selling pickaxes during a gold rush

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pages: 332 words: 97,325

The Launch Pad: Inside Y Combinator, Silicon Valley's Most Exclusive School for Startups by Randall Stross

affirmative action, Airbnb, AltaVista, always be closing, Amazon Mechanical Turk, Amazon Web Services, barriers to entry, Ben Horowitz, Burning Man, business cycle, California gold rush, call centre, cloud computing, crowdsourcing, don't be evil, Elon Musk, high net worth, hockey-stick growth, index fund, inventory management, John Markoff,, Lean Startup, Marc Andreessen, Mark Zuckerberg, medical residency, Menlo Park, Minecraft, minimum viable product, Paul Buchheit, Paul Graham, Peter Thiel, QR code, Richard Feynman, Richard Florida, ride hailing / ride sharing, Sam Altman, Sand Hill Road, selling pickaxes during a gold rush, side project, Silicon Valley, Silicon Valley startup, Skype, social graph, software is eating the world, South of Market, San Francisco, speech recognition, Stanford marshmallow experiment, Startup school, stealth mode startup, Steve Jobs, Steve Wozniak, Steven Levy, TaskRabbit, transaction costs, Y Combinator

Richard Florida, “The Spread of Start-Up America and the Rise of the High-Tech South,” The Atlantic, October 2011, 16. Chris Dixon, “Selling Pickaxes During a Gold Rush,” Chris Dixon blog, February 5, 2011, 17. Robin Wauters, “ Buys Heroku for $212 Million in Cash,” TC, December 8, 2010, Heroku had raised only $13 million in capital prior to its sale, so its investors enjoyed outstanding returns in a very short period of time.

Perhaps they could build a sideline business out of it and make a little money. They named their company MongoHQ, which left no question what line of software they were in. They worked on MongoHQ in the evenings and the wee hours of the morning while holding down day jobs. They took heart from “Selling Pickaxes During a Gold Rush,” a blog post published a couple of months earlier, in February, by Chris Dixon, a seed investor who was based in New York City but well known and respected in Silicon Valley.16 During the California gold rush, some of the most successful businesspeople—like Levi Strauss—didn’t mine for gold themselves but did well selling supplies to those who did.

Dixon mentioned that Y Combinator’s most successful “exit” to date was Heroku, the company that sold cloud-related services to other software companies, the digital era’s equivalent of selling pickaxes to miners. It was sold to less than three years after its birth at YC for more than $200 million cash.17 The two MongoHQ founders cited the Dixon post in their YC application and declared, “We are selling pickaxes during a gold rush.” In the section where they were asked to explain how the founders had met and how long they had known each other, they gave answers that would be far more likely to come from older founders than younger ones: they had known each other ten years; had worked together for much of that time; and could write, “We have often been referred to by others as work wives, although we argue about who is the wife in the arrangement. :)” When they applied, they could report that MongoHQ had 5,100 accounts and about $5,500 of recurring monthly revenue.

pages: 237 words: 74,109

Uncanny Valley: A Memoir by Anna Wiener

autonomous vehicles, back-to-the-land, basic income, blockchain, Burning Man, call centre, charter city, cloud computing, cognitive bias, cognitive dissonance, commoditize, crowdsourcing, cryptocurrency, Extropian, functional programming, future of work, Golden Gate Park, housing crisis, Jane Jacobs, job automation, knowledge worker, Lean Startup, means of production, medical residency, microaggression, new economy, New Urbanism, passive income, pull request, rent control, ride hailing / ride sharing, San Francisco homelessness, Sand Hill Road, self-driving car, selling pickaxes during a gold rush, sharing economy, Shenzhen special economic zone , side project, Silicon Valley, Silicon Valley startup, social web, South of Market, San Francisco, special economic zone, technoutopianism, telepresence, telepresence robot, union organizing, universal basic income, unpaid internship, urban planning, urban renewal, women in the workforce, Y2K, young professional

I looked around me at the blank walls, the closet door tilted on its hinges, the bars on the window, eager to identify hints of his success. But the designpreneur hadn’t slept in the room for years. He had moved into a gleaming, art-filled warehouse conversion close to his office. He’d left nothing behind. * * * The analytics startup made a pickax-during-the-Gold-Rush product, the kind venture capitalists loved to get behind. History saw the Gold Rush as a cautionary tale, but in Silicon Valley, people used its metaphors proudly, provided they were on the right side of things. Pickaxes were usually business-to-business products. Infrastructure, not services.

pages: 461 words: 128,421

The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street by Justin Fox

activist fund / activist shareholder / activist investor, Albert Einstein, Andrei Shleifer, asset allocation, asset-backed security, bank run, beat the dealer, Benoit Mandelbrot, Black-Scholes formula, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, card file, Cass Sunstein, collateralized debt obligation, compensation consultant, complexity theory, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discovery of the americas, diversification, diversified portfolio, Edward Glaeser, Edward Thorp, endowment effect, Eugene Fama: efficient market hypothesis, experimental economics, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, George Akerlof, Henri Poincaré, Hyman Minsky, implied volatility, impulse control, index arbitrage, index card, index fund, information asymmetry, invisible hand, Isaac Newton, John Meriwether, John Nash: game theory, John von Neumann, joint-stock company, Joseph Schumpeter, Kenneth Arrow, libertarian paternalism, linear programming, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, market bubble, market design, Myron Scholes, New Journalism, Nikolai Kondratiev, Paul Lévy, Paul Samuelson, pension reform, performance metric, Ponzi scheme, prediction markets, pushing on a string, quantitative trading / quantitative finance, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, road to serfdom, Robert Bork, Robert Shiller, Robert Shiller, rolodex, Ronald Reagan, selling pickaxes during a gold rush, shareholder value, Sharpe ratio, short selling, side project, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, stocks for the long run, The Chicago School, The Myth of the Rational Market, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, Thorstein Veblen, Tobin tax, transaction costs, tulip mania, value at risk, Vanguard fund, Vilfredo Pareto, volatility smile, Yogi Berra

As Fama said, if just one of the dot-coms ended up as valuable as Microsoft, the prices of all of them would be justified. Such reasoning didn’t hold, though, for Microsoft and other already established companies profiting from the tech boom. Asness focused his analytical attention on the most beloved of them all—Cisco Systems, the maker of the shovels and pickaxes of the Internet gold rush. Cisco had grown spectacularly over its sixteen years of existence. In March 2000, it wrested from Microsoft the crown of the most valuable company on earth, with a market capitalization of $531 billion. Six decades earlier, John Burr Williams recommended that investors use his formulas to deduce “the particular rate of growth, the particular duration of growth…that is implied by the actual market price, and see in this way whether the prevailing price is reasonable or not.

pages: 517 words: 139,477

Stocks for the Long Run 5/E: the Definitive Guide to Financial Market Returns & Long-Term Investment Strategies by Jeremy Siegel

Asian financial crisis, asset allocation, backtesting, banking crisis, Bear Stearns, Black-Scholes formula, break the buck, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, capital asset pricing model, carried interest, central bank independence, cognitive dissonance, compound rate of return, computer age, computerized trading, corporate governance, correlation coefficient, Credit Default Swap, Daniel Kahneman / Amos Tversky, Deng Xiaoping, discounted cash flows, diversification, diversified portfolio, dividend-yielding stocks, dogs of the Dow, equity premium, Eugene Fama: efficient market hypothesis, eurozone crisis, Everybody Ought to Be Rich, Financial Instability Hypothesis, fixed income, Flash crash, forward guidance, fundamental attribution error, housing crisis, Hyman Minsky, implied volatility, income inequality, index arbitrage, index fund, indoor plumbing, inflation targeting, invention of the printing press, Isaac Newton, joint-stock company, London Interbank Offered Rate, Long Term Capital Management, loss aversion, market bubble, mental accounting, Money creation, money market fund, mortgage debt, Myron Scholes, new economy, Northern Rock, oil shock, passive investing, Paul Samuelson, Peter Thiel, Ponzi scheme, prediction markets, price anchoring, price stability, purchasing power parity, quantitative easing, random walk, Richard Thaler, risk free rate, risk tolerance, risk/return, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, selling pickaxes during a gold rush, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, stocks for the long run, survivorship bias, technology bubble, The Great Moderation, the payments system, The Wisdom of Crowds, transaction costs, tulip mania, Tyler Cowen: Great Stagnation, Vanguard fund