Selling Shovels To Prospectors?

Both historically and currently, the most successful businesses were/are involved in selling shovels to prospectors, literally and metaphorically speaking.

Back in the gold rush days of the mid-1800s the hope for gold riches was running rampant among the masses. Prospectors rushed to California in hopes of striking it rich. In order to make an attempt at these riches they needed gear. Shovels, axes, pans, food, a roof over their heads, and so on.

The business owners who really struck it rich during this time were the ones who didn’t get caught up in the hoopla of gold. They got caught up in the hoopla of selling the gold-finding-hopefulls the tools they needed to make their attempts at winning the gold lottery.

This same example can be extrapolated to virtually any business.

  • Who is more successful, the real estate agent or the real estate company that the real estate agent has to pay a percentage to? We can take that up a notch. Who is most successful, the real estate company or the home builder? Let’s not take into account the past 10 years. ;)
  • Is it the sports team owner or the athlete? Is it the sports drink company or the athlete? Is it the super-star athlete or the consumers he cons into buying a sports drink?
  • Is it the record label or the band? Is it the company that distributes music (AmazonMP3, iTunes, et al) or is it the record company?
  • Is it the oil company or the automotive company or the automotive supplier or the dealership owner or the saleperson at the dealership?
  • Is it the cable TV company or the production company that creates the shows?
  • Is it the deli owner or the company the supplies multiple delis with their produce/meats?
  • Is it Aweber or the companies that use Aweber?

I’m not saying you can’t be successful as a “prospector.” In many of the examples above, the businesses lower on the totem poll are quite successful in their own right. You might not want to sell “shovels” and there is nothing wrong with that.

I’ve been on both sides of the coin. Being a prospector involves more nose to the grindstone hustle. You do almost everything yourself and if you don’t work you don’t eat. Selling shovels, on the other hand, is more difficult in the beginning stages, but there is more opportunity for growth. There is also more opportunity for you to step away or sell the business.

It all depends on what you want out of your business. Are you going to sell the shovels or dig the ditches? There is no right or wrong answer. There is only a right or wrong answer for you.

{ 15 comments }

Ethan

They say that you start a business to solve a problem. Maybe to start a really successful business you have to solve another business’s problem.

Karol

Not necessarily, but that is where a lot of companies have become massive.

Scott

Love the last two sentences. “There is no right or wrong answer. There is only a right or wrong answer for you.”

Karol

Thanks Scott!

asrai

Neither can exist without the other.

Which comes first the product or the need for the product?

Then again what do any of us really need for survival?

Karol

The need for the product comes first. You can’t solve a problem if there is no problem to solve. This isn’t a “chicken or the egg” scenario.

Jeff

I think this is about the best advice I’ve read. Most people try to hype up SEO, niche sites, insert latest net money maker here….Good post. You’re not selling anything, more like shedding light on something that seems obvious once somebody actually comes out and says it. Work smarter not harder never seems to lose relevance.

Karol

I’m a fan of working smarter and harder.

Thanks so much for your kind words Jeff. :)

Floricel

Couldn’t agree more with that. Can I just add one thing? “Is it the employee or the employer?” hehe Hope that sounds appropriate.

But what you said in your conclusion has made the whole thing interesting. It’s a thought that is worth thinking about.

Really powerful insights Karol! Thanks for sharing. :)

Karol

Thanks for your input Floricel. :)

Salvatore Greco

That’s a really bad ass post Karol… Definitely pluses and minuses on both sides of the coin.

If you can place a TON of value as the Shovel Seller… then you really “strike it gold”… ie. Google model type thing…

Surfs up,

Karol

Thanks man! :)

JenP

For me it would depend on what I enjoyed doing more. Selling the shovels or digging for the gold. Even if I got tons more money from selling the shovels, if digging for gold was what gave me real pleasure, I’d opt for digging for gold! Money is only part of the equation!

Ted

I get the feeling your saying it’s better to sell the dream of a location independent business then to actually run one yourself aka only72.com. Like the old saying goes “Those who can, do, those who can’t, teach”

I can name all these Lifestyle Designers, and each one will “teach you” to live their lifestyle, but few have a TRUE business outside of their email list, which they keep pushing even more products to newbs.

Rule 27 from 48 Laws of Power….

I’m really considering of flipping the script, and sell some shovels.

Karol

I don’t quite understand what you mean by the first sentence. It’s *not* better to sell just the dream. That’s exactly what I advocate against.

And I’m not necessarily saying you should sell shovels to prospectors. I am saying think about your business from both sides of the coin. You might come up with a good idea that will launch you to new heights.

And if you do have a shovel to sell you’d be silly not to in most cases.

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