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Pinterest Raises $100 MM at $1.5Bn Valuation

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

#31

Post by joshu »

Alex3917 wrote: post #24
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…

"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.

oh, if only.

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

#32

Post by joshu »

runako wrote: post #17
petercooper wrote: post #14

2005: Yahoo acquired Flickr for $35m, Delicious for $15-20m; 2012: Pinterest is now valued at $1500m, Instagram at $1000m. 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?

>> 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.

versus 2006? i doubt it's more than double the number.

maybe it's the comfort level of the audience that helps with monetization?

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

#33

Post by fusiongyro »

abijlani wrote: post #4

The justification for this frothy valuation is that somehow they will turn the browsers of pictures into buyers of products. It is a difficult task and wish them luck but I still don't understand why they would need $120 MM to accomplish it.

"Turning the browsers of pictures into buyers of products" is an excellent turn of phrase, but I think it kind of misses the point. In actuality, Pinterest is about to become the HSN of the internet. It plays to all of Facebook's weaknesses:

- 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.

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

#34

Post by runako »

petercooper wrote: post #22
runako wrote: post #17

Earlier quoted context omitted.

>> 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.

I imagine there is some of that involved but perhaps more importantly is the overall usage of the Internet by those people (i.e. time spent online, using mobile devices, etc)? 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 o…

I think we may be talking about two different sets of numbers. It sounds like you're quoting GOOG's penetration into US (or OECD) total population. (I'm guessing from the percentages.)

I'm saying that the aggregate number of people using the Internet has grown much, much faster. I don't have exact numbers handy, but it's certainly possible that the total Internet population has grown more than 100% over this period.

You also raise an interesting point about frequency of usage, which would also contribute to valuations.

In 2012 it doesn't require huge leaps to see how a company Pinterest rapidly could get to revenue numbers that support this valuation. At YHOO's current revenue-multiple-margin mix, this would imply revenues of around $400m-$500m. I don't know what their revenues are now, but given their growth and reach I'd be surprised if investors didn't pay a higher multiple for Pinterest than for YHOO.

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

#35

Post by runako »

Alex3917 wrote: post #24
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…

"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.

Or more neutrally (and accurately): delicious with pictures.

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

#36

Post by Alex3917 »

runako wrote: post #35
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.

Or more neutrally (and accurately): delicious with pictures.

The userbase is 80% women, and the percentage of active users who are women is probably even greater. Not sure of the demographics of delicious, but I'd guess roughly the inverse.

Also, the fact that the userbase is mostly women is materially important in valuating the business, since female users are generally worth much more than male users.

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

#37

Post by moocow01 »

ricardobeat wrote: post #28

Serious question: how does a company like pinterest spend $100 million? That's enough money to keep SpaceX running for an year, hundreds of engineers building space rockets. 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?

I'd imagine a notable chunk is likely going to servers and infrastructure costs and another chunk will be reserved for current or potential legal expenditures.

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".

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

#38

Post by johnrob »

sskates wrote: post #16

For everyone talking about a bubble, 1.5B might actually be low. If you agree that Facebook is worth about 100B, according to Alexa, Pinterest is about 1/20th of the size by uniques (by pageviews it's about 1/30th). 1/20th means that Pinterest should be valued at about 5B, not 1.5B. http://www.alexa.com/siteinfo/facebook.com http://www.alexa.com/siteinfo/pinterest.com

Interestingly, most bubbles end in a scenario where the decline of a popular asset causes a domino effect through out the system. Silicon valley might by in a 'facebook bubble' - we anchor all of our prices on facebook, and then hope like hell that it isn't over valued.

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

#40

Post by runako »

Alex3917 wrote: post #36
runako wrote: post #35

Earlier quoted context omitted.

Or more neutrally (and accurately): delicious with pictures.

The userbase is 80% women, and the percentage of active users who are women is probably even greater. Not sure of the demographics of delicious, but I'd guess roughly the inverse. Also, the fact that the userbase is mostly women is materially important in valuating the business, since female users are generally worth much more than male users.

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).

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