Pinterest Raises $100 MM at $1.5Bn Valuation • Hacker News Board

Re: Pinterest Raises $100 MM at $1.5Bn Valuation

#101

Post by grey-area » Thu, May 17, 2012, 12:47 PM UTC

arethuza wrote: post #90

madaxe wrote: post #83

Earlier quoted context omitted.

Bingo. Valuations should be based on.... drumroll profits and retained value - EBITDA. When we started basing valuations on arbitrary "well if facebook are $100bn, X must be $y", we set sail for another glorious future of people losing their shirts. 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 in…

Valuations are based on what someone else might pay - and they might pay a few billion for Pinterest.

That's precisely the sort of bubble economics that the parent was objecting to. The objection is to speculation as opposed to investment - investment expects a steady return based on real profits/assets, speculation expects a greater fool to come along later and pay more for this asset, regardless of what it might actually be worth based on revenue/assets alone.

In a bubble (tulips, houses, stock markets) there seems to be an unending supply of greater fools, until all of a sudden there isn't, and someone (who of course expected to find some other fool to sell to) is left picking up the tab for assets which are now close to worthless.

If your valuations are based on what someone else might pay in future, you are speculating, and will be lucky if you manage to get out before other people realise the assets you have bought are not worth $1B or whatever you paid for them. If on the other hand you bought because there is a steady income stream from an investment which will eventually pay off the investment and add returns, and thus underpins the price, you don't have to worry about whether this is a bubble or not.

Re: Pinterest Raises $100 MM at $1.5Bn Valuation

#102

Post by kefeizhou » Thu, May 17, 2012, 12:59 PM UTC

cletus wrote: post #5

Well I'm going to head off the predictable and boring "bubble" comments and say this: 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 gue…

These "bubble" comments may become self-fulfilling. Even if there's no substance behind the claims, enough talk of a possible bubble can shift investor and consumer mentality and end up causing a bubble down the line.

Re: Pinterest Raises $100 MM at $1.5Bn Valuation

#103

Post by rudiger » Thu, May 17, 2012, 1:03 PM UTC

Alex3917 wrote: post #45

runako wrote: post #40

Earlier quoted context omitted.

The functionality of Pinterest is gender-neutral. What makes it "delicious for women", other than that more women (in the US) use it right now? According to Wikipedia, more men than women use Pinterest in the UK ( https://en.wikipedia.org/wiki/Pintrest#Demographics ).

IIRC in the US women drive about 80% of purchases, meaning each female user is worth several times what each male user is worth. In terms of communicating the value of the business to investors, the fact that the userbase is mostly female is arguably the most important aspect of the site.

I've heard this figure cited before. Do you have a source? Also, is it true for online purchases, or just consumer spending in general?

Re: Pinterest Raises $100 MM at $1.5Bn Valuation

#104

Post by tommorris » Thu, May 17, 2012, 1:20 PM UTC

teyc wrote: post #66

Alex3917 wrote: post #24

Earlier quoted context omitted.

"Essentially scrapbooking on the Web" A better analogy is probably delicious for women, at least in terms of having a mental framework to estimate the value.

+1 scrapbooking is a fad, bookmarking is a sign of interest.

But I'd say Pinterest-style scrapbooking is a type of bookmarking, a visual style of bookmarking. And a lot of the things people get excited and interested in are at least in part visual: fashion, lifestyle goods, home and garden projects, wedding day stuff, arts and crafts, food and drink, cars etc.

I'm just looking at the comments on items on the Pinterest homepage: "Love this!", "WANT IT", "available now on Etsy", "Gift ideas", "can someone give me a link where i can buy it online". It's a veritable treasure trove of consumer information for people in the right markets. And it has just enough pictures of hot men, cute baby pictures and occasional silly memes to remain interesting.

Yes, it appeals more to women (and some gay men and arty types and so on), but in the right hands, it's a powerful tool for understanding and supplying the needs and wants of a significant market segment.

There's an interesting possibility for doing some kind of content partnership: imagine Pinterest TV, discussing all sorts of fashion and lifestyle stuff, with partnerships with existing media and retail brands - think Mumsnet or L'Oreal or Vogue or MTV...

Re: Pinterest Raises $100 MM at $1.5Bn Valuation

#105

Post by DanBC » Thu, May 17, 2012, 1:30 PM UTC

akrymski wrote: post #86

Sites like this seem to indicate there are tonnes of fake accounts on Pinterest: www.buyrealpinterestfollowers.com 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 G…

I've not seen fake profiles or fake posts on my Pinterest.

Maybe the fakes are good enough to look real?

Re: Pinterest Raises $100 MM at $1.5Bn Valuation

#106

Post by DanBC » Thu, May 17, 2012, 1:31 PM UTC

cletus wrote: post #5

Well I'm going to head off the predictable and boring "bubble" comments and say this: 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 gue…

> clear path to monetization through affiliate

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.

Re: Pinterest Raises $100 MM at $1.5Bn Valuation

#107

Post by tommorris » Thu, May 17, 2012, 1:32 PM UTC

its_so_on wrote: post #55

emmett wrote: post #48

Earlier quoted context omitted.

On what basis could you not have said the exact same thing about Facebook 5 years ago?

I don't remember where I was five years ago and what Facebook was saying, but if you look at this graph http://en.wikipedia.org/wiki/File:Facebook_popularity.PNG at 2007, and remember what Facebook is (since day 1), it's pretty easy to see Facebook making the argument that it will be used by pretty much everyone, everywhere. It's pretty obvious that pinterest has no such claim. That is one such basis. Other such base…

Hey, Pinterest being cloned by Pinspire? Google "pinterest for porn". It's an easy enough model to clone. So is Flickr and Wikipedia (hey, they'll give you the software for free!) and lots of other sites, but it's hard to recreate the same passionate community.

I think the important value that Pinterest has is the community of pinners and their collective aggregated opinions. That community has the potential to actually be quite a useful testbed and market research mechanism (or even sales channel) for a lot of consumer brands. Maybe not $1.5bn worth of value, but there's quite a bit of space in the social web for more of a female-oriented, arts-and-craftsy, fashionable, aspirational type of site.

Go to your local magazine seller: there's a lot of women's oriented magazines, lifestyle oriented magazines... that's where I think the value in Pinterest is, as a sort of online complement to "aspirational lifestyle" brands.

Re: Pinterest Raises $100 MM at $1.5Bn Valuation

#108

Post by chucknelson » Thu, May 17, 2012, 1:48 PM UTC

grey-area wrote: post #101

arethuza wrote: post #90

Earlier quoted context omitted.

Valuations are based on what someone else might pay - and they might pay a few billion for Pinterest.

That's precisely the sort of bubble economics that the parent was objecting to. The objection is to speculation as opposed to investment - investment expects a steady return based on real profits/assets, speculation expects a greater fool to come along later and pay more for this asset, regardless of what it might actually be worth based on revenue/assets alone . In a bubble (tulips, houses, stock markets) there seem…

Agreed. We can't justify these prices by going "well, that is the perceived value by population X, so it's OK!". Sure, market forces are fine, but when market forces start to be influenced more by hype and popularity than actual business fundamentals, we should shake ourselves and snap out of it.

This has already happened so many times in different markets and the SAME market in the late 90s. I guess it's human nature to just fall in the same trap eventually? Money makes us foolish?

Re: Pinterest Raises $100 MM at $1.5Bn Valuation

#109

Post by arethuza » Thu, May 17, 2012, 1:57 PM UTC

grey-area wrote: post #101

arethuza wrote: post #90

Earlier quoted context omitted.

Valuations are based on what someone else might pay - and they might pay a few billion for Pinterest.

That's precisely the sort of bubble economics that the parent was objecting to. The objection is to speculation as opposed to investment - investment expects a steady return based on real profits/assets, speculation expects a greater fool to come along later and pay more for this asset, regardless of what it might actually be worth based on revenue/assets alone . In a bubble (tulips, houses, stock markets) there seem…

"If your valuations are based on what someone else might pay in future, you are speculating"

Isn't that what angels and VCs always do then?

Re: Pinterest Raises $100 MM at $1.5Bn Valuation

#110

Post by mccon104 » Thu, May 17, 2012, 1:57 PM UTC

its_so_on wrote: post #55

emmett wrote: post #48

Earlier quoted context omitted.

On what basis could you not have said the exact same thing about Facebook 5 years ago?

I don't remember where I was five years ago and what Facebook was saying, but if you look at this graph http://en.wikipedia.org/wiki/File:Facebook_popularity.PNG at 2007, and remember what Facebook is (since day 1), it's pretty easy to see Facebook making the argument that it will be used by pretty much everyone, everywhere. It's pretty obvious that pinterest has no such claim. That is one such basis. Other such base…

Why is everyone in such a rush to compare this to facebook? I believe emmett was just trying to point out that OP's argument was essentially "they're not going to make $1.5b ever, trust me". Which frankly sounds a lot like "No wireless. Less space than a Nomad. Lame."

To give such a definitive "never" answer and say their only hope is if the "bubble keeps inflating" without offering a shred of evidence makes you sound like any critic of anything that has ever gone big.

If you're going to educate me re: the valuation, then by all means educate me. Don't give me some confidently worded finite opinion and expect to pass it off as fact.