The Gold Rush of Software

2010 September 23
by Emmanuel Goossaert

During the Gold Rush of California in 1849, thousands of men were ready to put at stake all they had in the hope of a better life. The software industry that we are currently experiencing shows, to a certain extent, very similar patterns. Smartphone and source code have replaced the traditional pick and scoop, however the goals and hopes remained the same. But is there anything for developers to expect from this gold rush of software?

James Lick and the California Gold Rush of 1849

As he was building a saw mill, James Marshall discovered gold in California’s American River. That was in January 1848. By Spring 1849, 30,000 men were already digging in the mud looking for gold. Pennsylvania-born James Licks arrived in California in January 1848, a bit before gold was discovered, with entrepreneurial ambitions. Like many, he took part in the Gold Rush of 1849, which made his fortune. The life of gold diggers was just horrible. Instead of a fast buck, most of them just found hunger and misery, living and sleeping in the same mud that they were digging. Some got limbs amputated, and many caught diseases due to the terrible hygiene conditions. Sure, digging required some skills, but a good part of finding gold was just pure luck. And so, some random guy would find a huge gold nugget every once in a while, return home as a rich man, and this one in a million man was enough to keep the gold fever alive among diggers. But James Lick was not one of these one in a million lucky men, for he was not a gold digger. He actually quit digging after a week. So you are wondering how he got rich? Very simple, he understood that he wouldn’t make his fortune by digging, but by owning the land and by offering services to the diggers, such as food and every-day necessary items. When everybody was rushing for some sad stupid dream — the hope of an instantaneous better life — he was just standing on the side, witness to the madness of man.

The High-Tech Gold Rush

Gold rushes still exist in our modern world, just take Las Vegas for instance. More surprising, gold rushes also exist in the software development industry. In one of his column from 1999, Steve McConnell stated:

The advent of a major new technology often means the beginning of what I think of as a “software gold rush” […] characterized by high-risk, high-reward development practices.

Nowadays gold rushes are not about digging in the mud or loosing your leg. For software, they are about burning your time and money (and also your eyes) programming on a computer. Just think about it. We always hear about the same success stories, the ones with high school kids programming some farting or snowing application on smartphone, and making thousands of dollars with it. There are also these stories of these college buddies who made a website in the dorms, who got funded and moved to San Francisco, and who are now richer than you and your whole family over ten generations. These success stories are sufficient to make us keep up on the dream that we are going to get rich some day. Therefore we try, by spending the time and money we have on that dream. A lot of projects are aborted before they are released, but many, many projects are also released and just fail. Indeed, we rarely hear about the other side: how many guys spent their whole summer working on an application or a website, released it, and failed? How many guys lost their girlfriends and jobs because they were working too much on some personal projects? Sure we are not in the 1800s anymore, but it is all about the same things. In 1849 they were digging in the mud, now we are digging in the code. You are going to tell me: “but this is totally different, gold digging is all about luck, whereas making a startup is all about skills and how smart you are.” Really? Then what is wrong with your applications and websites? Your ideas are good, you implement them correctly and you promote them well, but you are still not rich. That’s because the “skill” part of the deal makes us forget about the chance factor. I am pretty sure that the gold diggers of 1849 were all convinced that gold digging was all about skills. Don’t get me wrong, it is always good to try new ideas — and I am the first one on that — but it is also good sometimes to take a little distance from the digging fever, and put your time and money in the safest long-time investments, such as family and friends.

The Jackpot

James Lick led the way: the big money is not in digging, but in digging services. Let’s take an example. Some big technology company builds a new device, and creates an App Store for this device. You want to develop applications on it, because you are smart and you believe that you can easily get rich. Therefore you buy one or even two of these devices, and you also pay for a developer license in order to publish on the App Store. You make a couple of applications, that always take you more time to developed than planned, and that are not selling that well. Every once in a while, you read a blog post about some obscure application that made $50,000 and this keeps your code fever alive. So you buy the new version of the device, and you renew your developer license. But are you getting rich? If yes, congratulations, you are not only smart, you are also part of the one in a million lucky guys out there! And if not, then ask yourself: who is getting rich? As says Blondie, in Sergio Leone’s film The Good, the Bad and the Ugly:

You see in this world there’s two kinds of people my friend – those with loaded guns, and those who dig. You dig.


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