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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

#41

Post by its_so_on »

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…

Let me help you out with this part "Is it worth $1.5B?"

If you are left holding the bag, and they have to generate 1.5B in sales over their lifetime from this money to make it a worthwhile investment, then no: pinterest will never accrue 1.5B in revenue over its lifetime.

If you are not left holding the bag and this bubble keeps inflating, yes. It's easy to see how Pinterest can raise money at an even higher valuation with just a little more "spectacular" growth. (It's not really spectacular. More like a fad.)

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

#42

Post by ironchief »

Numbers for thought

Playing a thought game, let us say the money is supposed to last 18 months till the next round (with a higher valuation!?) Let us also assume engineers cost a flat rate of 100,000 per year.

120,000,000 dollars / 1.5 years (18 months) / 100,000 per engineer per year = 800 engineers for 18 months or 400 for 3 years

Pinterest: 31 employees http://pinterest.com/about/team/ 2.9 million DAU (Daily active users) 11.4 million MAU (Monthly active users) http://www.appdata.com/apps/facebook/274266067164-pinterest

Instagram: 13 employees 2.0 million DAU 16.8 million MAU http://www.appdata.com/apps/facebook/124024574287414-instagr...

They must envision hyper growth continuing ~14% a month (to see 10x increase over 18 months).

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

#43

Post by k-mcgrady »

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…

>> (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 provide a decent revenue stream.

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

#44

Post by notatoad »

nchuhoai wrote: post #25

Two points people should be thinking about: Yes, Pinterest has a good monetization scheme compared to Facebook ( http://cdixon.org/2012/05/15/facebooks-business-model/ ), because of the natural placement of affiliate links and purchase intent. But, Pinterest is so new (relatively), we don't really know whether it's just a fad or something to stay and I oftentimes feel like that risk of being replaced or simply forgot…

>But, Pinterest is so new (relatively), we don't really know whether it's just a fad or something to stay

i think we can confidently say that it's a fad. social content aggregators don't last. it's just a fact of the industry. kudos to pinterest for collecting some cash while they're hot, but it's only a matter of time before they go the same way as all their predecessors.

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

#45

Post by Alex3917 »

runako wrote: post #40
Alex3917 wrote: post #36

Earlier quoted context omitted.

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 ).

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.

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

#46

Post by andrewhillman »

k-mcgrady wrote: post #43
strlen wrote: post #27

Earlier quoted context omitted.

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…

>> (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.

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

#47

Post by emmett »

notatoad wrote: post #44
nchuhoai wrote: post #25

Two points people should be thinking about: Yes, Pinterest has a good monetization scheme compared to Facebook ( http://cdixon.org/2012/05/15/facebooks-business-model/ ), because of the natural placement of affiliate links and purchase intent. But, Pinterest is so new (relatively), we don't really know whether it's just a fad or something to stay and I oftentimes feel like that risk of being replaced or simply forgot…

>But, Pinterest is so new (relatively), we don't really know whether it's just a fad or something to stay i think we can confidently say that it's a fad. social content aggregators don't last. it's just a fact of the industry. kudos to pinterest for collecting some cash while they're hot, but it's only a matter of time before they go the same way as all their predecessors.

Would you care to set any kind of specific timeline on your very confident sounding prediction? Put your (reputational) money down?

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

#48

Post by emmett »

its_so_on wrote: post #41
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…

Let me help you out with this part "Is it worth $1.5B?" If you are left holding the bag, and they have to generate 1.5B in sales over their lifetime from this money to make it a worthwhile investment, then no: pinterest will never accrue 1.5B in revenue over its lifetime. If you are not left holding the bag and this bubble keeps inflating, yes. It's easy to see how Pinterest can raise money at an even higher valuatio…

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

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

#49

Post by emmett »

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?

Delicious was far smaller than pinterest is today. And unlike pinterest, it did not have an excellent monetization option attached. Not really comparable.

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

#50

Post by emmett »

ironchief wrote: post #42

Numbers for thought Playing a thought game, let us say the money is supposed to last 18 months till the next round (with a higher valuation!?) Let us also assume engineers cost a flat rate of 100,000 per year. 120,000,000 dollars / 1.5 years (18 months) / 100,000 per engineer per year = 800 engineers for 18 months or 400 for 3 years Pinterest: 31 employees http://pinterest.com/about/team/ 2.9 million DAU (Daily activ…

You're missing monetization. I love instagram, but it's a lot harder to monetize than a service which amounts to a giant online shopping guide.
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