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I don't normally talk about this, but here is what you are missing: Businesses that make (real) money revolve around one of two ideas: - They sell shovels -

I don't normally talk about this, but here is what you are missing: Businesses that make (real) money revolve around one of two ideas: - They sell shovels - They are middlemen (middlepeople?) They sell shovels. This is stolen from the old saying that during the American gold rush the people who made the money were the ones selling shovels. Or facilitating others to go and do what they wanted (in this case, chase a wild dream). Uber, the example you used, sells shovels. It lets people make money from their car. Real money. Not peanuts. Your idea to sell food to neighbors didn't have the potential to make much money. You weren't selling shovels, you were selling work (cooking is hard work). Now, let's take your current business (which you list in your profile). You sell shovels because you help companies get what they what in terms of engineering management (lots of money to be made there). Better engineering processes usually trickles down into the finances. In a way, you are selling money. They are middlemen. A middleman is someone who simply takes a cut for facilitating something. They import beer from somewhere else and by doing that they jack up the price a little bit and resell it to you. This is a very straightforward mechanic. Amazon is one of the best middlemen out there right now. It even changed the game by reducing the friction in selling online. Their whole "fulfilled by Amazon" approach is a classic middlemen tactic. Middlemen sell the idea that they make getting what you want easier. How to apply this to software Selling shovels: Build a product that makes people money. Ecommerce is still growing. Do something there. Be a middleman: Find something to facilitate. Look for inefficiencies. How? Listen to complaints. People love to complain to someone who listens. Make some contacts on social media and listen to people. They will show you the way. One last thing: don't be stupid. Big ideas are tied to a big ego. You are not Musk, Jobs, or Gates. Who cares?! Look for small ideas that you can execute well. And then execute, not for passion or ego, but as a grind. Like a regular job. Because that's what it is. Good luck.

acconrad 9y ago
Thank you for this thorough and thoughtful response! Lots to soak in here. I agree, I am certainly not Elon Musk, there is no ego here. I'm just saying that the problem spaces I want to help with (environment, health/fitness/healthcare) don't seem like the problems I can effectively tackle because, as I mentioned before, I can't seem to find a way to divide-and-conquer into a smaller idea I can execute on. Do you have any thoughts behind that? I guess maybe talk with people in those spaces and see what problems they are having that could benefit from some tiny innovation?
- growt 9y ago
  Let me try: How about a variant of your "selling food to neighbors idea"? Build a platform where people can organize local "cooking clubs" (like meetup.com for cooking). You can find other people in your area who like to cook (sometimes) and everyone in the group makes a meal for the rest of the group, taking turns. That way, if and what is cooked is not your business (no regulation), you're just facilitating the meetups and schedules.
  - pryelluw 9y ago
    Your heart is in the right place, but that idea will fall flat when compared to existing social networks.
    - avip 9y ago
      Vizeat runs on 1.5M ARR. funded in the 5M. Bought EatWith. Good thing they didn’t ask for forum advice just built and iterated.
  - bkcreate 9y ago
    At that point why not just organize a meetup and charge admission instead of reinventing the wheel?
- pryelluw 9y ago
  Map, filter, and reduce your ideas. Health, fitness, and healthcare all fall into the same bucket. However, the money is in helping companies operate more efficiently. Lots of great opportunities in the area of automation. I would start talking to people who work in healthcare companies about how they process their data. They still rely heavily on copying and pasting from excel spreadsheets. To give you an idea, I just built a system to do such thing at work. Took me a 2 days. It could easily be replicated and sold as a sass or onetime purchase. Plus it is selking shovels because no one likes to process data manually. Environment wise, I'd say that there is opportunity in the data collection side (this would make you a middleman). Lots of orgs need a way to CRUD localized enviromental data. Look into it. About dividing and conquering. Again: map, filter, and reduce. Map your ideas to business models (money making functions). Filter them to remove the ones who don't have a clear path to revenue. Reduce down to the one you can execute. Take your time.
baxtr 9y ago
What about Apple?
- moccachino 9y ago
  I'd say they are both. They sell you expensive shovels to take part in the FOMO gold rush, and they take a considerable cut of everything you buy with that shovel.
- pryelluw 9y ago
  Shovels. The bicycle of the mind is selling people on something they want. The iPhone, aside from being a technological leap over other phones in the market, allowed people to feel better than others by the simple act of ownership. Everything in their repertoire revolves around selling more shovels. Remember the app store rush? What fueled it? The opportunity to make an app and get rich.
  - baxtr 9y ago
    Well, yeah, fine. But that analogy is so generic, that every product is a shovel. BMW sells shovels, Apple sells shovels, IKEA sells shovels. In your worldview all of life is just a gold rush. I'm not sure if I find that analogy useful.
    - artimaeis 9y ago
      I'm inclined to agree with you. I don't think IKEA sells shovels. At least, not in the way Apple does. BMW is more of a middle ground between the two. I think what we're looking at is selling experiences? You can sell shovels and bundle experience with them - I think it's pretty straightforward to view Apple from that perspective. But home furnishings are just purely experiences. Clothing seems to fall into the same experience category. So maybe it's a sort of trifecta. Middlemen, Shovels, and experience. When I buy a television there's going to be a middleman - a retailer - who probably can provide some pro/con to the experience category. But what's driving me is the experience that the TV will afford. Same with IKEA. When I buy a Macbook Pro I'm looking for a device that can help me edit code and video in ways that I enjoy, so the shovel factor is important to me. If I'm going to buy a luxury car like a BMW then there's the shovel-factor of having reliable transportation, but the premium price comes from experience. Utility, middle-men, and experience. The extra category of experience seems to fill in the gaps.
ak39 9y ago
This is well articulated. I once had an unnecessarily heated argument with a BIL who didn't see the difference between what I called an "entrepreneur" (what you call a shovel maker) and a "trader" (the middle man). My problem was my nomenclature - they are both entrepreneurs (one builds, they other connects built stuff). You've done what I wanted to do so elegantly! Thank you.
- pryelluw 9y ago
  You are welcome and thank you.
jessesoo 9y ago
Depending on how you look at it, I don't think Uber (as of now) is selling shovels, I look at Uber as the middleman between the riders and the drivers, their job primarily in optimally satisfying the ride-hailing market demand.
- pryelluw 9y ago
  They sell making money to drivers and saving money to riders. Yes, they get a cut, but their model would collapse the moment that working for them becomes unprofitable (when the rideshare bubble bursts during the next recession that is about to hit).
enz 9y ago
In this case, who is the middleman selling shovels for food? Uber Eats/Deliveroo/Foodora? I think they are middlemen between a restaurant which makes food, someone who wants to make some cash from his bike, and the client.
- lucidguppy 9y ago
  Blue Apron?
- pryelluw 9y ago
  No, they sell shovels. Being a food delivery driver makes for some good quick cash in the form of tips (I used to deliver pizzas when I was young).
openfuture 9y ago
I often use the exact same example you gave to explain this to people (especially the one about the shovels) so I have a third thing you are missing: Fashion Although they can be called scammers and fraudsters when they are tech companies that can't deliver there are other sectors where utility isn't as apparent (literal fashion, art) and then sometimes well established players that are a little bit of each (middlemen, shovel salesmen..) start to capitalize on this angle, maybe Apple is the archetypical example? Edited for clarity.
- pryelluw 9y ago
  Could you expand some more?
  - smaddox 9y ago
    I assume he is talking about "selling entry" into a fashionable group, e.g. Apple product owner. Apple has a significant markup on their products, because they're fashionable. Neither the markup nor the fact that the products are fashionable is an accident.
- sharemywin 9y ago
  They still sell shovels. but some times the dirt aka problem is projecting being cool, hip etc.
skariel123 9y ago
if I build a gam then what is it as shovel? people will not makemoney out of it. I'm also not a middleman because there's just me and the end customer, I vuilt it from scratch. So who am I?!
- smaddox 9y ago
  A game is a shovel. People don't want to play games, they want to have fun, or disconnect from the real world for a period of time, or they want to connect with their friends. Games enable them to do so.
  - bilkoo 9y ago
    Agreed. So shovel for dopamine?
- deleted 9y ago
  [deleted]
- pythonaut_16 9y ago
  One of thousands of people entering into the highly competitive Indie Games market and hoping that you have the right combination of a desirable game and effective marketing that will get you enough sales that your time spent making the game is justified. Or in other words, a gambler. Your profit from the game relies on convincing people that your game is fun and worthwhile; two ill defined concepts that vary from person to person. With a business idea (shovels or middleman) your profit comes from convincing people that your product will help them make more money than they're paying you.
  - pryelluw 9y ago
    You bring a up a good point. A poorly designed game might qualify as a gamble. However, there are ways to build games that have well grounded revenue predictions. Though those are hardly built by indies because they are not very innovative.
- pryelluw 9y ago
jeffmould 9y ago
I know this doesn't add much to the conversation here, but I just had to say this might be one of the most well thought out and clearly articulated responses I have seen here in a long time.
- pryelluw 9y ago
  Thank you, that means a lot.
jxub 9y ago
Well, at least for me the fact that you can't strike it big selling expertise or art looks like the triumph of form over substance and a symptom of a society that has yet to develop fully, maybe because of its flawed model from the start (humans anyone?).
mathgladiator 9y ago
Also, sell a dream. See boats, vacation, music, movies
kenny87 9y ago
Your point about shovels reminds me of something Alan Kay said about human universals. That is if you want to make a lot of money take one of the top 20 human universals and build a technological amplifier for them. Link: https://www.fastcompany.com/40435064/what-alan-kay-thinks-about-the-iphone-and-technology-now https://www.fastcompany.com/40435064/what-alan-kay-thinks-ab...
- pryelluw 9y ago
  Thank you for posting that link.
  - infinite8s 9y ago
    And Alan Kay's response to that article: https://news.ycombinator.com/item?id=15268510 https://news.ycombinator.com/item?id=15268510
    - pryelluw 9y ago
      Wow, thank you for sharing the link.
thecrazyone 9y ago
To be honest, I'm not seeing the difference between uber and Amazon. It just feels like you're giving your interpretation of the situation rather than the reality. You day this about uber > It lets people make money from their car. I think the implicit assumption above is that cars don't make money traditionally. Same can be said amazon: "It let's you make (more) money from the things you're already selling" Uber is also a middle man between ride-hailer(user) and driver, the same way Amazon is a middle man between buyer and seller. Are the examples incorrect because they're way too similar (platform plays) or is my understanding incorrect (that they're very similar)? I'll be happy if somebody could take a few minutes to explain

acconrad 9y ago

Thank you for this thorough and thoughtful response! Lots to soak in here. I agree, I am certainly not Elon Musk, there is no ego here. I'm just saying that the problem spaces I want to help with (environment, health/fitness/healthcare) don't seem like the problems I can effectively tackle because, as I mentioned before, I can't seem to find a way to divide-and-conquer into a smaller idea I can execute on. Do you have any thoughts behind that? I guess maybe talk with people in those spaces and see what problems they are having that could benefit from some tiny innovation?

growt 9y ago
Let me try: How about a variant of your "selling food to neighbors idea"? Build a platform where people can organize local "cooking clubs" (like meetup.com for cooking). You can find other people in your area who like to cook (sometimes) and everyone in the group makes a meal for the rest of the group, taking turns. That way, if and what is cooked is not your business (no regulation), you're just facilitating the meetups and schedules.
- pryelluw 9y ago
  Your heart is in the right place, but that idea will fall flat when compared to existing social networks.
  - avip 9y ago
    Vizeat runs on 1.5M ARR. funded in the 5M. Bought EatWith. Good thing they didn’t ask for forum advice just built and iterated.
- bkcreate 9y ago
  At that point why not just organize a meetup and charge admission instead of reinventing the wheel?
pryelluw 9y ago
Map, filter, and reduce your ideas. Health, fitness, and healthcare all fall into the same bucket. However, the money is in helping companies operate more efficiently. Lots of great opportunities in the area of automation. I would start talking to people who work in healthcare companies about how they process their data. They still rely heavily on copying and pasting from excel spreadsheets. To give you an idea, I just built a system to do such thing at work. Took me a 2 days. It could easily be replicated and sold as a sass or onetime purchase. Plus it is selking shovels because no one likes to process data manually. Environment wise, I'd say that there is opportunity in the data collection side (this would make you a middleman). Lots of orgs need a way to CRUD localized enviromental data. Look into it. About dividing and conquering. Again: map, filter, and reduce. Map your ideas to business models (money making functions). Filter them to remove the ones who don't have a clear path to revenue. Reduce down to the one you can execute. Take your time.

baxtr 9y ago

What about Apple?

moccachino 9y ago
I'd say they are both. They sell you expensive shovels to take part in the FOMO gold rush, and they take a considerable cut of everything you buy with that shovel.
pryelluw 9y ago
Shovels. The bicycle of the mind is selling people on something they want. The iPhone, aside from being a technological leap over other phones in the market, allowed people to feel better than others by the simple act of ownership. Everything in their repertoire revolves around selling more shovels. Remember the app store rush? What fueled it? The opportunity to make an app and get rich.
- baxtr 9y ago
  Well, yeah, fine. But that analogy is so generic, that every product is a shovel. BMW sells shovels, Apple sells shovels, IKEA sells shovels. In your worldview all of life is just a gold rush. I'm not sure if I find that analogy useful.
  - artimaeis 9y ago
    I'm inclined to agree with you. I don't think IKEA sells shovels. At least, not in the way Apple does. BMW is more of a middle ground between the two. I think what we're looking at is selling experiences? You can sell shovels and bundle experience with them - I think it's pretty straightforward to view Apple from that perspective. But home furnishings are just purely experiences. Clothing seems to fall into the same experience category. So maybe it's a sort of trifecta. Middlemen, Shovels, and experience. When I buy a television there's going to be a middleman - a retailer - who probably can provide some pro/con to the experience category. But what's driving me is the experience that the TV will afford. Same with IKEA. When I buy a Macbook Pro I'm looking for a device that can help me edit code and video in ways that I enjoy, so the shovel factor is important to me. If I'm going to buy a luxury car like a BMW then there's the shovel-factor of having reliable transportation, but the premium price comes from experience. Utility, middle-men, and experience. The extra category of experience seems to fill in the gaps.

ak39 9y ago

This is well articulated. I once had an unnecessarily heated argument with a BIL who didn't see the difference between what I called an "entrepreneur" (what you call a shovel maker) and a "trader" (the middle man). My problem was my nomenclature - they are both entrepreneurs (one builds, they other connects built stuff). You've done what I wanted to do so elegantly! Thank you.

pryelluw 9y ago
You are welcome and thank you.

jessesoo 9y ago

Depending on how you look at it, I don't think Uber (as of now) is selling shovels, I look at Uber as the middleman between the riders and the drivers, their job primarily in optimally satisfying the ride-hailing market demand.

pryelluw 9y ago
They sell making money to drivers and saving money to riders. Yes, they get a cut, but their model would collapse the moment that working for them becomes unprofitable (when the rideshare bubble bursts during the next recession that is about to hit).

enz 9y ago

In this case, who is the middleman selling shovels for food? Uber Eats/Deliveroo/Foodora? I think they are middlemen between a restaurant which makes food, someone who wants to make some cash from his bike, and the client.

lucidguppy 9y ago
Blue Apron?
pryelluw 9y ago
No, they sell shovels. Being a food delivery driver makes for some good quick cash in the form of tips (I used to deliver pizzas when I was young).

openfuture 9y ago

I often use the exact same example you gave to explain this to people (especially the one about the shovels) so I have a third thing you are missing: Fashion Although they can be called scammers and fraudsters when they are tech companies that can't deliver there are other sectors where utility isn't as apparent (literal fashion, art) and then sometimes well established players that are a little bit of each (middlemen, shovel salesmen..) start to capitalize on this angle, maybe Apple is the archetypical example? Edited for clarity.

pryelluw 9y ago
Could you expand some more?
- smaddox 9y ago
  I assume he is talking about "selling entry" into a fashionable group, e.g. Apple product owner. Apple has a significant markup on their products, because they're fashionable. Neither the markup nor the fact that the products are fashionable is an accident.
sharemywin 9y ago
They still sell shovels. but some times the dirt aka problem is projecting being cool, hip etc.

skariel123 9y ago

if I build a gam then what is it as shovel? people will not makemoney out of it. I'm also not a middleman because there's just me and the end customer, I vuilt it from scratch. So who am I?!

smaddox 9y ago
A game is a shovel. People don't want to play games, they want to have fun, or disconnect from the real world for a period of time, or they want to connect with their friends. Games enable them to do so.
- bilkoo 9y ago
  Agreed. So shovel for dopamine?
deleted 9y ago
[deleted]
pythonaut_16 9y ago
One of thousands of people entering into the highly competitive Indie Games market and hoping that you have the right combination of a desirable game and effective marketing that will get you enough sales that your time spent making the game is justified. Or in other words, a gambler. Your profit from the game relies on convincing people that your game is fun and worthwhile; two ill defined concepts that vary from person to person. With a business idea (shovels or middleman) your profit comes from convincing people that your product will help them make more money than they're paying you.
- pryelluw 9y ago
  You bring a up a good point. A poorly designed game might qualify as a gamble. However, there are ways to build games that have well grounded revenue predictions. Though those are hardly built by indies because they are not very innovative.
pryelluw 9y ago

jeffmould 9y ago

I know this doesn't add much to the conversation here, but I just had to say this might be one of the most well thought out and clearly articulated responses I have seen here in a long time.

pryelluw 9y ago
Thank you, that means a lot.

jxub 9y ago

Well, at least for me the fact that you can't strike it big selling expertise or art looks like the triumph of form over substance and a symptom of a society that has yet to develop fully, maybe because of its flawed model from the start (humans anyone?).

mathgladiator 9y ago

Also, sell a dream. See boats, vacation, music, movies

kenny87 9y ago

Your point about shovels reminds me of something Alan Kay said about human universals. That is if you want to make a lot of money take one of the top 20 human universals and build a technological amplifier for them. Link: https://www.fastcompany.com/40435064/what-alan-kay-thinks-about-the-iphone-and-technology-now https://www.fastcompany.com/40435064/what-alan-kay-thinks-ab...

pryelluw 9y ago
Thank you for posting that link.
- infinite8s 9y ago
  And Alan Kay's response to that article: https://news.ycombinator.com/item?id=15268510 https://news.ycombinator.com/item?id=15268510
  - pryelluw 9y ago
    Wow, thank you for sharing the link.

thecrazyone 9y ago

To be honest, I'm not seeing the difference between uber and Amazon. It just feels like you're giving your interpretation of the situation rather than the reality. You day this about uber > It lets people make money from their car. I think the implicit assumption above is that cars don't make money traditionally. Same can be said amazon: "It let's you make (more) money from the things you're already selling" Uber is also a middle man between ride-hailer(user) and driver, the same way Amazon is a middle man between buyer and seller. Are the examples incorrect because they're way too similar (platform plays) or is my understanding incorrect (that they're very similar)? I'll be happy if somebody could take a few minutes to explain