Selling Shovels In a Gold Rush :10 Companies That Got Rich of Big Economic Trends

By Loraine
Selling Shovels In a Gold Rush :10 Companies That Got Rich of Big Economic Trends

Since the beginning of civilization, smart business people have fed a need based on economic trends. For example, the California gold rush where people were hungry for the gold in those hills. There was a lot of money involved and if you could offer a service that increased the chances of striking it big, you’d be successful. The smart, innovators of the world through each generation see the potential. Instead of gambling with the glory of finding a big vein of gold, you could have consistent incoming money without risking your life.

This can be seen today also. Instead of trying to compete in one of the big trends, some companies will aid in the trend. When a big technology trend arises from online videos or social media, entrepreneurs will try to leverage their product or service on the trend. This is far more lucrative than trying to compete with the pioneer of the original idea. The consumer product is the gold mine while the tool to make those consumer products more enhanced are selling the pickaxes.

Here are some examples of companies that intelligently gained success while riding on a big economic trend. In terms of the gold rush, it wasn’t about the gold at all. It was the fact that it was a source of wealth normal people could take advantage of with their innovation.

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1. Levi Strauss and Samuel Brennan – The Gold Rush

In the start-up world, they still use the term, “you can mine for gold or you can sell pickaxes”. This comes from the California Gold Rush. Success came not from those who struck gold but from innovative suppliers. Selling tents, jeans, pickaxes, and wheelbarrows to make a miner’s life easier or help them gain better access to gold was a highly lucrative endeavor.

In 1948, the first “gold rush” outside of Sacramento brought thousands of people from all over the world. With the hopes of making their fortune in gold mining, the population grew from a couple of hundred people to 75,000 people. This also brought smart entrepreneurs seeing a different opportunity. Levi Strauss was one of the thousands who moved to the boom town in San Francisco. His business plan was to make money on dry goods, sewing materials, and ready-made clothes.

While the glory sat with finding gold, the rush itself had a lot to do with the many people it brings to the scene. There were brothels, bars, and banks that all capitalized on the gold rush. The companies that really struck it rich due to consistent sales were the suppliers. Levi Strauss, of course, supplied his work jeans. Miners liked them because of the reinforced pockets with Levi’s now signature rivets. Sam Brannan did well for himself also, selling picks and shovels and staking gold miners.

Levi Strauss stuck with his “work pants” and is still a beacon of smart business practices. Brannan became California’s first millionaire. He upgraded shovel selling to buying real estate and banking.

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2. Thomas Larkin and Faxon Dean Atherton-Gold Rush Capitalizers

There were those who risked life and limb, winning great fortunes and then losing them in the blink of an eye. Thomas Larkin and Faxon Dean Atherton were among the richest Californians from the gold rush. They were the conservative businessman and this was to their benefit. At first, Atherton was skeptical about the economic gains of a gold rush. He was more involved in coal mining at the time, being an American merchant in Chile. He moved to a town in California in 1860 that would eventually be called Atherton.

Ironically, just 50 years later, Atherton saw a technological “gold rush” and became one of the wealthiest parts in the Silicon Valley. Maybe there’s something in the water?
Atherton and Thomas Larkin were close friends and would often partner up in business. Larkin was a consul to Mexico prior to America assuming control of California. Larkin was ambitious but didn’t get emotionally involved in gold fever despite the fact his letter to D.C. aided the beginning of the gold rush. He was actually experiencing a negative kickback from the rush as all his employees left for the gold mines.

Both these men got terribly wealthy from the gold rush indirectly. They did a little bit of investing in mining and sold some mining equipment. They really started to build the bankroll when they saw the potential to help the tens of thousands of people settling.

Larkin financed voyages that brought food and clothes to San Fransisco. The ship captains would buy goods worth thousands of dollars on credit from Larkin. These goods were in China, Mexico, and other Pacific parts. Larkin would buy all the ship’s cargo when it arrived to San Francisco. This would double his investment in just a few months.

Despite the chunks of gold weighing close to 200 pounds being found, Atherton and Larkin still came out the richest in the State. Their strategy was to build essential inventory that people needed like food. They also invested in dependable commodities and invested in land.

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3. Harpaar’s Bazaar – America’s First Fashion Magazine

Instead of being yet another fashion designer, Harpaar’s Bazaar sold class and elegance to the masses of the US. Offering the latest European looks to fashionistas in the US. Harpaar’s didn’t actually invest the concept of the magazine, they just branched off to something alluring. The first magazine actually came out in 1731 by an Englishman named Edward Cave. He published The Gentleman’s Magazine. The word “magazine” was invented by him, deriving from an Arabic word, makhazin. It translates to storehouse.

Harpaar’s Bazaar was founded in 1867 and was America’s first fashion magazine. It was purchased by Heart in 1913 which is one of the largest publications for magazines in the world. It is now available in 44 countries worldwide. They created a name for themselves as a style resource for women who want to have the best clothes first. Harpaar’s Bazaar appealed to the sophisticated woman who was all of a sudden finding her voice in America.

It was like a dreamland for women to have this magazine that was full of a fantasy life they wanted too. Photographers, designers, and visionary stylists got women hooked on having these magazines whenever they came on the shelf. It was basically like newspapers for women. Of course advertisers were happy to pay to get themselves in these publications.

At the beginning of the publication, it was a tabloid-size weekly newspaper for middle to upper class ladies. There was fashion showcased that American women wouldn’t otherwise have access to. Designers from German and France were strewn across pages. This simple past time of flipping through a magazine full of decadent things pretty much hooked women into the beauty industry. As of 1901, Bazaar became a monthly issued magazine.

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4. PayPal – The Digital Wallet

Why be another eBay when you can work with them and make money on the side. Peter Thiel and Max Levchin launched Fieldlink which was a security-focused company. It would allow users to store encrypted information on devices, creating a digital wallet with their handhelds. Peter and Max explained to the world that it would be safer than a physical wallet because it couldn’t be stolen nearly as easily. The same month, Google was launched which is slightly ironic being that they are now mobile wallet competitors.

In 1998, in Palto Alto, California, PayPal founders came together. This included Max Levchin, Elon Musk, Luke Nosek, Ken Howery, and Peter Thiel. Levchin and Thiel had launched Confinity which merged with the online banking company X.com. In the end, PayPal was the main focus and X.com officially changed its name to Paypal in 2001.
In the beginning of 2000, PayPal and eBay hooked up together.

Paypal logos start to become integrated into eBay’s marketplace. PayPal made it easy to pay for eBay shoppers. Once eBay agreed, PayPal’s account base skyrocketed to 100,000. EBay was quickly a believer in how essential PayPal was for them too. Seeing that PayPal was up to 1 million users, they acquired the payment network for $1.5 billion in 2002.

PayPal rode the eBay wave for a while but in 2016, they demerged which is fine because Paypal has grown separately from eBay for quite some time. Kind of like a baby bird flying the coupe. eBay will represent as little as 15% of PayPal’s business in the next two years but they will still move forward. With new acquisitions and their own product development. They bought Braintree last year for $800 million which is a mobile-focused payment processor. PayPal also integrated with Bitcoin, keeping with the trend of partnering up with brilliant minds.

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5. Salesforce – e-Commerce

As it became more apparent that we were hitting a world where computers would rule, Salesforce launched. They launched an IDG Demo conference at the beginning of 2000. The enterprise-class, web-based automation labeling it, “internet as a service.” They leveraged the internet to become one of the first business services that were relevant to the type of companies at the time.

XML APIs would complement the Salesforce.com program so that they could help their customers share data across the various business applications. Marc R. Benioff is the chairman and founders of Salesforce and had this to say about his creation and successful company,

“Salesforce.com is the first solution that truly leverages the Internet to offer the functionality of enterprise-class software at a mere fraction of the cost.”
Salesforce was the first to move towards the world of APIs and are still leading the pack in terms of real-time APIs. They have also recently been leading in regards to mobile application development and BaaS.

The reason Salesforce was so successful is that their software-as-a-service idea worked with the internet trend. Why should businesses have to deal with multiple millions of dollars in costs or implementations that would take precious time? Salesforce understood that the internet would create a new definition of time. The first prototype for Salesforce was finished within a month of beginning. It was basic and much like Amazon.com. They were looking to have a super easy interface experience for business applications.

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6. ProgrammableWeb-APIs

APIs were conceptualized long before personal computing and the internet. The idea was to have a well-documented set of entry points a user could address, allowing applications to communicate with another system. Since software development began, this was an important aspect of data processing.

The internet, along with distributed systems would increase the demand for APIs further. ProgrammableWeb has been the most important players in web API. They weren’t actually looking to strike it rich but the glory of the solution was as good as gold. It was in 2005 that John Musser started developing ProgrammableWeb. Originally, he defined it as a web-as-platform reference site and blog delivering news and resources specifically for developing apps using Web 2.0 APIs. John’s original blog post on why he started ProgrammableWeb was simply because he couldn’t find what he was looking for. What he was looking for was a starting point for web platform development that was based on technology.

When we consider companies that capitalized on the internet by making tools to enhance user experience, ProgrammableWeb is a great example. APIs are essential for everything from social networking to healthcare, education and beyond. A programmable platform allows us to access data and resources which has become an essential part to business and society.

The people at ProgrammableWeb diligently educated the public and the people involved in technology. This was an important step in defining what the API industry is. It allowed people to have a direction in which they could build upon. It’s likely that without the stories and information that ProgrammableWeb told, we wouldn’t have been able to understand how virtual interfaces could benefit our real life.

ProgrammableWeb consists of article content, the API directory, Mashup Direction (showcasing web apps that are powered by Web APIs), information for developers to hone their API skills, and their research center. This allows members to view statistics on the API economy.

7. ORACLE for Data Analyzing

Yahoo first introduced Hadoop seven years ago. The concept behind Big Data has become more relevant and essential in the past few years. Seeing the value of gaining insights into why people do what they do is important for anyone selling a product. So it is that all these Big Data companies are creating the source to help online businesses run better.

Big Data incorporates a lot of information and so many of the companies who are in the business focus on specific niches. Ultimately, there is no industry leader but if there was a big wig of Big Data, Oracle would be up there on top.

The many Big Data companies on this list offer approaches that focus on many different IT sectors. The Oracle Cloud provides many services within Big Data along with the means to deploy it. Oracle has a rich analytics platform with Hadoop distribution. This creates a very secure Data reservoir. Their services are flexible and offer high performance. Oracle also has their Big Data Appliance that combines an Intel server with many of the other Oracle software products. While some Big Data companies focus on one specific thing to analyze, Oracle is a medium to big business go-to.

Big data became a necessary part of gathering important information so we can do better business and communicate more effectively. This is why there are big data companies of all kinds. The strategies contrast one another and after a decade of Big Data, there is no discernible leader. Oracle is definitely one of the leaders of this ever emerging trend.

8. Akamai – Hosting Most of the World with Internet

Akamai’s inception began by a challenge posed by Tim-Berners-Lee (inventor of the World wide web). He was already seeing that there was congestion on the internet from so many users. He challenges colleagues at MIT to create a better way to deliver all of the internet content. He was only looking to solve an “academic issue” but of course it’s become a commercial service that greatly revolutionized the internet.

It was Tom Leighton, a math professor at MIT that believed the solution to internet congestion would be found in algorithms. He put together a team within his Algorithms group at the MIT Computer Science Lab. Danny Lewin helped to rapidly get the project going, finding many techniques to make the internet faster.

The team created mathematical algorithms to send the content over a big network of distributed servers. This method would be the solution to a major problem for people using the internet. They have obviously continued to move with the times, offering internet security along with other solutions.

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9. Alibaba

Alibaba started off as a small operation with not much direction to start with. They were founded in 1999 in the city of Hangzhou in Zhejiang. This is an area that has long been reputed for their artisans. Mr. Ma was the founder and his vision has made Alibaba one of the large online giants.

Mr. Ma understood that China had great assets in their products and the ability to undersell any nation. They have over 600 million subscribers with annual transactions in the billions. Alibaba holds 80% of the e-commerce market share. Alibaba saw the potential of online sales. They helped China’s economy go from export-driven to one driven by consumers.

Alibaba helped China become a part of international trading. The laws within China had created barriers for people to travel international. Mr. Ma saw this and created Alibaba to make a “one market” method of sales. Goods can be bought, delivered and paid for within the site. Alibaba not only became a success story, they also helped Chinese enterprises succeed more than any government policy ever has.

 

 

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10. Bloomberg and the Stock Market

Michael Bloomberg took what he knew about the stock market and created a tool that made it much easier for people. Making people’s lives easier is always going to be a lucrative idea and for Bloomberg, it certainly was. He made billions running his financial information company.

He created the Bloomberg Terminal which was a computer software system that let financial professionals access the Bloomberg professional service. This meant that users could analyze the financial market data in real time. Bloomberg left Salomon Brothers to start his own business.

Bloomberg had studied engineering so he helped build the hardware. This was at a time before PC’s and the internet were in our lives. He would fly off to Chicago to help out with infrastructure repairs. It took three years by the time Merrill Lynch purchased 20 terminals from Bloomberg. Stock exchanges and trading houses alike rely on Bloomberg and it’s valuable information.

Hopefully these examples of companies that proved successful due to offering the industry tools they had to have. Starting a company should be something you’re passionate about. Incorporating your passions by matching skills to meet the needs of the booming industry gives you the opportunity to get a piece of the pie.
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