https://www.sequoiacap.com/people/michael-moritz/

One day a fisherman was lying on a beautiful beach, with his fishing pole propped up in the sand and his solitary line cast out into the sparkling blue surf. He was enjoying the warmth of the afternoon sun and the prospect of catching a fish.

About that time, a businessman came walking down the beach, trying to relieve some of the stress of his workday. He noticed the fisherman sitting on the beach and decided to find out why this fisherman was fishing instead of working harder to make a living for himself and his family.

“You aren’t going to catch many fish that way,” said the businessman to the fisherman, “you should be working rather than lying on the beach!”

The fisherman looked up at the businessman, smiled and replied, “And what will my reward be?”

“Well, you can get bigger nets and catch more fish!” was the businessman’s answer.

“And then what will my reward be?” asked the fisherman, still smiling.

The businessman replied, “You will make money and you’ll be able to buy a boat, which will then result in larger catches of fish!”

“And then what will my reward be?” asked the fisherman again.

The businessman was beginning to get a little irritated with the fisherman’s questions. “You can buy a bigger boat, and hire some people to work for you!” he said.

“And then what will my reward be?” repeated the fisherman.

The businessman was getting angry. “Don’t you understand? You can build up a fleet of fishing boats, sail all over the world, and let all your employees catch fish for you!”

Once again the fisherman asked, “And then what will my reward be?”

The businessman was red with rage and shouted at the fisherman, “Don’t you understand that you can become so rich that you will never have to work for your living again! You can spend all the rest of your days sitting on this beach, looking at the sunset. You won’t have a care in the world!”

The fisherman, still smiling, looked up and said, “And what do you think I’m doing right now?”

Most Stanford students fail this challenge. Here’s what we can learn from their mistakes.

You’re a student in a Stanford class on entrepreneurship.

Your professor walks into the room, breaks the class into different teams, and gives each team five dollars in funding. Your goal is to make as much money as possible within two hours and then give a three-minute presentation to the class about what you achieved. 

If you’re a student in the class, what would you do? 

Typical answers range from using the five dollars to buy start-up materials for a makeshift car wash or lemonade stand, to buying a lottery ticket or putting the five dollars on red at the roulette table. 

But the teams that follow these typical paths tend to bring up the rear in the class. 

The teams that make the most money don’t use the five dollars at all. They realize the five dollars is a distracting, and essentially worthless, resource. 

So they ignore it. Instead, they go back to first principles and start from scratch. They reframe the problem more broadly as “What can we do to make money if we start with absolutely nothing?” One particularly successful team ended up making reservations at popular local restaurants and then selling the reservation times to those who wanted to skip the wait. These students generated an impressive few hundred dollars in just two hours. 

But the team that made the most money approached the problem differently. They realized that both the $5 funding and the 2-hour period weren’t the most valuable assets at their disposal. Rather, the most valuable resource was the three-minute presentation time they had in front of a captivated Stanford class. They sold their three-minute slot to a company interested in recruiting Stanford students and walked away with $650. 

The five-dollar challenge illustrates the difference between tactics and strategy. Although the terms are often used interchangeably, they refer to different concepts. A strategy is a plan for achieving an objective. Tactics, in contrast, are the actions you undertake to implement the strategy. 

The Stanford students who bombed the $5 challenge fixated on a tactic — how to use the five dollars — and lost sight of the strategy. If we focus too closely on the tactic, we become dependent on it. “Tactics without strategy,” as Sun Tzu wrote in the Art of War, “are the noise before defeat.” 

Just because a $5 bill is sitting in front of you doesn’t mean it’s the right tool for the job. Tools, as Neil Gaiman reminds us, “can be the subtlest of traps.” When we’re blinded by tools, we stop seeing other possibilities in the peripheries. It’s only when you zoom out and determine the broader strategy that you can walk away from a flawed tactic. 

What is the $5 tactic in your own life? How can you ignore it and find the 2-hour window? Or even better, how do you find the most valuable three minutes in your arsenal? 

Once you move from the “what” to the “why” — once you frame the problem broadly in terms of what you’re trying to do instead of your favored solution — you’ll discover other possibilities lurking in plain sight.

– Anonymous