Pinterest Raises $367M at $11B valuation(techcrunch.com)
techcrunch.com
Pinterest Raises $367M at $11B valuation
http://techcrunch.com/2015/03/16/pinterest-raises-367-million-pushing-it-past-1-billion-raised-in-all/
26 comments
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.
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.
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.
> 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.
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.
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/
[2] https://www.pinterest.com/explore/wedding-ideas/
[3] http://www.businessnewsdaily.com/7356-social-media-marketing...
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/
[2] https://www.pinterest.com/explore/wedding-ideas/
[3] http://www.businessnewsdaily.com/7356-social-media-marketing...
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_56...
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_56...
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.
Sure am tired of seeing that comment everywhere!
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-fo...
http://www.wsj.com/articles/viewers-dont-add-up-to-profit-fo...
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.
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.
If YouTube can increase ad prices without losing advertisers, why aren't they doing that now?
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.
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.
> 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?
But how do you know that it isn't actually 99% window-shopping and fantasy, until you actually put the theory into action?
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?
[1] http://blog.piqora.com/revenue-from-pinterest-more-than-trip...
[2] http://pinnablebusiness.com/infographic-research-shows-pinte...
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.
[1] http://blog.piqora.com/revenue-from-pinterest-more-than-trip...
[2] http://pinnablebusiness.com/infographic-research-shows-pinte...
> 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.
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.
Twitter, Facebook, Instagram are good examples.
[deleted]
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.
>"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?
On what planet is an IPO the finish line?
For founders, employees, and investors that will make significant financial gains from the IPO.
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.
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-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-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...
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.
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-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...
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.
Google Inc. co-founders Sergey Brin and Larry Page, who still own nearly one-fifth of the Internet giant, disclosed Friday that they intend to significantly reduce their stake by selling roughly $5.5 billion worth of stock over five years.[1]
That's from 2010. Since then, GOOG has almost doubled in price (note that there was a stock split)[2], and they have delivered almost constant revenue and profit growth.
Diversification can be a sensible strategy for founders.
[1] http://www.marketwatch.com/story/google-co-founders-to-sell-...
[2] https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...
That's from 2010. Since then, GOOG has almost doubled in price (note that there was a stock split)[2], and they have delivered almost constant revenue and profit growth.
Diversification can be a sensible strategy for founders.
[1] http://www.marketwatch.com/story/google-co-founders-to-sell-...
[2] https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...
Boy oh boy. This is taking a poorly chosen turn of phrase and really running with it. The IPO isn't the end, we get it.
They'd never say it was.. At minimum it's a milestone.
The private market finish line
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.)
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.)
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.
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.
When $111 billion and $11 billion both make sense, neither do.
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?
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.
If those numbers were declining investors wouldn't believe Pinterest could monetize their users like Twitter or Facebook.
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.
Just because it makes sense in the current model doesn't mean it makes sense.
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.
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.
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.
I'm comfortable pointing out misleading comparisons in any statement, whether I agree with the underlying argument or not. When you feel like you are in the minority, it is especially important to choose your comparisons and arguments carefully so that people don't dismiss you before understanding you. When discussing with detail oriented people, it's important to get the details right.
Welcome to the free market. Either deliver what people want or fail. If influencing human behaviour is more important to you, then you may be in the wrong profession.
I see it's now time to condescendingly explain economics to me to counter a morality lamentation, including the suggestion that I should shut up and get out of not just the industry, but my profession, as if somehow I fucked up thinking computers can effect change outside of marketing.
Right, how dare I invest my life into writing software and hoping the possibilities include anything outside of selling Pepsi and Versace. My bad. What do you suggest as my new profession, bottled_poe?
Right, how dare I invest my life into writing software and hoping the possibilities include anything outside of selling Pepsi and Versace. My bad. What do you suggest as my new profession, bottled_poe?
Trust me when I say I'm on your side here. But, let's not forget that computers do little more than add numbers and transmit data. It is the application of this technology that adds economic value to society. And those applications are driven by human desire. Societal change is more effectively influenced through social representation, and there are many avenues to achieve that, but I don't believe creating software in an office space is the most effective one.
I wish things could be different, but without financial freedom, we are destined to build what other people deem valuable. One of the best things we can do is work with people whose values align with our own.
I wish things could be different, but without financial freedom, we are destined to build what other people deem valuable. One of the best things we can do is work with people whose values align with our own.
[deleted]
Economic judgement should not be confused with morality.
I suspect many here agree that Pinterest doesn't contribute greatly to the betterment of humanity. That does not mean it isn't economically valuable.
I actually think there's an argument that trying to quantify moral value in economic terms in itself morally questionable. There's room for other measurement systems outside monetary value.
I suspect many here agree that Pinterest doesn't contribute greatly to the betterment of humanity. That does not mean it isn't economically valuable.
I actually think there's an argument that trying to quantify moral value in economic terms in itself morally questionable. There's room for other measurement systems outside monetary value.
[deleted]
I'm not trying to split hairs, it's a difference of 10x magnitude at least. It's a pet peeve of mine when people compare annual amounts to present values. I'm actually sympathetic to your argument about what society values, but if you want people to listen to what you are saying, you might want to be a bit more careful making comparisons like that.
[deleted]
I wouldn't worry so much about valuations.
Everyday it's XYZ company is raising XYZ million dollar round at X billion dollar valuation.
When the economy corrects itself later after the fracking market explodes this won't matter much.
I'd worry more about what you're doing then a company that monetizes users who look at pictures.
There are much greater problems to solve.
Everyday it's XYZ company is raising XYZ million dollar round at X billion dollar valuation.
When the economy corrects itself later after the fracking market explodes this won't matter much.
I'd worry more about what you're doing then a company that monetizes users who look at pictures.
There are much greater problems to solve.
To put this in perspective, the population of Armenia is ~3 million.
https://www.cia.gov/library/publications/the-world-factbook/...
Tbh, the fact that the advertising value of a company in the first world is worth that much is kinda silly imo. However, it makes your target unclear. Is it the fact that Armenians are so poor per capita?
https://www.cia.gov/library/publications/the-world-factbook/...
Tbh, the fact that the advertising value of a company in the first world is worth that much is kinda silly imo. However, it makes your target unclear. Is it the fact that Armenians are so poor per capita?
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.
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.
I'm not complaining about anything. I'm saying perhaps we overvalue marketing in general.
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.
I love pinterest because the type of people on Hacker News are obviously not the target audience and so can't understand it.
Someone gets engaged. Almost every day between that day and their wedding will be on pinterest to get great ideas on every single item / food / clothing involved.
It's like amazon referrals on steroids
Someone gets engaged. Almost every day between that day and their wedding will be on pinterest to get great ideas on every single item / food / clothing involved.
It's like amazon referrals on steroids
For anyone who thinks this is high: when my wife (and lots of other women in her social group) is in the market for clothes, or wedding ideas, or baby/nursery ideas, she goes to Pinterest first. That is huge potential for monetization from advertising and affiliate sales.
Pinterest is where shopping starts for tons of young women (primarily) with money.
Pinterest is where shopping starts for tons of young women (primarily) with money.
people are saying that 'huge potential' is why someone gives you a million-dollar valuation even though your app doesn't have a revenue stream.
we are talking about ten thousand times higher than that. still on 'potential'...
we are talking about ten thousand times higher than that. still on 'potential'...
It's more than shopping/ideas for shopping directly. Our nanny spends a lot of time on Pinterest to get ideas for crafts/activities with the kid, which are not purchasable items themselves, but still lead to sales indirectly. Another great mode of opportunity given some good analytics.
I think of Pinterest as a visually inspiring search engine. A large portion of people there just use it to browse around, but many people are going there as you mention with goal of finding something to buy. Monetizing that intent is basically the same concept as Adwords, just in a visual medium.
> Since launching in 2009, Pinterest has raised $764M dollars; once this round closes (whether or not they raise the full $578M), they’ll have surpassed the billion dollar mark.
For the sake of this comment let's assume that Pinterest has never had any income at all... can someone please explain what they have spent, or plan on spending, over $1B on? If there isn't a plan to spend this money, what other motivations could they have for raising so much money and why are investors still pouring it in?
For the sake of this comment let's assume that Pinterest has never had any income at all... can someone please explain what they have spent, or plan on spending, over $1B on? If there isn't a plan to spend this money, what other motivations could they have for raising so much money and why are investors still pouring it in?
If the stock market melts down - which it's prone to do once or twice per decade - the ability for Pinterest to IPO and take advantage of favorable market conditions will close, perhaps for years. Simply put, raising money in this environment is extraordinarily favorable, a company may only get this window once every seven to ten years.
The Fed has yet to raise interest rates, but may choose to this year. The end of QE has already removed some liquidity from the markets and set the dollar on a massive run which will put pressure on almost anything priced in dollars. If the Fed raises interest rates, it will sap at least some liquidity from the venture funding market (which is red hot right now).
If Pinterest can't IPO for five years because the stock market crashes in nine months and the economy turns south (almost six years since the last recession already), then ideally they'll want a cash war chest to keep up with the other giants they compete with (directly or indirectly) that are already public or are well funded.
Saying it's prudent for Pinterest to have a billion+ in cash is probably understating things.
The Fed has yet to raise interest rates, but may choose to this year. The end of QE has already removed some liquidity from the markets and set the dollar on a massive run which will put pressure on almost anything priced in dollars. If the Fed raises interest rates, it will sap at least some liquidity from the venture funding market (which is red hot right now).
If Pinterest can't IPO for five years because the stock market crashes in nine months and the economy turns south (almost six years since the last recession already), then ideally they'll want a cash war chest to keep up with the other giants they compete with (directly or indirectly) that are already public or are well funded.
Saying it's prudent for Pinterest to have a billion+ in cash is probably understating things.
this is a good point. if they didn't raise money now, they might have to resort to revenue.
I saw this type of statement a lot by Facebook doubters (it could never make money, it would never have real sales, it had no business model, etc).
Let me check Facebook's last fiscal year.
$12.4 billion sales; $2.9 billion profit
Could Pinterest reach $5 billion in sales and $1 billion in net income based on what they're capable of in the next five or six years when it comes to traffic and the obvious monetization? Yes, and it would make the present valuation dirt cheap.
Twitter just turned on their revenue machine two years ago, and they're already at $500m a quarter. They too supposedly had questionable business potential.
Let me check Facebook's last fiscal year.
$12.4 billion sales; $2.9 billion profit
Could Pinterest reach $5 billion in sales and $1 billion in net income based on what they're capable of in the next five or six years when it comes to traffic and the obvious monetization? Yes, and it would make the present valuation dirt cheap.
Twitter just turned on their revenue machine two years ago, and they're already at $500m a quarter. They too supposedly had questionable business potential.
The prevailing wisdom I was told, if you can raise money on favorable terms, do so.
In any business, and "startups" in general cash is king.
The money could be used to fuel acquisitions, pay early investors, or a number of things.
In any business, and "startups" in general cash is king.
The money could be used to fuel acquisitions, pay early investors, or a number of things.
500+ employees.
500 employees * lets say $150,000 per employee * 6 years is only $450,000,000.
That leaves ~$150m from previous rounds to spend on infrastructure etc before they need to raise more in the latest round.
That leaves ~$150m from previous rounds to spend on infrastructure etc before they need to raise more in the latest round.
Conventional wisdom is that an employee costs the company twice their salary (insurance, facilities, etc.) So it's closer to $1 billion.
I expect that they would be paying each of their 500 employees less than $150,000 yearly salary so had inflated that price to include the other expenses involved in hiring someone. Perhaps it is a little on the low side but if you also factor in that Pinterest wouldn't have been employing 500 people since 2009 I'd hazard a guess $450m is on the high side, not the low, of their actual employee expenses.
Then they are in excess of $2,000,000 per. That don't seem like the reason.
I work for a magazine corporation that does 86 million visitors a view a month. From the publication and media industry, this makes total sense. Within content circulation, Pinterest is often in the top tier of traffic referrers. They are often right after Facebook and in some cases even higher.
I wish they would just hurry up and IPO so I could invest in them. Anyone who thinks Pinterest isn't worth much, or it's just a scrapbook website, clearly doesn't have a woman in their life. My wife (and really every woman I know) use Pinterest all the time WITH THE INTENT TO PURCHASE things. Planning weddings, and nurseries, and houses, and remodeling, and and and...
That is why Google is valuable. People go there with intent to buy things. Facebook has learned how to make money. Twitter has learned how to make money. Pinterest has a much much easier road than either of those did. The people investing in this round will absolutely make money.
That is why Google is valuable. People go there with intent to buy things. Facebook has learned how to make money. Twitter has learned how to make money. Pinterest has a much much easier road than either of those did. The people investing in this round will absolutely make money.
I've said it before.
Pinterest is what Delicious should have been, if Yahoo had any vision at all.
Pinterest is what Delicious should have been, if Yahoo had any vision at all.
Isn't the holy grail of advertising perfect targeting? Users aren't annoyed by the perceived degradation of the platform where the ads are served, ad companies don't waste money on ads the user isn't interested in, and the clicks result in far more revenue. Pinterest is a leap in this direction. They have enormous potential and a brilliant team.
I can't remember a time I've purposefully clicked an ad on Facebook/Twitter. The only problem with Pinterest is that it seems plagued by duplicate content.
I can't remember a time I've purposefully clicked an ad on Facebook/Twitter. The only problem with Pinterest is that it seems plagued by duplicate content.
A lot of people here dismiss Pinterest as just a "digital scrapbook" or "marketing tool". And while Pinterest is those things, it's also a new way of searching. And that's where the real value of Pinterest is. Their search technology has the potential to rival Google. I think that's worth a valuation of several billion dollars.
nearly a million per employee. what the heck do they plan on using that much capital for... especially with forthcoming ad revenue.
Money is cheap right now.
What are they going to do with the money? How good can they make their website?
Technology acquisitions can be very useful for a company like Pinterest, whether for talent or the tech. It's not difficult for a company to spend tens or hundreds of millions on acquisitions.
There are no doubt useful companies out there for Pinterest to buy, no different than there have been for Facebook, Twitter, Google, et al. over the years of their various stages of maturity.
At Pinterest's size, and given their long-term ambition to be a large, successful business... it's for all the non-obvious reasons you can't think of that a billion dollar cushion might be useful. Always raise money when you don't need it; raising it when you need it, is the worst time, you'll go begging on your knees or at a minimum will be in the weaker negotiating position.
There are no doubt useful companies out there for Pinterest to buy, no different than there have been for Facebook, Twitter, Google, et al. over the years of their various stages of maturity.
At Pinterest's size, and given their long-term ambition to be a large, successful business... it's for all the non-obvious reasons you can't think of that a billion dollar cushion might be useful. Always raise money when you don't need it; raising it when you need it, is the worst time, you'll go begging on your knees or at a minimum will be in the weaker negotiating position.
Anyway to see how much of the company is still in the hands of founders?
By taking $367m at $11b valuation, they have given away ~ 3.33% in this round. You may work backwards for previous rounds.
For initial rounds with no public valuation info, you may assume 25% of the company was given away in each round.
For initial rounds with no public valuation info, you may assume 25% of the company was given away in each round.
Pulled valuation data for each round from the pitchbook.com platform:
http://i.imgur.com/OfBDZz0.png
Let me know if you want to see any specific cap tables, happy to pull those out.
http://i.imgur.com/OfBDZz0.png
Let me know if you want to see any specific cap tables, happy to pull those out.
Yeah, assuming all founders started out with 33%, they'd probably have 5-10% right now, probably closer to 5%.
Best case scenario would be: 33% * (75% angel) * (75% series A) * (75% series B) * (85% series C) * (95%^4 Series D-G) = ~10%
It could probably go down as far as 4 or 5% depending on how big option pools were and just how much dilution was in the earlier rounds.
Best case scenario would be: 33% * (75% angel) * (75% series A) * (75% series B) * (85% series C) * (95%^4 Series D-G) = ~10%
It could probably go down as far as 4 or 5% depending on how big option pools were and just how much dilution was in the earlier rounds.
> Best case scenario would be: 33% * (75% angel) * (75% series A) * (75% series B) * (85% series C) * (95%^4 Series D-G) = ~10%
Doesn't this assume that the earlier investors either didn't get pro rata rights (unlikely) or didn't choose to exercise them (conceivable for later rounds)?
Doesn't this assume that the earlier investors either didn't get pro rata rights (unlikely) or didn't choose to exercise them (conceivable for later rounds)?
When funding is announced the amount put in via pro rata rights would be included in whatever the total that is announced.
If a startup said they raised $10 million led by XYZ VC, that means that XYZ VC probably put in $5-7.5 million, and the rest would be filled with other investors and previous investors.
If a startup said they raised $10 million led by XYZ VC, that means that XYZ VC probably put in $5-7.5 million, and the rest would be filled with other investors and previous investors.
Makes sense -- thank you.
I think it's less then that. Pinterest's early days were rough, and I heard that their B or C round was on unfavorable terms just to keep the lights on before they blew up.
Well a worst case scenario might be something like:
33% * (66% seed funding) * (66% angel round) * (60% series A) * (60% series B) * (70% series C) * (85% series D) * (90%^2 series E/F) * (95% series G) ~= 2.4%
Still > 2% of an 11B company isn't bad.
33% * (66% seed funding) * (66% angel round) * (60% series A) * (60% series B) * (70% series C) * (85% series D) * (90%^2 series E/F) * (95% series G) ~= 2.4%
Still > 2% of an 11B company isn't bad.
I would not cry if I got, say, 1% of an $11B company (that is to say: $110 million).
Does anyone else think 11B is insane? Higher valued than Dropbox and Airbnb? They must have pitched hell of a monetisation plan.
I think Pinterest is way more valuable than Dropbox. They have a great product, very large dedicated user base, and a very clear path to monetization.
Isn't Pinterest more like del.icio.us in the sense that if something better comes along they are screwed? I understand that Facebook is hard to replace because you need to get everyone to migrate. Does that apply to Pinterest?
Less of a network effect than Facebook, I would think, because most users of Pinterest are pure content consumers, rather than hybrid content producers/consumers.
That said, they have a very large library of existing content, a large number of producers who have devoted a fairly large amount of time to Pinterest, and also... a space in which it would be hard to distinguish yourself by pure feature competition. How do you make a website that is substantially better than Pinterest at showing pictures and letting people bookmark them? If you create incrementally better search/recommendation technology, I think it would be hard to communicate your tech advantage to the average user, particularly before you develop a deep content library.
That said, they have a very large library of existing content, a large number of producers who have devoted a fairly large amount of time to Pinterest, and also... a space in which it would be hard to distinguish yourself by pure feature competition. How do you make a website that is substantially better than Pinterest at showing pictures and letting people bookmark them? If you create incrementally better search/recommendation technology, I think it would be hard to communicate your tech advantage to the average user, particularly before you develop a deep content library.
Delicious never acquired a truly mass audience, they never got out of the niche of traditional bookmarks as far as their peak audience days were concerned.
I'd say Pinterest has a few strong things in its favor: 1) it benefits from network effects, beyond anything Delicious saw; 2) people accumulate value in their use of the site, to leave is to abandon that effort; 3) they have a national (early global) brand, whereas most people never heard of Delicious 4) they dominate a demographic that is extremely valuable in line with their monetization plans, Delicious had nothing like it 5) Delicious was founded in 2003, the Pinterest scale potential in 2015 is drastically larger, with mobile opening a global audience of a billion potential users
It's also worth noting that bookmarked web sites rot, disappear, etc. Being able to visually go back and look at concepts, ideas, inspiration - is far more useful over the long haul (eg after three years of content accumulation as a user).
I'd say Pinterest has a few strong things in its favor: 1) it benefits from network effects, beyond anything Delicious saw; 2) people accumulate value in their use of the site, to leave is to abandon that effort; 3) they have a national (early global) brand, whereas most people never heard of Delicious 4) they dominate a demographic that is extremely valuable in line with their monetization plans, Delicious had nothing like it 5) Delicious was founded in 2003, the Pinterest scale potential in 2015 is drastically larger, with mobile opening a global audience of a billion potential users
It's also worth noting that bookmarked web sites rot, disappear, etc. Being able to visually go back and look at concepts, ideas, inspiration - is far more useful over the long haul (eg after three years of content accumulation as a user).
That's always a possibility, but I think at this point it would be just as hard to dethrone Pinterest. A lot of the content on Pinterest is pinned from within the site itself. I dunno what the percentage is, but most people I see that use Pinterest are usually just browsing their feed which is made up of pins from the people they follow (and the topics they are interested in). You also have to consider the amount of time that people invest into creating their boards and organizing all of their content. My sister has somewhere close to 20,000 pins now organized into very specific boards. She also has hundreds of followers and follows a ton of people.
They have some decent network effects. People follow each other and there are curated boards that are almost sub-brands on their own.
There have been some fairly well funded attempts to build a competitor (eg, Fab at one point tried it), but nothing really got close.
It's probably not as sticky as Facebook, but OTOH there's a lot more purchase intent.
There have been some fairly well funded attempts to build a competitor (eg, Fab at one point tried it), but nothing really got close.
It's probably not as sticky as Facebook, but OTOH there's a lot more purchase intent.
Well Airbnb is at 20B now, if that helps....
Getting some more money in before the bubble bursts. Intelligent move. Everyone should do that before it's too late.
I'm surprised they didn't get acquired yet. Surely they must have turned an offer or two down by now.
May have turned down 100s of millions from Google in 2012.
http://techcrunch.com/2012/01/19/ginterest/
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Good, world needs more consumer internet startups. All the B2B has been getting depressing.
its a visual search engine that is taking share from google. It's ad formats perform as well as search ads. $11B is undervalued, especially compared to whatsapp et al.
seems weird to raise so much money at this point in the game... a third of a billion dollars...
This shows that we are in a major bubble...finally poised for a major major market correction.
I can't stand Pinterest or any other site that forces me to login to see content that they copied from other sites.
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This seems like an amazingly high valuation for a company that basically does digital scrapbooking.
Think of it more like Google in that people search Pinterest for things they like and want to buy and it is much more interesting than a scrapbook. You can't really type 'shirt and shoes I like and want to buy' into Google, but you can do that same sort of thing on Pinterest. Pinterest can monetize that intent through affiliate deals and advertising like Google does with search intent.
I know, I don't think it's without value. I'm just not seeing how it's worth this much, though.
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That's larger than the market cap of LG, Citrix, Mitsubishi, Isuzu, Nvidia, to name a few. And those are companies that produce real goods and have real assets.
But is it overvalued? Only time will tell
But is it overvalued? Only time will tell
Producing real goods leads to small margins. Materials, manufacturing and transporting are not cheap to do. Technology companies enjoy high valuations based on their generally very high margins.
Margins are irrelevant without sales.
Also http://www.investopedia.com/terms/b/bookvalue.asp
Can't really understand why I'm downvoted for this, since all I did was state a fact.
Also http://www.investopedia.com/terms/b/bookvalue.asp
Can't really understand why I'm downvoted for this, since all I did was state a fact.
It's getting awfully frothy around here. I keep getting reminded of headlines like these (except that the numbers are even more insane now):
http://www.nytimes.com/1999/10/26/business/excite-home-to-ac...
http://www.nytimes.com/1999/10/26/business/excite-home-to-ac...
Good. In the age when the planet is faced with overpopulation, climate change, pollution and a myriad of other issues, including the shadow of ww3, the investors bet on a photo-sharing startup.
Down-voters rejoice, but I couldn't care less about pinterest and what it offers. Maybe I'm getting old or maybe being a parent gives me a different perspective, but 11B for nicely arranged list of photos is idiotic.
I'm sure it makes a lot of business sense to the investors, which is the really sad part of it all.
Down-voters rejoice, but I couldn't care less about pinterest and what it offers. Maybe I'm getting old or maybe being a parent gives me a different perspective, but 11B for nicely arranged list of photos is idiotic.
I'm sure it makes a lot of business sense to the investors, which is the really sad part of it all.
This point of view is incredibly myopic; what you're seeing is what innovation looks like to people who don't benefit directly from said innovation. Knowledge discovery is huge, and it becomes especially profitable when that knowledge is tied to existing products (e..g expensive jewelry, wedding dresses).
Maybe I'm myopic, or maybe everyone else is.
The state of the world seems to show that the vast majority of people, even the smart ones, don't really get it yet. But they will, sooner or later the elephant in the room will be impossible to ignore. Let's hope it won't be too late then.
The issue is this: the world doesn't need more 'innovation' - we've already innovated enough to the point of being on the verge, all in the name of 'products' and profit.
If articles like 'California has 1 year left of water' doesn't sound alarm bells then take a look around - these kind of news are all over the world.
Our only hope out of this is to apply what we already know and 'un-inovate' ourselves so that our children can have a chance of survival.
Not for the sake of profit, but for the sake of future generations.
And no, the governments, politicians and the like won't do it, they can't, they don't create the world - we do, the creators, the innovators.
It is our responsibility to switch focus and really look at how we can apply our knowledge to the real world 'problems'.
Pinterest's long term value (50+ years) is zero in my opinion, even though it might create a nice bubble in the short term.
The state of the world seems to show that the vast majority of people, even the smart ones, don't really get it yet. But they will, sooner or later the elephant in the room will be impossible to ignore. Let's hope it won't be too late then.
The issue is this: the world doesn't need more 'innovation' - we've already innovated enough to the point of being on the verge, all in the name of 'products' and profit.
If articles like 'California has 1 year left of water' doesn't sound alarm bells then take a look around - these kind of news are all over the world.
Our only hope out of this is to apply what we already know and 'un-inovate' ourselves so that our children can have a chance of survival.
Not for the sake of profit, but for the sake of future generations.
And no, the governments, politicians and the like won't do it, they can't, they don't create the world - we do, the creators, the innovators.
It is our responsibility to switch focus and really look at how we can apply our knowledge to the real world 'problems'.
Pinterest's long term value (50+ years) is zero in my opinion, even though it might create a nice bubble in the short term.
This is just another bubble, years of printing money and low interest rates, there is no way that Pinterest has that value, neither Uber with all its legal issues across the world. sorry downvote me all the what you want that is the true.
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.