Clumps and Gold Rushes Opportunity Strategy
Find artificial market gaps or sell portable tools to speculative booms
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 91%
This strategy offers two complementary opportunity screens. First, inspect laws, underwriting rules, and scoring systems for places where economically similar people are placed into different categories and charged materially different prices. A business may create value by lawfully bridging that artificial gap. Second, when a speculative rush is difficult to value, avoid relying on perfect bubble timing and instead provide infrastructure, tools, or services to participants. The service should be portable so it can survive when demand migrates to another asset or market. Both screens shift attention away from heroic forecasting and toward persistent frictions: classification gaps, transaction needs, compliance burdens, custody, data, and other enabling services.
Origin
Peter Conti-Brown offered these two recurring business strategies to students seeking careers in finance during the Masters in Business speed round.
Core principles
- 01Rules can create artificial boundaries between similar customers.
- 02A bridge across an artificial boundary can unlock overlooked value.
- 03Supplying participants can be safer than betting on a boom's winner.
- 04Tools should remain useful when the fashionable market changes.
How to run it
- 1
Scan for regulatory clumps
Find rules, scores, or underwriting categories that treat nearly identical customers differently.
Pro tip Compare customers immediately above and below a formal threshold.
Watch out Confirm that the difference is artificial rather than a valid risk distinction.
- 2
Quantify the gap
Measure differences in price, access, approval rates, or service quality created by the classification.
Pro tip Prioritize gaps large enough to support customer savings and a sustainable margin.
Watch out Do not call a gap an arbitrage before including compliance and default costs.
- 3
Build the bridge
Create a lawful product, data layer, or underwriting method that serves the overlooked middle more accurately.
Pro tip Explain precisely why the bridge improves matching without hiding risk.
Watch out Never evade a regulation or disguise customers to cross a boundary.
- 4
Screen active rushes for service needs
For booming assets or sectors, identify recurring operational needs rather than trying to predict the market peak.
Pro tip Look for custody, payments, compliance, security, analytics, and workflow needs.
Watch out Revenue tied only to rising asset prices remains a directional bet.
- 5
Test portability
Design the service so its capabilities can transfer to adjacent assets, industries, or customer groups.
Pro tip Name at least two alternative markets the product could serve.
Watch out Over-specialization can make the supplier collapse with the rush.
In the wild
A hypothetical fintech discovers that small digital-asset firms struggle with transaction monitoring. Rather than buying tokens, it builds a configurable compliance service that initially serves cryptocurrency companies but can also support remittance providers and online marketplaces.
→ The company benefits from current market activity while retaining a path beyond a single speculative cycle.
Common mistakes
Confusing rule evasion with arbitrage
A viable bridge improves lawful allocation; it does not conceal information or bypass legitimate safeguards.
Building for only one rush
A service that cannot transfer to another market remains exposed to the same bubble risk as its customers.
Is it for you?
Best for
Fintech founders and service businesses exploring regulated markets or fast-growing speculative sectors.
Not ideal for
Businesses that cannot verify regulatory compliance or whose product depends entirely on one transient asset.
From the transcript
“Look for ways in which rules have clumped when that should have been more evenly distributed.”
“Build a bridge, right.”
“we're not going to be in the gold mining business. We're going to sell stuff to people or in the gold mining business.”
From the episode
Peter Conti-Brown Discusses U.S. Financial History (Podcast)