Launched in March 2010, Pinterest is a website and mobile app that gives its users the tools to discover, collect, and share items on boards they create.
And the board possibilities, it seems, are endless.
Want to eat and live healthier? Make a board filled with tips and recipes for doing just that.
Love fashion? Create a board that demonstrates your personal style choices.
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Dreaming of redecorating your home or apartment? Make a board that has all of your potential design ideas.
This approach has really caught on with users in the social media sphere, propelling Pinterest to incredible growth and 200 million monthly users. In fact, the company reportedly only took nine months to go from 50,000 unique monthly visitors to 17 million unique monthly visitors. Compare that to 16 months for Facebook (FB - Free Report) and 22 months for Twitter (TWTR - Free Report) to achieve the same goal.
Pinterest possesses a unique balance of consumer and product, and uses advertisements to its advantage.
Whereas ads on Facebook stick out like a sore thumb, Pinterest works ads into the experience as a while. They are (almost) invisible.
Pinterest has also curated an audience of mostly women. This not only presents new possibilities in terms of marketability and loyalty, but it also drives online sales since women are more likely to shop and buy online.
Over the past few years, Pinterest has updated its website with new products.
The company has something called “Action Buttons,” allowing users to instantly add all the items from a cooking recipe straight to a shopping cart, or add a gadget straight to their wish list on Amazon (AMZN - Free Report) .
The company offers tools called Buyable Pins, which let consumers purchase directly from partners Pinterest works with.
Users will see prices, be able to select color or quantity, and then tap a button to buy the product.
After a successful first phase with selected advertisers—and using a tool called “Promoted Pins”—Pinterest is opening its ad sales platform to all merchants.
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Promoted Pins look just like regular pins, and according to the company, over 75% of pins saved to Pinterest come from businesses. “Promoted Pins don’t interrupt or distract Pinners.
They help people find the products and services that are right for them,” said the company in a blog post.
Pinterest also recently announced a new feature called Lens to its smartphone app; it lets you use your camera to identify décor, clothing, and food, for example, that you see in the real world. So by pointing your camera at a pair of shoes, you’ll be able to see similar styles within the Pinterest app and get ideas on how to style and wear them.
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Lens is currently in beta.
Despite commendable numbers and distinctive users, Pinterest has some growing pains to go through. Since its user base is mostly women, and the website has been perceived as more feminine-leaning.
One has to wonder, then, how Pinterest can both reach new users and keep up its blistering pace of growth.
But over the last few years, the online pin board has become more popular with men. According to Fortune, male users now make up about 40% of Pinterest’s monthly active users.
Pinterest’s platform is also vulnerable to copycats, with similar applications like Wanderfly—which was acquired by TripAdvisor (TRIP - Free Report) —and Gentlemint popping up left and right.
Internet users are always moving on to the latest and greatest, and Pinterest must prove to its users and investors that it is not just some fad.
Monetizing Pinterest is a risky bet, as its Promoted Pins could very easily have been a financial failure, and there is also a clear risk of the company devolving into a mess of advertisements.
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But the company’s ad strategy has serious revenue potential, and could help Pinterest show its staying power.
Road to IPO?
Back in 2013, Pinterest CEO Ben Silbermann, speaking at Fast Company’s Innovation Uncensored conference, said the digital pin board company was not angling to go public, and while he did not rule out the possibility of a future IPO, he emphasized that it was not a priority at the time.
Silbermann elaborated that Pinterest wanted to “stand on its own two feet,” and he was not sure if going public would help the company retain and grow its user base.
In its most recent funding round, the company raised $150 million in venture capital funding, increasing its total valuation to $12.3 billion and bringing its total funding to over $1 billion.
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Pinterest is forecasting over $500 million in ad revenue this year, according to Recode. This would represent growth of 67% from $300 million in 2016.
The tech website’s sources also said that while Pinterest wouldn’t IPO soon, it is “currently putting the pieces in place.” The company finally hired its first Chief Financial Officer, Todd Morgenfield, from Twitter last October, and has Tim Kendall on board, who is Facebook’s former monetization director; Kendall is overseeing all of Pinterest’s revenue efforts, among other duties.
And, Pinterest just hired another Facebook executive, its director of corporate development, Gary Johnson, as its head of corporate and business development.
Pinterest is one of the last of the popular social media companies to go public or be swallowed up in a merger.
And with Snap’s (SNAP - Free Report) successful IPO last March, investors are eagerly awaiting word from Pinterest.
Pinterest has become an important new way of driving traffic to web properties, as well as spurring high mobile usage—80% of its traffic originates from mobile devices.
With its impressive monthly active user count, the company has the potential to be great, but Pinterest must prove it’s not just a current craze, and convince advertisers that vast virtual pin board collections can somehow be monetized.
Its best feature, though, is not the $12.3 billion valuation or female-centered user base.
Since its launch, Pinterest has been dedicated to discovering its identity within the immense social network, and this desire to find itself may be what sets the company and its potential IPO apart from the crowd.
Investors will need to keep an eye on its Promoted Pins strategy, and follow Pinterest’s user growth from now until the company’s public debut, as revenue generation, particularly revenue derived from ads, will increasingly come in focus for the app maker.
Pinterest, however, has grown unlike very few Internet companies in history, suggesting that if they can figure out how to monetize its fast-growing user base, the company could become the next darling of the social media world before long.
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