There’s Gold in Them Thar Reels

The idea of the gold rush is deeply rooted in the American psyche. “There’s gold in them thar hills.” Anyone can abandon his family and community to gamble big on themselves. Thanks to this rugged individualism and the natural bounty of our territory, there’s a chance that you can strike it rich.

More than American, perhaps, the gold rush is specifically Californian. The Californian Dream in fact came to dominate the older American dream, according to historian HW Brands (quoted in Wikipedia):

The old American Dream … was the dream of the Puritans, of Benjamin Franklin’s “Poor Richard”… of men and women content to accumulate their modest fortunes a little at a time, year by year by year. The new dream was the dream of instant wealth, won in a twinkling by audacity and good luck. [This] golden dream … became a prominent part of the American psyche only after Sutter’s Mill.

Maybe this is why I hate California.

The big gold rushes of the mid-1800s and especially 1849 spurred mass migration and the development of downstream technologies involving transportation, mining equipment and the establishment of the State of California, in response to the lawlessness and breakdown in social order created by the gold rush. The San Francisco football team is still called the 49ers after the famous frenzy of that year; their cheerleading squad is called the Gold Rush. The whole thing smacks of gender.

In classic California fashion, one of the main exports of the gold rush of 1849 wasn’t gold but gold rushes: “The gold rush in 1849 also stimulated worldwide interest in prospecting for gold, leading to further rushes in Australia, South Africa, Wales and Scotland.” In the metaphor I develop below, we see that they’re still at it. California creates media (in silicon or celluloid) that creates frenzied gold rushes, in which existing social orders and lifeworlds are destroyed from within — what I’ve called whirlpools.

Desperation, hope, greed, overnight success, the desert, the mountains, alienation, development, secret knowledge, environmental destruction—the vibe of the actual, physical gold rush isn’t altogether positive but it is at least Romantic. And like much Romanticism, it’s only as beautiful as the human civilization it destroys.

The key ingredient separating a gold rush from an investment opportunity is that the expected value for each prospector is negative — the media frenzy means that more of these foolhardy souls pick up their pickaxes and shovels than the territory can supply gold. Some lucky few get rich, and the rest are ruined.

Romanticism is bad business. The B-School cliche is that you want to be selling shovels in a gold rush. It’s guaranteed business, less of the upside but none of the downside. Gold rushes entail the reduction of human beings from the fullness of our capacity to truffle-hunting dogs. People are abandoning their communities and existing ways of living to devote irrational levels of effort for a chance to strike it big. You just need to extract some small but reliable fraction of the capital going into the frenzy to make a tidy sum.

The problem facing VCs and startups seeking to deploy this strategy is that gold rushes are rare and unpredictable. So they have to figure out how to sell gold rushes.

The first step in selling something is getting people to want something they didn’t want before. At sustainable levels, this is simply advertising in consumer capitalism, convincing normal people to spend their disposable income on products you’ve created. “Here is a video game we made. Do you want to buy it? Yes. Cool, have fun.”

But sustainability and exponential growth are incompatible.

To sell a gold rush, you can’t just convince people that they want something you’re selling — you need to convince them that they don’t want anything else.

This works best when you’re not selling them anything at all.

In The Ordinal Society, Fourcade and Healy explicate beautifully the destabilizing effect of modern tech companies giving something away for free. The Gift, in Mauss’ famous theory, is dangerous: it disrupts the carefully balanced exchanges that ensure social stability. If you and I exchange objects of equal value, we know that we’re square. We don’t owe each other anything. But if you give me something for free, I don’t know where we stand. What do I owe you?

Oh here’s Facebook — it’s free, you get to connect with your friends. Haha look you can poke them. Join this Facebook Group called ‘everything sounds like a band name when you’re stoned.’ Haha.

Facebook is showing me ads? Facebook is selling my data? Well. Now I’ve got all these friends, I don’t want to miss out on all the Happy Birthday posts on my wall. And…it’s free, and everything else is so expensive.

Facebook took a while to build out, to expand both across people and in the depths of its digital media offerings. This was a slow-motion gold rush, still constrained by the internet from expanding across the population and constrained by the value they could extract from the behavior they captured within their artificial social world. On this time scale, it’s more accurate to talk not about gold but about oil. Behavioral data is indeed the new oil — and we’re the dinosaurs.

The real social media gold rush was sold not to audiences but to creators. They weren’t just looking for diversion or “connection.” There’s gold in them thar Reels, the 21st-century Californian Dream. Everyone wants to grow up to be an influencer.

The ability to convert audience attention into cash, through platform monetization schemes, Patreon, merch sales or crypto scams — this is what brought social media into its gold rush era.

Platform incentives and audience metrics have reduced these full, complex human beings into marionettes dancing for clicks. They abandon any kind of productive or regulative role in society in this monomaniacal pursuit. Recent examples of livestreamed reckless car crashes, dangerous weight gain and loss, and general public nuisance (forgive me for not linking) reveal how these gold rushes are degrading existing elements of our social system.

Precarity and burnout are the default condition of social media creators; the overwhelming majority are working at sub-minimum wages, while the network structure of the platform ensures that we all see the ones who are making the big bucks. And even successful influencers are beholding to a fickle audience judging their every move; Barrett Swanson’s account of the Anxiety of Influencers remains essential.

But the most egregious example is Twitter. Zuckerberg famously called Twitter “a clown car that fell into a gold mine” because they had captured so much high-value human activity on their platform without being able to extract very much capital from the process. We were just using the gold for fun, to make pretty ornaments, like the backwards not-yet-ahem-civilized humans we are.

Elon Musk’s X is a gold rush company. Selling Verification badges and paying people directly for viral tweets has turned the platform into a giant, degenerate gold rush. An inherently net-negative frenzies of activity that tore apart the existing (artificial, but still robust) social fabric by reducing human beings into desperate prospectors sifting barren soil until they get rich or die of malnutrition.

Everyone who cares enough about something else left the platform — including academics, as Jim Bisbee and I show in our recently-published paper The Vibes Are Off: Did Elon Musk Push Academics Off Twitter? But the wreckage of the X gold rush is spreading, as the wildly biased and conspiratorial content circulating is spread to other platforms or through word of mouth.

In this case, the destruction seems to have been the point. Maybe Musk simply made a mistake, applying his standard business model to a context he badly misunderstood. But I doubt it. Twitter had been a valuable communication vector for “the left” and “the establishment,” in Musk’s confused vernacular, and it served his political aims to destroy it.

My point here is that gold rushes are coterminous with destruction. Twitter had been a more-or-less stable platform, and Musk’s viral prospectors are strip-mining the attention landscape.

Every day my work computer’s home screen contains anodyne but beautiful landscapes paired with ads for their shitty media products. It’s like they’re going out of their way to be profane. Y’all could just put the ads there, I understand that you’re in charge of my pixels. The ads aren’t any more effective the angrier they make me. Or maybe they are.

But recently the ads have changed to be about the idea of AI. Did you hear — pharmacists are using AI to increase the rate of producing new drugs. AI is helping researchers preserve a dying language. An AI-powered robot is selling a painting at Sotheby’s.

“AI” is the next big gold rush California is trying to sell the world. Oh here’s this chatbot you can use, it’s free. Have fun : )