Do venture capitalists use real money or Monopoly money when they throw cash at a startup? For the startup’s sake, I hope it’s real money, but it sure looks like Monopoly money from here.
Naturally, they’re interested in seeing a massive return on their investments–that’s how these sky high valuations get thrown around.
Tumblr’s investors said they believe the company’s active and growing user base gives it tremendous potential to make money. Like Facebook and Twitter, Tumblr is trying to develop new forms of advertising that work organically within its service rather than running traditional banner ads.
I wish I knew what “advertising that works organically” means.
One thing is for sure, Silicon Valley VCs can say anything they want and a whole bunch of people, some who might even know better, are willing to run with it.