Pinterest – Initial Model

Pinterest (PINS.US)

[October 19, 2019]

Initial Model

Download the work-in-progress model in excel here to play around 🙂

It’s been a while since I put together initial analysis and deck skeleton on Pinterest. However, I have some difficulties to convert my thesis (particularly business development and competition) into numeric assumptions and found it’s not easy to validate those assumptions. So I just built an initial model and decided to wait and see.

More detective works required to build up conviction and to determine margin of safety. – Initial Thoughts (WUBA.US)

[August 23, 2019]

* Initial Thoughts *


I came across this stock when trying various online stock analysis tools. I listened to its 2Q2019 earnings conference call and briefly reviewed most recent company presentation. I found interesting because of its business model and new business initiatives such as 58 Town and Zhuan Zhuan (used goods marketplace) since they are to some extent related to my Pinterest analysis.

Business models and 58 Town are classifieds focusing on cities and rural areas respectively. One of the key concept for this type of platform is liquidity / density on each category / vertical. Eventually, the platform tends to concentrate on certain categories ( as example: jobs, real estate, used goods, automotive, and yellow pages and local services). Another concept is that certain verticals in the horizontal marketplace might be better served with dedicated products – described as unbundling / rebundling craiglist.



Source: The Gong Show by Andrew Parker





Source: A CROWDED SPACE by Josh Breinlinger

What is doing


Current challenge and opportunity

  • Macro headwind has negative impacts on certain categories such as housing and jobs.
  • There are some progress on 58 Town and Zhaun Zhuan. 58 Town has shown trajectory similar to in early stage per management team. The go-to-market strategy of 58 Town is social graph-based and has a an official “node” on each “town”.
  •’s business models are well-understood and not very exciting. The company faces competition at different degree on each vertical / category. The entry barrier is not from technical side but from indirect network effect. Experience in execution and traffic / brand of are asset for vertical player incubation.

Next Steps

  • Some initial analysis and talk to management team next week if possible
  • Revisit Mercari (Japanese used goods C2C marketplace player)
  • Pinterest business model analysis on parallel

Pinterest – Initial Analysis

Pinterest (PINS.US)

[August 14, 2019]

Initial Analysis

[0] 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


[7.1] Reference Model and Benchmark