This was quite literally the rally cry that swept the nation after gold was discovered at Sutter’s Creek. By 1864 the gold rush had ended, leaving in its wake tens of thousands of broken men and women who had gone out to California seeking their fortunes.

We have seen some semblance of this phenomenon in the past related to all things Internet. In the mid nineties we experienced the cyber rush as companies and individuals sought their fortunes online. Dotcom mania swept our nation like gold fever, with a similar net effect. How quickly we forget the past…

The vast majority of the forty-niners did not strike it rich. The real money was made by the industrious entrepreneurs of the day who realized that these miners needed to be fed and clothed. They also needed a place to stay and equipment with which to ply their trade.

William Randolph Hurst III, direct descendant of the man who won the San Francisco Examiner in a hand of poker during that era, is credited with the first use of the term “picks and shovels” as it relates to the Internet. You see, Mr. Hurst understood that it was the farmers, restaurant owners, inn keepers and suppliers of everything from shovels to newspapers who made the real money. People with names like Stanford, Levi and Straus. These tycoons, and many others, made fortunes on everything from blue jeans to prostitution.

To date, it has been the “picks and shovels” companies that have flourished and prospered online. These companies have implemented business plans geared towards helping other businesses harness the true value of the Internet – community, collaboration and communication. This is especially significant as we move from an economy based on the valuation of tangible assets to one based on the real value of information.

Opportunities abound for today’s enterprising Netrepreneur. For example, the applications service provider or ASP business model also referred to as SaaS (software as a service), which is the automation and outsourcing of business functions, in many cases dealing with the distribution and use of software utilizing the Internet as the primary medium, has grown exponentially to a multi-billion dollar industry in the last several years. Furthermore, this model has grown faster than eCommerce originally did.

In addition to back office automation we are confronted with the ever present need to find and use information effectively. Websites and blogs online that support this function are called Portals. These websites rely on the sharing of information among customers, business partners, vendors, stakeholders and constituents, centered on a general topic area or industry. The Portal owner benefits financially from the affiliate relationships that he or she has with numerous vendors and suppliers represented on the site. An excellent example of a Social Media portal is none other than The Social Media Portal (SMP), Which bills itself as a resource that maps global social media, social networks and user generated content (UGC).

Portals that address a very specific need, application or segment of an industry are called Vortals or vertical portals. Vortals provide seemingly endless amounts of information and support to all involved on a relatively narrow subject area. The Vortal business model lends itself to the entrepreneur or small business owner who has a very particular interest, passion or skill.

Let’s not forget about information aggregators or intermediaries, Infomediaries for short. These websites  and blogs provide specialized information to producers of goods and services and their potential customers, increasing the value through aggregation. Infomediaries provide valuable data about consumers and their buying habits. These data are made more valuable when they are carefully analyzed and used in target marketing campaigns.

Do you have information you want to sell? Could you do it online? You may want to consider it. The online information industry will grow dramatically over the next several years, further offsetting the traditional publishing and media industries!

These are but a few of the information centric “picks and shovels” company types presently supporting real commerce on the Internet. Others include, knowledge networks or expert sites, efficiency based manufacturing models, virtual merchants, advertising, marketing, branding and promotions… If you can think it up you can come up with an application on the web.

So, do it!

Stocks surged all over the world with the announcement yesterday by Treasury Secretary Timothy Geithner that the Fed would buy back toxic bank assets. The news was greeted with applause (literally & figuratively) and the reaction from the market was profound. In particular, the Dow swelled by a whopping 497+ points closing 6.8% higher and representing the largest gain since late 08′. Two of the larger banks, Citigroup and Bank of America, saw their shares rise by more than 20%.

The plan, which is being referred to as the Public-Private Investment Program, is based on an initial investment of $100 Billion from the treasury, in addition to guarantees by the FDIC, to buy distressed mortgage securities currently on the banks balance sheets.

The impetus of the plan is to get private investors, speculators really, to buy the securities and support them in doing so in an effort to narrow the gap between what banks are willing to sell them at and what the market will bear.

What’s curious about this plan is the apparent role reversal on the part of the banks in this particular case. Everybody knows that you buy low and sell high, especially bankers? These banks are being encouraged (forced…) to clear this debt from their balance sheet.  All of the major banks have received 10′s of Billi0ns of dollars as part of the bail-out. If you read Geithner’s tea leaves it’s clear that what is now required of them is to liquidate these “assets” for a onetime loss and to take the write down!

Ouch! Those just aren’t words that any banker likes to hear much less as it relates to their own assets. The banks’ hoped, apparently, to get the bail-out money (they got it) and then hold onto the depressed assets until the market returned, dump the assets and profit handsomely. Well, it doesn’t look like that’s the way this is going to go.

It will be interesting to see how much arm twisting will need to take place to get the banks to burn this crop in the field order to fertilize it for next season, so-to-speak.

(Excerpts taken from the Wall Street Journal 3/24)

If there is anything that has become extraordinarily clear in the recent past, as relates to our economy, it’s that Small Business, not big business represents the majority on multiple levels. From innovations and  patents to net new jobs created and gross domestic product, small businesses around the country have been giving it their all through thick and thin. America has always been a place where necessity is the mother of invention. As a matter of fact, this defines us as a people. This is what the American Spirit is all about.

Unfortunately, small businesses have never recieved the type of support that they are due given the percentage of the economy that they truly represent. According to the SBA – Small Business Administration small businesses:

1. Represent 99.7 percent of all employer firms!
2. Employ about half of all private sector employees
3. Make up 97.3 percent of all identified exporters…
3. Have generated 60 to 80 percent of net new jobs annually over the last decade
4. Create more than half of all non-farm private gross domestic product (GDP)

Here’s the gist of it; these small businesses that have such a marked and profound impact on the US economy, employing the majority of our workforce, are failing at an alarming rate! More statistics from the SBA: In 2007 there were an estimated 637,100 new businesses started. Approximately 560,300 small businesses were closed with approximately 28,322 ending in bankruptcy. Do the math… And here’s the epidemic part. It’s been this way for a very long time and it’s getting worse!

Here’s something else. Again according to the SBA a full one third of new businesses close their doors within the first two years. Fifty six percent close their doors after just four years and sixty nine percent go out of business by year number seven. In summary, our economy is dependant to a very large and growing extent on small businesses, more than half of whom never make it to their fith year anniversary. This, as stated above, is a problem of epidemic proportion and demands immediate attention.

We will endeavor in this blog to provide information, tips, methodologies, concepts, plans, resources, contact information, success stories and critical thinking in an effort to overcome the small business epidemic in America.

We thank you in advance for your interest and consideration and welcome your comments – It’s going to be an interesting trip!