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You know when you hear about a lot of insane valuations and your jaw sort of drops in disbelief? I feel the opposite when I think about Pinterest. My immediate

You know when you hear about a lot of insane valuations and your jaw sort of drops in disbelief? 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.

taylorbuley 12y ago
The pre-business model unicorn thing still confuses me. The kicker in your comment -- scratching the surface of profitability -- is what I find interesting. What if they start digging to find there's no depth behind this surface? http://www.wsj.com/articles/viewers-dont-add-up-to-profit-for-youtube-1424897967 http://www.wsj.com/articles/viewers-dont-add-up-to-profit-fo...
- nl 12y ago
  I'm not sure what your point is? 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.
  - tdees40 12y ago
    If YouTube can increase ad prices without losing advertisers, why aren't they doing that now?
    - nl 12y ago
      They don't need to. They'd rather increase the top line (revenue) by growing the market. That means keeping it as cheap as possible for advertisers to use, while still covering their costs. The idea is to get media buyers used to a given rate per video view, then use increases in YouTube usage to increase the total amount of money they bring in (revenue), and use economies of scale and technology change to drive costs down. The long game for them is to build the perfect video advertising platform on YouTube, and then allow other video platforms to use it (in the same way a huge number of websites use AdSense/DoubleClick). There's a lot of money in TV advertising. Google wants that money, and they can afford to wait another 10 years for the market to develop enough for it to happen.
  - kenko 12y ago
    > where a very significant amount of usage has almost direct purchase intent. But how do you know that it isn't actually 99% window-shopping and fantasy, until you actually put the theory into action?
    - nl 12y ago
      You can measure it: Revenue from Pinterest however was up by 2x over the Thanksgiving weekend and on Black Friday, and up by 3.6x on Cyber Monday (as compared to a 30-day average preceding Thanksgiving). This is very telling about the power of Pinterest in driving e-commerce transactions.[1] or How did shoppers, who had pinned an item before purchasing the item in store, originally discover the item? 10% reported that they discovered it while searching on Pinterest. 24% discovered the item on a stranger’s Pinterest board or newsfeed. 19% discovered from a friend’s board. 7% was from a retailer’s Pinterest board. This encompasses a total of 60% of people, who had pinned and later purchased an item, originally discovered the items on the Pinterest platform.[2] [1] http://blog.piqora.com/revenue-from-pinterest-more-than-triples-on-cyber-monday/ http://blog.piqora.com/revenue-from-pinterest-more-than-trip... [2] http://pinnablebusiness.com/infographic-research-shows-pinterest-increasing-sales-for-brick-and-mortar-stores/ http://pinnablebusiness.com/infographic-research-shows-pinte...
- deleted 12y ago
  [deleted]
- jlebar 12y ago
  > What if they start digging to find there's no depth behind this surface? 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.
  - free2rhyme214 12y ago
    Twitter, Facebook, Instagram are good examples.
jsmthrowaway 12y ago
No, it doesn't make sense. You've explained Pinterest as a marketing company that happens to have 70+ million willing participants. Now explain to me how in the context of the human race, being able to push a product to those 70+ million users is worth EDIT: about as much as SpaceX. Just because it makes sense in the current model doesn't mean it makes sense.
- aetherson 12y ago
  You want him to explain the entire global economy in a comment thread? That seems a little unreasonable. 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.
  - jsmthrowaway 12y ago
    I'm not complaining about anything. I'm saying perhaps we overvalue marketing in general.
    - fadsasda432 12y ago
      I agree with that. We live in a marketing bubble and the power of advertising will decrease a lot in the next years as new generations will just get more and more immune to it. Which is actually a good thing.
- jaronheard 12y ago
  Misleading comparison. Armenia's GDP is the estimated economic worth produced annually by Armenia. Pinterest's valuation relates to the economic value produced by Pinterest for all future years, not annually.
  - jsmthrowaway 12y ago
    I get the feeling no matter what comparison I make, you'd call it misleading, because that's really splitting at hairs. The thrust of the comment and the point of referencing Armenia's GDP was the scale of the figures. I've now edited it out since apparently nobody can address my point without slapping around the GDP comparison, as if it's important I get every word of my comment exactly right regardless of the point. Imagine what the $11 billion one would spend to purchase Pinterest could do in other areas, such as the developing world, our inner cities, public infrastructure. That's the point. Is that up front enough and leading you in the right direction, or am I still being misleading? Put another way, why do we value an online marketing tool at $11 billion and people efforting some real change like feeding starving children have to struggle for a meager five figure grant? And why are people here so hell-bent on feeding into it and silencing people like me who just have questions about it? Am I the only one that has ethical questions about spending my engineering career contributing to a market that values image distribution to push products and fuel consumerism at about the same order of magnitude as SpaceX? You can look at me with a straight face and say that Pinterest deserves to be valued at $11 billion for what, its user count? Its potential to open up new revenue streams for advertisers? Same with Snapchat, same with Instagram. I feel like our priorities are broken, and that's all I'm saying, and as much as all of my comments are flirting with being grayed out, it feels pretty hopeless and depressing to be the only one, apparently.
hnnewguy 12y ago
>"Seems like a no-brainer that this one is going to end up crossing the IPO finish line at some point" On what planet is an IPO the finish line?
- sharkweek 12y ago
  The private market finish line
- ptio 12y ago
  For founders, employees, and investors that will make significant financial gains from the IPO.
  - lisa_henderson 12y ago
    You should run away from any company where "founders, employees, and investors" regard an IPO as the finish line. Run away as fast as you can.
    - redorb 12y ago
      They'd never say it was.. At minimum it's a milestone.
    - lisa_henderson 12y ago
      I wonder why this was downvoted? I think the point is obvious: if you suspect that founders, employees or investors regard their company's IPO as any kind of finish line, then you should run away from that company. Here on Hacker News there have been many stories about companies doing badly once founders cash out. And we have read many stories about the negative signal that it sends. I thought this was common sense, and so I didn't see a need to post any links, but it is trivially easy to find articles on this subject: If Groupon were such a great business, why have the founders cashed out in each of the investment rounds? http://www.quora.com/If-Groupon-were-such-a-great-business-why-have-the-founders-cashed-out-in-each-of-the-investment-rounds http://www.quora.com/If-Groupon-were-such-a-great-business-w... "But even beyond the lockup, a founder selling a significant chunk of equity can send a negative signal to the market and erode confidence." http://www.rudebaguette.com/2012/05/22/going-public-its-complicated/ http://www.rudebaguette.com/2012/05/22/going-public-its-comp... "Zynga’s Mark Pincus is promising in an open letter to potential shareholders that his company will be a 'meritocracy'. Except that in his meritocracy, Pincus has created a class of stock just for himself. He’ll have 70 votes for every supershare of Zynga he owns." http://www.thedailybeast.com/articles/2011/12/14/zynga-s-ipo-gives-founder-mark-pincus-a-stock-class-all-his-own.html http://www.thedailybeast.com/articles/2011/12/14/zynga-s-ipo... Do a search on Google and you'll see a thousand articles like this, all with the same theme: when insiders sell, you should run.
madeofpalk 12y ago
Big TV show in Australia is The Block - a home renovation competition reality show. Each week starts with them looking at Pinterest for 'inspiration' for each new room or theme they're trying for - it's basically The Pinterest Show, weekly at 8:30pm on Channel Nine.
callmeed 12y ago
Agreed 100%. There's so much purchasing intent on Pinterest. I think it could be a stronger platform than Facebook for advertising non-digital goods. 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.
- AtmaScout 12y ago
  I have a family member who described a wedding she went to as a Pinterest wedding. Every thing from food to decorations seemed like it came from the site.
- monsterix 12y ago
  > Every bride uses Pinterest (and now most wedding vendors and bloggers). 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.
  - DanBC 12y ago
    You attended the weddings as a guest? Brides and grooms and wedding planners and venues make extensive use of Pinterest. Pinterest is brilliant for that kind of thing. You probably don't see that as a guest.
  - callmeed 12y ago
    I'm referring to brides using Pinterest as a planning tool (before the wedding). I can't believe you just asked me for a study based on that comment (where "every" is clearly hyperbole). Let me Google it for you (EVERYone uses Google). Look at that ... 70% of women use it for wedding planning BEFORE EVEN GETTING ENGAGED http://www.huffingtonpost.com/2014/07/25/wedding-survey_n_5618753.html http://www.huffingtonpost.com/2014/07/25/wedding-survey_n_56...
  - nl 12y ago
    I'm not sure you understand what "uses Pinterest" means. Brides typically use it to decide what they should wear, what their wedding party should wear, and what decor should be used at their reception etc. See for example [1],[2]. Note that [2] has 4 million followers, for that board alone. If it's studies you want, then something like [3] shows just how much traffic Pinterest drives: much, much more than Twitter, and second only to Facebook in terms of social sources. It's not typically used as an organization tool in itself. [1] https://www.pinterest.com/categories/weddings/ https://www.pinterest.com/categories/weddings/ [2] https://www.pinterest.com/explore/wedding-ideas/ https://www.pinterest.com/explore/wedding-ideas/ [3] http://www.businessnewsdaily.com/7356-social-media-marketing-traffic.html http://www.businessnewsdaily.com/7356-social-media-marketing...
logicallee 12y ago
but what you've said could be an argument for why it's worth 111B. I wonder why it's so underpriced? 11/111 is only 9.9%... I wonder what makes them so cash-starved that they would firesale this round at nine cents on the dollar compared to what we've seen they're really worth? /s 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.)
- sharkweek 12y ago
  The second line in my comment says... "My immediate reaction here" 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.
  - foobarqux 12y ago
    When $111 billion and $11 billion both make sense, neither do.
  - logicallee 12y ago
    I appreciate that, and you did identify it, but when you're talking about valuations, of course it makes the meta-commentary less valid not to mention any numbers at all! you have to talk about numbers, because otherwise what I said applies - i.e. why are they selling stock at 9 cents on the dollar in this round?
    - free2rhyme214 12y ago
      The only numbers that matter are the number of users and how long they spend using the product. That's it. If those numbers were declining investors wouldn't believe Pinterest could monetize their users like Twitter or Facebook.

taylorbuley 12y ago

The pre-business model unicorn thing still confuses me. The kicker in your comment -- scratching the surface of profitability -- is what I find interesting. What if they start digging to find there's no depth behind this surface? http://www.wsj.com/articles/viewers-dont-add-up-to-profit-for-youtube-1424897967 http://www.wsj.com/articles/viewers-dont-add-up-to-profit-fo...

nl 12y ago
I'm not sure what your point is? 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.
- tdees40 12y ago
  If YouTube can increase ad prices without losing advertisers, why aren't they doing that now?
  - nl 12y ago
    They don't need to. They'd rather increase the top line (revenue) by growing the market. That means keeping it as cheap as possible for advertisers to use, while still covering their costs. The idea is to get media buyers used to a given rate per video view, then use increases in YouTube usage to increase the total amount of money they bring in (revenue), and use economies of scale and technology change to drive costs down. The long game for them is to build the perfect video advertising platform on YouTube, and then allow other video platforms to use it (in the same way a huge number of websites use AdSense/DoubleClick). There's a lot of money in TV advertising. Google wants that money, and they can afford to wait another 10 years for the market to develop enough for it to happen.
- kenko 12y ago
  > where a very significant amount of usage has almost direct purchase intent. But how do you know that it isn't actually 99% window-shopping and fantasy, until you actually put the theory into action?
  - nl 12y ago
    You can measure it: Revenue from Pinterest however was up by 2x over the Thanksgiving weekend and on Black Friday, and up by 3.6x on Cyber Monday (as compared to a 30-day average preceding Thanksgiving). This is very telling about the power of Pinterest in driving e-commerce transactions.[1] or How did shoppers, who had pinned an item before purchasing the item in store, originally discover the item? 10% reported that they discovered it while searching on Pinterest. 24% discovered the item on a stranger’s Pinterest board or newsfeed. 19% discovered from a friend’s board. 7% was from a retailer’s Pinterest board. This encompasses a total of 60% of people, who had pinned and later purchased an item, originally discovered the items on the Pinterest platform.[2] [1] http://blog.piqora.com/revenue-from-pinterest-more-than-triples-on-cyber-monday/ http://blog.piqora.com/revenue-from-pinterest-more-than-trip... [2] http://pinnablebusiness.com/infographic-research-shows-pinterest-increasing-sales-for-brick-and-mortar-stores/ http://pinnablebusiness.com/infographic-research-shows-pinte...
deleted 12y ago
[deleted]
jlebar 12y ago
> What if they start digging to find there's no depth behind this surface? 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.
- free2rhyme214 12y ago
  Twitter, Facebook, Instagram are good examples.

jsmthrowaway 12y ago

No, it doesn't make sense. You've explained Pinterest as a marketing company that happens to have 70+ million willing participants. Now explain to me how in the context of the human race, being able to push a product to those 70+ million users is worth EDIT: about as much as SpaceX. Just because it makes sense in the current model doesn't mean it makes sense.

aetherson 12y ago
You want him to explain the entire global economy in a comment thread? That seems a little unreasonable. 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.
- jsmthrowaway 12y ago
  I'm not complaining about anything. I'm saying perhaps we overvalue marketing in general.
  - fadsasda432 12y ago
    I agree with that. We live in a marketing bubble and the power of advertising will decrease a lot in the next years as new generations will just get more and more immune to it. Which is actually a good thing.
jaronheard 12y ago
Misleading comparison. Armenia's GDP is the estimated economic worth produced annually by Armenia. Pinterest's valuation relates to the economic value produced by Pinterest for all future years, not annually.
- jsmthrowaway 12y ago
  I get the feeling no matter what comparison I make, you'd call it misleading, because that's really splitting at hairs. The thrust of the comment and the point of referencing Armenia's GDP was the scale of the figures. I've now edited it out since apparently nobody can address my point without slapping around the GDP comparison, as if it's important I get every word of my comment exactly right regardless of the point. Imagine what the $11 billion one would spend to purchase Pinterest could do in other areas, such as the developing world, our inner cities, public infrastructure. That's the point. Is that up front enough and leading you in the right direction, or am I still being misleading? Put another way, why do we value an online marketing tool at $11 billion and people efforting some real change like feeding starving children have to struggle for a meager five figure grant? And why are people here so hell-bent on feeding into it and silencing people like me who just have questions about it? Am I the only one that has ethical questions about spending my engineering career contributing to a market that values image distribution to push products and fuel consumerism at about the same order of magnitude as SpaceX? You can look at me with a straight face and say that Pinterest deserves to be valued at $11 billion for what, its user count? Its potential to open up new revenue streams for advertisers? Same with Snapchat, same with Instagram. I feel like our priorities are broken, and that's all I'm saying, and as much as all of my comments are flirting with being grayed out, it feels pretty hopeless and depressing to be the only one, apparently.

hnnewguy 12y ago

>"Seems like a no-brainer that this one is going to end up crossing the IPO finish line at some point" On what planet is an IPO the finish line?

sharkweek 12y ago
The private market finish line
ptio 12y ago
For founders, employees, and investors that will make significant financial gains from the IPO.
- lisa_henderson 12y ago
  You should run away from any company where "founders, employees, and investors" regard an IPO as the finish line. Run away as fast as you can.
  - redorb 12y ago
    They'd never say it was.. At minimum it's a milestone.
  - lisa_henderson 12y ago
    I wonder why this was downvoted? I think the point is obvious: if you suspect that founders, employees or investors regard their company's IPO as any kind of finish line, then you should run away from that company. Here on Hacker News there have been many stories about companies doing badly once founders cash out. And we have read many stories about the negative signal that it sends. I thought this was common sense, and so I didn't see a need to post any links, but it is trivially easy to find articles on this subject: If Groupon were such a great business, why have the founders cashed out in each of the investment rounds? http://www.quora.com/If-Groupon-were-such-a-great-business-why-have-the-founders-cashed-out-in-each-of-the-investment-rounds http://www.quora.com/If-Groupon-were-such-a-great-business-w... "But even beyond the lockup, a founder selling a significant chunk of equity can send a negative signal to the market and erode confidence." http://www.rudebaguette.com/2012/05/22/going-public-its-complicated/ http://www.rudebaguette.com/2012/05/22/going-public-its-comp... "Zynga’s Mark Pincus is promising in an open letter to potential shareholders that his company will be a 'meritocracy'. Except that in his meritocracy, Pincus has created a class of stock just for himself. He’ll have 70 votes for every supershare of Zynga he owns." http://www.thedailybeast.com/articles/2011/12/14/zynga-s-ipo-gives-founder-mark-pincus-a-stock-class-all-his-own.html http://www.thedailybeast.com/articles/2011/12/14/zynga-s-ipo... Do a search on Google and you'll see a thousand articles like this, all with the same theme: when insiders sell, you should run.

madeofpalk 12y ago

Big TV show in Australia is The Block - a home renovation competition reality show. Each week starts with them looking at Pinterest for 'inspiration' for each new room or theme they're trying for - it's basically The Pinterest Show, weekly at 8:30pm on Channel Nine.

callmeed 12y ago

Agreed 100%. There's so much purchasing intent on Pinterest. I think it could be a stronger platform than Facebook for advertising non-digital goods. 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.

AtmaScout 12y ago
I have a family member who described a wedding she went to as a Pinterest wedding. Every thing from food to decorations seemed like it came from the site.
monsterix 12y ago
> Every bride uses Pinterest (and now most wedding vendors and bloggers). 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.
- DanBC 12y ago
  You attended the weddings as a guest? Brides and grooms and wedding planners and venues make extensive use of Pinterest. Pinterest is brilliant for that kind of thing. You probably don't see that as a guest.
- callmeed 12y ago
  I'm referring to brides using Pinterest as a planning tool (before the wedding). I can't believe you just asked me for a study based on that comment (where "every" is clearly hyperbole). Let me Google it for you (EVERYone uses Google). Look at that ... 70% of women use it for wedding planning BEFORE EVEN GETTING ENGAGED http://www.huffingtonpost.com/2014/07/25/wedding-survey_n_5618753.html http://www.huffingtonpost.com/2014/07/25/wedding-survey_n_56...
- nl 12y ago
  I'm not sure you understand what "uses Pinterest" means. Brides typically use it to decide what they should wear, what their wedding party should wear, and what decor should be used at their reception etc. See for example [1],[2]. Note that [2] has 4 million followers, for that board alone. If it's studies you want, then something like [3] shows just how much traffic Pinterest drives: much, much more than Twitter, and second only to Facebook in terms of social sources. It's not typically used as an organization tool in itself. [1] https://www.pinterest.com/categories/weddings/ https://www.pinterest.com/categories/weddings/ [2] https://www.pinterest.com/explore/wedding-ideas/ https://www.pinterest.com/explore/wedding-ideas/ [3] http://www.businessnewsdaily.com/7356-social-media-marketing-traffic.html http://www.businessnewsdaily.com/7356-social-media-marketing...

logicallee 12y ago

but what you've said could be an argument for why it's worth 111B. I wonder why it's so underpriced? 11/111 is only 9.9%... I wonder what makes them so cash-starved that they would firesale this round at nine cents on the dollar compared to what we've seen they're really worth? /s 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.)

sharkweek 12y ago
The second line in my comment says... "My immediate reaction here" 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.
- foobarqux 12y ago
  When $111 billion and $11 billion both make sense, neither do.
- logicallee 12y ago
  I appreciate that, and you did identify it, but when you're talking about valuations, of course it makes the meta-commentary less valid not to mention any numbers at all! you have to talk about numbers, because otherwise what I said applies - i.e. why are they selling stock at 9 cents on the dollar in this round?
  - free2rhyme214 12y ago
    The only numbers that matter are the number of users and how long they spend using the product. That's it. If those numbers were declining investors wouldn't believe Pinterest could monetize their users like Twitter or Facebook.