Thanks to the participatory nature of technology these days, its become fiendishly difficult to predict what's going to produce wealth[1].

It used to be easy, wealth was made by growing something and eating it or digging something up and banging it into a shape. It got a bit more subtle when people realized that dragging stuff places (where said stuff was likely eaten or banged into a shape) could create wealth too.

It got even harder when information became wealth. Mostly at first by letting people know the best places to drag stuff and the best shapes to bang stuff into.

Now we are at the place where the idea itself can attract wealth when it goes viral and millions of people suddenly contribute to it. Facebook, wikipedia, twitter etc. It might actually be a clue that these are hard to "monetize" yet are seismic forces in peoples' lives. Wealth and money might finally be starting to go their separate ways.

I think maybe the author might have a little bit of dig stuff up and bang it into a shape bias, but I understand how it might be difficult to spot the wealth creation potential in some of these "new fangled" ventures.

[1] Wealth in the "bettering all human kind" sense, not the "pile of government printed paper" sense.

Wealth and money have always gone in slightly different ways. Every positive externality is wealth by your definition, but I unless its internalized I don't get paid for it. (And negative externality are basically stealing or looting.)

To give less abstract examples: I don't get paid for being a good citizen, voting, reading the newspaper to be informed. And I do not pay for being angry, putting a lot of strange gases in the atmosphere with my care (yet), congesting the streets. Or putting systemic risk on the financial world.

There is something to be said for connecting externalities with incentives. Giving the right incentives makes people's choices more compatible with the outcomes.

Well, I would have preferred to upmod and comment on a better-written post that expressed that sentiment, but this works.

I mean, I agree with some of his specific critiques and I certainly agree with the feeling -- that new startups should focus more on things that create wealth, and not just the short-term "people will invest in this" kind that can vanish overnight. (Let's leave aside, for the moment, that this was in reaction to an article about the "Best" Entrepreneurs, not the companies with the brightest futures).

But, obviously, it takes a lot of foresight and a deep knowledge of the company in question to know whether or not it's doing that.

You mentioned Google. I'd use his own example, to illustrate A) the grandpa factor, and B) the foresight problem.

He uses the example of Bill Gates. "At 20, Bill Gates had started his own company and written ... A BASIC INTERPRETER."

Grandpa factor: lots of us write interpreters; some of us even mess around with interpreters written in asm on old-timey hardware; it wasn't even rare at the time. There were TONS of nerds who wrote and write interpreters, and I'd be very surprised if a majority of the companies he mentions didn't have someone on staff who'd climbed that particular molehill. So, Grandpa Factor -- the things that a lot of these startups are doing are probably as impressive as anything Gates started out doing. And I don't think even Gates would argue that it was easier to set your sights on "BASIC Interpreter" than "carbon nanotubes in my dorm room."

Second, foresight. Given that all startups look like crap in their early stage (and we're now shining the light of journalism into startups at TREMENDOUSLY early stages, 'just another hobbyist implementing a standard basic interpreter'), etc, how do you know which crap will turn out to be valuable?

Anyone could probably have told, from his education and personality, that Gates was an ambitious, intelligent young man. Okay. That's a long way from "The umpteenth young gun writing an interpreter for frikkin BASIC is going to take over the world of personal computing."

This article is noise. You need to know why Twitter is valuable before you could honestly critique Tumblr or any number of these other social/real-time media services. You need to know just how bad Gates, Google et al all seemed at first before you can have credibility when you trash a wide swath of early-stage companies as a total waste of time.

( I have reservations that are similar in nature to his own, actually -- but I know enough not to confidently assert that, say, Tumblr will leave no trace on the tech landscape. And, of course, this is a Best Young Entrepreneurs article, not at all a Best Companies Started By Young Entrepreneurs -- you can argue that there shouldn't be a difference, but then you're arguing that Business Week should have better taste, and who cares?)