There is a saying in the startup world that “you can mine for gold or you can sell pickaxes.” This is of course an allusion to the California Gold Rush where some of the most successful business people such as Levi Strauss and Samuel Brannan didn’t mine for gold themselves but instead sold supplies to miners – wheelbarrows, tents, jeans, pickaxes etc. Mining for gold was the more glamorous path but actually turned out, in aggregate, to be a worse return on investment and labor than selling supplies. On May 12, 1848, a store owner named Sam Brannan held a “one-man parade” to announce the start of the San Francisco Gold Rush.
“Gold! Gold from the American River!” Brannan shouted up and down Market Street in San Francisco. He held his hat in one hand and waved a bottle of gold dust in the other. San Franciscans had received false news of gold before. But by all accounts, Brannan’s performance sent residents running in search of riches.
Brannan had a good reason for spreading the news rather than panning for gold himself. The canny entrepreneur owned a general store that served the workers at Sutter’s Mill, the site where gold was discovered. And in the week between learning about the discovery and yelling about it in San Francisco, he’d bought all the picks and shovels in the city.
Brannan’s announcement helped spur a seminal event in California’s history. As Brannan raked in money selling mining supplies, his actions also, years later, led to the coining of a famous maxim:
During a gold rush, sell shovels.
When you start a company, the most important consideration should be working on a product you love (a startup can be a 5+ year endeavor so if you don’t love it you probably won’t be able to endure the ups and downs). A secondary consideration should be matching the skills of the founders to the market.