You Can Dig for Gold, Sell Shovels, or Better Yet … Build the Railway to California


In reference to the great California gold rush of the 1800s it’s really popular to say “Don’t dig for gold, sell shovels”. The logic is sound because rather than investing in high-risk speculation, you can take a much more certain road and sell the tools that these high-risk, high-reward speculators need.

But there’s a limit to how many shovels you can sell. And there’s something bigger that both the gold diggers and the shovel sellers need. And that’s the railway to get to California and back.

When you build a “railway”, you’re building a platform, a gateway. The backbone of it all. You’re building a conduit through which all things must pass.

Examples of Business Railways

  1. Industry Standard Formats. Format wars are intense and Sony recently won the hi-def war when Toshiba bowed out. Sony now owns the hi-def railway and there’s a whole host of businesses that have to pass over it; companies that make DVDs, players, recorders, authoring software, films, and video games … they all ride the Blu-ray train now.
  2. Platforms. The MS Windows and Mac OSX operating systems are both platforms. Railways. Every piece of software needs an operating system to run it. And the beauty of creating a platform is you can make both the railway and the trains. In this case, that’s the OS and the software.
  3. Technologies. The Legaignoux brothers developed a simple yet amazing kite design for kiteboarding using inflatable struts. Every other kite manufacturer licenses the right to use their patented design. And those license agreements also set the price ranges at which each company can sell their kites. Can you say “All our competition are belong to us”.

There are lots of examples of business railways out there. And you don’t need to be a billion dollar company to do it. Microsoft started somewhere. So did the Legaignoux brothers. Any business can build a railway. You just need to recognize what people need, be innovative, and set the standards in your niche, local market, or industry.

Start small. And think big.

When you build a format, a platform, or an innovative technology, you’re building a railway. And everyone; gold diggers and shovel sellers included, needs to get to California somehow.

Can I see your ticket please.

2 thoughts on “You Can Dig for Gold, Sell Shovels, or Better Yet … Build the Railway to California”

  1. What an open minded fellow the writer is ! Good analogy !
    We might even compete with China with this sort of man at the helm.
    Who is Shane ? Come back Shane .[ sorry ] JW, Thanks 4 push .

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