Launched in March of 2010, Pinterest is a website and mobile app
that gives its users the tools to discover, share, collect, and
store items, pages, websites, etc. on boards they create. And the
board possibilities, it seems, are endless.
Want to eat and live healthier in the New Year? Make a board filled
with tips and recipes for doing just that. Love fashion? Create a
board that demonstrates your personal style choices. Wishing for a
complete home redecoration? Make a board that compiles all of your
design hopes and dreams.
This approach has really caught on with users in the social media
sphere, propelling Pinterest to incredible growth. In fact,
the company reportedly only took nine months
to go from 50,000 unique monthly visitors to 17 million monthly
unique visitors, compared to 16 for Facebook and 22 for Twitter.
High IPO Potential
Back in 2013, Pinterest CEO Ben Silbermann, speaking at Fast
Company's Innovation Uncensored conference, said Pinterest was not
angling to go public, and while he did not rule out the possibility
of a future IPO, he emphasized that it was not a priority.
Silbermann elaborated that the company wants to "stand on its own
two feet," and he was not sure if going public would help Pinterest
retain and grow its user base.
Fast forward to 2015, and Pinterest is one of the most talked about
IPO candidates of the year. It's the last of the popular social
media companies to go public or to be swallowed up in a merger.
Despite Silbermann's past comments, the company seems to be
following in the footsteps of other social media giants Facebook (
) and Twitter (
Currently, its valuation is at a praiseworthy $5 billion, allowing
it to join an exclusive club of start-ups, which include fellow
2015 IPO candidates Dropbox and Airbnb, worth between $5-$10
billion (also read
Will Uber Be the Hottest IPO of 2015?
And the value of Pinterest just keeps on increasing. Thanks to a
SkimLinks deal that monetizes links on Pinterest to other sites,
the company is expected to generate $50 million annually.
After a successful first phase with selected advertisers-and using
a tool called "Promoted Pins"-Pinterest is opening its ad sales
platform to all merchants. Wedbush Securities estimates ads could
generate $500 million in revenues in 2016.
In addition to monetization, Pinterest possesses a unique balance
of consumer and product. It uses advertisements to their advantage;
users-or, really, consumers-pin
they like, want, or have onto boards to share with others. Whereas
ads on Facebook and Twitter stick out like a sore thumb, Pinterest
works ads into the experience as a whole. They are (almost)
Pinterest has also curated a rare audience as women account for 80%
of its user base. This not only presents new possibilities in terms
of marketability and loyalty, but it also drives online sales since
women are more likely to shop and buy online.
Despite commendable numbers and distinctive users, Pinterest must
take on some daunting hurdles.
First, there is the problem of future user growth. Since its user
base is 80% women, and 1/5 of all Internet-using women are
registered users, one has to wonder how Pinterest will keep up its
blistering pace of growth over the next few years.
It is also highly vulnerable to copycats, with similar applications
like Trippy, Wanderfly, Gtrot, Manterstring, and Gentlemint popping
up left and right. Internet users are constantly moving on to the
latest and greatest, so Pinterest must prove that it is not just
some fad or craze.
Not only is monetizing Pinterest a risky bet-"Promoted Pins" could
very easily have been a financial failure-but there is also a clear
risk of the company devolving into a mess of advertisements.
Pinterest has become an important new way of driving traffic to web
properties as well as spurring high mobile usage (75% of its
traffic originates from mobile devices). With 70 million registered
users, the company has the potential to be great; however,
Pinterest must prove its staying power, and convince advertisers
that vast pin collections can somehow be monetized.
Its best feature, though, is not the $5 billion valuation or
female-centered user base. Since its launch, Pinterest has been
dedicated to discovering its identity within the immense social
network space, and this desire to find itself may be what sets the
company and its potential IPO apart from the crowd.
Investors will have to watch this 'promoted pins' plan and to
follow Pinterest user growth in the months leading up to any IPO,
as revenue generation will increasingly come in focus for this
However, Pinterest has grown unlike very few internet companies in
history, suggesting that if they can figure out the monetization of
its huge user base, it could become the next darling of the social
media IPO world before long.
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