I've been having a running debate with Henry Blodget in the comments section of this Alley Insider post on their effort to create a list of the "World's 25 Most Valuable Startups". I think these lists are dumb (including the SA100 which was an attempt to list the "players" on the internet scene in NYC).
But beyond my distaste for page view driven list making, I also think the idea of trying to determine the most valuable startups is an exercise in futility. Yes, it's clear that Skype, YouTube, Facebook created a lot of value for their founders and investors. We can state that with certainty. But look at the list of companies they are considering for the "SA25". I haven't heard of some of them and it's my business to know about companies like this.
Here's what is certain, many of the companies they put on their SA25 list will be busts. Many of the companies that don't make the list will create hundreds of millions if not billions for their founders and investors.
Josh Kopelman hit the nail on the head with these three words "I Don't Know". Henry asked me to nominate some of my companies. So I nominated all of them. I have no idea which ones will make us a lot of money and which ones won't. I hope they all succeed and we are working to help them do just that.
If you had asked me back in 1999 which Flatiron companies would be the most valuable at this point, I certainly would not have picked Mercado Libre. Our whole foray into latin america was turning into a disaster and Mercado Libre had a seriously tough competitor in Deremate. But here we are, MELI is worth $1.6bn. At the very same time, The Industry Standard looked like a sure thing. It was the "bible" of the Internet mania and there were so many ad pages in it, it was heavy to lift a copy. And a year and a half later, it was out of business.
Uncertainty is the hallmark of the venture capital business. If you think you know what's going to happen, you are wrong. The best you can do is be directionally correct about where things are headed, try to back as many good teams as you can find going in that direction, and help them weave and bob there way to creating successful companies. And most of all, do not ever count your chickens before they hatch.