Friday, July 1, 2011

John Mohler Studebaker as an Example of Boom Town Entrepreneur

From a Credit Bubble Stocks contributor, in response to yesterday's review of Petrolia: The Landscape of America's First Oil Boom by Brian Black.

Excellent, interesting review. The complete lack of infrastructure and services in boom towns leaves solid opportunities to make a fortune by being first to provide ordinary goods that are in high demand.

For example, John Mohler Studebaker, the founder of the Studebaker Car Company accumulated 500 ounces of gold, just by making a wheelbarrow for gold miners every day for 5 years.

In Studebaker's case, it was enough gold to buy into his older brothers' wagon-making business, just in time for the company to make a fortune building wagons for the Mormon War of 1857 & 1858 and the American Civil War of 1861-1865.

Studebaker built his fortune by skillfully exploiting a series of happy accidents that other men might not even have noticed.

As a 19-year old man, he lost all of his grub stake except 50 cents in a rigged game of chance while he was still in Iowa, during his 1853 trip to the California Gold Rush. So he had to find a job just as soon as he got to California. That's very lucky, because it was 1853 when he arrived, not 1848. So the easy gold pickings were all gone. He might have died broke if he had panned for gold. He might have panned for gold if he had gotten to California in 1849. But, by happy accident, he was too young for 1849.

He happened to talk to a doctor who knew of a wheelbarrow builder who needed help. So he took the job and methodically saved the gold he earned.

By a happy accident, the newspaper editor who covered the departure of Studebaker's wagon train from South Bend, Indiana, was Schuyler Colfax. Colfax became a United States Representative from Indiana (1855–1869), Speaker of the House of Representatives (1863–1869), and the 17th Vice President of the United States (1869–1873), all in good time to send plenty business to the Studebakers Brothers little wagon-making company.

By a happy accident, the automobile age began during John Mohler Studebaker's lifetime. His wagon company became the only wagon builder to make the transition to manufacturing automobiles.

That is because Studebaker was smart enough to understand that he was in the transportation business, not the wagon business.
I am a big believer in knowing what business you are in. This is an amazingly difficult thing to understand: newspapers and other media companies have stubbornly resisted the inevitable.

1 comment:

CP said...

Studebaker Brothers were the largest wagon maker in history, building 750,000 wagons.

Their wagons were the wagons the Union Army brought to Gettysburg and the same wagons that Robert E. Lee took with his when he left.