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China-US Business Summit Attending California Governor Candidate Campaign
Harvard Training

On the morning of April 21, the China-US Business Summit kicked off the third year of their Harvard Training program. This year’s lecturer was the winner of the EMK Prize Medal for Distinguished Research in Entrepreneurship, Dr. William Kerr. He discussed “Business Innovation and Globalization.” Business opportunities are usually presented to us in two forms: First, we invest 12 million dollars with a 10% possibility that we can earn 100 million dollars. However, there is a
90% possibility that we lose that money, much like gambling. Second, we invest 12 million dollars with a 100% possibility that we gain 2 million dollars in profit.
Which option will you choose? The first or the second?
Business opportunities are usually presented to us in two forms: First, we invest 12 million dollars with a 10% possibility that we can earn 100 million dollars. However, there is a 90% possibility that we lose that money, much like gambling.
Second, we invest 12 million dollars with a 100% possibility that we gain 2 million dollars in profit.
Which option will you choose? The first or the second?
No matter which option you choose, don’t forget that there exists a third option: invest 2 million dollars in the beginning and decide whether or not to invest the rest of the 10 million dollars based on your results.
Of course, 80% of normal cases show negative results. This means that you need to stop investing to avoid losing
10 million dollars. The other 20% of cases show positive results, but with an additional 50% possibility of failure.
What you need to understand is that first, you must attain accurate information from the test with a small
investment. Secondly, you must have the capacity of further investments, or else the test will make no sense to
begin with.

However, once the test shows negative results, you need the ability to stop investing. Because of human nature, it
becomes difficult to stop and we may not be willing to experience defeat.
During the class, the lecturer gave two classic cases of Harvard graduates running business tests. One is referred
to as “Cake Financial.” Students spent more than 6 million dollars in order to test their business in three years, and
ultimately failed. The second, referred to as “Rent Runaway,” only cost $20,000. From a Harvard-run test to a Yale run
test to an internet-run test, they received accurate information and created an entirely new business model,
achieving business success nationwide and establishing the largest dry cleaning business in the US specifically
for formal clothes.
The two case analyses tell us that running a test in advance with a small amount of money is an effective way to
avoid risks and manage the uncertainty. The key to success is how to reduce the costs while attaining accurate
information.
The results of the Harvard Business School’s cases, along with their analyses inspired our entrepreneurs.


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