Pick and Shovel Makers

On a cold January morning in 1848, a carpenter named James Wilson Marshall ignited one of history- great mass migrations by finding a nugget of gold on a farm owned by John Sutter near San Francisco. Wilson and Sutter, no dummies, tried to keep the discovery to themselves. But they failed, and as word spread, hundreds ls> ls> ls>

Table 20.4 Clean-Tech Conglomerates

Market Value,

Company

TIcker/Exchange

Headquarters

Technology

6/27/08 ($ millions)

3M

MMM/NYSE

U.S.

Green materials, desalination

48,950

General Electric

GE/NYSE

U.S.

Everything

261,740

IBM

IBM/NYSE

U.S.

Smart meters, building controls

164,890

Sanyo Electric

6764/Tokyo

Japan

Solar cells, batteries

4,669

Siemens

SI/NYSE

Germany

Water, wind

99,520

United Technologies

UTX/NYSE

U.S.

Fuel cells, geothermal

59,510

of thousands of would-be mining tycoons poured into the western United States. Most found only mud and rock and moved on when their seed money ran out. But another group—the steadier folks who sold the picks, shovels, and other gear needed to prospect for gold—did better. They got paid up front, and when their customers failed and left, new ones showed up with ready cash. A San Franciscan named Levi Strauss, for instance, sold durable denim pants that became the uniform of choice for prospectors. As an estimated 300,000 prospectors passed through San Francisco in the five years following the gold strike, Strauss sold a whole lot of "Levi's," eventually building a company that still bears his name. The lesson for clean tech? Every hot market follows the gold rush script: "Prospectors" pour in with hopes of hitting it big. Most fail, but all buy the requisite materials and equipment. The suppliers thus have a chance to prosper no matter who ends up winning the race. So for less volatile ways to play booming markets, look further down the supply chain to the miners, processors, and machinery makers that can profitably serve winners and losers alike. Using solar power as an example, consider the following.

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