
Pinterest Raises $367M at $11B valuation - ravenkat
http://techcrunch.com/2015/03/16/pinterest-raises-367-million-pushing-it-past-1-billion-raised-in-all/
======
sharkweek
You know when you hear about a lot of insane valuations and your jaw sort of
drops in disbelief?

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.

~~~
taylorbuley
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-for-
youtube-1424897967)

~~~
nl
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.

~~~
tdees40
If YouTube can increase ad prices without losing advertisers, why aren't they
doing that now?

~~~
nl
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.

------
bobbles
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

~~~
gtremper
I was really confused about the point you were making until I realized you
didn't mean user engagement.....

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patmcc
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.

~~~
logicallee
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'...

------
lostsock
> 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?

~~~
jamiequint
500+ employees.

~~~
lostsock
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.

~~~
mwcremer
Conventional wisdom is that an employee costs the company twice their salary
(insurance, facilities, etc.) So it's closer to $1 billion.

~~~
lostsock
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.

------
rememberlenny
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.

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clarky07
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.

------
nl
I've said it before.

Pinterest is what Delicious should have been, if Yahoo had any vision at all.

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PublicEnemy111
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.

------
Vomzor
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.

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jdprgm
nearly a million per employee. what the heck do they plan on using that much
capital for... especially with forthcoming ad revenue.

~~~
asavadatti
Money is cheap right now.

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woah
What are they going to do with the money? How good can they make their
website?

~~~
adventured
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.

------
funkyy
Anyway to see how much of the company is still in the hands of founders?

~~~
amitutk
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.

~~~
birken
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.

~~~
leroy_masochist
> 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)?

~~~
birken
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.

~~~
leroy_masochist
Makes sense -- thank you.

------
Fizzadar
Does anyone else think 11B is insane? Higher valued than Dropbox and Airbnb?
They must have pitched hell of a monetisation plan.

~~~
dntrkv
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.

~~~
johnpowell
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?

~~~
aetherson
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.

------
ulfw
Getting some more money in before the bubble bursts. Intelligent move.
Everyone should do that before it's too late.

------
Mahn
I'm surprised they didn't get acquired yet. Surely they must have turned an
offer or two down by now.

~~~
sgustard
May have turned down 100s of millions from Google in 2012.
[http://techcrunch.com/2012/01/19/ginterest/](http://techcrunch.com/2012/01/19/ginterest/)

------
solve
Good, world needs more consumer internet startups. All the B2B has been
getting depressing.

------
jpadkins
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.

------
apalmer
seems weird to raise so much money at this point in the game... a third of a
billion dollars...

------
curiously
This shows that we are in a major bubble...finally poised for a major major
market correction.

~~~
j79
And maybe the guys at Pinterest realize that, which is why they're building up
their cash war chest before the funding dries up?

~~~
curiously
history have shown those that rely on capital, also die from the lack of it.

ie) porsche

------
WorldWideWayne
I can't stand Pinterest or any other site that forces me to login to see
content that they copied from other sites.

------
anigbrowl
This seems like an amazingly high valuation for a company that basically does
digital scrapbooking.

~~~
stevesearer
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.

~~~
anigbrowl
I know, I don't think it's without value. I'm just not seeing how it's worth
this much, though.

------
bcg1
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

~~~
nemo44x
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.

~~~
bcg1
Margins are irrelevant without sales.

Also
[http://www.investopedia.com/terms/b/bookvalue.asp](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.

------
downandout
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-acquire-
bluemountain.html)

------
codeshaman
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.

~~~
coke12
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).

~~~
codeshaman
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.

