
Success, and Farming vs. Mining - aaronbrethorst
http://blog.wilshipley.com/2011/04/success-and-farming-vs-mining.html
======
nostrademons
You have to be very careful when following advice like this, because a lot of
the time things that look stupid and shortsighted simply reflect a deeper
understanding of what the _actual_ product is.

For example, for many VC-funded and fast-growing startups, the product is not
the website, software, whatever that they're showing users. It's the
_knowledge_ that users have a particular need, and that need can be satisfied
in a certain way. Startups are effectively outsourced R&D for big companies
here.

It's quite possible that the most economically efficient way to satisfy that
need is to simply fold the startup into some big company's other products. If
that happens, the code, most of the employees, cash, and even existing
userbase are essentially disposable. They can all be replaced at a larger
scale once the company's been acquired. The actual assets that the acquirer is
paying millions for is the detailed knowledge of the problem domain - key
employees, key algorithms, history of other ideas that tried and failed, and
any patents or other intellectual property. That's why acquisitions usually
are contingent upon certain employees coming on-board, yet the acquirer is
often all too happy to fire other employees.

~~~
donnyg107
I don't think this writer has much opposition to the sale of a company itself,
but the attitude with which many founders are creating their companies. I
think he's using recent results to establish that usual pretense for many
startup is not very pure or quality oriented. I think he'd acknowledge that
selling a startup is often the right choice, but creating a startup with no
care for quality or long term product stability is not.

~~~
pacohn
I agree. I think the article speaks to the founder and his/her vision and
intent rather than the product.

Sometimes the planted flag is much different from the fully implemented
product.

------
kujawa
I come from Montana, and I _hate_ this dichotomy.

The fundamental law of resources in this world is: if you can't farm it, you
must mine it. They're a yin and yang. I come from Montana, a state which
basically has only two industries: farming and mining. When you live that
close to the land, it becomes very apparent who the actual producers are.

Everything else is wanking. Productive wanking, but wanking nonetheless. The
welder is nothing without the miner. Without the farmer, he can't even eat.
Me, as a software engineer, I'm so far removed from those who are actually
producing things that what I do is as ephemeral as the wind. I change states
on a magnetic disk all day. I lift weights, run, and have a stand-up desk so
my body doesn't decay while I do this ludicrously minimal amount of work each
day, but because I know how to shape those bits in a certain way, society
values me much more than the guy who feeds me, or the guy who mines the rare
earths that make my job possible.

~~~
schwabacher
Miners use software to find minerals to mine, farmers use Combines and
harvesters run with software. The farmers plant seeds and use fertilizers and
pesticides that were created with the help of software. Mining and farming
equipment is designed and built using software. If a farmer or miner gets
sick, a doctor might use software to display and interpret their MRI or
ultrasound.

We have come a long way from subsistance farming, and computers, software, and
the people who create them have helped make miners and farmers (and everyone
else's) lives much easier and better than they would be if people only mined
and farmed.

So, congratulations for doing important work!

------
d2
Wil's metaphor is brilliant and the values he describes are exactly what our
industry needs to hear. I have been jumping from product to product for years,
with the expectation of dump trucks arriving one day out front and unloading
tons of money. I'm doing it again with my current company. We have a solid
niche, strong traction and are leaders in our space, but rather than making
what is good, really excellent, I'm considering jumping to the next shiny ball
that may be the home run. This blog entry has caused me to reevaluate.

~~~
sudonim
I once read a quote that goes something like: "If a book causes a reader to
reevaluate their own life, it says more about the reader than the book".

That has happened to me a couple of times. Most recently was probably reading
"Atlas Shrugged" by Ayn Rand. I had pigeonholed that book as something that
banking types read and presupposed the book advocated "Mining" (to use Wil's
analogy). However, the protagonists in the book are hard-working (in spite of
family wealth) and innovative. In the book, the protagonists opt out of what
the world at large deems as the "right" way to do things.

Ignore the mythology that glorifies "mining". It's nonsense. Find different
people to look up to.

This interview with David Heinemeier Hansson reinforces Wil's point of view:
[http://mixergy.com/david-heinemeier-hansson-37signals-
interv...](http://mixergy.com/david-heinemeier-hansson-37signals-intervie/)

------
DanI-S
On a slight tangent, modern farming techniques are more akin to the mining he
describes than they are to farming. It's not just the software industry that
is affected by this short-term thinking; it's the majority of human endeavour.

It's hard to tell whether the stock market is a cause or a symptom - our
primary mode of 'investing in the future' is so prone to being short-circuited
for short term gain.

~~~
ytNumbers
Large scale conventional farming is akin to mining. I guess it's always the
little guy who gets enlightened first. There are a lot of small farms
practicing sustainable agriculture. It feels like it's taking way too long to
persuade conventional farmers to clean up their act (and to persuade consumers
to make better food choices), but the number of acres involved in sustainable
farming has grown quite a bit in the past decade. Human nature being what it
is, I don't know if we'll ever get the majority of people to behave
responsibly over the long-term. But, the current trends do look promising.

<http://en.wikipedia.org/wiki/Organic_farming>

<http://en.wikipedia.org/wiki/Sustainable_agriculture>

------
macrael
For those who don't know, Wil Shipley is the author of Delicious Library.
<[http://delicious-monster.com/>](http://delicious-monster.com/>); A
perennially popular MacOS app. It is a great way to catalog most everything
you own.

It started off being only for books, but since has acquired the ability to
keep track of just about anything.

~~~
avolcano
Delicious Library: one of the apps that makes me wish I could afford a Mac.
Genius stuff; shame there doesn't seem to be a Windows equivalent.

~~~
radicaldreamer
Have you thought about buying one second hand or refurbished?

~~~
avolcano
Oh, many a time. Spent a couple days just browsing eBay for Mac Minis.

Truth is, though, I really won't have the kind of money to drop on a system
for quite some time. Hell, I wouldn't even have a laptop if I wasn't lucky to
enough to receive a CR-48 :p

Some day, when I have money, I'll probably sell off the CR-48 (it's a nice
little system, once you get the BIOS flashed and ChromeOS replaced) and put
that towards a plastic Macbook. Until then, I'll just continue lusting over
Delicious Library, TextMate, and everything Panic Software puts out...

~~~
stray
How much [cw]ould you pay for a mac mini? I have one sitting across the room
from me that I hardly use. It's an early intel model with 1gb.

I want to buy a new one to run OpenCyc (which requires 4gb) on but I can't
bring myself to just scrap the old one.

~~~
nkurz
Just give it to him already. Ask him to pay shipping, and bask in the good
deed while you wait for your new machine. Rather than asking him to part with
a small amount of money he probably can't really afford and you likely don't
really need, tell him to pass the favor on to someone else someday.

~~~
stray
Perhaps he's too proud to accept charity from a stranger.

Offering to sell it to him for whatever he can comfortably pay (no matter how
small) is both generous and respectful.

If he cannot afford even a penny, I'm happy to pay shipping as well...

~~~
avolcano
Uh... wow.

This actually came at a crappy time for me, since right now I don't have a lot
of disposable income - I'm 17 and jobless (no available transportation...). I
would try to pay at least $100 or something, but right now I'm almost flat
broke.

If you're okay with going total charity, you can email me at tommy04@gmail.com
so we can work it out, but if you're not, I understand.

~~~
stray
You have mail.

~~~
avolcano
Dude, you're awesome. Thanks :D

------
fleitz
No when you're mining you use the capital you acquired to start more mines.
There are lots of unprofitable mines, software is much more akin to mining in
that your market is generally unknown, it requires a lot of capital cost and
the the payoffs if you strike gold are enormous, however most will not strike
gold. As we've discovered in Canada once you've dug that hole you can make
decent coin by allowing cities to fill it with their trash.

Producing software is a capital intensive business with large pay offs that
are irrespective of the amount of labour/capital inputted, consulting is a
business in which one makes a slight profit over labour. Software that you own
outright is a labour intensive capital good. If you're advocating the farming
market of the software business then you're advocating consultancy which if
done right can make you decent coin, the problem is that if you can actually
make software that people want to use then you're generally better off moving
towards the mining market.

What the OP is talking about is largely the difference between owning a mine
and being a mining industry consultant / mine worker. Mining is an industry
that is unpopular and his impression of farming is largely that of something
that last existed in the 1920s.

Modern farming has nothing to do with returning the land to it's native state
and has everything to do with pumping it full of nitrogen, spraying it with
pesticides and hiring low wage workers, applying for gov't subsidies so that
you can eek out 1-3% profit with enormous capital costs. The picture in the
supermarket of a farmer is not reality.

~~~
bigiain
"As we've discovered in Canada once you've dug that hole you can make decent
coin by allowing cities to fill it with their trash."

Ah ha! The mining industries version of a "pivot" huh?

Seriously though, I assume that actually means "you can attempt to recover
some tiny part of your existing loss" instead of "make decent coin".

------
donnyg107
It seems this guy is basically just describing the markets and calling traits
problems. Obviously you need to invest in a company before its popular for it
to be a good investment. A company with a fully stable profit won't even take
your investment most of the time. "Mining" is just the process of investment!
However, I do not think this is the point. The important point I think he's
getting at is not that the markets are evil, but that founders shouldn't be
investors. If you start a company, you should be interested in BUILDING A
COMPANY, not selling a big company and making a boatload. Obviously, people
want to make money, but for some reason the misconception that the cash in
hand for a crappy company is worth more than the cash in stock for a great and
growing company. And even further, the founder interested in building a great
company is more likely to reach that amount of money faster, just because they
are invested in making a good company, and will make efficient and secure
progress toward his or her vision with every day of work. Great companies
start with people who want the company to succeed and investors who wan to
make a buck, not the other way around.

------
teyc
Ex-mining engineer here. Mining is very different to what Will describes. In
fact, mining has very many similarities with the lifecycle of a software
company.

Firstly there is the prospecting phase. This is akin to customer development.
You look for where there might be traces of customers, and if you encounter
them you drill a bit further to define the customers a bit better. Next, you
do economic analysis to determine whether you are going to make a profit on
this, or whether this is the right size/risk for your company. There is also a
technical phase where you need to run trials to determine whether you will be
able to successfully separate the minerals from the waste given whatever
impurities that exist. You keep iterating, drilling, testing until you've hit
the equivalent of product-market fit.

Then you have the expensive issue of scaling up. To build a mine takes great
investment that will take years before it turns a profit. This is where the
model diverges, because at this stage, the mining company has a defined asset
but they do not build the mine themselves. These are done by a major
contractor. It is like a giant civil engineering project and is managed as
such.

When the mine is built (and roads, rails, port facilities are put in), the
mining company then operates the mine. Operations is not anything like
prospecting. It is dealing with daily issues and doing strategic planning,
developing markets etc.. People live and work on a pretty steady basis, with
rosters etc. In contrast, life as a prospector can be pretty rough. :)

Many startups function around the prospecting stages, since entry costs is
lower but it is very risky. The rewards are high at this stage of course, but
the prospectors have little ability to execute if they hit upon a mother load.
Outside money will have to be brought in, or the prospector might sell up and
get a nice exit.

------
jarin
> What’s upsetting is the number of people who have come to me with the idea
> of becoming miners: “I know nothing about software, but I can see there’s
> gold in them thar’ hills, and so I want to start up a company and make my
> million dollars! I’ve got an idea and everything, just tell me what magic
> incantation you did to get rich and I’ll be on my way.”

Reminds me of an interview I heard with Steve Martin (promoting his book _Born
Standing Up_ ), where he talks about the advice he gives to aspiring
comedians. When they ask him what the trick is to getting famous, he just says
"hard work". He said they usually seem disappointed, because that's not what
they wanted to hear.

------
jrspruitt
The miner in this reminds me of the movie Easy Rider, make a big score, then
take the money and do what ever you want, which in the end turns out to not be
what they thought it was. I've never had the fortune of making it into the
industry, so from an outsiders perspective. I wonder since it seems a lot of
what internet start ups are based on, is having a following, as in, your app
is useless unless its got users to go with it. If some of the mining is
similar to creating a product and selling it to someone with the ability to
manufacture it. Like if I thought of a cool toy, patented it, and then sold
that to Mattel, because I don't have the resources to capitalize on it. In the
start up internet world, to prove the worth of the design, you need users. So
the mining concept is just the adjustment needed in the internet world, for
inventors to sell their inventions. Seems kind of similar. For me at least, I
would probably want out as soon as possible, the business side of it, isn't as
interesting as the building side of it, I would loose money on a successful
business for sure, but it would give me the lateral mobility to pursue my
interests, which are not being a CEO of a company.

------
crasshopper
_The stock market ... what’s important ... is the potential growth of your
sales, not your current sales, since the point of buying stock is to sell the
stock to someone else later on, at a higher price._

Or to receive dividends. Heard of blue chip investors? Buy-and-hold strategy?

"Mining" versus "farming" is disputed in the stock market as well. That's why
people talk about P/E ratio.

------
donnyg107
At first glance, it seems this guy is basically just describing the markets
and calling traits problems. Obviously you need to invest in a company before
its popular for it to be a good investment. A company with a fully stable
profit won't even take your investment most of the time. "Mining" is just the
process of investment! However, I do not think this is the point. The
important point I think he's getting at is not that the markets are evil, but
that founders shouldn't be investors. If you start a company, you should be
interested in BUILDING A COMPANY, not selling a big company and making a
boatload. Obviously, people want to make money, but for some reason the
misconception that the cash in hand for a crappy company is worth more than
the cash in stock for a great and growing company. Great companies start with
people who want the company to succeed and investors who wan to make a buck,
not the other way around.

------
nanoanderson
One thread that is interwoven throughout the piece but surprisingly _not_
called out explicitly is the role of the tech media in the glamorization of
high-growth, high-exit-return startups and their investors. Nostrademons has
some good points about the virtues of startups that Wil didn't touch upon
(though I'm sure he's aware of them. His piece doesn't strike me as though
he's blanket-bashing venture-capitalized startups).

The dollar amounts attached to these "lottery" startups (whether in investment
or in exit) are awesome, but not outrageous, especially given who the
investors are. The one thing that Wil said that _did_ bother me was his
assertion that a funded started is necessarily a "mining" startup, to use his
metaphor. I see it his way, and it brought me down a little bit, even though I
already knew it inside.

------
msort
The stories of Google, Facebook, and Twitter show that VC has values. We want
more investments to start-ups, rather than the opposite. Let the market decide
itself: the money will flow where the value is, eventually. I think success is
hard either way: faming or mining, it is better than not trying.

------
ph0rque
Hmmm, to torture the idea even further... what about permaculture farming that
minimizes the amount of back-breaking work you have to do while building up
the soil to be richer than before (albeit at a slow pace)? What's the software
company equivalent?

~~~
mopoke
Testing. Put the hard yards in early and it'll look after you later. Build up
the quality by starting slower.

------
nethsix
As long as there are VCs that are willing to fund, companies that are willing
to acquire (demand), there will be developers looking to 'mine' (supply). If
enough people who made 'loss' in this ecosystem were to exit this ecosystem
then 'mining' will be obsoleted. However, there are always people/companies
looking for a quick-buck/fix to inflate their bank balance or complement their
product line, therefore perpetuating 'mining'.

------
mopoke
See also "built to last" by Jim Collins which covers the same ground from a
different angle.

------
Stormbringer
Wil is a great writer and worth reading. In this case, I'm going to raise
objections to his thesis, but I have tremendous respect for his credentials.
That said, I think the comparison to mining is a stretch, also farming, but
lets start with mining.

Wil makes it sound like most mines blow up or explode at the first touch of a
nugget of whatever you're trying to uncover. Or alternately that after taking
investor money and building all the mine infrastructure, you sell it off as
soon as you strike it rich. I would think the opposite is true, the last thing
the mine owner would want to do is flog it off just when it starts making big
money.

Eventually mines run out this is true, but sometimes they last for decades if
not hundreds of years (the hundreds of years was probably more common before
modern methods).

Secondly, with the mines if you read Jared Diamond's† book, I think it is
called _Collapse_ , he talks about this in great detail. And the biggest
problem with mining is actually what happens when the mine closes. According
to his research, nowadays the mining company is required to estimate the
cleanup costs, and over the lifetime of the mine they contribute to a fund to
cover the cleanup cost. Sounds good, right? The problem of course is that it
is _the company_ that estimates the costs, and they have an incentive to
grossly underestimate the costs of cleanup. The usual discrepancy is something
like two orders of magnitude. Ie assuming a large mine the company estimates
costs of 10 million, hands the state govt a cheque for that as it closes shop.
Then when the state govt discovers the actual cost is approx 1 Billion (maybe
more) the company (which has long paid out all its funds as dividends to its
shareholders) shrugs and declares bankruptcy.

I don't think that there is really any parallel in IT in terms of cleanup
costs. You could argue that Y2K was similar, but I would point out that wasn't
a uniquely mining only problem. All kinds of software was effected, from
mining (startups on steroids), farming (slow and steady startups, the tortoise
vs the hare), vendors, universities, consultants and even your big software
retailers (Microsoft) all had this problem.

Okay, he admits he's stretching the metaphor (on the rack as it were). :D

What about farming? Personally I'm a fan of farming in the software sense, but
farming in the real world is a nightmare. Assuming you don't manage to destroy
the land, farmers I've talked to say that in good years they are making ~4%
(return on capital), and in bad years they are losing 2-3%, and there are more
bad years than good years. How do they survive? Typically by taking loans out
against the (ever increasing) value of the property. But if the value of the
property doesn't keep going up, or if the banks decide not to loan the farmers
money, or if there is a particularly bad drought... then farming is much worse
than mining and you get farmers walking away from their land, or just dying on
it. Jared talks a little bit about how bad mining is, but the main thrust of
his book is that improperly managed farming _KILLS ENTIRE CIVILIZATIONS_. In
terms of cost/benefit, I think dirty water from mining >>> extinction. :D

He touches on another metaphor, the Lottery. Lotteries are usually regarded as
a bad thing (a tax on people who are bad at math). The problem is that for
every $1.00 you put in you get back out say $0.40 on average. In other words,
all lotteries have a negative expectancy (with the notable exception of the UK
Lottery, because even though you are unlikely to win, at the end of the day
you can still get back all the money you spent on it (it is more similar to a
savings account with pathetically low interest, and a miniscule chance of some
excitement).

Okay, fine, lets take it as given that 'lotteries' with negative expectancy
are bad....

If the 'software mining' (ie startup) industry was a lottery, would it have a
negative expectancy? I suggest probably not. What if there was a lottery that
for every $1 ticket there is a 1% chance of winning $200? That'd be a positive
expectancy! I'd play that, _you'd have to be bad at maths not to_. Moreover,
even if it was break even (ie for every millionaire ten people have to gamble
and lose their house), as the mining example shows, sometimes there are hidden
costs/benefits. I'm _guessing_ that the startup 'lottery' has a positive
expectancy (especially in silicon Valley, perhaps not everywhere else in the
world), but if someone argued that the benefit to society of all the startups
is negative I'd think they were crazy.

An example: I've heard it said that since the beginning of commercial flight
in the US that the industry as a whole has barely (or not even) broken even.
But to suggest that I personally don't benefit from the ability to fly round
the world in 30 hours as compared to sailing round the world in six months is
ludicrous. Even if the airline industry didn't make their average investor
rich, it provided more than enough benefit to society to be able to justify
its existence.

Lastly, and I suspect this is very wall of text so I apologise, there is a
logical flaw underpinning Wil's entire thesis. He assumes that somehow the IT
industry is special. He assumes if you launch a _software_ company with an
exit strategy that is somehow different (bad) compared to say launching a
_furniture_ company with an exit strategy.

I think that rather than just assuming that software is different in this
regard, I think he should at least try to make an argument to that effect.

†If the name is familiar, he wrote Guns Germs and Steel as well, which is one
of those books that lots of people have heard of, but few have read :D

