The Mothers listing at a ¥222.1bn valuation (2006)

What a company takes on when the price runs ahead of it

What made this listing unusual was less the money raised than the distance between the company’s actual strength and the market’s price for it. A firm with under ¥5 billion of revenue was valued above ¥200 billion, and the founder’s stake alone came to ¥100 billion. Kasahara’s remark that he felt the weight of the responsibility shows that he was watching that gap from the closest possible vantage point. The market was pricing an asset that did not yet appear in the accounts — the sheer density of time members spent on the service — and in that one can read the character of the SNS business itself.

An asset priced in advance, however, does not necessarily survive a change in the device people hold. The intensity of relationships built on invitations and diaries took another form as smartphones and real-name networks spread, and the premises of the advertising revenue changed with it. The local success or failure of the IPO matters less than the path the company took afterwards — swapping its core business out for games, then sports, then overseas betting — because that path is what reveals the true nature of what the market priced in 2006. Can a company that earns a high valuation keep rebuilding the grounds for it? This listing is the entrance to that question.