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

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

#121

Post by jon_dahl » Thu, May 17, 2012, 3:49 PM UTC

madaxe wrote: post #83

stroboskop wrote: post #56

Earlier quoted context omitted.

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

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…

You're ultimately right, though future EBITDA (or future dividends) is more interesting than current EBITDA. Otherwise a pre-launch startup with no revenue and interesting technology would be worth $0, and a declining company with $1B of EBITDA would be worth the same as a growing company with $1B.

The question is whether Instagram can eventually contribute enough to Facebook's bottom line to justify the $1B valuation. Its current (lack of) revenues obviously don't get it there, but it's the future that matters.

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

#122

Post by inthewoods » Thu, May 17, 2012, 4:00 PM UTC

jonknee wrote: post #117

inthewoods wrote: post #99

Earlier quoted context omitted.

According to the blog post, consumers are 10% more likely to buy vs. Facebook - well, that's a decent lift stat but it does, as someone else mentioned, depend on the base. Then, later in the article we learn that in Sept 11 they had 75 total orders (across 26,000 shops) via pinterest, then 320 orders in April 2012. Yes, that's more or less 4x the Sept number and does indicate an upward trend - but that's still a very…

... That's just from Shopify stores though. Most things people buy (and Pin) aren't sold on Shopify stores. All that data is good for is showing that it's increasing rapidly.

That was kinda my point - and that the rate is unlikely to sustain...

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

#123

Post by inthewoods » Thu, May 17, 2012, 4:03 PM UTC

joering2 wrote: post #118

inthewoods wrote: post #100

Earlier quoted context omitted.

Get bought by Amazon or Google in my mind - they have stock to do it, and it would benefit either of them (although less for Google). I could see Amazon buying them as, essentially, infrastructure for driving ecommerce sales.

they just raised a round on 1.5B valuation. Just exactly how much money you think Amazon or Google would be willing to spend on this deal? I would assume that if they just raised that round, the would not talk about anything less than 10X. I don't think neither Amazon nor Google would pay 15B for a company, regardless how much traffic they are getting. For that amount, and knowing Google, they would rather build thei…

Why would you assume it would have to be 10x? But I agree with your broader point that it would have to have amazing metrics to support that valuation on purchase. Instagram, from my point of view, was as much as defensive move as anything else - not sure there would be the same driver here.

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

#124

Post by joshuahedlund » Thu, May 17, 2012, 4:05 PM UTC

andrewhillman wrote: post #46

k-mcgrady wrote: post #43

Earlier quoted context omitted.

>> (as far as I understand Pinterest does not yet have revenue) 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…

I think they stopped using skimlinks a few months ago.

And they started stripping user affiliate links (at least to amazon) about a month ago (aka soon after the story came out about the guy spamming pinterest for thousands a day). I know, it's hard to keep up!

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

#125

Post by wtvanhest » Thu, May 17, 2012, 4:12 PM UTC

madaxe wrote: post #83

stroboskop wrote: post #56

Earlier quoted context omitted.

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

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…

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.

Having a £3M business is insanely awesome. If you want an answer to your question about why your business isn't worth $1.5B, please give detials on your business and people will surely tell you.

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

#126

Post by Alex3917 » Thu, May 17, 2012, 4:48 PM UTC

rudiger wrote: post #103

Alex3917 wrote: post #45

Earlier quoted context omitted.

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?

I don't have a good cite, I believe it's supposedly all purchases though. Not sure how accurate it is, but my understanding is that sites with a lot of women do have vastly better clickthrough rates and conversion on their ads so it's not entirely apocryphal.

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

#127

Post by jdavid » Thu, May 17, 2012, 4:54 PM UTC

strlen wrote: post #27

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…

The other interesting part about Pinterest is that they mostly gained traction outside of the traditional early adopter segments. 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 ther…

pinterest was profitable before the court case that made it more difficult to use skimlinks.

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

#128

Post by k-mcgrady » Thu, May 17, 2012, 5:12 PM UTC

andrewhillman wrote: post #46

k-mcgrady wrote: post #43

Earlier quoted context omitted.

>> (as far as I understand Pinterest does not yet have revenue) 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…

I think they stopped using skimlinks a few months ago.

Wow, things move fast. I thought they only started using skimlinks a few months ago! Thanks.

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

#129

Post by joshu » Thu, May 17, 2012, 9:06 PM UTC

jamiequint wrote: post #72

joshu wrote: post #63

Earlier quoted context omitted.

Any sense of how big pinterest currently is?

A few months ago they had one board and auto followed all their users to it. That board had around 21M registered users. Comscore put them at 17.8M uniques in February.

Hm. Delicious had ~ 7m registered when I left. Maybe not so different in size.

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

#130

Post by grey-area » Thu, May 17, 2012, 10:04 PM UTC

arethuza wrote: post #109

grey-area wrote: post #101

Earlier quoted context omitted.

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?

Pretty much, yes, though you could argue that the best ones speculate not on what others will be prepared to pay for a company in the future, but on what they think a company could earn.

Pinterest, Instagram etc will likely never earn enough to pay back their current crazy valuations, so their valuations are the first kind of speculation, not the latter. Personally I feel Facebook is also in this group, and is overvalued right now, given their current and likely future revenue.