My Experiences Investing in a Start-Up, Part 2: Spring Fling

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(This is part 2 of the story.  To find part one, go here.)

Spring Fling, the annual campus carnival, was a day away and I jumped in the back of an old pick-up truck with a load of lumber and tools to build our booth.  The gas tank was leaking, and I smiled a bit inside when a couple of the guys from the “security team,” which were frat brothers wearing oh-so-cool sunglasses and t-shirts that said ‘SECURITY” on them in bold letters, held us up for a minute to ask where we were going.  I pictured the pool of gasoline building up under the truck that the guards would need to smell all night.  Like everything involved with Spring Fling, the security guard positions were given out to friends of the organizers and were coveted posts that really didn’t require much of anything and allowed the holders of those positions to go to the event for free in exchange for a couple of hours of “work.”  Those in these positions enjoyed wielding their power over us lowly members of non-Greek organizations.

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We continued on to our booth and unloaded.  The next hour or two was magical as we, a group of five or six engineers, worked together to build out our booth from the blank frame that was provided.  It is really neat when you’re working with a group towards a common purpose and everyone is doing their part.  As dusk began to settle over the mall (the grass section in the middle of campus), our booth was ready.  The next day we would install a lounge chair that Bob claimed would provide a sense of weightlessness and was identical to the one used in the movie, The Lawnmower Man, and the computer and other equipment for the virtual reality “experience.”

Bob had been working on the program for the carnival for the last several weeks.  It was supposed to give the user the experience of doing a bungee-jump into a canyon.  The program pretty much pushed the user through the experience – you couldn’t choose not to do the jump.  It was true that you could “look around” by turning your head with the helmet on, but that was about all the control the user had.  The scene was also very flat and rudimentary, as if you were walking out onto a cartoon bridge rather than the real thing.  The holodeck of Star Trek, this was not.

Still, after the carnival opened, people were lined up to “take the ride.”  To say that it was a success would be a great understatement.  Because I didn’t want people waiting hours to go through the VR experience, we devised a system where people signed up and then were given a ticket with a number.  Whoever had the lowest number at any given time was next.  This system seemed to work well as people could get their ticket and then come back in an hour or two and step right in.  I guess we were ahead of Disney and Fast Pass.

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The tickets became an issue, however, in that people would buy tickets at central locations that they would then give to the club vendors to buy things like drinks, food, and, in our case, experiences.  The way the clubs were paid was that at the end of each night, each club would turn in the bag of tickets to the organizers, who would then weigh the bags.  Proceeds for the day were divied out (after the organizers took a big cut) based on the weight of your tickets compared to the total weight of all tickets turned in.  We were under constant threat of having the whole bag disqualified if tickets were wet or foreign objects were in the bag.  In their zeal, some of the volunteers in our booth put the tickets we were using to reserve spaces into the box with the other payment tickets, putting us in danger of losing the whole day’s earnings.  Luckily, we just received a warning.  (The truly funny part was that some of the people who bought the rides from us, paying 5 tickets per ride, were giving the reservation tickets to other booths by accident, effectively paying $6 for a $2 coke and fouling the other vendors’ bags!)

Another issue was the free giveaways.   To promote the company, Bob gave away a lot of VR experiences to those he considered VIPs during the carnival.  In addition, on Monday night, the security and other “volunteers” were given the ability to do the rides for free after the carnival had closed for the night.  While we were really a booth like the popcorn and soda vendors and not a ride like the Ferris wheel, which was contracted out by the organizers, for some reason the folks volunteering at our booth stayed after and allowed all of the workers to have VR experiences for free.   All of this cut into the amount we raised, so while we were really packed the whole time, we didn’t make anywhere near as much as we should have, given the number of people we had come through the booth.

It was clear from the experience at Spring Fling that we had a gold mine.  I was eager to a VR experience center created near campus and to start seeing the company making some regular money.  We could start with a single location near campus, then use the profits earned to buy another location, and continue building the chain.  We could even franchise the operation at some point and have VR experience locations in every major city in the US.  Unfortunately, that wasn’t quite the same vision that Bob had.

To Be Continued….

Click here for Part 3.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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