Best Practices For Investing In The ‘Picks And Shovels,’ Not The Gold Rush

Jayden Wei is Founding Partner of OGBC Group, investing in AI, quantum computing, and blockchain infrastructure.?Every major technology cycle tends to follow a familiar arc: Early enthusiasm drives valuations up. A correction follows—sometimes brutal. Then, quietly, the real infrastructure gets built. That third phase is where I want to be invested.I call this the “picks and shovels” framework. During the California Gold Rush, the people who reliably made money weren’t always the miners. It was also the companies selling equipment that every miner needed. Regardless of who found gold, everyone needed a shovel. The same logic applies to emerging technology sectors, and it has shaped how my firm evaluates investments across quantum computing, AI infrastructure and blockchain.??Conviction requires timing discomfort.The hardest part of infrastructure investing is that the entry points often feel deeply uncomfortable. In late 2022, I made my first investment into what became a closed-end fund investing in the equity of private companies building blockchain infrastructure. The timing felt terrible. The industry was navigating one of its worst downturns, institutional appetite had evaporated and “blockchain” had become a near-toxic word in boardrooms.But contrarian timing isn’t about ignoring risk—it’s about separating sentiment from fundamentals. The question I kept returning to was: Regardless of market conditions, does this infrastructure actually need to exist? For digital asset custody, compliance tooling and enterprise blockchain platforms, the answer was yes. These were businesses with customers and contracts, not speculative bets on price appreciation.Three questions can help inform an infrastructure bet.When evaluating whether an emerging technology sector is worth an infrastructure position, I apply three questions consistently.1. Is the infrastructure necessary regardless of which player wins? In the early internet era, you didn’t need to pick the winning browser to invest in networking equipment. Infrastructure that serves an entire ecosystem, rather than betting on one platform, is structurally more durable. This is the first thing I look for.2. Are there already revenue-generating businesses in the space, or is it purely anticipatory? Early-stage infrastructure investments are most defensible when real companies already have real customers. Existing revenue is a sign of genuine market demand rather than enthusiasm about what might eventually exist.3. Is the regulatory and institutional environment moving toward clarity? Infrastructure investments require long time horizons. I look for signs that policy is trending toward workable frameworks rather than prohibition and that institutional capital—even tentatively—is beginning to engage.Structure matters as much as strategy.One of the practical lessons I’ve taken from this approach is that the investment vehicle’s structure is as important as the thesis behind it. That closed-end model I previously mentioned investing in—which doesn’t face redemption pressures that can force premature asset sales—was purpose-built for illiquid, long-duration private company investing. The architecture enabled the strategy. I’d encourage anyone evaluating similar opportunities to scrutinize structure, not just portfolio composition. A sound thesis in the wrong wrapper will underperform.The approximately 2.5-year timeline from my initial investment to the fund’s New York Stock Exchange listing was unusually compressed compared to the seven- to 10-year venture capital horizon I find is typical. I’d caution against treating that pace as a template. The more transferable lesson is that contrarian positioning during an industry’s low point, combined with structural patience, could offer a genuine and repeatable competitive advantage.The Broader ApplicationWhat I’ve described isn’t unique to any one sector. We apply the same framework to our investments in quantum computing and AI infrastructure more broadly. In each case, the question is identical: Am I investing in something the ecosystem needs to function, or am I making a directional bet on a specific outcome?Infrastructure investing rarely generates the most exciting early returns, but it has the potential to generate enduring ones. In every technology cycle I have observed closely, the companies that usually built the foundational layer outlasted the companies that built on top of it—and they created value for a far broader set of stakeholders along the way.If you’re evaluating exposure to an emerging technology sector right now, I’d start by asking: What is the shovel?The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?