The number of "I don't get it." comments on this thread should be a lesson for everyone. THIS is the reason diversity in your company and social circle is important. A forum full of men not understanding how a $3.8 billion company is successful.
> A forum full of men not understanding how a $3.8 billion company is successful.
I guess that begs the question: how is a web app that reposts content that doesn't belong to them and with zero revenue a "$3.8 billion company" again? I won't accept any answer from an investor or web "entrepreneur" type that has everything to gain from cashing in. The real lesson here is speculation and shortsightedness never changes and this is 1999 all over again.
Looking forward to the coming IPOs of Pinterest, Snapchat, Rap Genius!
You should do some google digging on early Facebook, Twitter, and Amazon commentary. Granted, Facebook and Twitter don't have Google-level revenues, but early commentary about them was pretty much "they CAN'T make money on a social product". Facebook made over 4 billion dollars in 2011. Amazon's first years had some great commentary as well.
It turns out that EVERY SINGLE TIME someone builds a product that zillions of people love in an enduring way, they are able to hire world-class value-extraction experts who can make zillions of dollars.
Pinterest has the extra advantage of intent-- shoppers pinning products that they want/love gives Pinterest a lot more power to advertise cleverly than Facebook/Twitter. Unsure about Snapchat and RapGenius, but the key question is "With that audience and that growth, what could the smartest people in the industry turn them into if they were armed with functionally infinite spending money?"
> "With that audience and that growth, what could the smartest people in the industry turn them into if they were armed with functionally infinite spending money?"
Ad-ridden, privacy-destroying malware I'd imagine. Since that's all the "smartest people" in the biz are working on: getting people to click ads and subverting the web.
The Facebook Jr's out there won't like to hear it but that's the cold truth.
I was commenting on the revenue potential, not the ethics or quality of the product at the end of the process.
That said, I still love Google Search-- it's nigh magical how it shortens the distance between my brain and the answers it craves at any given moment. And I still watch youtube (yet another service that some said would never make money), even with the ads. And I still use Facebook to stay connected with friends while I travel the world for the next 6 months or so. I don't see any (present or future) privacy consequences with these services, and the ads hover right around the "tolerable" range.
No privacy consequences with Facebook? I don't think that sounds right. They've been hell-bent on destroying the term since conception which isn't good for most users not mindful of that.
What are the consequences, though? Yes, they have a lot of data about me. What can they do with it that damages me? And even if we can imagine something that benefits them at my expense, every news outlet DREAMS of publishing a "Facebook ruins user's life with privacy invasion" story. Doesn't take many of those for wholesale evacuation of Facebook, does it?
The consequences range from enabling the surveillance state, data theft, NSA slurping, job loss, employer intrusion, bullying, lowering of credit scores, depression, stalking, jail.
That is a great piece of advice. I'm increasingly confused about how best to understand & keep on top of what's happening in the world of social media because I personally don't use Facebook, Pinterest, Whatsapp, Snapchat, Google+ etc.
At what point will my personal decision to opt out off the leading social networks (Twitter, and LinkedIn to a lesser extent, are exceptions) start affecting my professional insight into where the Internet and the bulk of its users are headed? I frankly don't know.
I'm in exactly the same position. I'd honestly rather spend my time meditating, reading or playing outside in the world.
I rationalize the renunciation of social media by remembering that I'm looking to build something incredibly innovative. And to build something incredibly innovative, it helps to (first) step away from the crowd, (second) find a boon, and (third) bring it back.
I think you can worry about the crowd after the first 2. At least then you have direction amidst the chaos.
All that is fine and kudos to you for having that ambition. Do remember that you also need to know how things work and what makes them work.
Internet, at its root, is a communication medium. Things like facebook, google+, pinterest, snapchat, etc. are part of a VERY natural evolution of this medium.
Being part of the chaos doesnt mean you cant see order amidst it. That's where great entrepreneurs come from. They dont go away from all society and magically, one day, reappear with a brilliant idea. They are in the middle of the chaos, figuring out what works, why it works and how to make it work even better...
This is exactly the rebuttal that was given for Facebook 2 years ago. Facebook has been hitting or besting their numbers since IPO. Yes, creating a valuation for a company that doesn't make money is going to be somewhat inaccurate, but companies that solve the chicken egg problem and gather mass have great value in the digital age. Even if you take an example of a website that failed like Myspace, they made enough revenue off ads to justify their valuation before they tanked.
Facebook clearly had something two years ago. In 2011 they managed to generate almost $1 billion in free cash flow on almost $4b billion in revenue...obviously there is a business model in there somewhere, even if its valuation is debatable (when isn't it?). Pinterest however, as I understand it, doesn't generate any revenue let alone any profits. It's the whole minor formality of zero freakin revenue that's the tip-off that something is hugely amiss with Pinterest as a capitalistic enterprise.
In case anyone wants an easy way of understanding what Pinterest is and why it's so popular with women, I urge you to find one of those cheesy women's magazines (Cosmo will do) and flip through it. You will most certainly find a page that looks like this: http://www.zatchels.com/press/wp-content/uploads/2013/03/Wom...
Pinterest is a digital representation of exactly that page, but now anyone can be the curator (not just Cosmo) and more importantly, it has the ability to make the buying process more frictionless. You want the hat, sunglasses, and skirt? Great, just click the button and buy.
While that's part of the attraction, I think to really understand Pinterest you should probably understand three use cases: why you'd curate, why you'd care about what an actual friend curated, and why you'd care about what a stranger curated. It's the interaction between these three which causes Pinterest to spread like wildfire.
A bridal magazine curated by your bff is not just a bridal magazine.
We're tearing our kitchen down to the studs and building a ridiculous new one. Erin's been pasting details up on Pinterest, and sharing them with some of our friends who are also interested in stuff like this; just that casual sharing has generated purchases.
I think people really underestimate the impact of purchase intent, and overestimate the impact of value propositions that work with women.
Even though I would have wanted a new kitchen as well I would have negotiated with my wife to allow me to spend some of the money from selling my company (you know what I'm referring to) on a fast car or other similar toy while she was distracted with the joy of the new kitchen. And before the bathroom is torn up down to the studs.
I had a fast car sold it and bought another when they re-did the model.
That said it provides no where near the enjoyment that playing with computers does or negotiation (which is fun and a game for me). Both I never get tired of. Had a boat for years but I would get bored if I used it more than every week or two. (Sold that). I'm renting out a vacation place since I only used it twice over the summer. Same thing tired of it at this point.
I get more thrill out of writing a shell script that automates something than from driving the car.
But people who see the car (especially younger guys on the way up) think it's the greatest thing in the world.
The best I can do with it on the local road is say hang at 15mph and take it to 75 which gives perhaps 2 to 2.5 seconds of thrill. (Not going to go from a dead start and burn the clutch or wear tires or anything). Once at 75 you are done. I could take it to a track but that is miles away and well I don't want to put to many miles on the car.
I enjoyed the hell out my car the year I bought it, but then every other year, all I could think about was how much better successive years models were; it was unhealthy.
Reminds me of a convo with one of my very best friends..
Him: "You live in San Francisco. What do you need a car for?"
Me: "Loving, mostly."
I get more enjoyment out of having and caring for and loving the car than driving it. But that sort of love does diminish when I start to covet other models or newer model years.
No; she's not curating for friends, she's just using it as a pasteboard to collect ideas. But even without the intent to curate a collection for others to view, the purchase influence was there, and strong.
It's like an infographic crossed with consumer reports crossed with a best practices post... I had wondered about the value of pages like this in magazines, but if you swap out women's blazers with say iPhone docks, I suddenly see the crack-like appeal of pages like this. Come to think of it, I seem to recall Popular Mechanics having a similar spread for power screwdrivers!
That's a great example that you gave actually. The person who creates a site that allows people to do exactly that (construct outfits just like that sample shown) will have a possible winner on their hands. Not that I play it (I'm not into sports) but I'd imagine a site like that is a bit like fantasy football in appeal.
This won't go over well with the YC crowd given the forgiveness-is-better-than-permission indoctrination, but I find the scale of Pinterest's copyright infringements (users or Pinterest copying images from blogs and other sites and republishing them on Pinterest pages) to be really mind-boggling. I guess as long as it's not music or movies, both with powerful lobbies and lawyers behind them protecting their interests, still images are fair game (forget fair use) and rights-holders, often individual bloggers who took a nice photo, are at the mercy of DMCA. So Pinterest just pisses me off.
I think many HN readers have a hard time relating to Pinterest because we aren't the target demographic, but from what I can find they have great metrics.
The question is whether they can monetize despite lack of purchasing intent (as compared to Google, Amazon, Yelp, etc). However from some anecdotal evidence[0], it appears that growing revenue may not be as difficult for Pinterest as it is for Facebook or Twitter.
I'm pretty bullish on Pinterest, and a $3.8B valuation doesn't seem out of line compared to Twitter ($20B) and Facebook (~$80B pre-IPO), Instagram ($500M).
Heh, careful with that "we" - don't leave out those of us who are in the target demographic of both Hacker News and Pinterest. :)
I have less purchasing intent while browsing Pinterest than I do while looking at Yelp or Amazon (or Etsy), but I spend more time on Pinterest than on shopping sites. I've bought several things I had originally pinned just because they were interesting and then later realized would make a good gift for somebody.
Did you end up going back to Pinterest to find them or did you just have it in your head after pinning it? The entire attribution of a pin to a purchase in a store is tough if there's no obvious path from Pinterest to the retailer.
I usually go back to Pinterest to find the specific thing, and sometimes I'm directly browsing through my pins while trying to think of a gift. But it's a leaky system of course; for example, sometimes I've pinned a Flickr photo of the thing instead of an image linked to a website that sells the thing.
The data alone must be valuable. If you were a brand and you got an idea of who pins your wares, and what else they pin, and their demo, you could really sharpen your marketing messages. You could also uncover affinities you didn't know about.
I disagree re: lack of purchasing intent. Pinterest is, in many ways, a personally curated gallery of things people want.
If I were to sort social media properties by purchasing intent, I'd put pinterest near the top - certainly far above facebook or twitter, probably above google too. Still below Amazon, but Amazon is also not fundamentally social, whereas Pinterest is.
Pinterest is the fastest growing source of social referrals on the web, 3x as many as twitter.(1) Price seems high, but they are only 2nd to Facebook on one of the holy grails of marketing - social referrals -
I used to think that Pinterest was a fad but that's because I had little understanding of its appeal and obviously I am not the target market but over the last few months for an article I've been writing about Pinterest being a silently growing dark horse in the social category I've come to realise it appeals to a lot of people. Amongst the fashion, make-up and hair niches Pinterest is pretty darn popular. Fashion stylists use it to create inspiration collections, make-up artists use it for helping create new looks and hairdressers especially love creating hair collections for inspiration as well.
There is also another segment that Pinterest appeals to and it's massive: women. Pinterest is used by a lot of women to create wishlists and curate their own look collections. My girlfriend has an avid interest in vintage clothing & decor and the TV show Mad Men and she uses Pinterest to create outfits that match those of the TV show. But not only that, she uses it as a shopping basket/wishlist of sorts and that kind of data is surely valuable. I know for a fact she has made purchases as a result of collections she has created on Pinterest, more times than I can count and I assume many other people have as well.
Many might not see the appeal in what appears to be from the outside an over-glorified image collecting service, but it's obvious it's a lot easier for Pinterest to make money in comparison to the likes of Facebook which currently struggle with monetisation. Don't underestimate Pinterest.
Then you are obviously not the target market for such a site either. The fact they have the kind of engagement metrics other sites would literally kill for says something about how good their product is.
I'm not surprised, Pinterest is the ultimate consumerist social network and thus worth a lot of money. The method of self-expression is obsessively arranging and curating shopping lists of colorful items, and sharing them with like-minded people. It doesn't take long to realize how much money there is to be made off this.
I smell a bubble. They're not nearly worth any of this.
Their service is trivial, and can't scale. They have a great user base, but I can't imagine them moving in the right direction. At the moment, it looks like a glorified wishlist.
At one point, the paradox of choice will kick in, and they'll realize that too much (without proper curation) is as bad as not enough.
I hope they will do the right thing (it's quite obvious what they should do), but I predict that they won't. They'll miss the big picture, focus on scaling in quantity (not quality), and burn through their money in no time. That's what happen to startups that think they have won.
But that's just my prediction. We will see what will happen.
Pinterest engagement metrics are (at least as of six months or so ago) higher than those of Facebook, Twitter, and Tumblr, and users have much more clearly defined levels of purchase intent.
In a world where Tumblr and Instagram hit star-studded exits, I would be incredibly surprised to see Pinterest fail.
I agree, its actually the only one on that list that doesn't suffer from underwear gnome syndrome in my opinion. (Yes, I know Facebook makes money but I claim that emperor is naked and on the way out)
Its probably not a coincidence that its also the only one that you can derive value from as a user without engaging in "social" mode. I bet Amazon will scoop them up like they did Goodreads - same sort of thing, much bigger niche.
I guess it would be helpful to know the number regardless. Revenue as in gross, or at least the number of paid subscribers. But I think if they were able pull in this new round of funding, they must have some good number of sells lately.
There are a lot of websites with a lot of users but they die quickly too.
This is a great example of survivor bias. Just because you can list a handful of high-profile successes by no means discounts the arguments against Pinterest.
I can give you an equally invalid example of failure bias:
Groupon,
Friendster,
Myspace,
Digg,
Zynga,
etc
It's got nothing to do with survivor bias, it's just logic. The original commenter is effectively saying 'if A, therefore B'. I just listed several cases of 'A' where 'B' did not result. Therefore 'If A, therefore B' is not true.
Friendster failed because users migrated, ditto Myspace, Bebo and whatever else. Even Diggs downfall could be partially attributed to the ready made life boat of Reddit.
My sister described pinterest as "Reddit for women". I don't expect most of us to understand its value as we're not the target demographic.
Curation is done like subreddits. People have their own pinterest boards. Like Reddit, only the front page is nonsense, but if you have a specific interest, you can find a subreddit/board for it.
But reddit is for women too!
It's ironic that though we wish to be hte same, because of [insert favourite media / social theory here] our cultures still inherently split the sexes into two ery differently-interested genders, even though our geek-rationality-wish-world likes to wish that men women be just as broadly interested in everything. I'm curious to see how this might be different in 100 years time. I suspect we'll learn a lot about the actual factors concerning genders' similarity and differences through research through places like Pinterest. But yes, pinterest to me is so... ugh!
Pinterest will be bigger than Facebook. That's my prediction.
The reason is that there's a strong purchasing intent associated with Pinterest. Facebook has trouble monetizing because the intent is social; when you inject commercial posts into a social stream, people get turned off. Pinterest focuses around projects that people want to do, and it's very typical to need to purchase supplies for a crafting or home improvement project. They can monetize very easily without pissing off their userbase, and their total potential market size is huge. They may rival Google someday; much of Google's revenues comes from a very similar market.
I will let the "market" judge me by modding this up or down, but I for one think your opinion of your own powers of prognostication to be overrated. You make no case except "listen and behold my awesomeness."
I think you're a little too taken with fads and don't pay enough attention to trends. Your list of "next big things" reads like the pop science articles on Wired and doesn't have any data from the real world to support it.
At several Startup School talks, Ron Conway, probably the most successful angel investor in SV, has frequently said "you never argue with metrics." In a talk at Startup School 2012, he said that he "didn't get" Facebook, but he invested (I think it was the round after Peter Thiel's investment, so very early) after seeing the metrics, "way up and to the right."
Somewhat similarly, USV has a well-known blog post detailing how they really liked the Airbnb team, but they "didn't get" the idea, missing out from investing at the seed stage in a multi-billion dollar company.
There is a reason that metrics (growth) and/or a stellar team are commonly cited by investors as being more important than (getting) the idea.
> Ron Conway, probably the most successful angel investor in SV, has frequently said "you never argue with metrics."
I disagree. Metrics only indicate what people think they want, not what they need. Metrics are only accurate if you look for trends. Long-lasting businesses don't rely on trends.
> In a talk at Startup School 2012, he said that he "didn't get" Facebook.
Facebook, just like AirBnb, make a lot of sense. You don't need metrics to understand that.
The big problem with most investors today (not all of them) is their mindset and lack of vision. They're sheeps, just like everybody else. The only difference is that they had success and experience, which skew reality and reinforces old ways of thinking, which they try to apply to future investments. It doesn't work that way.
Do you want to live in a world where investors all throw their money at the next Instagram? Or do you want to live in a world where they invest in the next Xerox Parc?
People used to have dreams, people used to have big ideas. Now, it's all about quick money. Heck, the goal of many startups now is to get acquired by larger players. How sad is that?
Pinterest is not an awful idea, but unless they have a larger vision in mind, they're going nowhere.
> Metrics only indicate what people think they want, not what they need. Metrics are only accurate if you look for trends. Long-lasting businesses don't rely on trends.
This really does not make any sense. Metrics as a general concept can and do encapsulate all the positive things you just mentioned (long-lasting value, what people need, etc). Just because a subset is shitty/misleading does not invalidate my argument. Obviously an investor must sift shitty metrics from good metrics, and shitty teams (that appear good) from good teams.
> Facebook, just like AirBnb, make a lot of sense. You don't need metrics to understand that.
Firstly, hindsight is 20/20, so that's easy for you to say. Obviously everyone now believes Facebook is a good idea; the same is not true back in 2004. Good investors recognize that they cannot necessarily tell the good ideas from the bad ideas, so they focus on team/metrics. The most revolutionary ideas typically seem like bad ideas.
> Do you want to live in a world where investors all throw their money at the next Instagram? Or do you want to live in a world where they invest in the next Xerox Parc?
You have not provided a reason we cannot have a world with both. Those are not mutually exclusive.
It fails when the metrics obscure fundamental problems with the business model which will lead to the metrics cratering later.
The most obvious example in recent memory is Groupon. They had insane metrics, huge revenue growth, and lots of adoption. The problem is that their value proposition was based on companies selling at a loss, treating it as a marketing expense, and then making it up in repeat business later. Many companies bought into that proposition at first, tried it, but then the repeat business failed to materialize, and they vowed never to go near Groupon again. When Groupon exhausted their initial market, sales collapsed. Groupon may survive based on the smaller market of companies where their value proposition holds, but they aren't going to meet initial investors' expectations.
An older example would be online retailers like Webvan and Kosmo.com that sold below cost, hoping to make it up in volumes. Here the problem is that the investors were looking at the wrong metric; the stocks climbed to astronomical heights based on userbase and revenue, but the key metric for a retailer is operating margin, and this was negative for these companies.
There are a few reasons. For large institutional investors, they have a responsibility to stand behind their decisions: saying "I didn't really understand what it is they were trying to do, but their metrics, whoa!" does not stand up.
And a lot of more conventionally-minded investors look to truely understand what a companies value proposition and product is. If you could invest earlier in Pinboard, or a company which has found a revolutionarily cheap way to manufacture toilet paper - you know which one has a more steady and obvious demand, right?
Although SV, the YC/VC world, operates very different. Just a few ideas.
I am sure many investors look to invest in companies that they understand, so they can leverage any expertise they have to evaluate why this startup is the special snowflake that will make a gazillion dollars.
If a startup has insane metrics but you don't "understand" their secret sauce, it may still be a sound investment, but I imagine you'd ask yourself if it was too good to be true, or due to temporary conditions, or rigged data, or something else, since you lack the expertise to understand why the numbers are so good.
It's all too easy to dismiss a service of which you are obviously not the target market. How can you honestly say Pinterest aren't worth what investors think they are? Did you see those engagement metrics? Facebook which is arguably the most active social network currently in existence has nowhere near the level of engagement Pinterest does.
The strong purchasing intent coupled with invaluable data that companies would be clamouring for on what consumers like and what they don't is MASSIVE. Pinterest needs to exploit and utilise their massive trove of data and continue growing it and I think they'll eventually beat out Facebook.
People were once proclaiming that Twitter was a fad too, look them now...
As an infrequent Pinterest user I see the value in it. The service in my opinion has the chance to become huge in the online e-commerce referral/purchase space. I can see your train of thinking by calling it a "glorified wishlist" but I think its bigger than that Pinterest becoming the ultimate place to window shop and given human nature that will always be something valuable
But to say that Pinterest is a novel and future-resistant shopping interface is foolish. We can do much better than this. It reeks the web 2.0, where content has no meaning.
Links, captions and pictures? Come on, any 12 year old has the ability to produce a better system than that.
For pinterest user, why do you use it? I tried it once and thought it wasn't so helpful to me. I am always skeptical about the outlook of Pinterest but it seems like it's pretty strong with funding.
I'm a UI and motion designer. I use it for curating different types of art that I see around the internet. If I need inspiration for a project its helpful to look through some of my boards for ideas. Sometimes I'll make one-off boards for individual projects also.
I've found it can be helpful for research too as just an organizational tool. For example I'm building an LED display so I've been collecting useful links or cool applications of LEDs on a board.
I never used it until someone who I asked to decorate my apartment got me on it, and we would start pinning things we liked or find tasteful and comment on them. Then it was really handy. You could have boards for the kitchen, bedroom, artwork, etc. Really useful, especially to keep a record of things you need to buy eventually too (this is what it looks like, and heres the link). I think it's likely a great professional tool for interior decorators, designers, contractors, etc.
When I am about to pay for shoes or anything clothing, or when I just want ideas for what to buy I search to find if someone has pinned or fancied them.
Perhaps I'm the only one that finds it odd that Pintrest, Imgur, and even Facebook are filled with photos of text, or text is the dominant theme, rather than images? A meme is really the utter destruction and decent of a meaningful image into a text-based cliche. The designers of the internet have created a world so poorly usable by the average joe that billionaires are made fixing and herding stupid.
"International expansion that builds on 125% international growth since the beginning of the year"
"Investment in the core Pinterest service, especially mobile which has grown 50% since the beginning of the year to become more than three-fourths of all usage"
Woah, that's big. This is Pinterest trying to dominate the market, to be the online curated catalog for women. This space has seen a lot of new players, like Fab and Wanelo. And the nature of the product lends itself to network effects that aren't nearly as sticky as FB's and Twitter's, so while they've seen incredibly massive growth, they can't rely on user lock-in to maintain it longterm. But the traction is there, the intent is there, so now they need to rev their engine to red line to dominate. Fitbit's recent round of funding comes to mind.
Dunno, given how much my wife is on Pinterest checking things out, including intentionally looking for various products she may want to buy, I think Pinterest has a very bright future....
So my guess is they want to do something similar to fancy.com but probably on a more massive scale? What do you spend $200M on in less than 10 months with max 150 employees?
