The Gold Rush of ‘48 reconsidered: Lessons for small business owners

Garrison Keillor’s January 24 offering on his  “Writer’s Almanac” mentioned the anniversary of the discovery of gold at Sutter’s Mill in California in 1848. It pointed out that Sutter tried to contain this news so he could continue building his sawmill.  Needless to say, word got out.  Looking into this a little further I learned that the discovery and subsequent gold rush ruined Sutter and he spent the rest of his life  trying to recoup his losses.

Looking back from 2012, what lessons can we learn from Sutter about managing unexpected developments and opportunities today? Here are the four I takeaway:

Hope is not a plan. Sutter asked his workers to keep the discovery secret for six weeks, although he later wrote he doubted they would. Given his own admission, at a minimum Sutter should have identified better ways to maintain the secret. Most likely this would have involved sharing the potential wealth. Incentives might have included a promise that the team would share in the returns for keeping the find private and/or rewarding the entire team after six weeks of silence. With hindsight we can also imagine that the excitement was such that, regardless of incentives, it was not realistic to assume no leaks. Of course this calls for embracing the discovery rather than denying it, which leads to the next lesson.

Some developments are unstoppable and undeniable. Had Sutter recognized that the discovery of gold was too big to stop, he might have found better options than trying to keep it under wraps for even a short time. These options might have included bringing in new investors, selling out, and/or refocusing to embrace the emerging opportunity rather than treating it as an obstacle. After all, many became wealthy supplying those looking for gold with everything they needed to live and work. Of course, this type of adjustment is wrenching. As business owners we are all invested in our current endeavors and it feels risky to change. Sutter’s case illustrates the risks of resisting when the assumptions underlying a business no longer apply.

Big developments offer big opportunities, even if they aren’t immediately obvious. Looking backwards it’s easy to see the incredible opportunities and wealth that flowed from the discovery of gold in California. The gold rush is widely recognized for its historic importance in the development of the west. It fueled San Francisco’s early development and the growth of companies such as Levi Strauss and Wells Fargo Bank, which both served the needs of those who came in search of wealth.

Vision and boldness are hard to sustain. Sutter seems to have been a visionary in many ways. By the time gold was discovered he had already achieved substantial success as a result of his vision and ambition. Nevertheless, he was unable to extend his vision to the new opportunities gold presented as he saw the discovery as interfering with his immediate intentions.

I find the Sutter story both inspiring and humbling.  Are there other lessons you see in it? Are there other cases from business history that inform you? I’d love to hear about them.

Karen Utgoff, principal of Karen Lauter Utgoff Consulting, is a market-oriented business strategist based in Amherst, MA. Learn more at http://www.utgoff.com.

© Karen Lauter Utgoff Consulting 2012. All rights reserved.

3 comments

  1. JeanneYocum says:

    Karen, I love the idea of going back in history and seeing what business lessons we can learn. I am guessing that if we analyzed the top 10 mistakes small business owners make today, they would not be that much different from the top 10 of a century or even two centuries ago. Sutter's story would make a good business school case study! Thanks so much for bringing it to our attention.

  2. Karen Utgoff says:

    Thanks Jeanne. Glad you enjoyed this. I agree that there is much to learn from historical cases. It seems to me they let you see the 'forest for the trees' in a way that is difficult when dealing with recent developments. I'm on the look out for others informative examples!

  3. Fascinating and extremely relevant… thank you Karen! Really love the headline, it got me to the post (where my curiosity was rewarded).

Leave a Reply

Subscribe to keep up with the latest on how to make your small business a success.