[August 14, 2019]
 Analysis Background | Approach Selection
While Pinterest has been a listed company since April this year, it is still in early stage and is more like a pure play of something. If you think runway left is enormous, a bottom up approach to follow the company increases the conviction for a long term bet.
[1.0] How Pinterest Describes Itself and Its Vision
Pinterest is the visual discovery engine to bring everyone the inspiration to create a life they love
[1.1 ] Business Model
Pinterest is an image/video-oriented user generated content site (UGC) with visual discovery engine as key feature for its users to get ideas/inspiration created by other users.
Users generate content by Creating a Pin or by Saving others’ Pins and they can organize their Pins by creating Boards.
There’re two interesting features on adding content page 1) Add a destination link; 2) Save from site. Pinterest not only helps users to find ideas/product but also encourage content creators to show where the ideas/products come from. Pinterest help content creators leverage its discovery engine to direct traffic to their sites.
Below is the content of a Pin. Blue circle shows Pinterest’s priority is to encourage to save a pin (engagement and content creation). It also shows which user saved the pin, how it categorizes the item (it’s under “quilted tote bag” board) and how many time it’s been saved. Commercial intent of user can be satisfied as destination link shows this product appeared on Etsy, an e-commerce marketplace. User can follow the link to find the product or similar products available for sale and the shop/person who made the product.
While Pinterest has social features that allow users to view other Pinner’s profile, follow them, follow their boards and leverage users’ social graph on Facebook to send message to friends and see their activities on Pinterest… It seems those features were not emphasized when I tried the product on web browser. Apparently, core value of Pinterest is not social networking, news feed based on social graph or communication tool. New user doesn’t need to have a friend on the platform to start experiencing the product. This is important when making comparison between products that have social elements: Facebook, Instagram, Twitter, Pinterest, Whatsapp, Snapchat… Different products have different user behavior which reflects in metric. If someone wants to gauge user engagement by DAU/MAU (number of daily active users divided by number of monthly active users), Pinterest might rank lowest on this metric. This is normal because you would not expect Pinterest’s users to visit the site on a daily basis given current product offering. Higher DAU/MAU might be good and being low might not be a problem.
I feel the core of Pinterest is a crowdsourced visual database where data is either originally generated or saved from internet by users. Users add information or “curate” by adding title and description to each Pin and creating relationship among Pins via organizing Pins under Boards. Those curation help text / visual data science on discovery engine and other features. It’s important for Pinterest to reduce the friction of generating / organizing content, coming up with use cases and finally monetizing traffic and intent on the platform. Maybe Pinterest is a Google in a visual-dedicated user-curated universe.
Theoretically, this platform has direct network effect while it is not as strong as products based on social network.
[2.1] Products (Pinterest website) / Features / Function
[2.2] Ad Formats (Pinterest website) – Monetization
[3.1] Traction and Metrics
[4.1] Geographic Exposure and Demographic
Around 28% of Pinterest users come from US and the company doesn’t provide further breakdown on international users. Pinterest has penetrated around one third of social networking population in US. The primary Pinterest users demographic in US is female. Currently, US MAU shows saturation. To further penetrate US market, Pinteret might foster categories or come up with use cases appealing to potential male users.
The majority of revenue is generated from US market because its the first market Pinterest choose to monetize. The company also starts monetization initiatives in Canada and some Western Europe markets. Among international markets, I think Japan has huge potential to become a major revenue contributor.
[5.1] Competing Products
Basically, the technical entry barrier is low and Pinterest is competing with large companies that can offer similar features in their product. The moat, if any, comes from Pinterest having what users want and users being able to find what they want or get inspired. Pinterest needs to keep flywheel running fast: User Generated Content – User Curation – Search/Recommendation.
[6.1] Other Info for Pinterest.com
[7.1] Reference Model and Benchmark