Along with Dr. Seuss’ “Green Eggs and Ham” and Marcia Brown’s “Stone Soup”, the seemingly innocuous board game “Monopoly” has played a pivotal role in the United States’ rise as an economic superpower.
Although Monopoly originated from a variety of sources and evolved regionally over several decades, it was brought to Parker Brothers in 1934 by Charles Darrow. A number of international versions were developed soon after its initial release, but America has consistently remained the bastion of Monopoly’s popularity. In contrast, the USSR and other communist nations foolishly banned Monopoly, thereby denying their citizens an inexpensive yet effective hands-on course in entrepreneurship.
As stated in its official rules, the object of Monopoly is to, “become the wealthiest player through buying, renting and selling property”. A more negative way of looking at this objective is to “drive all the other players into complete and utter bankruptcy”.
Why has Monopoly, which takes hours to play, moves at a relatively slow pace, is completely devoid of surround sound and offers players no opportunity to blow up aliens or other combatants in high definition, remained so popular over the past 70-years? Part of the reason for its enduring legacy in America, and its emergence as a popular pastime in burgeoning free-market economies around the world, is because it acts as a proving ground for budding entrepreneurs to hone their business savvy, negotiation tactics, and communication abilities – all of which are highly compensated skills in capitalistic societies.
Given that over 750 million people have played the game, I will assume that most of you are familiar with the basic rules. If you are not, you may have already blown your chance at becoming a successful entrepreneur on The Fringe, as your future competitors gained hundreds of hours of hands on experience while you played with your GameBoy.
Hands on Learning
Numerous entrepreneurial lessons and skills are developed as you drive your friends and family into the Monopoly poorhouse, including the following:
– Just like in the ‘real world’, luck plays a significant role in the outcome of Monopoly, as two dice dictate each player’s movements. Luck intervenes with the first roll of the dice, which determines the order of play. The players who go first have a much higher probability of landing on an available property during their initial trips around the board.When starting a company, luck plays a bigger role than successful entrepreneurs care to admit, and a smaller role than unsuccessful entrepreneurs like to claim.
Cutthroat Negotiating with a Smile – There is only one winner in Monopoly; ties are non-existent. This winner take all style of gameplay engenders a manic, hypercompetitiveness among the players. Although luck plays a considerable role in the game’s ultimate outcome, you can significantly enhance your chances of winning by strategically cutting deals with your opponents. Monopoly is a ‘social’ game, which requires you to establish a rapport with the other players if you are to be a successful dealmaker. Often, the best deals are the ones in which you form an alliance with another player, to the detriment of all the other players on the board. For instance, you might sell a property to another player that grants them a monopoly, but include in the deal that you can land on any of the properties that comprise the newly formed monopoly rent-free for the duration of the game. Such a deal ensures that your opponents will pay a higher price whenever they land on any of the properties which make up the monopoly, while you simultaneously increase your cash position by selling the lynchpin property at a premium.Even though the game is cutthroat by design, most people consistently play the game with the same basic group of family and friends. As such, successful players realize that a ‘bad deal’ they cut in one game will carry over to future games, and may limit the other players’ willingness to negotiate. This is also very ‘real world’. You can try to screw everyone once, but that is generally an expensive and inefficient business model. You are far better off establishing solid relationships based on mutual gain and trust, rather than cutting a one-sided deal which results in a short-term ‘win’.
Vigilance – You cannot take your eyes off the board when playing Monopoly, as you risk a player landing on one of your properties without paying the appropriate rent. This same dogged vigilance is required in your adVenture. You need to focus on constantly delivering value to your customers and ensure that you are paid for all of the value that you deliver.
Cash Flow – Entrepreneurs on The Fringe know that properly managing their cash is one of their primary objectives, especially during an adVenture’s early phases. Monopoly is a great training ground to develop cash management skills. It also exposes young capitalists to a number of other financial concepts, including: mortgages, interest, counting currency, dealing with a bank, etc.
Government Intervention – As every successful entrepreneur knows, the government prefers to punish you for your success, rather than ‘thanking you’ for risking it all and creating numerous jobs for your fellow citizens. Monopoly is no different. In addition to the Luxury Tax board space, there are also Chance cards that require you to pay a percentage of your net worth in taxes.
– In a very real-world sense, the location of your properties is of critical importance. Some properties have a higher rental charge and some have a higher probability of opponents landing on them, due to the distribution of potential outcomes from the rolls of the dice. In addition, there are several Chance cards that direct a player to “Go To” a particular property, as well as cards that require a player to “Go Back Three Spaces”. Each of these factors impact the probability that certain properties will be visited more than others. As noted in “Nurture or Nature”, the location you chose for your adVenture (as well as any retail or satellite office locations) will have a huge impact on your probability of success.
Tenacity, Persistence & Endurance – One of the most important lessons to be derived from Monopoly is that in business, the spoils often go to those who remain at the table the longest. The game usually takes hours to complete, and in many cases it becomes a battle of wills to see which players have the requisite stamina to see the game through to its conclusion. Thus, as is true with your adVenture, doing whatever you can to ‘stay in the game’ will go a long way toward your ultimate victory. If you quit before the game is over, you can be assured that you will never have the chance to ‘win’.
Passing Go – With a few exceptions, every time a player passes “Go” on the Monopoly board, they are given $200 by the bank. Often, these funds are all that sustain a player and allow them to remain in the game. In business, you want to get $200 for passing “Go” as well. One way to do this is to structure a portion of your sales in the form of evergreen annuities, annual maintenance payments, quarterly license fees, or monthly subscriptions. The specific form that such payments will take varies depending on the specifics of your business model. However, the key is to smooth the ‘lumpiness’ of your cash inflows by structuring all, or a portion of your revenue to be recurring.Recurring revenue provides you with far greater predictability, which will ease your cash management responsibilities. Such annuity revenue allows you to ‘stand on the shoulders of each prior month’, and thus grow your overall revenue in a predictable and linear fashion. For instance, if you establish subscription revenue of $10,000 per month, you enter each new month with at least $10,000 of revenue, less any revenue lost due to customers that terminate your service. Investors and acquirers also grant recurring revenue a higher premium, because it reduces the business’s overall risk profile.
Jail – Like it or not, entrepreneurs have a social and a legal contract with their customers, employees, investors and other stakeholders. Just like in Monopoly, if this contract is broken, the entrepreneur can be thrown in jail. The Jail board space serves as a reminder to budding entrepreneurs that ruthless competition is OK, as long as it is kept within the acceptable bounds of fair play.
America’s Not-So Secret Weapon
Monopoly is now sold in over 80 countries, and has been translated into over 26 languages. Even citizens of the former Soviet states are now avid Monopoly fans. There are, no doubt, thousands of lively games of Monopoly being played all over the globe, even as you read these words.
Monopoly is training a global force of entrepreneurs who will internalize the skills which the game embodies and ultimately the rewards as well. Some of these entrepreneurs will join The Fringe and create thousands of jobs, and billions of dollars in wealth.
“Thank you”, Mr. Charles Darrow or should I say, “Без перевода”…
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