thing, it's a cheap shot. If you want to take a moral stand on the sanctity of restaurant reservations, do so with pride! Don't feel the need to pretend that your debate opponents are also against motherhood, apple pie, and life itself.
For another, it's a different problem. The laws against paying for donor organs are in place because the market for donor organs is worlds different from the market for restaurant seats: You can't open up new sources of donor organs the way you open up a new restaurant [3], and the difference between the best chef and the second-best chef is smaller (in quantity and in kind) than the difference between one kidney and zero kidneys. Nobody dies if they don't get a seat at their favorite restaurant and have to eat at -- gasp! -- the International House of Pancakes down the street.
---
[1] We don't really have another name for this, do we? I've been burned by this hole in our lexicon before. Me: "Do you take reservations?" Restaurant: "Yes." Me: "Can I make a reservation?" Restaurant: "No, we don't take them over the phone. We give them out as you arrive."
[2] I can't believe I just wrote that, either.
[3] Well, not unless you're Sweeney Todd. In which case you can do both at once!
{edit} To expand on that, the legality of what is being done doesn't matter either. There are many unethical things that are still legal (e.g. patent trolls, large companies burying competition through using the legal system as a money drain, suing someone for defamation/slander just to shut them up about something that is true but you don't want anyone to know about, etc).
And it wasn't 'above the board' either, because it's not like they told the restaurant what they were doing. If I call ahead and book a table for two that I have no intention of using unless I can scalp/pawn it off on someone else, how am I being ethical by lying to the restaurant? {/edit}