Originally posted on May 24, 2012. 100-million dollar investment in Pinterest, the social networking picture sharing site, marks the latest exuberant valuation of a company yet to realize a profit. Rakuten, the investor, might be seen as Japan’s version of Amazon, and they already have enough industry clout both at home and in the U.S. market to make their 1.5-billion dollar assessment of Pinterest less of a presumption, and more of a reality.
This is the tech industry. But with social media, and Rakuten in particular (who also own a portion of Buy.com), it’s also about selling stuff. Reaching more people and selling more products with the ease of the internet is a combination that yields optimism among investors. While we see value in it, we don’t share that same exuberant optimism for social media, a sector economists persistently say they don’t really understand. Continue reading