‘Liars standing next to a hole’
There is a little old saying in the gold investment business, at least it’s something I have been saying for a while, that mining companies are ‘liars standing next to a hole’. People invest in their stocks, and raise the value of their companies based on prospective, and sometimes purely speculative, geological and other proprietary data. So, to think that a mining company would freely share and open up their unedited, preliminary data to scrutiny seems like an insane idea. From an investment perspective specifically, it is extremely risky.
As we know, open-sourcing is utilized in other industries, “But Goldcorp isn’t a dot-com kind of company. Mining is one of the world’s oldest industries, and it’s governed by some pretty conventional thinking. Take Industry Rule No. 1: Don’t share your proprietary data“. However, In the case of the ‘Goldcorp Challenge’, starting in March of 2000, nothing could be farther from the truth. Goldcorp Inc. went from a flailing mining company with a market cap of $100 million into a multi-billion dollar revenue generating company, a juggernaut within the mining community, with a market cap around $30 billion. I am betting the shareholders are happy.
Where’s the Gold?
Under the direction of its’ CEO, Rob McEwen, Goldcorp published their “geological data on the Web for all to see and challenged the world to do the prospecting. The ‘Goldcorp Challenge’ made a total of $575,000 in prize money available to participants who submitted the best methods and estimates.
Every scrap of information (some 400 megabytes worth) about the 55,000 acre property was revealed on Goldcorp’s Web site. News of the contest spread quickly around the Internet and more than 1,000 virtual prospectors from 50 countries got busy crunching the data.”
Out with Old, in with the New
Within a few weeks, they were receiving submissions from around the world. But, it wasn’t just from a bunch of would be, armchair prospectors. What was so impressive about this story is the variety of specialties in the submissions. “We had applied math, advanced physics, intelligent systems, computer graphics, and organic solutions to inorganic problems. There were capabilities I had never seen before in the industry,” says McEwen (Goldcorp CEO). “When I saw the computer graphics, I almost fell out of my chair.”
Submissions are one thing, physical results are another. Did it work? Ummm, yeah! The contestants identified 110 targets, 80% of which produced a total of an astounding 8 million ounces of gold, worth billions. Gold!
Can I have some more please?
This is one of my favourite examples of mass collaboration. What makes it so intriguing to me, is the industry in which it happens, and even the time frame in which it happens. In this case, open-sourcing was so unexpected, so away from the norm. An ‘old sector’ industry breaking away from the mold, and facilitating something extraordinary, with amazing results.
I am only left to wonder, why isn’t this happening more often, and more importantly, why can’t some of my stocks do the same!!!???
Source:
via “Innovation in the Age of Mass Collaboration” (BusinessWeek, February 1, 2007)
by Don Tapscott and Anthony D. Williams (co-authors of the recent bestseller Wikinomics)