Pinterest is becoming the next big name in the social media space. For those who do not yet know, Pinterest is an online pinboard that lets you put your favorite images on a single web page. You can share your "pins" with your friends or browse pinboards created by others. Pinterest has become a popular tool for users trying to plan weddings, decorate their homes and share recipes, among other activities.
Conceptualized by Ben Silbermann, Evan Sharp and Paul Sciarra, Pinterest was launched in 2009 and since then has experienced rapid growth. According to statistics released by ComScore in February 2012, Pinterest has over 10 million monthly unique visitors and is now the third most popular social networking site behind Facebook and Twitter. With these staggering numbers, it looks like Pinterest could be on track to become the next social media giant.
Venture Capital Behind Pinterest
Pinterest originally received a total of $500,000 from about 10 different angel investors in early 2010. In 2011, Pinterest raised $10 million in a series A round of funding and then later in the year, another $27 million in a series B round of funding. The $27 million dollar round of funding valued the startup at roughly $200 million dollars. Funding was led by powerhouse venture capital firm Andreessen Horowitz. When it comes to successful startups, Andreessen Horowitz has had its hands in nearly every popular one, including: Airbnb, Digg, Facebook, Foursquare, Groupon, Instagram, Skype, Twitter and Zynga. Almost all of these companies either were acquired or went public.
Pinterest has grown from roughly 1 million users in July 2011, to over 20 million today. In May 2012, Pinterest raised $100 million more in funding, which now values the company at $1.5 billion. Not bad for a site in operation since only 2009 and yet to make a dime in revenue. Pinterest, though, has stated on its site that it has "tested a few different approaches to make money, such as affiliate links" and "might also try adding advertisements, but haven't done this yet." The focus currently is on growth and it has definitely excelled in this area.
Shoppers Prefer Pinterest
The website industry is all about knowing your user and the more you know the better. This is the key to success in this sector and a major reason behind Facebook's success. They know their users and as a result, advertisers have flocked to the site where they can focus their sights on target customers.
Pinterest obviously does not release information about its users, but some other companies have compiled their own information about Pinterest users. Some recently released data by Modea shows Pinterest users are around 68% women and 28.1% of users have an average household income of over $100,000. Furthermore, about half of the users have children and over 27% of users are between the ages of 25 and 34. Modea also noted that Pinterest users spend an average of 15.8 minutes on the site, which is more time than users spend, on average, on Facebook and Twitter, according to the data gathered.
Online jewelry site Boticca has also released some interesting statistics about Pinterest and how its users stack up against Facebook's. Boticca found that Pinterest users spent on average of $180 or $95 more than the average Facebook user and Pinterest also influenced 3% more transactions than Facebook's 7%.
It's no secret that part of Pinterest's success revolves around shopping. The company can obtain key information about the hobbies and interests of its users and use this to its advantage. Pinterest recently launched a weekly newsletter called "pins you'll love" that sends users pins of interest, based on information that Pinterest has gathered about the individual user.
The idea is similar to the popular "genius" run by the Apple app and iTunes store. This is a clever strategy and should Pinterest venture down the route of recruiting advertisers in the future, this could become a vital tool.
The Bottom Line
Pinterest is well on its way to becoming the next household name in social media. By no means is it going to replace Facebook, nor is that its intention; in fact, Pinterest relies on Facebook as a platform to attract more users. This is done by allowing Pinterest users to add the pins to their Facebook timeline. What this does is then show users pins on their Facebook profiles, thus expanding the audience. Pinterest's Facebook page currently has over 2 million "likes."
This company has definitely created a buzz in the social media space and with the line of successful venture capitalists backing the company, it is well on its way to gaining an even a larger market share in the social media space. The concept is unique and as long as consumers continue to shop, Pinterest is positioned to become an even greater force.