Pinterest has real value and a clear path to monetization through affiliate and/or advertising revenue. It's really a stupidly simple idea (essentially scrapbooking on the Web) executed incredibly well.
Is it worth $1.5B? I don't know. I would say it's definitely worth more than Instagram for whatever that's worth (not a lot). I guess we'd need stats on number of active users, engagement and revenue to make that determination--something we're not likely to get.
The only concerning point to me is that that it's foreign money, only because foreign money seems to be less discerning, at least based on DST and similar investments.
Anyway, congrats to the team. They've done exceptionally well.
Saying that predictably gets you upvotes for sure. But it's not about "bubble" comments being "boring" or not. The question is whether bubble claims have any substance. If they have, the bubble won't simply go away just because some people wish it would.
Is it worth $1.5B? I don't know. I would say it's definitely worth more than...
Comparisons like this are inflationary. It seems you really don't care about bubbles. But a bubble would affect many people here at HN.
It doesn't matter whether bubble comments are boring or not, it's about the importance of a bubble.
Frankly, it just pisses me off - we're a profitable business which has grown 150% YOY for 6 years, and our value is barely £3M, based on our profits and growth. Why an infant company with little discernable revenue should have an astronomical value is beyond me.
Not sure any what's the right way to value this kind of company: obviously if it was an established public company, a $1.5b figure might be scary (as far as I understand Pinterest does not yet have revenue). However, it isn't: venture capitalists valued it this high, in the hopes that there's a realistic (compared to similar companies, funded at the same stage) chance that they will have a $7.5b-$15b exit.
It _would_ be a sign of bubble if Pinterest were to go public without revenue (which has happened during the 1990s) , with pension funds (that have a very different risk/reward profile from VCs) buying the shares. You could say "it's 1999 again" if as a result Sun (hey anyone remember them?), Cisco, and Oracle stock rose exorbitantly as a result of Pinterest buying a record number of servers, routers, and commercial databases (hey, remember when companies used to do that?) and their shareholders expecting (with great certainty) that there will be more and more companies like Pinterest sprouting up, i.e., that sales will keep growing.
I've only caught the tail end of the bubble (I had an internship in a startup junior/senior year of HS, 2000-2002 -- and participated in SVLUG, meeting folks who worked for Webvan, RedHat, Va Linux, et al).
I still remember just how differently it felt from today: for starters you couldn't drive from Sunnyvale to Fremont (over the bridge) without being completely stuck in traffic (as early as 3pm, and as late as after 8pm), and without driving past at least 3 or 4 Sun campuses.
Nowadays: there is still commercial real-estate in that area that is empty (including the former Sun East Bay campus, where manufacturing happened), the Dunbarton Bridge is fairly traffic-free even during the rush hour.
They use a service which scans all links on the site and where possible converts them to affiliate links (they don;t change affiliate links users have set). So if someone pins an Amazon product and another user clicks through and buys that Pinterest is getting a cut. So Pinterest is already making money. I have no idea how much but it seems like it could provide a decent revenue stream.
A better analogy is probably delicious for women, at least in terms of having a mental framework to estimate the value.
BUT I think they need more time to answer these questions:
- Is this a fad, or is Pinterest here to stay? - Can they really pump up revenues the way they think they can? And can they do it fast?
It's like buying condoms before the first date. (Sorry for the inappropriate inference.)
I just feel like they needed more time and history before pulling in these types of numbers.
Am I the only one that thinks that's a good idea? Seriously, people in cars cause accidents, accidents in cars cause people.
But at the end of the day, its just a very well executed image board, marketed to women. The concept in itself is not a fad, but they may need to add features that make a user feel penalized for moving elsewhere. (e.g. the network effect from Facebook, or a users library with Kindle)
Pinterest tried affiliate links with Skimlinks. They didn't have a great time, and they've dropped skimlinks.
Personally, I think they should work out a way to try it again.
If you are left holding the bag, and they have to generate 1.5B in sales over their lifetime from this money to make it a worthwhile investment, then no: pinterest will never accrue 1.5B in revenue over its lifetime.
If you are not left holding the bag and this bubble keeps inflating, yes. It's easy to see how Pinterest can raise money at an even higher valuation with just a little more "spectacular" growth. (It's not really spectacular. More like a fad.)
I'd rather have 75 del.icio.us's than 1 Pinterest but.. I readily admit I'm getting old ;-) So my question is, did the folks 7 years ago get a bad deal or are the valuations now over the top?
More likely Option 3: Vastly more people are connected to the Internet, which now has far superior paths to monetization.
On the people count front, Google's numbers show %-wise between 2006 and 2010 we went from 68.21% to 79.3% population wise (and population generally went up 4%) so there was a growth in the user base but not one to justify 40x growth in value on similar headlining companies IMHO.
Anyway, I think the OP here is spot on. It's not that these companies are crap or worthless. It's the size of these valuations. We throw around billions like it's nothing now, when less than 10 years ago it was rare to see valuations 1/10th of that. Name something else that had it's value grow so greatly over such a short period of time. Houses maybe?
maybe it's the comfort level of the audience that helps with monetization?
$1.5b pretty much prices them out of any real acquisition now for the most part. So is Pinterest going to go IPO?
Where do they go from here? That's the question of the day.
In this another debate of "is this a bubble", something interesting came to my mind. I thing the issue here is that any online real estate that made it big, made it huge because they used the latest technology available. Think YouTube. When it started, barely anyone knew how to program flash and have a container to upload 5MB file and it could be coded in different movie codecs and youtube would read it anyways. This was definitely pushing the envelope! The technology was new, but it let you display videos and thats what counted. I think with the new technology coming in, like HTML5, etc, there will be new websites coming out and grabbing huge audience based on this new technology. So in other words, whomever is betting $1,500 millions on Pinterest, is like betting that nothing new will be invented over the web. This is like buying GeoCites, because nobody is sitting in garage developing WordPress 1.0. On buying MySpace because there is no Facebook. I hope you get my drift...
Of course, Pinterest is all about design, which is why Groupon will also have to acquire Instragram. This will allow the merged company to select the right photo for any coupon and, if necessary, saturate the yellows, unfocus the background, and add a creatively misaligned border. That night your friends enjoyed the half-price alcohol they bought at Jerry's Drive-In Liquor will look extra cool when the photo has been processed through the "1977" filter. And on the plus side, Groupon/Pinterest/Instagram gets to keep it for their next liquor-oriented deal, giving them free advertising material. It's too early to tell what this new supergroup of startups will be called, but I want some credit if it becomes Groupstagram.
I'm only half-kidding, of course.
But I'm thinking, more so than Pinterest it's closer to "Path" where you and your small network of close friends collectively get a deal (at Jerry's liquor, lovely example) then post cute photos of your night/experience (sans the trip on the porcelain bus) which become public on "Jerry's Drive-In Liquor" or whatever, and exposes the deal to other people in the private networks of those who were in your private network... a sort of "local viral" marketing effect which works as advertising and as the regular "look how awesome my saturday night was" that we (what? just me?) use Facebook/Instagram for anyway.
I think it perfectly combines the innate desire to show off and receive value while maintaining an air of exclusivity plus the whole validation thing, from strangers and friends alike.
They don't seem to have, or need, a sales force. They hire mostly developers and designers, and I imagine having hundreds of them isn't of much use unless their service will change radically in the future. Ideas?
But yes I agree its hard to understand how they are able to put all of that money to work - probably a lot goes into an "emergency fund".
- Pinterest makes money on sales rather than ads, through referral links
- Pinterest makes identical money on users with accounts and anonymous users
- Pinterest has exactly the users who have money and want to spend it
- Pinterest runs on greed, envy and materialism rather than lust and boredom
It will be interesting to see how it plays out. They've already had a big setback in that they were rewriting or inserting referral links and they had to stop. I'm not sure what the conception is moving forward, but I'm sure $120M will help them figure it out. Unlike a lot of the other big names being bandied around now, there is a sense that they're trying to build a company rather than find the fastest largest way to sell out.
It seems like what has made Pinterest really successful is that it's basically 9gag/tumblr photo/meme sharing. If you look at their content it's mostly of that type.
Products seem to be a relatively tiny portion of the content. I'm sure they can make a nice chunk of money off that content, but it's unlikely to be a really big business I think, especially if their content skews more and more towards memes/photo sharing which it has been.
I think we'll look back on Pinterest as an over-hyped fad I'm sorry to say. People love to rag on it but Groupon will probably look very good in comparison.
Lately there's been a lot of discussion about some difficulties Facebook has had in the advertising sector. Jason Bigler of Google was snarking about this earlier today. [1] I realize this is largely because all the snarks come out of the woodwork before an IPO, but to a certain degree - they're right. Facebook just isn't a place that puts people into a "transactional mindset." People go to interact, and they kind of seem to like pictures, but only insofar as they're sharing pictures that are (a) funny or (b) very personal and of themselves or their pets.
Pinterest is different. People go on Pinterest to look at pictures of stuff that they like or that they think is cool. Yeah, I can't get into the Pinterest thing either, but I know a few people who do, and I have to say that that model - getting people to amass collections of stuff they think is neat or cool - is much, much more likely to put people in an buyer mindset than most social networking models.
And as a few people have shared above, it seems as though advertising on Pinterest has a lot of momentum; many companies have reported extremely good results. My feeling is that this will continue. The whole metaphor of Pinterest seems to be extremely similar to shopping and acquiring - collecting stuff, putting it on your page, browsing other people's collections.
[1] http://www.businessinsider.com/gleeful-google-exec-takes-a-s...
Are people going to be posting and clicking on pictures of ketchup or cleaning products or life insurance policies?
You should have a read and see if you change your mind.
Meanwhile, Pinterest already has amassed well over 10 million users in a very short time, sees enough hits daily to be a top-ten social networking site, and already has a number of advertising arrangements, particularly with retailers like the Gap and Nordstrom.
If this is a bubble, it's been around for a while; and this doesn't seem like the most sterling example. If anything, this is less stunning than valuations of tech companies we've been seeing for many, many years.
[1] http://www.wired.com/techbiz/startups/news/2007/10/facebook_...
http://online.wsj.com/article/SB124335674958054943.html
http://www.insidefacebook.com/2009/02/14/facebook-surpasses-...
Yes, Pinterest has a good monetization scheme compared to Facebook (http://cdixon.org/2012/05/15/facebooks-business-model/), because of the natural placement of affiliate links and purchase intent.
But, Pinterest is so new (relatively), we don't really know whether it's just a fad or something to stay and I oftentimes feel like that risk of being replaced or simply forgotton about is not taken into account. We have seen dozens of growing companies that ended up nowhere, the sheer number of users just covers that up these days.
i think we can confidently say that it's a fad. social content aggregators don't last. it's just a fact of the industry. kudos to pinterest for collecting some cash while they're hot, but it's only a matter of time before they go the same way as all their predecessors.
I don't know anything about valuations but why would a company like Pinterest need 100 million dollars cash?
Playing a thought game, let us say the money is supposed to last 18 months till the next round (with a higher valuation!?) Let us also assume engineers cost a flat rate of 100,000 per year.
120,000,000 dollars / 1.5 years (18 months) / 100,000 per engineer per year = 800 engineers for 18 months or 400 for 3 years
Pinterest: 31 employees http://pinterest.com/about/team/ 2.9 million DAU (Daily active users) 11.4 million MAU (Monthly active users) http://www.appdata.com/apps/facebook/274266067164-pinterest
Instagram: 13 employees 2.0 million DAU 16.8 million MAU http://www.appdata.com/apps/facebook/124024574287414-instagr...
They must envision hyper growth continuing ~14% a month (to see 10x increase over 18 months).
They suggest Pinterest will use the money to expand internationally. What does this mean? Buy infrastructure internationally or just pursue overseas advertisers?
If anyone is interested in building Hacker News with photos get in contact.
I think you are totally not getting whats the value in HN. Seriously, do you see at least one picture on this site, except their logo?
If anything, it would be interesting to see Pinterest for HN comments. So often I miss out reading amazing comment because I either skip it or did not come back to the board when it showed up. Perhaps an idea where hackers could "pin" awesome comments to their boards and then I could lookup hackers by their karma (or karma/their lifetime here to see high karma on average per post) and follow hackers that pin awesome comments (so I can read more amazing comments in less time, with a "comb"), perhaps that idea would fly.
But not photos for HN for cry out loud.
Already been discussed two years ago: http://news.ycombinator.com/item?id=1276030
My guess is that the majority of accounts are fake, and most posts are uploaded by spammers. However, this may be not much of a problem - like the HN / Digg / Reddit community the core Pinterest community is enough to rise the "good" stuff to the top I guess. If "social filtering" does work better than Google's algorithmic filtering and can't be gamed - Pinterest will succeed.
In some ways Amazon has had similar functionality for a while, called the "wish-list". They could easily have build something similar based on their existing data.
Maybe the fakes are good enough to look real?
Why are we determining what these companies are worth based on things like number of uniques and users, rather than the actual amount of revenue they bring in? Users, in-and-of themselves, are useless. Revenue is always and everywhere the end goal. Somehow we've begun to take at face value that more users=more money, and I don't think that's the case.
TL;DR - Pinterest drives as much ecommerce traffic as twitter with significantly more purchase intent
Pinterest is definitely interesting - I'll be trying it out for some eCommerce, but I'm not expecting much at this point.
