Finance Geek

It is now two and a half weeks since Facebook announced its $1bn acquisition of Instagram yet people are still talking about how and why such a young startup with no revenues achieved such a high valuation. I have written previously about the why (Facebook wanted to protect their valuation at IPO and $1bn isn’t a big figure in the context of a $100bn+ market cap) and this morning there is an interesting post on Venturebeat which gives good insight into the how.

If the gossip and rumours are to be believed Instagram employed two pretty standard tactics to maximise their valuation on exit.

Firstly they used a venture capital round to induce Twitter to make an offer, and then they took that offer to Facebook and doubled their valuation.

There are elements of this that every startup can learn from.

1. If you have M&A discussions that are not moving forward as fast as you would like then raising a round of venture will force the potential acquirer into making a decision. They will know that once a round is closed the valuation required to get a deal done will likely have to go up in order to satisfy the new investors, and so if they want the company they will get off the pot and make an offer. According to Venturebeat Instagram had been talking to Twitter for some time but didn’t get an offer until their venture deal was about to close.
2. Fear and competition are important driers in M&A and it is often the case that market leaders only become interested in buying startups when they learn that one of their competitors is close to making an acquisition and start to fear for their market dominance. Photo sharing is at the heart of Facebook and they are vulnerable on mobile. It is easy to see how the combination of Twitters strength and Instagram’s coolness might trouble them.

The final thing to note is the obvious point that these strategies only work if the startup is highly desirable. Instagram was hot enough to be wanted by Twitter, courted by venture capitalists, and scary to Facebook. Most startups don’t get that lucky, and it is important to be realistic about potential exit valuations and whether the company is special enough that acquirers will enter into a bidding war.

More…

Wouldn’t it be cool if you could stick a $5 module into anything and have it talk wirelessly to the internet?

That’s what our portfolio company Neul (pronounced like ‘fuel’) is building, and they just announced the the launch of a city-wide wireless network in Cambridge, England, that connects devices powered by their modules to the web – i.e. an internet of things. The network operates in the spectrum that is freed up by the switch from analogue to digital TV, and their technology includes the modules that connect the devices and the software for operating the network.

We think this could be huge. Cisco and others are predicting that 20 billion devices will be connected to the internet by 2020, and Neul’s technology is a key enabler. Using existing cellular networks is expensive and unwieldy as the modules are too power hungry to rely on batteries, the spectrum is licensed, and the network stack is optimised for voice traffic rather than intermittent bursts of small data. Neul’s modules can run for years from a single battery, operate in free spectrum and use the new ‘Weightless’ standard which is optimised for machine to machine communications. The network will be cheap to roll out too – the Cambridge network runs from only five base stations.

The first and most obvious application is smart meters but more exciting to me is the new applications that people will dream that are only possible with such cheap and low friction connectivity. My favourite idea is toys. I like the idea of being able to communicate with (or through) my children’s teddy bears from my laptop as they get ready for bed.

More…

Yesterday I spent an enjoyable mentoring startups at Springboard, the London chapter of the Techstars accelerator programme. Reflecting on the day I was struck by two things. Firstly the quality of the companies is improving. I mentor at Springboard and Seedcamp and at just about every session I’ve attended the companies have been stronger than the previous session, and the same was true again yesterday. On average, the businesses are a little further developed and the entrepreneurs have a clearer and more credible idea of what they want to do and how they are going to go about it.

The second thing I was struck by was the number of businesses who were working out how big their opportunity size is. Some were working through bottoms up analyses, others were iterating their plans to open up a larger opportunity, and both these are sensible and appropriate approaches. A third group were taking a different approach of beginning with the belief that their market size is huge and building up a case to support their belief.

This third group have things the wrong way round.

Getting an accurate assessment of the opportunity size is very important for startups as it informs the exit potential and financing strategy. Companies with small opportunities can be very successful for their founders and investors if they keep their financing requirements correspondingly small. Conversely, companies that over-estimate their opportunity size can struggle in a number of ways:

• fundraising proves difficult as investors don’t believe their projections
• if a large round is raised and expenses are ramped the chances of going bust increase significantly as revenues fall short of budget
• if a large round is raised and an exit comes it will be below expectations, the founders will make less money than if they had raised a smaller amount, and the investors will only achieve a mediocre return

The best way to accurately assess the opportunity size is to jettison all pre-held convictions and work it out from scratch. That is a useful exercise for more established companies to do periodically as well, in light of changes in market conditions. Maybe the folk at Dropbox are having a re-think now in light of recent announcements from Google and Microsoft….

More…

Regular readers will know I’m a big believer in the power of social media as a force for good in our society. Now that everyone can publish their opinion and no-one can control the media integrity is becoming more and more important for brands and individuals, and I think that’s great.

There are many people who think differently however, the most recent example of which is MIT professor Sherry Turkle who wrote a piece in the New York Times arguing that all the connecting people are doing on Facebook comes at the expense of real conversations. In other words social media is bad because it weakens our relationships. This commentary from Turkle adds to a daily stream of stories from publications like the Daily Mail about the problems that social media is bringing to our society, from people embarrassing themselves by sharing inappropriately to people using Facebook to approach young girls for sex.

These stories irk me because they don’t reflect the truth of the matter, so I was pleased to see GigaOM produce a comprehensive analysis of how Turkle has misunderstood the role that social media plays in people’s lives.

As you can read in more detail on GigaOM, the flaw in Turkle’s reasoning is that status updates on Facebook and texting are not substituting for conversation or deep relationships, rather, they are compliments to other deeper, richer, forms of communication, including one-on-one conversations. In fact, the research shows that people who are more social online are also more social offline.

I think a lot of the negative sentiment surrounding social media is best understood as fear of the new and fear of change, and echoes the moral panics that have histroically accompanied new forms of media. I strongly believe that over time social media will become an accepted and valued part of the fabric of society in the same way as telephones, television and many other new technologies have before.

That said, there are many important concerns around social media that need to be addressed and probably regulated for, most obviously child safety and privacy. However, those concerns are best addressed in an atmosphere of calm and well informed debate. My fear, and reason for writing this post, is that we will get regulation driven more by fear than logic.

More…

I love the fact that every week someone releases some new and powerful data into the public domain, often for free. This week Chitika has released data from a panel of 200,000 US websites which shows market share for iOS, Android and other mobile OS’s. Observers of the mobile industry will remember that Android overtook the iPhone to become the market leader by device sales last year, but for me that was always a slightly misleading statistic. Many Android phones are pretty low end and market share by internet usage is a much more interesting measures, and that is what the folks at Chitika are counting.

As you can see from the chart below iOS dominates overall, but if you strip out the iPad (and iPod, for what it’s worth) then we see that the iPhone and Android are more or less equal at around 25% each. Unfortunately the data released doesn’t go back very far and we can’t see a trend, but given the way device sales are going I would expect Android is gaining at the expense of the iPhone. Mobile app developers should look keenly at this data as it will inform their choice of which platform to develop for first. My observations in the market are that most people still develop for the iPhone first. That may start to change.

Stripping out the iPad data makes sense to me because tablets don’t compete with smartphones. If there is any Android tablet traffic in the Android figure it should be reversed out to give a true comparison with the iPhone. However given that the iPad dominates the tablet market I wouldn’t expect any changes to be more than 10-20% of the Android total (note also that Amazon’s Kindle Fire, probably the best selling Android tablet, is more geared for reading books than using the internet).

The final thing to note is that the iPad is much larger than the iPhone and Android, despite it’s lower unit sales (iPad’s are 50-60% of iPhones). This is testament to the suitability of the tablet format for browsing and app usage, and underlines the fact that we use our tablets very differently to our smartphones.

More…

Startups appreciate in value most quickly when consensus starts to build that the market is tipping in their direction, and this is when the high multiple exits occur. Looking at the mobile advertising industry over the last few years suggests that tipping point is around 3-5%. It’s an old cliche that for the first ten years of this century every years was supposed to be the year of the mobile, then the iPhone and Apple app store arrived and the mobile internet finally took off.

After the arrival of the iPhone mobile inventory sky-rocketed and revenues at the leading mobile ad network, Admob (a DFJ investment), went in the same direction. Their success led to a $750m acquisition by Google towards the end of 2009 and Apple responded by acquiring Quattro, the second player in the market for $250m at the beginning of 2010.

The latest news in the mobile advertising industry is of course the Milennial IPO on March 28th (2012) – their market cap peaked at $1.9bn, but has since fallen back to $1.4bn.

As you can see from the charts below (courtesy of AllthingsD) mobile advertising was 3% of the total online ad market in 2010 and rose to 5% last year.

The first wave of successful exits in a new market are about growth in that market. After that the attention turns to dynamics within the market as competing models start to emerge. That is the thesis behind our recent investment in StrikeAd which seeks to exploit and accelerate the trend towards mobile advertising being bought in real time over exchanges, instead of over ad networks.

More…

Tony Shin emailed me about the Infographic below asking if I would share it with all of you. I said that depended on whether it was interesting. He emailed it through yesterday and I like it. I like it for the way it contrasts  the declining value of an MBA with the increasing ease of becoming an entrepreneur, and it dovetails nicely with my belief that as the world changes faster and faster the course content at most business schools is getting less useful in building startups. I still think that MBAs are useful for many people, particularly those looking to build their networks, just not necessarily for entrepreneurs.

Created by: MBAOnline.com

More…

Garren Givens, founder of social commerce site Dibsie, wrote a great post on Venturebeat explaining how founders should think about accelerator programmes. As the number of programmes mushrooms there is inevitably going to be some bad ones to go with the good ones, and so this is a topic that founders need to think more about.

His main point is that at their heart accelerators are venture capital funds. They exist to make money for their investors. Whilst the principals might love working with startups when push comes to shove they will have to prioritise making the numbers work.

His second point is a great one. I’m going to quote it in full:

One of the common pain points I’ve heard from friends in all the top accelerators is that they get tons of feedback, much of which is confusing and even conflicting. If you ask for a critique, you get criticized—and knowing what to filter is on you. Have conviction in your decision-making, or risk paralysis by analysis. Never have I taken so many meetings in such a condensed timeframe or chatted so much about Dibsie and social commerce. And some folks just don’t get it (which has sometimes made me wonder if I do). But what I’ve learned is to seek out the folks that really understand our space and our goals, and to elevate their feedback above the noise.

In the early stages of a company soliciting feedback from a wide range of people, including those with contrary opinions, helps to speed the iteration of the plan and increase the chances of success. However, the feedback will inevitably be conflicting and as Garren says the difficult part is deciding which advice to take and which to ignore. It is challenging to be open to criticism and new ideas whilst at the same time being able to quickly discard comments which are unhelpful, particularly when great ideas can come from the most unlikely of places and even experienced people sometimes come up with bad ideas (myself included). Good innovators are particularly adept at rising to this challenge.

More…

Regular readers will no that I’m a long-time fan of Jeff Bezos and Amazon and also that I have a keen interest in the evolving roll of gatekeepers in the internet age (see here and here for two recent posts). For these reasons I was very interested to read the following quote from Jeff Bezos recent letter to his shareholders (reported on Techcrunch):

even well-meaning gatekeepers slow innovation. When a platform is self-service, even the improbable ideas can get tried, because there’s no expert gatekeeper ready to say “that will never work!” And guess what – many of those improbable ideas do work, and society is the beneficiary of that diversity

Whist Bezos is talking his own book here and I suspect the timing of this statement has a lot to do with the ongoing legal battle between Amazon’s self service book publishing platform and the traditional publishing industry, I think he is on the money here. The ‘gate’ that traditional gatekeepers are ‘keeping’ has always been distribution, in the case of book publishing that has been the ability to get books onto shop shelves, and in that environment there is little incentive to innovate. Staying with the book industry as an example – publishers and retailers want reliable sales, and as a result they lack the tolerance for failure that is a pre-requisite for innovation.

As Bezos says, in a self service world there is nobody stopping innovators from trying their experiments. In fact self service platform providers typically encourage experimentation as they benefit from the successful ones and don’t suffer with the failures.

It isn’t all happiness and light though. In this self service world there are new gatekeepers and they are the companies with large audiences – Apple, Amazon, Facebook and Google. For the reasons explained above I think these gatekeepers will be more pro-innovation than the businesses they seek to usurp, but they are still self interested companies who will seek to maximise the rent they extract. Worse, some of them may end up in quasi-monopoly positions.

More…

Yesterday Google announced great results and a change to their share structure which will in effect give the founders control over the company in perpetuity. The founders in their “Founders’ Letter 2012″, a large part of which I’ve copied below, explain that their reason is to free themselves from outside pressures so they can manage for the long term.

Ever since I was an undergraduate in the early 1990s, and probably before, critics have railed at The City and Wall Street for pressuring companies to focus on the short term to the detriment of long term value creation. It is a well recognised problem, and one that I see affecting large companies all the time when they fail to respond to changing market conditions because it will hurt their business in the near-term. However despite the problem problem being well understood it is tremendously difficult for managers to do anything about. If they ignore the pressure from the financial markets their share price falls and they risk losing their jobs or their company falling victim to take a takeover.

Google is to be praised for taking the step to protect themselves from short-term pressures and I’m pleased to see that Facebook is likely to be doing the same. Hopefully both these businesses will be successful over the long term and investors will come to reward them for insulating themselves from pressure to manage to short-term objectives.

As you can see from the chart below (courtesy of Venturebeat) Google has earned the right to take this step with an impressive performance over the last two years. Maybe, in the not too distant future, other companies which are less strong will also be up to manage themselves for the longer term.

You can read more about this on AllthingsD.

FOUNDERS’ LETTER 2012

Introduction

Throughout our evolution, from privately held start-up to large, publicly listed company, we have managed Google for the long term — enjoying tremendous success as a result, especially since our IPO in 2004. Sergey and I hoped, though we did not expect, that Google would have such significant impact, and this progress has made us even more impatient to do important things that matter in the world. Our enduring love for Google comes from a strong desire to create technology products that enrich millions of people’s lives in deep and meaningful ways. To fulfill these dreams, we need to ensure that Google remains a successful, growing business that can generate significant returns for everyone involved.

Corporate Structure

When we went public, we created a dual-class voting structure. Our goal was to maintain the freedom to focus on the long term by ensuring that the management team, in particular Eric, Sergey and I, retained control over Google’s destiny. As we explained in our first founders’ letter:

“We are creating a corporate structure that is designed for stability over long time horizons. By investing in Google, you are placing an unusual long term bet on the team, especially Sergey and me, and on our innovative approach…

We want Google to become an important and significant institution. That takes time, stability and independence…

In the transition to public ownership, we have set up a corporate structure that will make it harder for outside parties to take over or influence Google. This structure will also make it easier for our management team to follow the long term, innovative approach emphasized earlier…

The main effect of this structure is likely to leave our team, especially Sergey and me, with increasingly significant control over the company’s decisions and fate, as Google shares change hands…

New investors will fully share in Google’s long term economic future but will have little ability to influence its strategic decisions through their voting rights…

Our colleagues will be able to trust that they themselves and their labors of hard work, love and creativity will be well cared for by a company focused on stability and the long term…

As an investor, you are placing a potentially risky long term bet on the team, especially Sergey and me. …. Sergey and I are committed to Google for the long term.”

I wanted to quote all that because these were the clear, well-publicized expectations we established for investors in 2004. While this decision was controversial at the time, we believe with hindsight it was absolutely the right thing to do. Eight years later, these statements are still remarkably accurate, and everyone involved has realized tremendous benefits as a result. Given Google’s success, it’s unsurprising that this type of dual-class governance structure is now somewhat standard among newer technology companies.

In our experience, success is more likely if you concentrate on the long term. Technology products often require significant investment over many years to fulfill their potential. For example, it took over three years just to ship our first Android handset, and then another three years on top of that before the operating system truly reached critical mass. These kinds of investments are not for the faint-hearted.

We have protected Google from outside pressures and the temptation to sacrifice future opportunities to meet short-term demands. Long-term product investments, like Chrome and YouTube, which now enjoy phenomenal usage, were made with a significant degree of independence.

We have a structure that prevents outside parties from taking over or unduly influencing our management decisions. However, day-to-day dilution from routine equity-based employee compensation and other possible dilution, such as stock-based acquisitions, will likely undermine this dual-class structure and our aspirations for Google over the very long term. We have put our hearts into Google and hope to do so for many more years to come. So we want to ensure that our corporate structure can sustain these efforts and our desire to improve the world.

Effectively a Stock Split: And a New Class of Stock

Today we announced plans to create a new class of non-voting capital stock, which will be listed on NASDAQ. These shares will be distributed via a stock dividend to all existing stockholders: the owner of each existing share will receive one new share of the non-voting stock, giving investors twice the number of shares they had before. It’s effectively a two-for-one stock split — something many of our investors have long asked us for. These non-voting shares will be available for corporate uses, like equity-based employee compensation, that might otherwise dilute our governance structure.

We recognize that some people, particularly those who opposed this structure at the start, won’t support this change — and we understand that other companies have been very successful with more traditional governance models. But after careful consideration with our board of directors, we have decided that maintaining this founder-led approach is in the best interests of Google, our shareholders and our users. Having the flexibility to use stock without diluting our structure will help ensure we are set up for success for decades to come.

In November 2009, Sergey and I published plans to sell a modest percentage of our overall stock, ending in 2015. We are currently halfway through those plans and we don’t expect any changes to that, certainly not as the result of this new potential class. We both remain very much committed to Google for the long term.

It’s important to bear in mind that this proposal will only have an effect on governance over the very long term. In fact, there’s no particular urgency to make these changes now — we don’t have an unusually big acquisition planned, in case you were wondering. It’s just that since we know what we want to do, there’s no reason to delay the decision. Also note that there will be no immediate change in votes, because everyone will still have the same number. In addition, Eric, Sergey and I have all agreed to “stapling” arrangements so that, above set thresholds, if our economic interest in Google were to decline, our votes would as well. We also have provisions to ensure all shareholders are treated fairly from an economic perspective.

For more details on all of this, please see the postscript below from our Chief Legal Officer, David Drummond, and the preliminary proxy statement we will file with the SEC next week.

Conclusion

We have always managed Google for the long term, investing heavily in the big bets we hope will make a significant difference in the world. Some of these bets have been tremendous, funding our activities and generating significant gains for our shareholders. Others have been less successful. But the ability to take these kinds of risks has been crucial to Google’s overall success and we aim to maintain this pioneering culture going forward.

More…

There is a post on Techcrunch this morning titled: Jim Gaffman Releases His Own, All-New Special, Cutting Out The Middleman, which makes Gaffman the second major US comedian to go direct in recent weeks. I’ve said it before and I will say it again now: I think we will see more and more of this model going forward and eventually get to the point where going direct is the default option for most artists. Now that distribution is as easy as uploading a file to the internet middlemen simply don’t add enough value any more. Jim Gaffman’s new comedy special is available to download for $5 and he says going direct will net him more cash and gives him more creative freedom. Fans also like the idea that all their money is going to the artist.

Nicholas Lovell and I saw something similar when we talked to publishers about our 50 Questions you should ask before raising venture capital blog series and book. Publishers were keen to work with us, but only if we changed the nature of what we wanted to write so it matched with one of their pre-existing categories of readers of business books. They wanted us to either make it more populist or more serious and formal. We decided to stick with our plan to write for the audiences we already had on our respective blogs.

At the moment the direct to consomer model only works for artists like Gaffman who already have an audience and production companies that can afford their own marketing. Over time I expect we will see technology and agency companies that offer marketing and financing services that enable aspiring artists to also go direct.

More…

I’m just back from a week skiing and visiting relatives and the big news whilst I’ve been away is undoubtedly Facebook’s $1bn acquisition of Instagram. The question on everyone’s lips is, of course, ‘how come a two year old startup with no revenues is worth $1bn?’. I think the answer is pretty clear – it’s all about Facebook’s IPO price. Assuming they get out at Zuckerberg’s rumoured $100bn target then the Instagram deal only has to make a 1% difference to the FB share price for it to be worth $1bn. I think that high priced acquisitions of startups are often valued with half an eye to the acquirers share price. In this case Facebook’s pending IPO make it particularly easy to understand the logic.

Returning to Facebook, small improvements to their IPO share price will come from taking analysts concerns off the table and this deal helps with big concerns two:

• Instagram’s competitive threat to Facebook’s photo sharing dominance (particularly if acquired by Google)
• Revenues from mobile are an important part of Facebook’s growth going forward and photo sharing on their mobile app is mediocre at best

Other incidentals that help are:

• Instagram’s growth has been explosive up to 30m users, and with the release of an Android app last week that growth is widely expected to accelerate
• Instagram is an incredibly well run company – there are numerous small pieces of evidence for this, but my favourite is that they got to 4m users with only 4 employees
• Valuation has been increasing rapidly and the deal likely won’t get any cheaper (Sequoia and other VCs who invested last week at a $500m valuation would likely want more than 2x if they stayed in for any length of time)
• Instagram doesn’t rely on other social networks and transition to ownership by Facebook won’t create any difficulties with Google and other competitors changing their attitude to the business
• $1bn values Instagram at $33 per user, which compares with $118 on Facebook (assuming a $100bn IPO)

Alan Patrick makes some similar arguments about Facebook’s IPO driving the price here.

When I was interviewing to become a VC for the first time in 1999 I was asked to do an analysis of AOL’s valuation and I said then, as I am saying with Instagram now, that it only makes sense in the context of the valuation of other similar companies. If you try and make sense of it from a fundamentals perspective – i.e. from forecast cashflows or profits, it quickly becomes clear that the only way to get there is by making outrageous assumptions. The same isn’t true of Facebook though, where they have significant profits and cash flow already and whilst their forecasts are aggressive they aren’t ridiculous and are underpinned by logic and trading history. I think that is the difference between 1999 and today.

More…

Pinterest is the startup that everyone is talking about (this is my second post about them this week) and the data in the infographic below tell you why. Their growth in traffic and time on site over the last ten months are incredible. Opinion is divided as to whether Pinterest will ultimately be a Myspace style fad or Facebook style piece of the furniture but it is easy to see why the bulls are excited and rumours are circulating that Pinterest may soon join AirBnB in the $1bn club.

My favourite fact on this infographic is that venture capital is the top interest on Pinterest in the UK. Either Dragon’s Den has captivated the nation’s imagination to a greater extent than I had realised or their traffic here is small enough to be dominated by curious investors.

More…

The news is out today that the seven Harry Potter titles have become available as ebooks for the first time. The interesting thing is that whilst the books can only be bought from Pottermore (JK Rowling’s publishing company) they will work on Amazon’s Kindle, Barnes & Noble’s Nook, Google Play and most other popular ebook readers.

For a long time I have thought this ‘artist sells direct to end user’ model is the most obvious and efficient way to structure the value chain for all content types in the internet era. Prior to the internet gatekeepers were required to manage the limited distribution platforms and provide working capital to various different players in the ecosystem. Those functions are now redundant and there is no longer a need for gatekeepers of any sort. The gatekeepers we have today exist because they have worked their way into being gatekeepers, rather than because the gatekeeper function is in itself important. Many of today’s gatekeepers have been gatekeepers for years and these businesses have simply managed to protect their existing positions, although they are all getting weaker. Good examples are TV companies like ITV, Sky and Comcast, record labels like Universal and EMI, newspapers like The Guardian and The Daily Mail, and publishers like Penguin and Random House. Some of todays gatekeepers are new, and they have leveraged innovations and control of adjacent markets to become gatekeepers. Good examples are Amazon with the Kindle, Apple with the App Store, Google with Play, and maybe Facebook in the future.

JK Rowling was able to leverage her popularity as an artist and force Amazon, Barnes & Noble, and others to relinquish control over their ebook reader platforms and let her sell direct. This is analogous to decisions by Madonna and other popular music stars to bypass record labels and organise their own concerts and music distribution. My hope is that competition between different distribution platforms will increase across movies, books, TV and music, and that more and less powerful artists will be able to sell direct. The gatekeepers are taking more money out of the ecosystem than they deserve and the more they are bypassed the more money artists will make and the more our creative industries will flourish.

Note that most artists will still need the help with marketing and distribution that the gatekeepers have typically provided. The difference is that they will get it from agency style talent management businesses who get paid according to how much they help instead of demanding exorbitant fees simply to open the gate. LiveNation, Simon Cowell’s Syco, and Simon Fuller’s 19 are all talent management businesses in this mould.

The biggest obstacles to this vision are rights management and financing of production. The former is solvable through technology and there are a multitude of potential solutions to the latter, not least crowdfunding so I’m hopeful we will get there. It will take a while though.

More…

I just saw this very interesting picture on Pinterest. It was followed by reams of comments (from other Pinterest users) saying how true and funny it was.

I’m still working through what it means, but I wonder if it talks to something fundamental about life and what sort of people enjoy using Pinterest and Facebook. Specifically, I wonder if Pinterest is a place where people go to escape from real life whereas Facebook is real life, or in more detail, Pinterest is a happy place where people go to dream and have pleasant but ultimately shallow interactions with people they don’t know, whereas people go to Facebook to play out their real relationships, with all the good and bad that entails.

For those that don’t know, Pinterest is the hot social media story of the last year or so and is now the 57th most popular site on the web.

More…