
Pinterest Completes $200M Funding at $2.5B Valuation - ssclafani
http://allthingsd.com/20130220/exclusive-pinterest-complete-200-million-funding-at-2-5-billion-valuation/
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shawnee_
Always great to hear about success coming from humble beginnings:

 _Pinterest used Hacker Dojo as their primary workspace in late 2009, and
hired both of their first two engineers from the Dojo's membership._

Source <http://www.hackerdojo.com/InvestinStartups>

~~~
callmevlad
(Writing this as I take a break from working on my startup at the Hacker
Dojo...)

Ben/Pinterest are probably the most well-known ex-residents of the Hacker
Dojo. It is an awesome place to work, and there lots of promising startups
that have set up shop here.

Speaking of hiring engineers, the 2013 Hacker Fair is coming up:
<http://www.hackerdojo.com/HackerFair3>

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CoffeeDregs
Two notes:

    
    
      1) They raised $100MM just 9 months ago.  That's $300MM raised in 
         under a year.  Money is stupid cheap and this is sorta terrifying.
      2) The word "revenue" is not contained within FTW.
    

Instagram drew an incredible line in the valuation sand as a "comp".

~~~
OGinparadise
That's smart of them. Anyone remembers 2007-2008? Even blue chip companies had
to beg and give their proverbial first born to refinance their debt.

A billion is not what it used to be, was my first thought but who can blame
Pinterest.

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nchuhoai
I think Pinterest is in a great condition ... at this time.

Like they have tons of users who religiously use their product, and it's
actually coupled with intent to buy, which makes monetizing easy.

However, you can't change the fact, that pinterest is riding on a "trendy"
wave right now. There is not a whole lot that keeps you threre. Just in two
years, there can be another spot where all the women in world woo about their
lives.

It's an inherent social problem which accounts for the so far pretty short
lives of social companies. You gotta have to be able to tie/commit your users
much like Facebook does (owning your diginal private life).

~~~
BrianEatWorld
I thought the problem with Pinterest was that "intent to buy" was actually
really low compared to other traffic sources.

I know its an old article, but has anything come out contradicting it?
[http://www.forbes.com/sites/jjcolao/2012/07/13/new-data-
show...](http://www.forbes.com/sites/jjcolao/2012/07/13/new-data-shows-
pinterest-users-look-but-dont-buy/)

~~~
the_bear
This is just one data point, but my mom and I run a cooking blog that makes a
decent amount of money from the Amazon affiliate program, and people from
Pinterest definitely come to her site with an intent to buy. Given how much
money we making from Pinterest visitors, it doesn't seem crazy to think that
they could figure out a way to monetize their user base.

~~~
xeon47m
My girlfriends makeup site embraced pinterest in early 2012 which resulted in
gradual traffic growth from females who have been strong contributors and
buyers.

I feel its more saturated now but still a great platform to leverage.

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timjahn
The amount of ideas my wife, her sister, and many other women in their lives
get from Pinterest is amazing. It's a household name now in our family. From
birthday gifts to children's crafts, I'd venture to guess at least 1 idea
every 1-2 days.

There's something there in terms of monetization. I'm just not sure what yet.

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WestCoastJustin
It is worth pointing out they are using AWS. Gave a really interesting talk at
PuppetConf '12 [1]. Talks about the stack and how they use it. Seems they used
AWS to their advantage, to keep up/ahead of the hunger for computing power.

[1] <https://www.youtube.com/watch?v=aU-bCbBq8zs>

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metafour
I do not understand how the company is being valued at 2.5B. It doesn't look
like even the business accounts at Pinterest have any type of fee associated
with them.

How do they make money? Or is this valuation most likely based on the
possibility of making money down the line?

EDIT:

According to this post, <http://news.ycombinator.com/item?id=5254498>, it
seems like it is based primarily on potential revenue from data mining.

~~~
mikeryan
Not being snarky but is there a profitable website who's primary source of
revenue is based on data mined from their users?

I keep hearing about this "data mining" revenue stream but can't think of a
place where its worked. That being said Pinterest seems like one place where
it might.

~~~
jonknee
Google? Targeting interests is a solved problem.

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jgalt212
Surprise, suprise Andreessen Horowitz involved in another crazy valuation.

~~~
OGinparadise
They are throwing lots of money trying to make a name as VCs, that's my
opinion.

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martinshen
Pinterest as compared to Instagram is better deserving of this kind of
valuation, I think. Their product is so good (pretty much a picture focused
front-end) that thousands of others (myself included) have copied. And it
works, brilliantly.

I'm confident that they can drive sales... however, can they do something
interesting with that.

Or maybe Yahoo should buy them.

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vyrotek
Is it just me or did they just make their site require you to register to view
it now? <http://pinterest.com/>

Edit - Interesting. If you do a google search for something like "Pinterest
Cake" you can get past the registration.

~~~
suyash
I noticed that today too, I don't like when sites force behaviors like that.
Groupon used to be the biggest offender, Quora still use these tricks.

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gfodor
The "where is the revenue?" line is tired when talking about Pinterest. Unlike
sites like Instagram and Facebook it's pretty obvious they can start making a
shitton of money at any time. The biggest question is how sustainable this
product is. People focusing on revenue for a product like Pinterest are
missing the point: I would want the company to be focused on growing the user
base, not toying around with revenue models at this point.

~~~
sheri
What is their path to making a "shitton" of money? I don't know, I am really
asking.

~~~
gfodor
They have purchase intent up the wazoo. They could cut a rev share deal with
one or two of the big vendors easily. They could add paid placements. They
could cut affiliate deals on behalf of their curators. They could add a
payments system for people to directly purchase items they browse on
Pinterest. Etc etc

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melkisch
Do they charge websites for traffic referral?

~~~
create_account
That's only part of it.

It seems this "affinity data" model is the basis for the high hopes and high
valuation: [http://gigaom.com/2012/03/24/pinterest-weve-got-a-
business-m...](http://gigaom.com/2012/03/24/pinterest-weve-got-a-business-
model-for-you/)

------
slashCJ
Pinterest is in a great spot. Everybody pins products - they'll be able to
monetize. I'm betting this'll be a decent investment. I see why Tapiture is
doing the same thing for the men's market here in LA <http://wp.me/p1fNUP-gK>

------
stormen
Cool. I never thought Pinterest would reach this far. It's promising for all
web startups.

~~~
angersock
EDIT: Removed because I'm tired and my reading comprehension is crap.

------
PhilipA
How do they make the evaluation evaluation, when they don't earn anything? I
would imagine it is hard to put a number on a user on their site, when they
dont generate any income?

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goronbjorn
I would love to see the pitch deck they had for this round.

~~~
thisisrobv
My impression is that most pitches that happen at that stage are simply growth
rate followed by revenue projections, no real magic when you're seeing the
growth that they are.

~~~
goronbjorn
$200m is a lot to throw at a company that _only has a lot of users_.

They have little to no revenue at this point and no current revenue streams
that point to being able to generate anything worthy of a $2.5b valuation. I
guess my point was that I'd like to know what revenue streams they are
anticipating creating that would warrant such a high valuation.

~~~
niggler
That's not how the game works:

The investors at this stage still don't care about revenue. The main question
is whether or not they can flip the investment to some other firm later (that
is to say, will the picture look rosy enough in the future that someone else
will buy in at a higher valuation).

Revenue starts to matter in the last round before the IPO (if it goes that
route). If the sequence ends in an acquisition, revenues won't really matter..

~~~
triplesec
yeah it's weird, especially since you can't be sure they will make money in
the end, but that's how the incestment money works

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kb120
Can someone shed light on how Pinterest and Instagram can be worth billions?
But Reddit is only worth 400m?

~~~
andrewhillman
This is a complicated question with many angles. First, Reddit is now apart of
bigger company. Obviously, this changes anything to do with valuation. Do
investors want a "piece" of a company that is within a bigger company? Maybe,
but if they do the valuation is going to be a lot lower compared to if Reddit
was independent.

The other issue is that Reddit makes money therefore the valuation is based on
earnings. Their earnings might be low for the amount of traffic they get.
Sometimes it's better to not generate any money because the valuation would be
based solely user growth+engagement.

With this being said, if Reddit was an independent company then they too would
have a crazy valuation. I am sure the founders think they sold way too early
but at the time, it was the best option. Kudos to the buyer who didn't let it
enter the M&A dead pool.

~~~
robryan
If they were an independent company and didn't have any revenue history to go
by I think they would be worth more. Part of the Pinterest valuation would be
speculating on how much they could generate through various forms of
advertising.

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dclowd9901
What's their revenue/net?

