I feel the opposite when I think about Pinterest. My immediate reaction here is "yeah, makes sense." I guess it must stem from my marketing agency days. I had SO MANY clients begging me to get them into Pinterest ads when they released. I also sit at home and see how much time my wife spends on the site and how dedicated she is to discovery through the app, especially as she makes many purchasing decisions after seeing things she likes pinned, from food to furniture.
Seems like a no-brainer that this one is going to end up crossing the IPO finish line at some point, and I would imagine they have bigger and better plans moving forward. I barely think they've scratched the surface of profitability.
Every bride uses Pinterest (and now most wedding vendors and bloggers).
My mother-in-law uses it every day to plan all her home remodeling projects and she's 60-something.
Any study covering all the brides situation to qualify that comment? I attended three weddings recently. Not one was on Pinterest, all were on email rather.
http://www.wsj.com/articles/viewers-dont-add-up-to-profit-fo...
1) Youtube isn't profitable, but it's taking more and more "hours watched" out of the TV market. Google can keep it running at break even for as long as they want, and then adjust the ad prices up very, very slightly and start making profit based on the huge audience.
2) Video watching (usually) has very little commercial intent, especially in terms of some kind of "commercial value per byte served" measure. This compares very badly to Pinterest, where a very significant amount of usage has almost direct purchase intent.
Then the investors stand to lose money.
Investing is a bet, right? If making money here were a sure thing -- e.g. if they already had the money in hand -- then they wouldn't need to raise capital.
Maybe your question is, why would anyone invest in a company without a business model, particularly at this valuation? I'm not an investor, but I'm sure part of the calculus is looking back in history towards similar companies.
On what planet is an IPO the finish line?
seriously while I appreciate your comment, none of what you've said has anything to do with any financial numbers, even to within an order of magnitude. . . it's nice that this is your reaction but don't you think an analysis of... something should enter the equation at some point? there are 3.5 billion women in the world, so you're valuing every user past and present that you've described, at $3. Why not $10 and call it 35b in revenue for a nice 110B valuation at a fair multiple of earnings.
seriously shouldn't we be looking at...something here? these numbers are literally astronomical. (as in, getting up there with the number of stars in the galaxy.)
Not every comment on HN needs to be an in depth analysis, especially when my comment is, exactly as I said, a gut reaction to a piece of news. Are the points I made anecdotal? Absolutely, but that doesn't make the meta-commentary any less valid.
Just because it makes sense in the current model doesn't mean it makes sense.
https://www.cia.gov/library/publications/the-world-factbook/...
Tbh, the fact that the advertising value of a company in the first world is worth that much is kinda silly imo. However, it makes your target unclear. Is it the fact that Armenians are so poor per capita?
What's the actual substance of your complaint? Are you worried that Pinterest can buy Armenia? It can't. Are you just offended that two not-very-comparable numbers are X > Y instead of Y > X? That doesn't seem like a big deal to me.
Are you complaining that Armenians are poor? That's perhaps a big deal, but we don't know how to make poor countries not poor.
Someone gets engaged. Almost every day between that day and their wedding will be on pinterest to get great ideas on every single item / food / clothing involved.
It's like amazon referrals on steroids
Pinterest is where shopping starts for tons of young women (primarily) with money.
we are talking about ten thousand times higher than that. still on 'potential'...
For the sake of this comment let's assume that Pinterest has never had any income at all... can someone please explain what they have spent, or plan on spending, over $1B on? If there isn't a plan to spend this money, what other motivations could they have for raising so much money and why are investors still pouring it in?
The Fed has yet to raise interest rates, but may choose to this year. The end of QE has already removed some liquidity from the markets and set the dollar on a massive run which will put pressure on almost anything priced in dollars. If the Fed raises interest rates, it will sap at least some liquidity from the venture funding market (which is red hot right now).
If Pinterest can't IPO for five years because the stock market crashes in nine months and the economy turns south (almost six years since the last recession already), then ideally they'll want a cash war chest to keep up with the other giants they compete with (directly or indirectly) that are already public or are well funded.
Saying it's prudent for Pinterest to have a billion+ in cash is probably understating things.
In any business, and "startups" in general cash is king.
The money could be used to fuel acquisitions, pay early investors, or a number of things.
That leaves ~$150m from previous rounds to spend on infrastructure etc before they need to raise more in the latest round.
That is why Google is valuable. People go there with intent to buy things. Facebook has learned how to make money. Twitter has learned how to make money. Pinterest has a much much easier road than either of those did. The people investing in this round will absolutely make money.
Pinterest is what Delicious should have been, if Yahoo had any vision at all.
I can't remember a time I've purposefully clicked an ad on Facebook/Twitter. The only problem with Pinterest is that it seems plagued by duplicate content.
There are no doubt useful companies out there for Pinterest to buy, no different than there have been for Facebook, Twitter, Google, et al. over the years of their various stages of maturity.
At Pinterest's size, and given their long-term ambition to be a large, successful business... it's for all the non-obvious reasons you can't think of that a billion dollar cushion might be useful. Always raise money when you don't need it; raising it when you need it, is the worst time, you'll go begging on your knees or at a minimum will be in the weaker negotiating position.
For initial rounds with no public valuation info, you may assume 25% of the company was given away in each round.
http://i.imgur.com/OfBDZz0.png
Let me know if you want to see any specific cap tables, happy to pull those out.
Best case scenario would be: 33% * (75% angel) * (75% series A) * (75% series B) * (85% series C) * (95%^4 Series D-G) = ~10%
It could probably go down as far as 4 or 5% depending on how big option pools were and just how much dilution was in the earlier rounds.
But is it overvalued? Only time will tell
Also http://www.investopedia.com/terms/b/bookvalue.asp
Can't really understand why I'm downvoted for this, since all I did was state a fact.
http://www.nytimes.com/1999/10/26/business/excite-home-to-ac...
Down-voters rejoice, but I couldn't care less about pinterest and what it offers. Maybe I'm getting old or maybe being a parent gives me a different perspective, but 11B for nicely arranged list of photos is idiotic.
I'm sure it makes a lot of business sense to the investors, which is the really sad part of it all.
The state of the world seems to show that the vast majority of people, even the smart ones, don't really get it yet. But they will, sooner or later the elephant in the room will be impossible to ignore. Let's hope it won't be too late then.
The issue is this: the world doesn't need more 'innovation' - we've already innovated enough to the point of being on the verge, all in the name of 'products' and profit.
If articles like 'California has 1 year left of water' doesn't sound alarm bells then take a look around - these kind of news are all over the world.
Our only hope out of this is to apply what we already know and 'un-inovate' ourselves so that our children can have a chance of survival.
Not for the sake of profit, but for the sake of future generations.
And no, the governments, politicians and the like won't do it, they can't, they don't create the world - we do, the creators, the innovators.
It is our responsibility to switch focus and really look at how we can apply our knowledge to the real world 'problems'.
Pinterest's long term value (50+ years) is zero in my opinion, even though it might create a nice bubble in the short term.
