Discovery — the art of finding things you’re seeking and being presented with things you never knew you wanted — is one tough problem to crack. And it’s not for lack of dozens of companies in Silicon Valley trying to crack it.
Pinterest, the attractive, photo-centric startup home to tens of millions of users, also wants to crack discovery — both online and off — via the company’s most powerful tool: Collections. “Collecting tells a lot about who you are as a person,” Pinterest CEO Ben Silbermann said in an interview. “There are millions of people that are basically organizing all of the objects online and on the Web according to the things they are interested about.”
Which, in a nutshell, is what Pinterest is all about. If you haven’t used the product, it’s super simple: Users are prompted to pick and choose photos they’ve collected — either taken themselves or found online — and organize them into different thematic groups. The classic examples are “pinboards” for recipes you want to try, clothes you’d like to buy or cute animals you want to hug.
On first blush, Pinterest may sound like a hundred other social media websites where people share images and comment on them. But the design choices of Silbermann and his cofounder Evan Sharp, based on a new way of browsing that dispenses with the web’s rigid rules of presenting content, have made the service incredibly addictive. To create a pinboard is to say to the world, "Here are the beautiful things that make me who I am--or who I want to be." Young women use Pinterest to plan their weddings, men collect watches and bikes into de facto gift registries, and couples assemble furniture sets for their new homes. "When you open up Pinterest," Silbermann says, distilling his vision, "you should feel like you’ve walked into a building full of stuff that only you are interested in. Everything should feel handpicked for you." In other words, it’s a store in which every single product has been tailored to your needs, ambitions, and desires.
That type of offline discovery, coupled with the company’s early rapid growth, is why the retailer communities love the site and its referral traffic, and why the company commanded the massive valuation of $2.5 billion the last time it raised money. The key to Pinterest’s growth beyond this simple theory lies in the visual. The site is simple, essentially amounting to a series of well-designed pictures arranged in an attractive, organized manner. “Many things were once very text-based and very popular,” Silbermann said. “But instead of being time-based” — like Facebook or Twitter’s ever-flowing activity streams — “we made it visual.” And that visual layout seems to have struck a chord in people, and how we interact with the Web and devices.
Pinterest was hard for investors to understand at first (these days, they’d cut off a limb for equity) because it deviated from the trends of the moment. “When we first started, people were obsessed with this idea of real time, and everything was real-time text feeds,” Silbermann said. Pinterest, on the other hand, isn’t about speed or dense information. “To me, [Pinterest's image-dominated] boards are a very human way of looking at the world,” Silbermann said. By contrast, “You never see a tweet older than 48 hours, unless it’s ironic. I wanted to create a service that’s a bit timeless.” Pinterest’s big idea is “helping people discover things that they didn’t know they wanted,” Silbermann said, so beauty and simplicity are its highest product goals.
For all the talk of Pinterest’s promise as a business, it is currently generating no revenue whatsoever. The fact is far from a secret. Go to its website, click on "Help," and then click on the frequently asked question, "How does Pinterest make money?" The answer is, in short, that it does not.
In 2010, Silbermann began experimenting with a service called Skimlinks that paid it a small fee for referring customers to the websites of some retailers--roughly 6% of the sale price of every item sold as the result of a pin. Last February, he turned off that revenue stream. So far, the company has not attempted advertising sales. This too is by design. "At a small company, so much of the trick is focus," Silbermann explains, repeating "so much" for emphasis. "Not only can you only do a finite number of things, but you have to do them in the right order. So we actively try to remove things that take away focus from things that are really important."
Investors seem perfectly happy to let Silbermann take his time in developing a business model. To date, Pinterest has raised $138 million from an A-list roster of investors.
Some of Pinterest’s most popular users--and the brands that want to reach their followers--are not waiting for Silbermann to create commercial opportunities, choosing instead to create ones for themselves. For example, certain brands pay Satsuki Shibuya, a 31-year-old designer with more than a million followers, between $150 and $1,200 every time she pins an image of their product. She refused to tell me which brands she’s worked with and, because paid pins look identical to unpaid ones, it’s hard to guess. "A lot of brands are getting into the game," she says. "It’s a smart move. They’re already putting ads in magazines and there are 10 times as many people looking at Pinterest." Earlier this year, she said no to an advertiser because the items seemed too far removed from her personal style. "For three or four pins," she notes, "I could have bought a car."
"Right now we don't make money -- it makes bookkeeping more straightforward," Silbermann said. "But, when we think about our mission -- we think there's a direct link between what people buy and what they want to purchase in the future. When we do announce our monetization plans, we want to make it easier for people to discover things they love -- we want to help people take the next step."