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why mine for gold when you can sell shovels

Why Mine for Gold When You Can Sell Shovels?

- Updated November 30, 2019

why mine for gold when you can sell shovelsThis is one of my favorite quotes: “Why mine for gold when you can sell shovels?”

Some people get a little hung up on the meaning. I interpret saying why work in a certain industry when you can create tools for that industry and make more money?

For example, why be an artist when you can sell paint?

Why be a blogger when you can sell keyboards?

Why be a pen when you can sell ink?

If you sell a tool for doing the thing rather than doing the actual thing, you also support those who are doing the thing.

It just seems like a better business model to me.

Let’s Talk About Selling Shovels

In 1848, gold was discovered in California. It was thought there was enough gold that all of California couldn’t dig it out in 50 years’ time.

We’re all aware of the rush that followed because it’s still legend to this day and it seems every subsequent bubble suffers its comparison.

A fellow named Samuel Brannan strategically opened his store in Sutter’s Fort, now present-day Sacramento, and it just

samuel brannan
Samuel Brannan

happened to be the last stop between the town and the gold fields.

Samuel made it his business to buy every pick, shovel, and pan he could find and sell them from his store. He paid 20 cents for a pan and sold them for $15 each. That was a crazy amount of money in 1848.

Samuel ended up making $150,000 per month throughout 1849 and became California’s first

millionaire. He then used the money for other ventures, mostly real estate, but there is a valuable lesson we can learn from Mr. Brannan.

While everyone else was doing whatever it took to mine for gold so they could get rich quick, Samuel merely sold them the tools to do so. His fortune came to him rather than him having to go dig it up. It was also he who became a millionaire as a result…not the miners.

Ol’ Samuel was a bit of a price gouger though, and I don’t really agree with him there, but we’re going to discuss some real-world, modern-day ways to use the same concept this brilliant man pioneered.

In 2015, I started following a few marketers who were cashing in on the self-publishing craze.

They weren’t writing books though, and I was appalled!

I had two or three self-published titles myself. I had never considered that someone might hire ghostwriters to pen ALL of their books and never write a word themselves.

But hey, who was I to ask questions? These guys claimed to be making upwards of $10,000 per month. I didn’t want to debunk them, I wanted to BE them.

Even so, there was no way I was going to pay someone else to write for me. I mean that was my schtick, I didn’t need to outsource it.

These marketers’ next steps were pretty much identical, and I lost interest in their way of doing things.

They went on to charge for coaching and develop courses in self-publishing. None of them are publishing now.

However, don’t miss the point here…it’s not my astonishment at their tactics, it’s that they came into an industry, dabbled in it, created tools around it, and then moved onto the next thing. They sold shovels.

I have never reached that $10K per month level in self-publishing myself, but I currently work as a virtual assistant to several self-publishers who are still in the game. I sell shovels…as do most of my clients.

This idea provides 3 opportunities to focus on tools:

  1. You can provide tools for consumers.
  2. You can provide tools for the providers.
  3. You can provide tools for both.

If you really want to blow it out of the water, provide a tool that is needed by more than one industry. Freshbooks is a great example of that or even a social media network like Instagram.

How To Sell Shovels

So, the burning question is…how do you sell shovels in this day and age?

It’s simple…develop a business or tool that a lot of businesses can use or focus in one industry and create numerous tools and services that make life easier for businesses in that industry.

You can even bring it all the way back to the basics when you’re considering a product or service. Focus on things that answer questions and/or solve problems.

Let’s turn this into some actionable steps.

Step 1. Choose an industry.

As always, you’ve got to figure out where to aim your genius first. Whether you’re going for an industry that is kind of a one-trick pony or you’re going for multiple industries, this is where you must start.

Step 2. What’s your shovel?

You must have some rough idea of what you want to offer, right? If you don’t, it’s time to figure out what your shovel is. You want this to be a well-developed idea, so spend some time on it. Don’t reinvent the wheel.

Step 3. Do you need funding?

Unless you’re independently wealthy or you can single-handedly create your shovel yourself, you’re going to need capital to get started. Put your business skills to work here deciding if you want to attract investors or if you want try your hand at crowdfunding.

Step 4. Research and development.

This is where you put together your game plan and you start making your idea tangible. This could culminate in everything from digital products to prototypes. This is always where you put together everything you need to get your idea into the hands of your target audience.

Step 5. Test it.

It’s time to test your concept in the marketplace. Release your darling to your target audience and ask for feedback. Understand that this will probably be one of the most stressful steps of the entire process because it’s here where you find out if your idea flies or dies.

Step 6. Improve your shovel.

Take the feedback from your audience and repeat Step 4. Make your product or service the best it can possibly be.

Step 7. Officially launch.

Set your darling free. Be prepared to be in a constant state of improvement and expect that you will need to pivot as time and technology change. I hope you hit the big time! Perhaps I’ll find myself using your shovel someday.

Afterthoughts

I’ve had this quote…the one about “don’t mine for gold when you can sell shovels”, on a Post-It at my desk for several months now, and I always feel a little spark when I read it.

When I think about the things I want to do online and how I want to expand my work and business, I keep in mind that I sell shovels. I sell shovels because it’s just smart.

I may never be an expert Internet marketer or a self-publisher earning $10K a month, but one of these days, I might just find the right shovel.

This article originally appeared on June 27, 2018, when the corresponding podcast episode was released. It’s included here because it has been updated and is still relevant!

If you’d like the show notes for this episode in PDF format, grab them here! You can actually grab the show notes from the first 10 episodes all compiled into one PDF by visiting HeyYoAva.com/First10.