10 Lessons For Startups From The Gold Rush

The world is always changing yet repeats itself quite a bit.

In the Summer of 2002 I had an absolutely amazing experience outside Eagle, Alaska (map) helping build a cabin roughly 8 miles from a road.  It was total subsistence living, with a net in the mighty Yukon River catching 20 fish a day (mostly used to feed the sleightman dogs) and a garden capturing the 20 hours of sunlight.  I was not involved in startups at the time, but these words from The Cremation of Sam McGee now ring true:

There are strange things done in the midnight sun,
By the men who moil for gold;
The Arctic trails have their secret tales
That would make your blood run cold;

After a halfday motorboat ride up to town, we hitched a ride on a cruise line taking tourists up to Dawson City, Canada.  We found a canoe and floated back to the cabin, a four day trip.  The Yukon travels at around 7 miles per hour, and is almost 100 yards wide (think of that mass moving that quickly).  It is a sight.  What is almost even more incredible, is this is where the Klondike Gold Rush happened.  We spent the days stopping and discovering what once was the highway to riches and broken hearts.  All of these lessons are either from books checked out from the library in Eagle (please return within 3 months) or from folklore as told by the few people we met on the journey (from notes in my journal).  Lesson #11, sometimes folklore becomes fact.

1. There Are Opportunists, Entrepreneurs and Employees (they can all be the same)
   When the Klondike Gold Rush ‘started,’ 100,000 people left San Francisco and only 30,000 made it up to the mines.  Some went thinking it was easy to come back with a barrel of gold, some went to set up shop and some went to work for someone’s mine.
2. Hype Isn’t a Long Term Commodity
   Miners read stories from the papers in San Francisco about endless claims and opprotunity to get rich with hard work.  What actually was there was just a bit off of the truth.  Ten years after it started, it was over.
3. Not Having a Premier Claim Isn’t The End of the World, But Is
   After the trip from San Francisco, the miners arrived at Forty Mile Creek to find all of the claims were already made, and if they wanted to get their hands on some gold, they would have to work for someone.  Before the .com1 bubble, almost every quality domain was taken.  Some domain names are impossible to get, but sometimes you just have to wait for new areas to open up.  A few years after Forty Mile was popular, a larger rush happened upriver at Dawson City caused by three people that ventured out on their own.
4. One Day, The Gold Will Dry Up
   Thousands of people made an amazing amount of money of the rush, but a hundred years later, gold mining isn’t a profession in the US (or, at least, there are very few jobs).  Most mines are closed up.  People still buy gold, but the industry has changed so much that it is near impossible to start up a mining claim.  The rush started in July of 1897 and within a year had over 30,000 people moving in.  There was no thought about sustainability, health care or longevity.  It was all about the quick buck, working as hard as you could, and this didn’t sustain (surprise!).
5. Partnerships are Marriages, Choose Wisely
   Miners would spend the cold and dark winters in their poorly constructed cabins (made from ‘green wood’ the cabins were famous for warping during the winter leaving 4″ gaps to the -30 degree cold outside) with partners they started the adventure with, or, in the worst case, were thrown together right before the big frost came.  There are some great stories about the feuds that erupted after spending so much time working and living together.  Choose your partner, employees, and investors wisely, you will be spending the winter together (and there are mosquitoes… read #6).
6. Sometimes, it is the Little Things That Kill
   What was the number one reason for death of a miner in the rush?  Suicide.  And the reason for almost all of the suicides?  Mosquitoes.  Who would have guessed?  The number one killer of startups?  Lack of money.
7. Use Renewable Resources Wisely (People Are People Too)
   The Stern-wheelers ships that powered the boats 2000 miles up the Yukon to bring equipment and food during the summer were powered by wood.  After years of stopping on the shore and cutting down as many trees as would fit in the boat, the Yukon basin was clearcut for the entire length of the river a mile back on both sides of the river. Even though renewable (vacations) people need to be taken care of so there isn’t a clearcut where there should be a business partner (learn to enjoy the simple things in life, take care of each other).
8. The Fremium Model Works
   Who made the most consistent money in the rush?  The hair cutters in town, who offered free haircuts to miners, and then would mine the hair for little bits of gold.
9. Learn To Tell Your Story
   We all read Robert Service and Jack London as kids, and were touched, a hundred years later on the stories of the big rush.  How does your company tell the story of what you do and the impact you are having?  What happens when you don’t succeed?  Will they talk about you for years to come?
10. Have Fun
    Even with arguably the worst conditions and jobs in the world, the miners would get together and play cards, drink bad hooch (the SourToe is the most disgusting thing I have ever done in my life) and tough out the rough times together.

Now get back to your startup… there is gold in em hills.