The new goldrush.com

Author: By Chris Gulker

Maybe we’ll all be known as the ’99ers. There was a huge explosion of activity in Northern California in 1849. Gold had been discovered in the foothills of the Sierra Nevada, and thousands flocked to San Francisco to find their fortune. The San Francisco football team is still called the ’49ers, after the term locals used to describe the recent arrivals 150 years ago.

Huge wealth was created during that time, but, truth be known, many more fortunes were made outside of the goldfields than in.

You see, Americans are by their nature a migratory group. With the exception of Native Americans, this is a nation of immigrants, folks who pulled up stakes and tried something new rather than endure a life bereft of opportunity in the old country.

The 1849 Gold Rush was really just a particularly good excuse for Americans to do what they loved to do anyway, which is move. And, boy, was it ever an excuse.

Folks were so eager the sailors on many of the ships that came had no intention of going back: many ships were simply driven up onto the beach and abandoned as captain and crew headed immediately to the goldfields.

The dockside streets and quays of San Francisco are still paved with the ballast stones that came from the holds of those ships, and many civic amenities – park benches, for example – were built with their planks and timbers.

Not a lot of the ’49ers struck it rich in the mines: finding and mining gold is very difficult work. The big fortunes were amassed by the savvy folks who realized that all these buckaroos were going to need to be fed, and clothed and equipped with picks and shovels. Chicken farmers in Marin County, north of the city, prospered selling eggs and poultry to would-be miners, the Levi family amassed a huge fortune selling particularly durable pants, and tycoons built fortunes providing every sort of service, from prostitution to banking to rail transport and mail delivery.

San Francisco was a wild town then (some say it still is), on the edge of chaos. An Australian criminal gang called the Sydney Ducks set the town on fire one night, just for fun. Nevertheless, folks with names like Stanford and Hearst managed to do pretty darn well.

Indeed, William Randolph Hearst the Third, direct descendent of the man who won The San Francisco Examiner in a poker game, once looked at me across his desk early in 1994 and said “picks and shovels”.

“Picks and shovels, Will?”, said I, then a lowly sub-editor at The Examiner. We had been talking about this new thing called the Internet.

“In the early stages of the Gold Rush, the savvy people made money by selling picks and shovels, or denim pants,” said he.

“It was a smart strategy: you let others take the risks associated with trying to find gold, and you prospered regardless – they all had to buy your stuff to go mining. It was the surest way to succeed.

“It was the same when the telegraph came – the early fortunes were made selling poles and wire to the companies that undertook the huge risk of building the system.

It wasn’t until enough of the system had been built to make it truly useful that companies lie AT&T and Western Union prospered.”

I remember those words. Shortly thereafter, Will quit his job as Examiner publisher, and joined a venture capital firm in Silicon Valley. One of his first startups was @Home, a service provider that was a “poles and wires” company for the Internet.

Will’s firm’s initial investment of a few million came back perhaps a hundredfold when the company went public last year.

And so, surveying the Silicon Valley landscape from my home just off Sand Hill Road (home to Silicon Valley’s venture capitalists), it’s easy to compare 1849 with 1999.

You have folks like Keith Teare, who came to Silicon Valley from the UK in 1997 to start a small company called Real Names. His first offices were in a corner of a converted warehouse. Two years later, he’s just accepted $70m in additional venture funding, has offices overlooking the San Francisco Bay, and is advertising for employees on local billboards. What Keith sells is a way for people to find Web merchants without having to type in long, prone-to-error URLs. And he sells the service to the Web merchants out there trying to strike it rich in them thar golden cyberfields. Keith’s a prototypical cyber-rusher.

And he joins a long line: Mark Andreesen, a greenhorn Illinois kid who had an idea for a “browser”, something called Netscape. You betcha everybody was going to need one of those to do a little Internet prospecting.

Hacker gangs have taken over where the Sydney Ducks left off, and tycoons are springing up providing every sort of service from cybersex to e-mail to grocery deliveries for Internet startup workers who are just too busy to make it to the market.

True, there are many differences: the ’49 Gold Rush was about a suddenly-mushrooming population, while the ’99 rush is about a fundamental shift in the global economy, more akin to the Industrial Revolution than the Gold Rush.

But there certainly are similarities to how fortunes are being amassed: I’m wondering how many cyberchickens I can sell to the buckaroos of ’99?

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