A Venture of Value

A VENTURE OF VALUE

“Jennie Stockitt, report to the principal’s office immediately!”

The mechanical voice scratched through the loudspeakers at 12:45 on the second Friday of the new school term while the school children were returning from lunch-break.

“ENTER!” the stern voice came at the first knock.

Light from the window behind the principal framed the image of her head reflected in the polished surface of the long table. A halo – how incongruous! Jennie quickly (and wisely) dismissed the angelic image before it elicited a comment. Careful, Jennie! I mustn’t let my  quick mouth get me into trouble again.

Sixteen-year-old Jennie knew what the loudspeaker call was about and was mentally prepared to defend her actions. However, what the shrewd teenager, armed with the unyielding logic of adolescence, was not prepared for, was the array of five people already in the office. Seated at the head of the long table, the headmistress was flanked on her right by the chairlady of the School Governing Body and on her left by the School Counsellor and the manager of the school cafeteria. The fifth adult in the room, seated in an armchair by the wall, was Mercy Stockitt, Jennie’s mother! The lonely chair at the other end of the table sat empty, in silent accusation.

Nobody was smiling.

For a group of school friends from the computer and economics classes had applied their learning to do an experiment. Its success had ballooned entirely beyond their control. The trouble had begun the previous week after Jennie had been out of town for the winter break. Upon her return, she had discussed with her mom getting rid of her ‘holiday bulges’. Imagine the scene on the first day back at school:

--oOo--

Lunch break came, temptation prevailed.

Cheeseburger, here I come! Jennie thought. I’ll start my diet tomorrow.

She accessed the money-app on her phone, gazed delightedly at the balance, and made her way to the cafeteria queue. During the vacation, she had not done her chores – “earned her keep” – as Mercy would have put it. No work, no pay. Nothing for nothing – simple economic principles. So Jennie had borrowed the money from her mother, to be repaid at the end of the month.

“A double cheeseburger with fries and a large Coke, please, ma'am.”

“That'll be four Dollars, seventy-five.” said the cafeteria attendant as she registered the sale on the terminal. “I’ve sent the cost to your phone.”

“Okay, I see it, ma’am.” Jennie acknowledged, glancing down at her phone. “I'm transferring the payment now.” There was a pause as Jennie tapped the screen. Her irritation turned to worry as she repeatedly tapped the ‘PAY NOW’ icon.

“It won't go through,” she said in dismay.

“Hmmm, I see the trouble.” said the attendant. “My system is rejecting your transaction because you're trying to pay with programmed funds.”

“Programmed for what? ” Jennie asked, wide-eyed.

“The system reports: These resources good for health-foods only.” said the attendant.

As the same message appeared on her phone, Jennie glared at the screen as if it had done her a sneaky, personal injustice. 

“What's on the health-food menu today, ma'am?” Jennie asked quietly, blushing and contrite.

She carried her meal to a table next to the sports field. It was a lunch of Greek salad with a low-calorie dressing, laced with strips of grilled chicken breast. She had chosen fresh orange juice to drink. She smiled in silent admiration for her mother.

Mom, she thought, you know me so well. I didn’t even know that the cafeteria had categorised the foods in this way; programmable Dollars sure add a brand-new meaning to the phrase ‘smart money’.

--oOo--

“Sit down, Jennie. Are you running a business supplying foodstuffs and cooldrinks to the students?” The school principal got straight to the point.

Pungent mahogany polish stung Jennie’s nose as she took a deep breath.

“Ma’am, it’s just a little experiment for do-and-show-and-tell in our Economics class. The Future-proofing module encourages us to try such things.”

“Is the function of the school cafeteria the supply to food and drink to the students? Just Yes or No.”

“Yes, Ma’am.” Then Jennie took a chance and continued, “But I only supply what the cafeteria doesn’t provide. So it follows that I am not competing with the cafeteria.”

This kid is too smart for her own good! The thought came unbidden to the principal.

“But me no buts, young lady! When you say ‘I’, don’t you mean ‘we’? You aren’t in this alone, are you?”

“No, Ma’am. I’m not in it alone.”

“Who-all are in it with you?”

Jennie was quite prepared to ‘take a hit for the team’ and accept the entire blame for the venture. The concept was exclusively hers, after all. Yet she thought it unfair that she was being asked to snitch on her friends. She took a deep breath and asked: “Ma’am, may I address the school counsellor?”

”What has this to do with the counsellor, Jennie? We’re talking about financial damage that your ‘little experiment’ has done to the economic viability of the school cafeteria.”

“I want to ask the counsellor about being a tattle-tale, Ma’am.”

This kid is MUCH too smart for her own good! The headmistress hesitated. But she’s right.

“OK, Jennie. Forget the question about your co-conspirators. We have to shut down your experiment. Do you accept that?”

“Yes, Ma’am. The research did get a bit out of control. Its growth was exponential and it has rather escaped from us and taken on a life of its own.”

“Good. Now we’d like to hear about how you did it.”

“Well, Ma’am, it started with what we learnt in Economics. Previously the cafeteria provided what the kids wanted – salty-fatty-sugary treats as well as health-foods – according to the laws of supply and demand. Then the school forced the kids to spend most of the money that their parents had provided on health-foods. That was done by coding the amount in the money-apps on the students’ phones as “TREATS” for just a small part of the value. Most of the value was coded for “HEALTH FOODS”. They categorised the merchandise in the cafeteria according to the same protocols. We refer to the salty-fatty-sugary merchandise as ‘SFS’. Okay so far?”

“Yes, Jennie. Keep going.”

“The school’s actions created a pent-up, unfulfilled demand for the SFS stuff. We simply borrowed a point-of-sale device from the Economics Lab, took it to the Computer Lab and programmed it to create another category that the money apps would recognise: ‘SFS FOODS’ as an alternative to ‘HEALTH FOODS’ but including the same items as ‘TREATS’ – cheeseburgers, sweets, chips, chocolates and so on.

Then we wrote a ‘redirect’ app overlay that kids could download from the Computer Lab. It allows them to switch up to half of the HEALTH FOODS allocation in their phones to SFS. Sales against our SFS category were credited to the joint bank account that we opened last week.

Then we bought SFS merchandise like chips and sweets that the kids wanted, as well as ingredients for home-made SFS foods. We make our cheeseburgers in the Food-and-Nutrition Lab, to the highest standards of hygiene. I think our cheeseburgers are even better than the ones that the cafeteria used to sell. I hope that none of this will be viewed as dishonest.”

Jennie’s Mom couldn’t resist giving her daughter the biggest grin when Jennie caught her eye. By now some of the others were smiling too.

“Did you make a profit?” The principal was now also becoming interested.

“Yes, Ma’am.”

“How much?”

“I’m not sure; we were just cashing up when your call came over the loudspeaker.”

“Make an estimate.”

“Well, from when we started on Monday until yesterday, our gross margin was about four thousand Dollars. Since we have no real overhead costs, that’s a decent estimate of our net profit as well. Come to think of it, we have not paid to use of the Food-and-Nutrition Lab to make our hot foods or for the point-of-sale equipment that we borrowed from the Computer and Economics labs. We should subtract those input costs if you need a more accurate estimate.”

“What was your cost-of-sales – the goods that you bought?”

“About two thousand Dollars.”

“WHAT? You made a profit of four thousand off a cost of two thousand? So your revenue was six thousand Dollars in just four days?

“Yes, Ma’am.” Jennie paused. “Three and a half days, really. Monday’s sales were a bit slow but by Tuesday, nearly three quarters of the kids had downloaded our app. Remember what I said about unfulfilled demand? We knew that demand was high and supply was restricted by the school’s “health foods” protocol. So we knew that our merchandise could stand a high price. That means a high profit if our costs are low. Therefore, to pitch our selling prices, we simply multiplied our cost-of-sales by three.”

Jennie paused, judging the mood of the meeting. Then she took the plunge, adding with a mischievous smile: “If our revenue is triple our costs, we always make a profit of three percent! - - SORRY, Ma’am! I shouldn’t joke like that.”

This time everybody laughed.

“Jennie, I acknowledge your spirit of adventure in creating such a hustle based on the principles that you learned in school. So there will be no punishment. Do you have any creditors?”

“No, Ma’am. We’ve settled all of our debts except for the use of the school’s facilities and equipment.”

“Very well then, let’s ignore those. Now, consider this: It’s important to look at the consequences of your actions:

ONE: The cafeteria had procured a lot of fresh health-foods that they couldn’t sell. So that has gone to waste.”

TWO: The parents who provided the funds on their children’s money app did so trusting that most of the value would be spent on health foods. Your venture betrayed that trust. So it’s not fair for you to keep the profits.”

The principal paused to collect her thoughts and to stop herself from giggling. Then she continued:

 “So this is what will happen: Your profits will be used to compensate the cafeteria for its losses. Your sealed merchandise like sweets, chocolates and crisps that remain unsold, will also go to the cafeteria. For health-and-safety reasons, your fresh foodstuffs, for example the ingredients of your cheeseburgers, will have to be destroyed. The cafeteria can’t accept them because they have to guarantee the integrity of the overall chain-of-custody for foodstuffs. Your burger-patties don’t meet those requirements.

If you regard any of this as unfair, tell us now.”

Jennie thought for a few moments and then said: “That’s fair Ma’am, but I suggest that instead of destroying the patties, consider giving them to the SPCA.”

The principal adopted her most serious face, thinking too smart – – too smart. Then she warned: “Think through the possible consequences of your actions, Jennie. Before you act, cast your agile mind into the FUTURE.” Her emphasis was on the last word. “Have you anything else to say before you leave us?”

“Thank you for not punishing us, Ma’am.” Jennie blurted without hesitation. “We’ll take your advice seriously, but I think it was the German physicist, Niels Bohr, who said, Predictions are very difficult, especially about the future. ”

“You may be excused, Jennie!” The five grownups tried ineffectually to hide their grins.

As Jennie closed the door behind her, she heard all of the adults begin talking animatedly at once. One phrase particularly pleased her – the chairlady of the School Governing Body saying: “Is nobody going to say it? Well then, I will! Congratulations, Headmistress! You teach matters of great importance at our school. Please convey our compliments to the Economics teacher.”

Jennie’s co-conspirators had all heard the loudspeaker message at the end of lunch break, so she didn’t have to seek them out after school. She finished her explanation as follows: “So, our SFS venture is finished but there will be no punishment apart from confiscation of our profits and materials. They don’t even know that you-all were involved. I was able to keep that secret.”

“Ah, well! It was fun while it lasted. And the rest of us get off scot-free and blameless, thanks to Jennie.” The speaker was Johnny, a twelfth-grade boy, a year older than Jennie. Her heart gave a little flutter at this back-handed compliment. At least he had noticed her and acknowledged her guts and leadership!

“Thanks, Johnny. Given the chance, I’d do it all again! Who’s in and who’s out for the next idea?”

-oOo-