Insights From The Pony Express: Why The Five-Year Tech Refresh May End Up Costing You More

By August 26, 2014Strategy

Prior to 1860, it could take several weeks to months for correspondence from the east coast to reach the Pacific states. As settlement of the West exploded due to the promise of free land from the Homestead Act and the discovery of gold, a faster line of communication was needed. Especially with war looming, the ability to facilitate faster mail delivery became critical to every facet of society, enterprise, and government.

To undertake this monumental feat (remember, this was before the advent of the continental railroad), William Russell, Alexander Majors, and William Waddell—who already ran successful freight and drayage businesses—joined forces to devise a network of stations roughly 10 miles apart that stretched from St. Joseph, MO to San Francisco, CA.

Riders, who had to be lightweight, travel light, and run their specially-selected smaller horses at a gallop between stations, would often ride around 100 miles per day. (The horses were burdened with only 165 pounds on their backs, including the rider.)

With this relay method of riding fast, light, and taking on fresh horses at every stop, a letter could make it across the country in 10 days, an accomplishment that was previously thought impossible.

“A letter could make it across the country in 10 days, an accomplishment that was previously thought impossible.”

So let’s summarize the technology and methodology of the day and what made delivery of mail to the West coast in 10 days possible:

Tech

  • Small riders, often children (orphans were preferred because of the hazardous occupational dangers accompanied by job of the rider)
  • Small horses (the happy medium between speed and overhead; larger horses eat more and can’t run as fast at distance)
  • The Mochilla pouch (fit over the saddle and carried locked mail compartments, water and a bible)

Method

Stations 10 miles apart helped overcome:

  • Finite running capacity of the horses
  • Weather
  • Terrain
  • Danger from crossing into Indian lands that were hostile

Operating for a period of just 18 months, the Pony Express was one of the most ambitious endeavors in American history. By October 1861, it was over, displaced by the more cost-effective technological advancement of the telegraph.

Let’s take a look at the known costs of running the Pony Express from a CAPEX and OPEX stand point. We don’t have historical records on all details, so I will take some liberties using guestimation.

CAPEX

  • 400 horses at $200 each
  • 184 stations at $600
  • Tack (saddles, horse shoes, Mochilla) $20 per horse

Total: approximately $200K
Value today: approximately $76 Million

OPEX

  • 80 riders at $100 per month
  • 400 staff at $20 per month
  • Feed at $5 per horse per month

Total: approximately $18K per month
Value today: approximately $7 Million

old telegraph key

The reason I use this example is to show that disruptive technologies throughout history have led to monumental changes in the way we conduct commerce. The advent of a letter traveling with a Pony Express rider across the country in 10 days, which once was thought impossible, was eclipsed by laying down telegraph cable and Morse code. Not only did the telegraph render the enterprise of the Pony Express irrelevant, but cost prohibitive, especially at $1 per ½ once.

It would have taken years to recoup the startup capital and turn a profit. We can also look to the advancement of the telegraph as seeding other life-changing technologies, such as the telephone and the continental railroads (which followed the telegraph lines across known safe passages into the West.)

“Do we really want to put ourselves in a position that stifles our ability to ride the ebb and flow of advancement … because we are locked into rigid maintenance contracts with original equipment manufacturers?”

I guess the point I’m trying to articulate is: technology that supports and drives business today can change even faster than in 1861. Do we really want to put ourselves in a position that stifles our ability to ride the ebb and flow of advancement, which blocks our ability to drive up efficiencies and drive down costs, because we are locked into rigid maintenance contracts with original equipment manufacturers?

I say no.

Keep your business agile. Be prepared for the next big thing that poses relevant change in information technology. Keep your maintenance schedules to three years. Don’t let history repeat itself on you and your enterprise.

Photo credits via Flickr, in order of appearance: bombeador; digitaltrails.