4 ms·

During a gold rush the best way to make money is to sell shovels.

opportune 7y ago
Or invest a small amount in a number of small shovel-part, shovel-services, and shovel-as-a-service outfits all shuffling money between each other looking like they have actual traction in hopes of fooling other investors into buying in
- bitwize 7y ago
  That's yesterday's business model. The future is shovelless. You specify where to dig, and a team of experts will dig for you; you pay only for the dirt removed.
rb808 7y ago
Tell that to Sun Microsystems
- lallysingh 7y ago
  Selling expensive heavy iron shovels when cheap aluminum ones worked better didn't help.
- grogenaut 7y ago
  Sun was selling steam shovels.
adventured 7y ago
> During a gold rush the best way to make money is to sell shovels. That's never actually true, it's just a nice saying. The most money is always made in owning a super structure business - in tech, a platform - that has very wide appeal, rather than concerning yourself with trying to compete to sell shovels to a temporary gold rush. Selling shovels is an opportunistic business, only good for a short-term run. The real money is always made by focusing instead on larger, longer term opportunities that are sustainable. Some things persistently ignored about the shovel selling business during gold rushes: most of the shovel sellers lose their hats in the bust, because they don't see it coming and they carry inventory and speculate on demand constantly. The history of gold rushes is that the shovel sellers frequently miscalculate the duration of the rushes. They get hammered when it ends, most of them go bankrupt (see: every oil boom in US history). It's better to be Exxon or Chevron and own large reserves in the ground, not the primary company selling little pieces of gear to Exxon. It's better to be the majors in the Permian (gold rush) making money long-term off the reserves, not the little shovel sellers that constantly boom and bust with each big blip in the oil market. It was far better to own refining and pipelines - chokepoint super structures - during the oil boom in Standard Oil's time, than to be a shovel seller to the oil industry or oil wildcatters. It's better to be Rio Tinto, Newmont or BHP and own the mines & supply than to be selling mining equipment. BHP is a $137b company, Rio Tinto is a $91b company. The shovel sellers are comically tiny by comparison, borderline irrelevant in size versus these juggernauts. For the last century it has been better to be De Beers than to be selling diamond industry equipment. During the car boom in Henry Ford's time, it was better to be one of the surviving majors than to be a shovel seller. This fundamental is always true. During the mobile gold rush it's better to be Apple and Google than ARM, Foxconn or Qualcomm (Samsung for their part covers all the bases). The super structures - Apple & Google platforms in this case - usually by far make the most money, the shovel sellers are typically much smaller and less profitable.
- kev009 7y ago
  IBM is over 100 years old. I don't think most people in tech understand how profound that is, between the obvious changes in leadership but more astonishingly business-sinking technology shifts, industry tanking economic phenomenon, etc. There will not be another IBM coming out of San Francisco culture. I only skimmed the article so I couldn't tell if it was loathsome or self-paraody of what is going on in SF right now. But I hope they and readers realize it is simply ouroboros.
  - deleted 7y ago
    [deleted]
  - adrianN 7y ago
    I don't know. Apple has something like 250 billion in their war chest. They could stop selling stuff for a hundred years and still pay 20000 people $100k a year.
    - kev009 7y ago
      Sure but neither a startup nor raised in the current SF startup culture. Apple definitely has potential to transcend tech and leadership although we need to see 1-2 more changes in leadership to know for sure.
- manojlds 7y ago
  Bitmain selling the mining equipment but also mainly mining Bitcoin.
- antpls 7y ago
  Your claims are lacking sources and evidences. If you own the reserve, everything is fine as long as your reserve is not empty or has still value to some people. If you are an hardware supplier, there can be a way to repurpose parts of the hardware to customers from other domains. Building oil extractors but oil is not selling anymore ? Repurpose and sell water extractors. I also do not have sources nor evidences.
- 7y ago

Or invest a small amount in a number of small shovel-part, shovel-services, and shovel-as-a-service outfits all shuffling money between each other looking like they have actual traction in hopes of fooling other investors into buying in

bitwize 7y ago
That's yesterday's business model. The future is shovelless. You specify where to dig, and a team of experts will dig for you; you pay only for the dirt removed.

rb808 7y ago

Tell that to Sun Microsystems

lallysingh 7y ago
Selling expensive heavy iron shovels when cheap aluminum ones worked better didn't help.
grogenaut 7y ago
Sun was selling steam shovels.

adventured 7y ago

> During a gold rush the best way to make money is to sell shovels. That's never actually true, it's just a nice saying. The most money is always made in owning a super structure business - in tech, a platform - that has very wide appeal, rather than concerning yourself with trying to compete to sell shovels to a temporary gold rush. Selling shovels is an opportunistic business, only good for a short-term run. The real money is always made by focusing instead on larger, longer term opportunities that are sustainable. Some things persistently ignored about the shovel selling business during gold rushes: most of the shovel sellers lose their hats in the bust, because they don't see it coming and they carry inventory and speculate on demand constantly. The history of gold rushes is that the shovel sellers frequently miscalculate the duration of the rushes. They get hammered when it ends, most of them go bankrupt (see: every oil boom in US history). It's better to be Exxon or Chevron and own large reserves in the ground, not the primary company selling little pieces of gear to Exxon. It's better to be the majors in the Permian (gold rush) making money long-term off the reserves, not the little shovel sellers that constantly boom and bust with each big blip in the oil market. It was far better to own refining and pipelines - chokepoint super structures - during the oil boom in Standard Oil's time, than to be a shovel seller to the oil industry or oil wildcatters. It's better to be Rio Tinto, Newmont or BHP and own the mines & supply than to be selling mining equipment. BHP is a $137b company, Rio Tinto is a $91b company. The shovel sellers are comically tiny by comparison, borderline irrelevant in size versus these juggernauts. For the last century it has been better to be De Beers than to be selling diamond industry equipment. During the car boom in Henry Ford's time, it was better to be one of the surviving majors than to be a shovel seller. This fundamental is always true. During the mobile gold rush it's better to be Apple and Google than ARM, Foxconn or Qualcomm (Samsung for their part covers all the bases). The super structures - Apple & Google platforms in this case - usually by far make the most money, the shovel sellers are typically much smaller and less profitable.

kev009 7y ago
IBM is over 100 years old. I don't think most people in tech understand how profound that is, between the obvious changes in leadership but more astonishingly business-sinking technology shifts, industry tanking economic phenomenon, etc. There will not be another IBM coming out of San Francisco culture. I only skimmed the article so I couldn't tell if it was loathsome or self-paraody of what is going on in SF right now. But I hope they and readers realize it is simply ouroboros.
- deleted 7y ago
  [deleted]
- adrianN 7y ago
  I don't know. Apple has something like 250 billion in their war chest. They could stop selling stuff for a hundred years and still pay 20000 people $100k a year.
  - kev009 7y ago
    Sure but neither a startup nor raised in the current SF startup culture. Apple definitely has potential to transcend tech and leadership although we need to see 1-2 more changes in leadership to know for sure.
manojlds 7y ago
Bitmain selling the mining equipment but also mainly mining Bitcoin.
antpls 7y ago
Your claims are lacking sources and evidences. If you own the reserve, everything is fine as long as your reserve is not empty or has still value to some people. If you are an hardware supplier, there can be a way to repurpose parts of the hardware to customers from other domains. Building oil extractors but oil is not selling anymore ? Repurpose and sell water extractors. I also do not have sources nor evidences.
7y ago