Picks and Shovels

Building a picks-and-shovels business can make you super successful. Think about the gold rush in the mid-1800s. You might strike it rich mining, but the probability of finding gold is tiny. Or you can sell tools—picks and shovels—to miners. That’s much more likely to bring you wealth!

Lots of founders want to create the next Facebook or Amazon. More power to you! You might be one of the fortunate few. However, I recommend thinking sideways. I’m bullish on workflow management, but I like picks and shovels too. Twilio, Splunk, and Stripe are all massive companies that the average person has never heard of. As of November 8, 2020, Twilio has a market cap of almost $47 billion, Splunk has a market cap of almost $33 billion, and Stripe just raised $600 million at a $36 billion valuation. Their technologies underpin or monitor popular services that consumers use every day. They didn’t invent the next best thing, but they’re critical to the next best things’success.

The pandemic has accelerated change in the world. Things that would otherwise have played out over a decade happened in six months. Rapid change has created a rare opportunity for founders to build solutions that will support the next wave of transformational companies. If you’re a founder or want to be, here’s a good question to ponder: what picks and shovels can you offer that others will need?