Chapter Twelve. Software Gold Rushes

Prosperity doth best discover vice, but adversity doth best discover virtue.

FRANCIS BACON

The root of all superstition is that men observe when a thing hits, but not when it misses.

FRANCIS BACON

In January 1848, James Marshall discovered gold in California's American River near a mill he was building for John Sutter. At first Marshall and Sutter dismissed the pea-sized nuggets as a nuisance; they believed the attention that gold would bring would spoil Sutter's plans to build an agricultural empire. But within months word spread, and by 1849 thousands of men and a handful of women from around the world had contracted Gold Rush Fever. They headed to California to make their fortunes in what became known as the California Gold Rush. The rush west created a new economy driven by high-risk entrepreneurialism and fueled by dreams of striking it rich. Precious few 49ers actually realized that dream during the gold rush days, but the dream lives on in many modern software companies and individual software developers.

The California Gold Rush was unique in that the gold was found in riverbeds instead of embedded in hard rock. That meant that, at first, anyone with a tin pan and an entrepreneurial spirit had a chance to make a fortune. But by mid-1849, most of the easy gold had been found, which meant that a typical miner spent ten hours a day in ice cold water, digging, sifting, and washing. As time passed, this backbreaking work yielded less and less gold. There were occasional lucky strikes well into the 1850s, which provided just enough good news to encourage thousands to keep digging. Most failed every day, but they kept on for years.

After the early days of the gold rush, miners had to use more advanced techniques to extract gold. By the early 1850s, a single miner could no longer work a claim by himself. He needed the help of other people and technology. At first, miners banded together informally to build dams, reroute rivers, and extract the gold. But soon more capital-intensive techniques were needed, and the informal groups of miners were replaced by corporations. By the mid-1850s, most of the miners who remained were corporate employees rather than individual entrepreneurs.