7 ms·

Thanks for the synopsis. I'm curious, though, what makes the solutions 'immoral' or dishonest? They seem perfectly legitimate to me.

nkurz 17y ago
There are two levels --- the first is within the context of a class assignment, and the second is as a business operation. 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-about-marketing 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.
- rdrimmie 17y ago
  Regarding item 1, in the real world analogy of getting seed money an entrepreneur certainly isn't limited to only using that seed money. They can use their credit cards or their house or their own equipment or anything else. 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.
- mechanical_fish 17y ago
  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. 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 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?
- raffi 17y ago
  I once heard one of the participants from the first season of the Apprentice speak. One of the assignments her team was given was to take a business taxiing people about via bicycle and make it as profitable as possible. 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.
mechanical_fish 17y ago
From what I can see, their customers were happy, they made money, and it was all above-board, let alone legal. Clearly, something must be wrong! 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.
- Tichy 17y ago
  "their customers were happy" 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.
  - mechanical_fish 17y ago
    I'm assuming, based on the teacher's description (which involved "those little buzzers" and the concept of "trading one buzzer for another"), that these "reservations" they were selling were in fact "places in line". [1] If you built a business around selling reservations at a reservation-only restaurant, where the typical reservation was made days in advance and they were handed out in fixed quantity, I would have more... reservations about the business, as you do. [2] 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!
dkarl 17y ago
Making and selling restaurant reservations doesn't strike you as dishonest? It's an honor system. What's to stop me from making reservations at ten different restaurants for my blind date tonight, and deciding at the last minute which one will make the best impression on my date? The system relies on honesty. It only works because few people are willing to abuse it, and those who do so only do it in a small way. This business would either be blackballed and frozen out by the restaurants, or the reservation system it depends on would be abandoned. 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.
- mechanical_fish 17y ago
  The system relies on honesty. 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...
  - dkarl 17y ago
    Restaurants do care if they deny reservations to non-paying customers and then have empty tables because your business didn't sell as much as usual. They also care about alienating customers who are told, "We don't have any free reservations available, but some are available for an extra charge." Very likely, if they found out what you were doing, they would put you out of business whether you were hurting them or not, just to prevent their patrons from ever facing that choice. 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.
bhousel 17y ago
Agreed.. I'm surprised by the comments here where many seem to think that some ways of making money are more fair than others. I would have expected the Hacker News crowd to really admire the winning team's 'hack'. 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.
- prodigal_erik 17y ago
  It's a funny stunt once, but it's not an admirable business, because over time it would create less value than it destroys. Stanford classroom hours are limited and vastly expensive for the students.
- raganwald 17y ago
  I am not surprised in the least! 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.
- gnaritas 17y ago
  > But anyway, as long as it's not illegal, I don't see what the problem is. 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.
  - bhousel 17y ago
    That's true, and I totally agree with you. I guess my comment came out wrong. What I meant to say was that I don't see what the problem is for the purposes of the assignment. 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.

nkurz 17y ago

There are two levels --- the first is within the context of a class assignment, and the second is as a business operation. 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-about-marketing 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.

rdrimmie 17y ago
Regarding item 1, in the real world analogy of getting seed money an entrepreneur certainly isn't limited to only using that seed money. They can use their credit cards or their house or their own equipment or anything else. 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.
mechanical_fish 17y ago
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. 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 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?
raffi 17y ago
I once heard one of the participants from the first season of the Apprentice speak. One of the assignments her team was given was to take a business taxiing people about via bicycle and make it as profitable as possible. 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.

mechanical_fish 17y ago

From what I can see, their customers were happy, they made money, and it was all above-board, let alone legal. Clearly, something must be wrong! 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.

Tichy 17y ago
"their customers were happy" 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.
- mechanical_fish 17y ago
  I'm assuming, based on the teacher's description (which involved "those little buzzers" and the concept of "trading one buzzer for another"), that these "reservations" they were selling were in fact "places in line". [1] If you built a business around selling reservations at a reservation-only restaurant, where the typical reservation was made days in advance and they were handed out in fixed quantity, I would have more... reservations about the business, as you do. [2] 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!

dkarl 17y ago

Making and selling restaurant reservations doesn't strike you as dishonest? It's an honor system. What's to stop me from making reservations at ten different restaurants for my blind date tonight, and deciding at the last minute which one will make the best impression on my date? The system relies on honesty. It only works because few people are willing to abuse it, and those who do so only do it in a small way. This business would either be blackballed and frozen out by the restaurants, or the reservation system it depends on would be abandoned. 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.

mechanical_fish 17y ago
The system relies on honesty. 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...
- dkarl 17y ago
  Restaurants do care if they deny reservations to non-paying customers and then have empty tables because your business didn't sell as much as usual. They also care about alienating customers who are told, "We don't have any free reservations available, but some are available for an extra charge." Very likely, if they found out what you were doing, they would put you out of business whether you were hurting them or not, just to prevent their patrons from ever facing that choice. 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.

bhousel 17y ago

Agreed.. I'm surprised by the comments here where many seem to think that some ways of making money are more fair than others. I would have expected the Hacker News crowd to really admire the winning team's 'hack'. 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.

prodigal_erik 17y ago
It's a funny stunt once, but it's not an admirable business, because over time it would create less value than it destroys. Stanford classroom hours are limited and vastly expensive for the students.
raganwald 17y ago
I am not surprised in the least! 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.
gnaritas 17y ago
> But anyway, as long as it's not illegal, I don't see what the problem is. 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.
- bhousel 17y ago
  That's true, and I totally agree with you. I guess my comment came out wrong. What I meant to say was that I don't see what the problem is for the purposes of the assignment. 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.