Thursday, December 22, 2011

Theory of the Gold Miner

Having done startups on both coasts, I have a theory of why people have different perceptions of an entrepreneur who has to close his company, and by extension, indicates why there are significantly more California startups. All things being equal, i.e. you worked long, hard hours, stayed current with the market and technology, and ran an honest business, there are still plenty of reason good business people close a business. Here's the difference in perception:

On the East Coast, closing your business means you are a failure. People don't want to be associated with a failure


One the West Coast, closing your business means that you weren't able to make it work for what's likely a combination of things you can control, and things you can't control, but you learned a lot along the way. People will work with you the future because your experience can be invaluable.

I hear this in just the casual conversations with people. East Coasters regularly used the phrase "failed", whereas the West Coast folks say "shut down". So where does this come from? I think it's from the gold miners.

In the early days of gold prospecting in California, finding gold was an inexact science that involved a lot of hard work, persistence, and a fair amount of luck. When a gold miner didn't find gold, they would only be perceived as a failure if they didn't work long, hard days. If their fellow gold miners did hit a big vein of gold, they'd look around to their peers who had not been so fortunate, and bring them into their mine. The other miner had learned the art of mining, but had just not found the vein of gold. They weren't failures, but they did have enough sense to know when to stop digging in an empty hole, and work where the better opportunity arose.

I like to perceive closed startups as "shut down". There shouldn't be such a social stigma against an honest, smart, hard-working entrepreneur who didn't make their company soar. If they learned how to run a business, they're likely to help someone accelerate their growing business, and will likely use the experience to start and grow their own company in the future.