A timeless business insight that changed how I look at entrepreneurship:
Understand who actually makes money during a gold rush.
Here’s what I mean…
Historically, there was the actual Gold Rush, right? Where tons of people travelled out west hoping to strike it rich by prospecting for gold.
Tons of people, hoping for untold riches, enthusiastically poured what little money they had into investing in the “right” equipment to succeed.
A lucky few actually found enough gold to retire. A few more found enough to make the trip worthwhile. But most lost more money than they made.
So who actually made money during this Gold Rush?
Simple: The people selling shovels (and other equipment).
And if you understand this concept, it can change how you look at entrepreneurship, too. So you can build a successful business and avoid getting conned by charlatans.
Here’s what I mean…
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The Secret to Making Money
You can make money in a gold rush by digging for gold. But this approach is gambling—there’s no real way of knowing if it’ll work out. The only thing that’s guaranteed is that you need to buy equipment that facilitates your goals.
Savvy entrepreneurs understand this difference—finding gold is a gamble, but needing shovels to find gold is a guarantee.
Why gamble when you have a guarantee staring you in the face?
Now I said savvy entrepreneurs understand this. I didn’t say savvy and morally principled entrepreneurs understand this.
Some entrepreneurs are charlatans who sell shovels in an amoral Machiavellian way, while others are ethical entrepreneurs who sell high-quality shovels that genuinely help people reach their goals.
Learning to see this difference will give you an insight into how to succeed in business most people miss.
So let’s start with some examples of this concept gone wrong, then we’ll move into how to use it effectively to actually help people…
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Shovel-Selling Charlatans
Charlatans will sell you one thing (a fancy shovel to dig for gold), but they themselves don’t make money doing that thing (digging for gold)—they make money doing something else (selling fancy shovels).
But they claim the thing they’re selling will make you money.
Here’s what I mean…
- Charlatans will sell a course on how to make money as a ghostwriter. But they aren’t make money ghostwriting—they’re making money selling courses on how to make money as a ghostwriter.
- Charlatans will sell a workshop on how to make money building an agency. But they aren’t making money building an agency—they’re making money selling workshops on how to make money building an agency.
- Charlatans will sell a book on how to make money writing fiction. But they aren’t making money writing fiction—they’re making money selling nonfiction about how to make money writing fiction.
While you’re broke and desperately digging for gold, the charlatans are happily walking away counting the gold you gave them to buy their bullshit shovels.
Charlatans have been doing this throughout history.
From actual snake oil salesmen hocking bullshit remedies they themselves didn’t use, to modern motivational speakers who actually make money speaking and not whatever bullshit methodology to achieve your dream life they’re selling you, to recent things like crypto, NFTs, and AI.
Charlatans claim to sell the secrets to success. But they don’t make money using those secrets—they make money selling those secrets.
So don’t look at what a charlatan claims to sell. Look at what they’re actually making money selling.
Charlatans live by the motto: Get your bag. Meaning get whatever you can out of your customers at all costs, then get away as fast as you can.
Yes, some people who buy shovels from charlatans do find gold, but most just end up with a collection of fancy shovels sitting around collecting dust and nothing else to show for it.
Whether it’s actual gold digging like back in the day, courses, crypto, workshops, software, AI, or whatever “gold rush” will happen in the future—this lesson timelessly applies:
Look at the people selling shovels, because they’re the ones actually making the majority of the money.
When there’s a gold rush, take a second to step back and evaluate where the money is actually moving—who’s making it using guaranteed methods and who’s gambling?
Ask: What are the shovels? Who’s buying them? Who’s selling them?
Understanding this concept can make you a more successful entrepreneur for two reasons:
- You can avoid getting suckered into buying bullshit shovels by charlatans
- You can sell high-quality shovels to actually help people achieve their goals
In fact, most successful businesses make money selling shovels.
Here’s what I mean…
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Ethical Shovel Dealers
If you see a shovel as a way to facilitate your ideal customer’s desired transformation, you’ll make a high-quality shovel that actually helps them.
So if your ideal customer wants to find gold, and they need a shovel to do that (plus whatever other equipment like a prospecting pan and a pick), then you can focus on selling high-quality equipment tailored to their needs that increases their chances of success.
Here are a few good examples of ethical entrepreneurs and companies selling shovels to actually help people succeed (some of the below links are affiliate links, but I’ve used and like all of them):
Kajabi makes money selling a course hosting platform (to people who want to make money selling courses). I’ve hosted my courses Build an Intentional Life and World-Class Coaching on Kajabi and use them for most of my landing pages. Their “shovels” include a website builder, CRM, course hosting, email marketing, and tons of other features that legitimately facilitate my desired transformation of building my business and making money with courses and coaching. If you want to check out Kajabi, this link extends their trial to 30 days. And if you want to learn how I used their 30-day trial to generate enough sales to pay for seven years’ worth of their service before the trial expired, check out this article.
Ghost makes money selling a no-code website platform (to people who want to make money with a website). My main website is on WordPress, and it’s honestly a pain in the ass to manage. So I’m building new project (more details coming soon) on Ghost because they’re fantastic at making your website just work. Built-in analytics, tons of integrations, an easy editor to streamline writing articles, and other cool features facilitate my desired transformation of building an incredible website (and monetizing it) super simple and easy.
Fathom Analytics makes money selling analytics (to people who want to make data-driven decisions to make money in their business). We all know Google Analytics requires a technical degree to understand, and muggle technology just isn’t my thing. Fathom Analytics makes understanding how my content is performing, where I’m getting traffic, and the overall trajectory of my website in a super easy to understand dashboard. They facilitate my desired transformation of making data-driven decisions about my business in an easy to understand dashboard.
ConvertKit makes money selling an email service provider (to people who want to make money using email). The backbone of my business is in my email list. ConvertKit gives me tons of options to capture emails, segment my audience, set up automations and welcome sequences to build a relationship with my audience, and send my newsletter. ConvertKit facilitates my desired transformation of developing a deeper relationship with my audience, sell on autopilot, and share nuanced insights (via my newsletter) I can’t share on social media because of character limits.
And if you really want to make the best shovels for your customers, then you need the insights you only get from using the shovels you’re selling.
Here are some of my favorite examples of people who are selling the very shovels they’ve used to “find gold” in their own lives and business:
- Ali Abdaal’s Part-Time YouTuber Academy. Ali used these methods to grow his own YouTube channel to over 5 million subscribers and his annual revenue to several million dollars (or pounds). If you want the most robust playbook to starting and scaling your own YouTube channel, this course is the gold standard.
- One of my courses, World-Class Coaching. This course goes through everything I’ve learned growing my own coaching practice, building a value ladder of products and services, and creating a content ecosystem to attract life-changing opportunities. If you’ve ever wanted to become a coach, or level up your current coaching practice, check out this course.
- Kieran Drew’s High Impact Writing. Kieran used these methods to grow his own social media accounts to several hundred thousand, along with his annual revenue. If you want to position yourself as a thought leader in your space through proven writing frameworks, this course is fantastic.
- Justin Moore’s Brand Deal Wizard. Justin has generated millions of dollars through brand deals. In this course, he walks you through the best of what he’s learned to help you negotiate your dream sponsorships, too. No one knows as much about negotiating brand deals as Justin. I can’t recommend this course enough if you want to land huge brand deals.
Genuine entrepreneurs live by the motto: Help your customers get their bag. Meaning do whatever you can to help your customers succeed, then continue supporting them as much as you can.
Figuring out what your ideal customer needs to succeed, then creating it and offering it to them, is how you create a win-win situation. They achieve their desired transformation, and you make money selling a shovel that facilitates their desired transformation.
This is the crux of ethical entrepreneurship
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Final Thoughts
See the difference between charlatans and ethical entrepreneurs selling shovels?
Charlatans focus only on themselves and take advantage of their customers. Ethical entrepreneurs focus on their customers and take advantage of knowing what their customers need so they can provide it to help them succeed.
Most of business comes down to selling shovels—not digging for gold.
So in any gold rush, ask:
- What are the shovels?
- Who’s buying them?
- Who’s selling them?
This will help you avoid scams and figure out what shovels you can sell that actually help facilitate your ideal customer’s desired transformation.
That’s how to make money in a gold rush.
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P.S.
If you want more strategies to succeed in business, check out How to Make Success Inevitable (7 Skills Anyone Can Learn).
