With my kids now in elementary school, I find myself back playing the same board games again, that I grew up playing. So, with the game of Monopoly fresh in my head, I found some terrific entrepreneurial lessons to share therein:
PASSING GO (THE FASTER THE BETTER)
The more times you pass GO in Monopoly, the faster you can collect $200 to reinvest into your game. So, high rolls and speed are clearly in your advantage. That is no different in entrepreneurship. The faster you are moving, the bigger distance you are building on your competitors, gaining customers and market share before they do.
BOARDWALK EMPIRE (GO BIG OR GO HOME)
While many Monopoly players may shy away from investing $400 in the Boardwalk property, the most expensive property in the game. They are being short-sighted. If you think about your long term investment on that property, you will earn a competitor-crippling $2,000 in rent every time another player lands on that spot, after you have built a hotel at that location. Putting a ton of cash into your hands, to reinvest into the game, while draining your competitors’ cash coffers as the same time. Not many competitors will be able to survive that onslaught. So, don’t under-invest in your startups, and always put on your long-term lenses.
LOCATION, LOCATION, LOCATION (BUILD BARRIERS TO ENTRY)
When I play Monopoly: (i) it is a land grab to attain first mover advantages, buying up everything I can afford; (ii) I try to bias properties in the same color family (e.g,. all the red properties), in order to start developing the properties before my competitors start developing their properties; and (iii) I try to build up long stretches of sequential investment (e.g., all the neighboring red and all the yellow properties), that would make it near impossible for a competitor to not land on my properties, and pay me rent. Startups are the same thing: you want to look for first mover advantages, you want to keep your lead and you want to look for ways to cripple your competitors, with competitive barriers to entry.
DEVELOP PROPERTIES (BUT, NOT FASTER THAN YOU CAN AFFORD)
Without contradicting the “faster is better” section above, you don’t want to build your business too quickly that the wheels end up coming off the bus!! For example, I never spend any money in Monopoly, that takes my cash resources down below what I feel is a safe level, to fend off competitors, and live another day. If I see a bunch of competitor “land mines” in my immediate future (e.g., high odds I land on their properties to owe them rent), I want to make sure I have enough cash resources to pay those rents, to stay in the game without have to sell or mortgage my other properties to do so, crippling me in the process. Making an investments too quickly, can end up hurting you, if you can’t drive a near-term ROI from them.
THE RAILROADS (FOCUS ON UNCAPPED INVESTMENT RETURNS WITH NO DISTRACTIONS)
First of all, the railroad properties in Monopoly have a capped payout (at $200 in rent if you own all four railroads), compared to New York Avenue (the same $200 initial cost), having a $1,000 rent if developed with a hotel. And, secondly, if you think about real life, what does a hotel operator know about running a railroad company? Pretty much nothing!! So, as an entrepreneur, if the same investment in two different opportunities, can yield materially different returns, focus on the higher return option. And, as always, stay clearly focused on your core competencies in your business, and don’t stray into areas where you have limited expertise.
TAKE A CHANCE (MANAGE RISK AND REWARD)
Building a startup is pretty much taking a chance, where the higher risks you take, the higher your potential rewards will be. But, like in the game of Monopoly, you never really know what is going to happen, until it happens. So, while you may be hoping for an “Advance to GO” card to collect a much needed $200, you may get dealt a “Go Directly To Jail” card. So, make smart bets, and hope for the best.
COMMUNITY CHEST (IT’S ALL ABOUT THE ECOSYSTEM)
In Monopoly, the Community Chest cards could have you engaging with the local opera house, stock broker, bank, hospital, doctor, city repairmen and beauty pageant. Guess what, building a startup is no different, in that you are building your business as part of an ecosystem with other entrepreneurs, investors, mentors and service providers. You are not in this battle by yourself. Tap into your local ecosystem for help.
DON’T GO TO JAIL (PLAY WITHIN THE RULES)
The section title pretty much says it all. You will never be successful if your hands are cuffed, sitting on the sidelines. Build your business ethically, and never cut any corner that could end up back-firing in your face.
Hopefully, you are not only a better entrepreneur after reading this post, but you are also a better Monopoly player!! Be sure to read this companion piece on Startup Lessons from Scrabble.
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