Dig For Gold! Or Sell Shovels?

If you’ve been around me for a while, you probably know I like a good analogy…  I’ve heard most of us are wired this way and it stems back to it being the way all our cultures knowledge shared – through stories…  

Don’t go there – there’s something dangerous… My father told me and his father told him…  Don’t eat that – it makes you sick… My parents saw their parents try it and it didn’t go well…

So let me share a story…  It’s one that anchors me when I get excited about ‘the next big business idea’…  Also known as the ‘Bright Shiny Objects’… It’s a story I’ve shared a lot that always seems to make people go ‘ahhh’ and change their perspectives in some way….

LET’S DIG FOR GOLD!

Throughout the Australian gold rush, populations grew from 430,000 in 1851, to 1.7 million in 1871. In America, towns such as San Francisco grew from 200 in 1846, to 36,000 in 1852 as people came from far and wide to prospect for gold and make their fortunes…  They were times like no other, where anyone willing to roll up their sleeves could change the direction of theirs and their families lives forever!

A lot of people’s lives sure did change, but these were few out of the thousands of people that rolled into towns…  Towns that were as little as a few hundred people before people knew there was gold below the dirt…

The Gold Rush Era truly was a unique time, but who really made all the money…  

OR SHOULD WE SELL SHOVELS?

With thousands upon thousands of people turning up into towns across Australia and America, you have to wonder what portion really dug up an amount of gold worth talking about?  However, every single one of the thousands of people that rolled up, needed a shovel to at least give it a crack… Right?

Admittedly I couldn’t find records for how much money was made selling shovels in the gold rush era…  I guess John and Mary standing in front of their convenience store that stocked shovels wasn’t exactly ‘front page news’ when Barry and Sarah dug up nugget after nugget of gold down the road…  But stick with me….

As an example, research has shown one of the wealthiest people in the early years of the American Gold Rush Era was Samuel Brannon. He was a publisher and shopkeeper who purchased all the prospecting equipment he could as the rush began. He then set up one of the first supply stores in Sacramento, and other spots across California, selling them at a substantial profit to anyone wanting to dig up their fortune.

THAT WAS THEN, THIS IS NOW!

The Gold Rush Era was The Gold Rush Era…  I know… Maybe there isn’t as much money in shovels as there was back then…  But what else has absolutely boomed and taken the world by storm, where people made their money because of the boom (the people digging for gold), and others made their money supporting the boom (the people selling shovels).

UBER

I thought I’d use an example that everyone knows about – even if you’re like me and live the next suburb over from the CBD and catch an Uber when 2 blocks is 2 blocks too many. Uber has shaken up the taxi industry in almost every market it’s entered…  From a consumer perspective it’s been great – we get reliable transport all around the world from a single app… From a driver perspective it’s been great – they’re able to make money before and after work, in their spare time or between jobs as long as their vehicle meets the requirements.

I know this doesn’t compare to the gold rush era.  However, when you hear Uber is entering your market do you think ‘let’s become an Uber driver!’… OR, could you think ‘let’s support all the Uber drivers!”…  It blew my mind when I found out how many Uber drivers actually hired their cars to be an Uber driver. There are car hire companies who have essentially purpose built packages for Uber drivers who don’t have cars, or don’t have cars that meet the Uber requirements. The packages allow drivers to hire cars for 5-7 days at a time for example, at a cost effective rate that allow them to still make a profit!  

I dig it (pun intended)…

SO WHAT

Ok – one of the dreams I remember having since, probably towards the end of high school is having a wine bar, with the walk in cellar that has backlit wine racks, glass doors and all glass walls facing into the bar so you can see it alllllll…  I’ll get there one day and it won’t necessarily be to make millions, it’ll be more of a passion project… Somewhere that people come to relax, catch up with friends and have great wine…. And somewhere, well, I can just walk into, decant something nice and know it’s mine…  

Thanks for indulging me on that little dream…  Why I share that is, I probably could have gone and set this up now…  And partner with some really smart people who know the industry better than me….  And bust my behind to make it work… And everyone would be happy and I’ll have my wine bar…. OR…  I could go down the path I have, where I’ve set up a business that can help 10, 20 or 30 wine bars with their online marketing and online strategy…

As I say, I’ll end up having my wine bar one day…  So I’m not saying you shouldn’t pursue your passions or interests – that’s where some of the best businesses come from!  What I’m saying is, if your driver for going into business is more of a financial one – before going all in and setting your business up to dig for gold…  Is it worth seeing if there’s an angle you could take to support that sector, and sell all of them shovels?