Pinterest Raises $367M at $11B valuation

http://techcrunch.com/2015/03/16/pinterest-raises-367-million-pushing-it-past-1-billion-raised-in-all/

by ravenkat • 11 years ago

109 111 11 years ago

funkyy• 11 years ago

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

amitutk• 11 years ago

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.

birken4• 11 years ago

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.

sharkweek5• 11 years ago

Pulled valuation data for each round from the pitchbook.com platform:

http://i.imgur.com/OfBDZz0.png

Let me know if you want to see any specific cap tables, happy to pull those out.

Fizzadar• 11 years ago

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

dntrkv2• 11 years ago

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• 11 years ago

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?

jordanthoms• 11 years ago

Well Airbnb is at 20B now, if that helps....

apalmer• 11 years ago

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

sharkweek5• 11 years ago

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• 11 years ago

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...

nl8• 11 years ago

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.

jlebar• 11 years ago

What if they start digging to find there's no depth behind this surface?

Then the investors stand to lose money.

Investing is a bet, right? If making money here were a sure thing -- e.g. if they already had the money in hand -- then they wouldn't need to raise capital.

Maybe your question is, why would anyone invest in a company without a business model, particularly at this valuation? I'm not an investor, but I'm sure part of the calculus is looking back in history towards similar companies.

jsmthrowaway4• 11 years ago

No, it doesn't make sense. You've explained Pinterest as a marketing company that happens to have 70+ million willing participants. Now explain to me how in the context of the human race, being able to push a product to those 70+ million users is worth EDIT: about as much as SpaceX.

Just because it makes sense in the current model doesn't mean it makes sense.

aetherson3• 11 years ago

You want him to explain the entire global economy in a comment thread? That seems a little unreasonable.

What's the actual substance of your complaint? Are you worried that Pinterest can buy Armenia? It can't. Are you just offended that two not-very-comparable numbers are X > Y instead of Y > X? That doesn't seem like a big deal to me.

Are you complaining that Armenians are poor? That's perhaps a big deal, but we don't know how to make poor countries not poor.

jaronheard3• 11 years ago

Misleading comparison. Armenia's GDP is the estimated economic worth produced annually by Armenia. Pinterest's valuation relates to the economic value produced by Pinterest for all future years, not annually.

fweespeech• 11 years ago

To put this in perspective, the population of Armenia is ~3 million.

https://www.cia.gov/library/publications/the-world-factbook/...

Tbh, the fact that the advertising value of a company in the first world is worth that much is kinda silly imo. However, it makes your target unclear. Is it the fact that Armenians are so poor per capita?

hnnewguy• 11 years ago

"Seems like a no-brainer that this one is going to end up crossing the IPO finish line at some point"

On what planet is an IPO the finish line?

sharkweek5• 11 years ago

The private market finish line

ptio• 11 years ago

For founders, employees, and investors that will make significant financial gains from the IPO.

madeofpalk• 11 years ago

Big TV show in Australia is The Block - a home renovation competition reality show. Each week starts with them looking at Pinterest for 'inspiration' for each new room or theme they're trying for - it's basically The Pinterest Show, weekly at 8:30pm on Channel Nine.

callmeed2• 11 years ago

Agreed 100%. There's so much purchasing intent on Pinterest. I think it could be a stronger platform than Facebook for advertising non-digital goods.

Every bride uses Pinterest (and now most wedding vendors and bloggers).

My mother-in-law uses it every day to plan all her home remodeling projects and she's 60-something.

AtmaScout• 11 years ago

I have a family member who described a wedding she went to as a Pinterest wedding. Every thing from food to decorations seemed like it came from the site.

monsterix• 11 years ago

Every bride uses Pinterest (and now most wedding vendors and bloggers).

Any study covering all the brides situation to qualify that comment? I attended three weddings recently. Not one was on Pinterest, all were on email rather.

logicallee4• 11 years ago

but what you've said could be an argument for why it's worth 111B. I wonder why it's so underpriced? 11/111 is only 9.9%... I wonder what makes them so cash-starved that they would firesale this round at nine cents on the dollar compared to what we've seen they're really worth? /s

seriously while I appreciate your comment, none of what you've said has anything to do with any financial numbers, even to within an order of magnitude. . . it's nice that this is your reaction but don't you think an analysis of... something should enter the equation at some point? there are 3.5 billion women in the world, so you're valuing every user past and present that you've described, at $3. Why not $10 and call it 35b in revenue for a nice 110B valuation at a fair multiple of earnings.

seriously shouldn't we be looking at...something here? these numbers are literally astronomical. (as in, getting up there with the number of stars in the galaxy.)

sharkweek5• 11 years ago

The second line in my comment says... "My immediate reaction here"

Not every comment on HN needs to be an in depth analysis, especially when my comment is, exactly as I said, a gut reaction to a piece of news. Are the points I made anecdotal? Absolutely, but that doesn't make the meta-commentary any less valid.

lostsock3• 11 years ago

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• 11 years ago

500+ employees.

CPLX• 11 years ago

Then they are in excess of $2,000,000 per. That don't seem like the reason.

lostsock3• 11 years ago

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.

adventured4• 11 years ago

If the stock market melts down - which it's prone to do once or twice per decade - the ability for Pinterest to IPO and take advantage of favorable market conditions will close, perhaps for years. Simply put, raising money in this environment is extraordinarily favorable, a company may only get this window once every seven to ten years.

The Fed has yet to raise interest rates, but may choose to this year. The end of QE has already removed some liquidity from the markets and set the dollar on a massive run which will put pressure on almost anything priced in dollars. If the Fed raises interest rates, it will sap at least some liquidity from the venture funding market (which is red hot right now).

If Pinterest can't IPO for five years because the stock market crashes in nine months and the economy turns south (almost six years since the last recession already), then ideally they'll want a cash war chest to keep up with the other giants they compete with (directly or indirectly) that are already public or are well funded.

Saying it's prudent for Pinterest to have a billion+ in cash is probably understating things.

logicallee4• 11 years ago

this is a good point. if they didn't raise money now, they might have to resort to revenue.

balls187• 11 years ago

The prevailing wisdom I was told, if you can raise money on favorable terms, do so.

In any business, and "startups" in general cash is king.

The money could be used to fuel acquisitions, pay early investors, or a number of things.

jdprgm• 11 years ago

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

asavadatti• 11 years ago

Money is cheap right now.

solve• 11 years ago

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

woah• 11 years ago

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

adventured4• 11 years ago

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.

anigbrowl2• 11 years ago

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

stevesearer2• 11 years ago

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.

anigbrowl2• 11 years ago

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

rememberlenny• 11 years ago

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.

patmcc• 11 years ago

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.

stevesearer2• 11 years ago

I think of Pinterest as a visually inspiring search engine. A large portion of people there just use it to browse around, but many people are going there as you mention with goal of finding something to buy. Monetizing that intent is basically the same concept as Adwords, just in a visual medium.

logicallee4• 11 years ago

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'...

foobarian• 11 years ago

It's more than shopping/ideas for shopping directly. Our nanny spends a lot of time on Pinterest to get ideas for crafts/activities with the kid, which are not purchasable items themselves, but still lead to sales indirectly. Another great mode of opportunity given some good analytics.

codeshaman2• 11 years ago

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• 11 years ago

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).

codeshaman2• 11 years ago

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.

criloz2• 11 years ago

This is just another bubble, years of printing money and low interest rates, there is no way that Pinterest has that value, neither Uber with all its legal issues across the world. sorry downvote me all the what you want that is the true.

curiously2• 11 years ago

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

j79• 11 years ago

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

curiously2• 11 years ago

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

ie) porsche

bobbles• 11 years ago

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• 11 years ago

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

sharkweek5• 11 years ago

If my wife could one-click shop on Pinterest? Oh boy...

Vomzor• 11 years ago

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.

bcg12• 11 years ago

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• 11 years ago

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.

bcg12• 11 years ago

Margins are irrelevant without sales.

Also 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.

Mahn• 11 years ago

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

sgustard• 11 years ago

May have turned down 100s of millions from Google in 2012. http://techcrunch.com/2012/01/19/ginterest/

nl8• 11 years ago

I've said it before.

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

downandout• 11 years ago

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...

jpadkins• 11 years ago

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.

PublicEnemy111• 11 years ago

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.

clarky07• 11 years ago

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.

ulfw• 11 years ago

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

WorldWideWayne• 11 years ago

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

Pinterest Raises $367M at $11B valuation

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