Pinterest just went public. At
IPO, it was valued at $10 billion.
So what is Pinterest and how does it make money?
Pinterest was started in 2010 and it's the creation of Ben Silbermann and
Evan Sharp, who are ex-Google ex-Facebook techies.
What they created is a social app that lets folks bookmark images that
they find around the internet.
Pinterest is an online social network where users can bookmark images they
find online by pinning them to their boards, which can range from recipes,
to weddings, to home remodeling.
Then users can share their boards with friends or all Pinterest users.
Users find new ideas by following friends, influencers and brands, or
simply by searching Pinterest's large user base.
Pinterest has 265 million monthly users and it's a group of users that is mostly women.
So it's not a very diverse group, but it is pretty favorable for
advertisers who are trying to reach consumers who are going to spend money.
Pinterest makes money from all those users in one simple way: advertising.
Like most consumer-facing tech companies, Pinterest makes money from
advertisements. So its real challenge in this space is competing against
Facebook and Google which basically control the digital advertising market.
Pinterest sells promoted pins to advertisers, making three dollars per user last year.
Advertisers pay for an ad to surface in their desired audience's home feed
or at the top of search results.
These promoted pins appear in a variety of formats: a standard still image
pin, small or large video, a promoted app, or an image slideshow.
Pinterest also has hundreds of retail partners like Ulta Beauty, Lowe's
and Wayfair.
Shopping ads invite users to click-to-buy and can appear in users' feeds
when they're in one of those partners' stores.
For the most part, Pinterest users go on the app when they're planning some big sort of event.
So maybe they're doing a house renovation, they're planning their wedding,
they're going on a big trip.
That's when they turn to use the app.
So it's not the kind of app that you open on a daily basis.
However when you are using it, it's because you're probably very likely to spend money.
Pinterest's value at IPO is down from its last private valuation of $12 billion two years ago.
For 2018 Pinterest made about seven hundred fifty six million dollars in
revenue which is pretty good it's almost at $1 billion and they've shown really good growth.
However in 2015 there were projections that came out that had them making about $2.8 billion in this past year.
So they are making money.
However they haven't reached the potential that some folks thought it had.
Pinterest took off with rapid growth in 2012 but expansion has tapered off,
largely because of what employees told CNBC is a work culture that's slow
when it comes to making decisions.
I spoke with 20 former Pinterest employees and they described to me the
culture. It's one where folks are very nice to each other.
So it's a very cool place to work, however things get done very
slowly. One former person told me that it's done at a glacial pace.
And that's because rather than giving folks direct feedback, they're
essentially just doing meeting after meeting to just get everyone to buy
in on a project before they move forward with it.
Pinterest is part of a big wave of tech companies expected to go public this year.
It's listed as "PINS" on the New York Stock Exchange.
The thing to take away with Pinterest is that although the company isn't
growing users or revenue at the fastest pace, they aren't running into
scandal. They are very deliberate about everything that they do and once
they commit to it, they go full force.