08.08.19 | An interest in Pinterest

By Bryna Howes 08 August 2019 3 min read

In the age of digital everything, it hardly comes as a surprise that the humble cork pin board has a virtual version thanks to Pinterest, a nearly decade-old tech business.

With Pinterest, users can search, discover and “pin” images — from a catalogue of more than 200 billion — to their collection of personal, themed boards. Though Pinterest CEO Ben Silbermann once said the site is not a social network, users can follow and be followed by other users, and every user has a page that sums up a personal brand of sorts.

As for what people pin, take your pick. The images run the gamut, though home decor, recipes, and fashion are hot topics. The sky's the limit though. My grandmother, for example, had boards devoted to images of mice, umbrellas, bread, cows, and tiny homes.

You’re not just pinning because you like a picture, though. Pinterest works sort of as a visual search engine. Users are typically searching for information and/or inspiration, and the image is just the start. Also, the more you pin, the more the algorithm learns what to serve up next.

For instance, one of my colleagues here at Spaceship signed up recently. For one reason or another, after pinning a few images, Pinterest suggested an infographic titled “50 Things Every Man Should Own.” Seemingly, the site had reasoned this was the sort of info he was after.

(Either way, imagine his dismay when he realised he was lacking great soap, superb socks, a pet, and an all-purpose pump from his collection of must-own goods!)

So, how does a site that has you sharing images of mice and bread, and merely for your own purposes, actually make money, one might ask?

There are two answers:

  1. Promoted pins: Pinterest sells targeted ads, which appear at the top of users’ feeds and search results. The promoted pins you see might be based on your activity on an advertiser’s site (using a retargeting pixel) or based on your Pinterest activity.
  2. Product pins: If you run an e-commerce store, you can create product pins that allow users to click-to-buy. They are free, but you can also promote them, which means you’ll pay Pinterest to extend your reach by displaying the pin in key positions and to specific demographics.

It sounds simple enough. And simple is good, it seems, because as they announced earlier this month, Q2 revenue grew 62% year-over-year to US$261million.

And this wasn’t the only positive news to come out of the second earnings report that Pinterest has delivered since becoming a public company in April.

Global monthly average users increased 30% to 300 million, while monthly average users in the United States increased 13% to 85 million. Global average revenue per user jumped 123%, while average revenue per user in the United States jumped by 41% on a year-over-year basis.

Shares soared with this news, making Pinterest one of the few “unicorn” companies (i.e. private companies valued at more than US$1 billion) to go public this year and live up to its hype.

The growth was likely caused by features that also seem relatively simple: improved search recommendations, shoppable products, and a burgeoning video content arm.

As such, here at Spaceship, we’re watching Pinterest closely.

Pinterest might not want you to think of it as a social media site or stock, but it’s often lumped with Facebook, Twitter, and Snapchat — and it seems it’s growing faster than all three right now, in terms of both user growth and revenue, which we see as a plus.

Additionally, it doesn’t have wads of overlap with other social networks.

While both Instagram and Pinterest rely heavily on images, Instagram is mostly focused on sharing while Pinterest is largely focused on discovery.

Another plus? Pinterest hasn’t been plagued by anti-trust or privacy issues like some networks.

In terms of revenue — which we’re also watching — the company is seeing momentum in “internationalising [its] ads business.” They launched into six new markets in the second quarter of this year, which means they now serve ads in 19 countries across the world.

Currently, international revenue makes up only 9.1% of overall revenue, and accordingly, we feel this is just the beginning of Pinterest’s global push. Opportunity beckons!

Of course, it’s still early days for Pinterest as a public company. We’ll continue to watch what happens, especially after 15 October, when up to 538 million shares of common stock will be released from the 180-day lock-up.

If you have any thoughts on this, we’d love to hear from you.


Important! We’re sharing with you our thoughts on the companies in which Spaceship Voyager has considered investing for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s potential investments. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.

Words by
Bryna Howes Right Chevron

Bryna Howes is the Head of Content at Spaceship. She's equally obsessive about cinnamon donuts and scouring the web for great reads.

08.08.19 | An interest in Pinterest