I was just leafing through my old email archives and I came across a piece that I wrote in January 2000 but which I didn’t pitch to my editor and so was never published. It was inspired by a friend of mine who told me he was setting up an online estate agency. He had no clue about property, not much more idea about business, but was determined not to get left behind in the IPO frenzy of the dot com boom. I was so horrified that I sat down immediately and penned this piece called Gold Rush. It was quite prescient as it turns out, since the boom busted out within months of my writing, and I’ve replayed it here now because it strikes me that we are in a sort of mini web boom again. I wonder how this one will pan out?

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Was it like this in the California of 1849? Were newspapers of the time crammed
with pages of things relating to the ‘great opportunity’. When you sat down to
dinner with a few friends, did the conversation veer inevitably to the prospect
of becoming ‘rich beyond our wildest dreams’? Of course it must have been the
same, for there is little doubt that we are going through the 20th century
equivalent of the California Gold Rush, in the form of our very own Internet
Fever. The parallels are eerie. Both have their roots in the Western part of the
United States, and both have consumed the interest of not just a nation, but the
world.

I have to confess that I find this inelegant stampede all a little surreal. Not
a week goes by without one or other of my friends ringing me to chat about their
attempts to sieve the gold out of the World Wide Web. The conversations usually
start with some kind of request like, ‘what do you know about.?’ and move on to
The Next Big Idea. These types of conversations must be occurring all round the
world right now, but it doesn’t make it any easier to understand. One friend
keeps ringing me to persuade me to start up an on-line estate agency. He knows
absolutely nothing about the business of selling houses, but he’s met some
‘really switched on technical guys’ and he’s convinced that he can panhandle his
way to fame and fortune. This time next year he’ll be a millionaire – and we
laughed at poor old Del Boy.

The point is that gold rushes are seldom what they seem, and there is no reason
to assume that this one is any different. Oh sure there are some major
differences between the Internet and American River in 1849, but at the heart of
the thing beats the same pulse – the search for easy untold riches without
having any particular skills. It seems a strange sort of way to approach a
business. It is a sobering fact to remember that the person who became the
richest man in California in the late 1800s was Sam Brannan, who cornered the
market in picks, shovels and anything else he could lay his hands on. He never
prospected for a piece of gold his whole life.

Sam’s the man.
The American historian J. S. Holliday summed up the attitude of that period in
the 1800s. “The California Gold Rush made America a more restless nation —
changed the people’s sense of their future, their expectations and their values.
Suddenly there was a place to go where everyone could expect to make money
quickly; where life could be freer; where one could escape the restraints and
conventions and the plodding sameness of life in the Eastern states.” Substitute
Britain for America, and Surrey for the Eastern states and he could be talking
about the attitude of today’s British digital entrepreneurs.

Of course there are a lot of would-be Sam Brannans circling the Internet wagons
right now. You can’t open the door without stumbling over a Web designer, or
order a cup of coffee in a restaurant without overhearing an e-commerce
consultant making a sales pitch. This Web phenomenon, this global glittering
black hole, seems to be sucking everything into its orbit like a giant vacuum
cleaner of common sense. Already the people hitching the horses to their
metaphorical wagons – these wannabytes for want of a better name – like my
friend have lost sight of all reality.

You want to start up a business as a brain surgeon? No problem, start up a Web
site. You want to sell ice cream cones to the Eskimos, hey you can do that
really cheaply and easily with an e-commerce site based in Streatham. No matter that you don’t know what you’re talking about, what the business entails, what
the pitfalls and experience needs are. The technology will take care of all
that. Build it and they will come. Only they won’t.

The pioneers of the Web are already realising this. While we and the rest of our
Wannabyte friends and neighbours are busy hitching the bridle to the nags, the
early Web entrepreneurs of several years ago are busy jumping off the
buckboards. For the game has now changed. Gone are the days when you could set up a simple Web site and e-zine and gain thousands of readers in a few months.
Now it needs advertising spend, and unless you’re willing to fork out Amazon.com type figures you’re likely to get nowhere. Gone also are the prospects for a Web
site with a good idea and no realistic business model.

The easy gold has gone off the bottom of the river, now it’s a long hard slog to
sieve out the nuggets. So the pioneers are moving off to other pastures,
consulting, advising, giving lecture tours. They’re staying away from the suits
who bought them out, because the fun’s not there any more. It’s no coincidence
that Amazon is now busy building warehouses to store books – clicks and mortar
they call it – because even this mega-pioneer has realised that real businesses
need real infrastructures to compete in the long term. The glory days of the Web
are coming to an end, my friend, and the answer is blowing in the wind.

Calcutta counts.
Of course the Web is bound to continue throwing up astonishing business concepts for some time yet, for creative ideas are two a penny. Nowadays an arts graduate in Calcutta has as much chance of coming up with a Web winner as a Stanford U.
geek. The problem in the future is not going to be finding new creative ideas,
but how to turn these ideas into workable business propositions. Especially when
your idea is competing against x million other creative ideas. This is not a new
business problem, just one writ large by the scale of a global network.

So what can I advise my friend, he of the houses on the Web fame? Well perhaps
the first lesson that needs to be learned is that there is no quick route to the
gold fields. The 49ers had the choice of a scurvy-ridden 6 month boat trip or an
equal time on a hot dusty wagon to get to their veins of metal. Wannabytes may
find it takes much much longer to hit paydirt on the Net. Forget about the idea
of going public in six months and retiring to the yacht. Even if you succeed in
getting that glamorous IPO, it’s just the start of the journey. Web business,
after all, is just business, and needs to be treated that way.

Do you really want to become a florist? Then why get all excited about setting
up an online flower seller? You’ll still have all the hassles of supplying the
goods to demanding customers, whether it’s online or on Cheam Lane. And why not
come up with an idea that adds value to the customer? Don’t just set up a
florist, set up something which really helps people to make gift giving easier.
Do a deal with other online and conventional companies in similar fields, offer
a plethora of information and advice on horticulture, provide a rose watering
service for after delivery value. Do anything but offer a plain Jane brochure of
a lot of digitised flora.

Above all though, it pays to remember one thing. When the fever is over and the
venture capital vultures have moved on to their next big score, you will still
be left with your business. For good or ill it will have to give you a living,
winning out against the white heat of global competition – from a clever ‘mom
and pop’ in Seattle to a multi-lingual conglomerate from Hong Kong, Helsinki or
Bratislava. If you’ve got any doubts about being able to cope on this scale in
the long run, remember clever Sam Brannan – digging in the dirt may not be the
only way to make money in this kind of climate.