It appears the entrepreneurial seed has sprouted.
At summer’s start, my eldest son was taking his first steps into a larger world. I had challenged him to make some money by any (legal) means he chose over the summer.
While his first choice was a lemonade stand, he quickly saw its drawbacks. He asked me what would make for a great business, and I told him a) solving a problem and b) building leverage in the model would certainly be a good start.
He liked the concept of solving a problem, and one of his greatest problems to date had been starting the 5th grade. In moving from elementary to intermediate school, he had faced a huge, stressful transition, and the school-provided information was woefully inadequate.
He decided to write a guide to starting the 5th grade at his school to capture everything he wished he had known.
It was fun talking to him about leverage and marginal costs. I explained how he’d need to do all of the work upfront and then the revenue (if any) would come in with little extra effort. His Guide would be similar to a software company. “Like Microsoft!” he cried (how is that the first software name to come to an 11 y.o.?).
As he scoped the document (which hit many of my own pain points from his transition), I saw it would be worth a lot to incoming students and their parents, but properly monetizing the Guide would be troublesome. Charge a fee and people would balk (plus for some there’d be a huge consumer surplus), but give it away / ask for donations and risk countless free riders.
In a nod to simplicity and with faith in his fellow man, he decided to give the Guide away but ask nicely for donations. I highlighted the risk that he might do a lot of work to help other people and get paid nothing. However, as the Guide took shape and he started to feel some pride for his creation, he said, “Even if I don’t make any money, I’ll still have done something to really help the new students.” Nicely done, son. You should start a blog 🙂
Writing the guide wasn’t a Herculean task, but it did involve a steady amount of work – he started writing well before school was out, and he continued to write for the first three weeks of summer. (“Writing” was a loose term – he used the voice typing function in Google docs a lot. Kids nowadays.) I was impressed with his diligence, especially given the risk his efforts would return nothing.
When the guide was in final draft form, I was happy to help him out with formatting, getting some pictures, and setting up the gmail, PayPal, and Venmo accounts for him. We also made an awesome video of him opening his locker (somehow lockers are kryptonite for incoming 5th graders – they think they’re impossible to open and literally lose sleep worrying about them).
I could expertly summarize the Guide, and I’d probably still bore most of you while leaving a handful of curious folks wanting. So instead, I’ll just give you the option to view the actual Guide in all its glory (redacted for privacy and with most links removed):
He was a little worried about putting his name out there, even though he played the content straight down the middle. While I knew anonymity might cost him some revenue, I was glad he was already sensitive to reputation risk.
He “launched” the product on the Friday we were due to fly to Japan. The missus just posted it in our local neighborhood Facebook group, and we were all a little nervous. People are so sensitive nowadays I could envision many dark social media scenarios playing out. But she didn’t even name him – she just referenced a neighborhood kid (wink wink) who’d put together the Guide.
As we went to the airport, my budding entrepreneur was having stomach issues – he appeared to have picked up some minor food poisoning at the last day of his little camp. By the time we made it to the airport, he was as sick as a dog. He and I were stuck in the family bathroom while we waited for the flight. He couldn’t even keep water down.
As he leaned over the commode, I got a notice on my phone. He had just made $2! He forgot his misery for a second, and there was a look of joy in his eyes. Everything we had talked about – front-loading work, building leverage, passive income – was captured in his smile. My little Bill Gates was in business!
[When we were traveling later in the summer, we passed by the same bathroom and my youngest reminded his brother, “Remember that bathroom? That’s where you made $2 while you were yookering!” Clearly it had made an impression.]
As the summer progressed, a few more donations trickled in. The figures were modest, but my son was really happy with each donation and was clearly amazed at the stream of dividends from prior work.
Finally, as school approached, we decided we’d post the document on the Facebook page for the entire town – “[City Name] Parents”. This was a scary step, because conservative estimates peg roughly half of the members of this group as insane. Battles have raged over the most innocent of posts, and the torch-and-pitchfork crowd is just waiting for a social media misstep. But risk / return, right?
To make things even more exciting, the missus, my son, and I agreed we should sorta identify the guide as our son’s work. In the first Facebook post, we thought everyone would instantly realize the “neighborhood kid” was our son, but it turns out cleverness and subtlety are in rather short supply on Facebook.
It fell to me to post the Guide to the city-wide group. Facebook, don’t let me down.
by the missus to our neighborhood HOA Facebook group
“Parents of incoming [school name] 5th graders – one of the neighborhood kids has put together a guide to the 5th grade and I wanted to share it here 🙂 Please enjoy and pass it on!”
The post earned a total of 20 thumbs up (these are known as “likes”) and 4 hearts (“loves”). The comments were:
“So great! Love that he took the initiative to create this document.”
“This is cute.”
Not exactly overwhelming, but it was just to our neighborhood.
by yours truly to the [Name of City] Parents Facebook group
“Parents of incoming [school name] 5th graders – our 6th grader put together a guide to help with the transition. Enjoy!”
This post earned 27 thumbs up, 4 hearts, and two surprised faces (aka “wows”). The comments were:
“Wow! [My son’s name], I am so proud of you, buddy! Some new 5th graders will really appreciate your inside info!”
“Incredible!” (and then there was a picture of a heart, but in a fun twist, it was green)
“This is 100% awesome. What a creative kid!! My daughter was really nervous last year before her first day of 5th grade at [school name]. By far the best transition (compared to my older 2 that went to [other school]). This is such a handy guide & my soon to be 6th grade daughter approves!”
“I LOVE this! As the Registrar at [my son’s school] I may want to share this with all our new families to [school name], whether 5th or 6th. Fantastic job!”
“This is so good!”
“Outstanding Dragon spirit, [my son’s name]! So proud to see you reaching out to help the incoming 5th Graders.”
“Nice work, [my son’s name]!!”
“This was an amazing guide. Just the right length. And I got some great tips out of it. Sending you a Venmo.”
“I am going to share this with my tutoring students – many good tips to help make the transition smoother! Great idea – this takes stress off – wonderful!!”
“This was so well done. I\’m trying to make a donation, but I am not finding you on Venmo as instructed.”
(N.B. The “Dragon” reference is to the school’s mascot. And I helped the lady with her Venmo challenges.)
Thankfully every comment was positive. The last trace of anonymity for my son was gone when someone named him in the first 10 seconds, but the most positive comments were from the most respected teachers at the school (whom we didn’t even know were members). Once the lurking Facebook attack squad saw that, they knew there were easier battles elsewhere.
The comments and feedback made it clear that this was a valuable guide, and my son had done a great service in writing it. He felt really good to see strangers praise his work, and the missus and I congratulated him heartily on helping so many people out.
That’s nice, but he’s not running a charity here. How did it do financially?
I had no idea what to expect in terms of donations.
Well-to-do folks abound in our fair burg, and people can be extremely generous, but they typically prefer public displays of generosity. VERY public displays. Even if the Guide were a huge help, would they be as generous when no one was watching?
It appears not.
He ended up making $32 from a total of 5 people. We anonymously added another $10 to keep things interesting as the summer wore on. (We’re also discussing a final bounty we’ll give him as a reward for his service to Mankind.)
When you consider that my son worked for over three weeks on the Guide (and got pro bono advisory from a Kellogg MBA…), $42 wasn’t the best return in the world. The proceeds certainly aren’t going to make him a high roller; some local spoiled brats get more than that per tooth from the Tooth Fairy.
However, $42 seemed like a lot of money to him, and the model – doing upfront work and then collecting dividends the rest of the summer – made a huge impression.
Judging this enterprise by this summer’s take is entirely the wrong way to view it, though. That might be how you evaluate a lemonade stand, but this is something far bigger.
Since my primary goal was to sow the seed of entrepreneurship, I’m going to rule this adventure a resounding success.
He learned a lot:
- Business concepts
Pricing, distribution, marketing, risk, leverage, brand value, social media, customer service. I was surprised how much he learned from a modest little venture.
- Intellectual property
We talked about protecting his Guide, and the risk of plagiarism. I also taught him about picture copyrights, and we made sure each picture in the guide was under a creative commons (CC0) license. He even got to build a spreadsheet to track his sources (and understands why that’s important). As a new owner of IP, I think he’s got newfound respect for it.
- Hard work is rewarded
He had to put in a lot of work to create the Guide, and I’m glad he made money from it. He’s also proud of the Guide itself, and he can see how his effort made that happen.
- Work doesn’t always equal pay
He’s moved beyond the pure “work = pay” model. The second launch of his Guide on Facebook provided most of his revenue, but it took almost no extra effort. An entrepreneurial spirit and an ownership mindset can be lucrative.
He impressed me with his diligence:
- Customer service
He wrote a thank-you email to every donor, and he reminded them (as valued customers) to ask him any additional questions they had.
- Paying his debts
Every time we discussed his proceeds, he kept netting out the amount (10%) he had promised to pay the PTO. I never had to remind him, and he saw this as a really important obligation because of his promise. I liked that.
He has a business!:
- Next year
I thought that providing the Guide for free would sink any future revenue. I believe that was wrong. As modest as this venture was, there was a lot of execution involved, and he’s going to be targeting a whole new group next year. Plus, I can’t see someone trying to steal his content or copy him – the low return wouldn’t justify the risk of social media crucifixion (see, social media can help).
- New products and services
He can develop a Guide for the sister school to his own. He’ll also go through another school change and transition in 7th, 9th, and 11th grades. This could be a publishing empire!
- Brand value
My son didn’t brand his endeavor with his school’s name, but rather used the handle “Tips for Dragons” (the school mascot for every district school is a dragon). As funny as it sounds, I do believe that name – independent of him and his Guide – may have a value >$0. Perhaps not by much, but it’s cool to think that the quality of his Guide and the customer service he provided will linger in the name and carry over to new ventures.
Unanticipated benefits abound:
My son already had a good reputation at the school, but now there are a number of teachers who are REALLY impressed with him. The value of that is hard to quantify, but a great reputation is an ace in the hole in the game of life.
- Sibling motivation
My 7 y.o. is chomping at the bit to get started with his own business. He was really happy for his brother with every donation that came in, but you could also see a hunger in his eyes. Sibling rivalry is a far better motivator than parent encouragement!
- Roth IRA
I believe his third-party proceeds count as income in the eyes of the IRS. That means I could, in theory, open a Roth IRA for him. I’ve got a little research to do, but I think I’ve found a fee-free, no minimum option (I sense a blog post…). $32 is a small start, but it’s a start.
A Bright Future
A lightbulb moment for my son came as the end of summer approached. We reviewed how much he made and talked about re-launching the Guide next summer. I asked him how much time he’d need to update the Guide and re-circulate, and his eyes got wide when he realized what was going to happen. With about five minutes of work and a quick chat with a younger friend, he’ll be able to do this all over again. That beats the heck out of a lemonade stand.
I’ve spent a lot of time – both in advising my son and in chronicling his effort – on something that is pretty small beer. However, I firmly believe entrepreneurship is one of the greatest paths to happiness and wealth. If the lessons from this first foray help send him down that path, a lighthearted summer project could end up paying a lifetime of dividends.
Picture courtesy of Neville Kingston