I finished Kurt Andersen’s Heyday: A Novel on my week off in long island. It’s a grand story about four friends’ adventures together in the United States during the years of 1848, 1849, and 1850. It starts in New York and ends in San Francisco.

At various times during the book, I felt that Kurt was writing about today instead of 150 years ago. I posted about one of those moments a while back, but it was the part about northern california during the gold rush that really felt like it was a direct analogy to what is going on in the web technology business, which of course is also centered in northern california.

As that summer began (summer of 1849), the heyday of California was either ending or beginning, depending on where one looked. An era of acute uncertainty had begun. …. The excitement was an echo of last year’s, but everything else had changed. Not only had there been more gold in the ground and fewer people looking for it, but all of the men at the mines in ’48 had managed to get there fortuitously …. Each of these new "forty-niners", on the other hand, had made a large and risky investment. Each had abondoned his family and friends and job and familiar surroundings on a bet, persuaded by mere stories in newspapers, equipped with no special advantage, nothing but a longing for good luck… The Eden of 1848 was disappearing. Economic life was returning to normal. The losers and middling survivors would once again vastly outnumber the winners, as they always had.

Maybe it’s because Kurt and I went mining for gold together in 1999 (the last gold rush) and came up mostly empty, that I see the analogies between his story of the heyday of the mid 19th century gold rush and the web technology business. This new gold rush that we call web 2.0 is certainly different, but Kurt’s words about economic life returning to normal ring true to me.

Many of the best web 2.0 companies were formed during the bleak "nuclear winter" of ’01/’02/’03 when nobody was looking for gold. The balance was tipped in their favor as a result. The opposite is true today. Everyone is mining for gold, at least everyone I know in the web technology business. So it’s a different dynamic and the losers and middling survivors will again vastly outnumber the winners, as they always have.

#VC & Technology

Comments (Archived):

  1. Peter Cranstone

    Totally agree – then it’s time to look in another stream for gold. It’s there, just can’t be in the same river as the “maddening crowd”.

  2. stevehopkins

    Long time reader, first time commenter…here goes :)I think it’s interesting that we believe we have to look for the next stream for more gold. If we are always ‘looking’ for the next big thing, then how are we so different from the ‘maddening crowd’ as Peter calls it?I tend to think that the 48-ers, and those building the successful web 2.0 social channels in 01.02.03, we’re just keeping an open mind to things. I think we, as a society, continue to have a severe problem/solution mindset, which stops us from thinking more broadly and creatively. Is there really anything new coming out of silicon valley at the moment? I don’t know – but how much different from everything that has come before is it? The gold the 49-ers were looking fro was the same as the gold the 48-ers found…there was just many more people looking for it.I think the next wave, or stream if you like, comes without looking for it. The very process of looking for it, includes you in the crowd. Should we start thinking about our thinking instead?

  3. A Weissman

    Being that “many of the best web 2.0 companies were formed during the bleak nuclear winter” (an assertion I agree with), do you think another nuclear winter, or correction as it were, will again produce those same results (correction here being defined as where the cost of venture capital gets much more expensive, those resulting in a different mix of people/companies getting funded, and at different valuations)?

  4. vruz

    I’ve always been in the technology business. Ever since I was 14.I’ve seen miners come and go. The truly passionate ones will never leave.

  5. Sam

    I think this is a great insight. In fact, in doing some recent digging, I have been blown away by the historical ties to another era in California – the 1960’s. I had no idea that social media’s roots were so deeply entrenched in the counterculture movements of the hippies. Should have paid more attention in high school history class!http://www.leveragingideas….

  6. jackson

    For the record, in ’94 I made the ‘wild west/internet’ analogy, you may all stand in awe of the mighty Jackson.

  7. Azam Khan

    An increase in web startups is simply a result of people coming online more often and thinking people are gettin rich without putting in too much effort. When you “think” of a web startup, you think of all the leisures and luxury of being in your own space, being connected anywhere the net is available, and how things can move extremely fast across the net. I, as a student, would not attempt a biotech startup simply because it can be extremely time consuming and the genius of it has to be developed and cultivated overtime, through lab experiences and what not. Although the space is crowding, good analytical skills and a core geographic location can make difference in the success rate of the startup. Someone launching a startup in SF will be more likely to succeed than someone in Kansas.Read/write web has a great article on the future web trends. As we will see our life become more digital, the startup scene will change from just having web developers to people who can do technological backend work that connects real life to the web and accelerating the vanishing of the line that separates them. Plus the advent of biology and neuroscience has yet to integrate within all this stuff.. so there’ll be plenty of opportunities to ‘compete for peoples attention’.

  8. Graham Hill

    Jeff Bezos has a great TED talk comparing the internet boom to the gold rush at http://phobos.apple.com/Web…(although i know that fred isn’t into apple these days, at least it’s free!).