Pinterest: Growth Study

Pinterest – a site for discovering new ideas, design inspiration, and life hacks – experienced modest growth when it first launched, but now boasts over 200 million monthly active users, over 100 billion ‘pins’ (posts), and went public through an IPO in 2019.[1] This growth study explores how the platform began, the difficulties it experienced in its initial months, the mechanisms that were used to build traction, and how they expect to continue this positive trend throughout the next few years. Now valued at over $12 billion [2], Pinterest has ambitious future plans to be the visual search engine of choice and tap into the flourishing e-commerce market.

“Years ago we thought of the company's mission very similar to how we think of it today. We thought of Pinterest as trying to build the world's catalogue of ideas, and we do that because we want to help people discover ideas for themselves, for their everyday lives.” [3]

Image via infobunny.com [4]

Ben Silbermann[5], a modest and unassuming individual from Iowa, is the brainchild behind the platform. Growing up he was fascinated by the pioneering characteristics of successful entrepreneurs, such as Steve Jobs, which led him to pursue a job at Google before establishing his very first tech company, Tote. [6] Despite failing, Tote had distinct similarities with Pinterest through its ability to allow users to “save [their] favourite” items and “browse items from dozens of retailers”. [7]

Image via philmichaelson.com [8]

As Tote struggled, Silbermann moved his attention towards Pinterest and conceived the idea when remembering his own love of collecting bugs as a youngster. [9]He believed that by showing others what you love (by sharing a collection of your favourite items) you would be able to show off what you stand for with greater ease. In short, a collection could visually demonstrate your personality. This is an idea that Silbermann’s friend, Evan Sharp, quickly bought in to and helped design the platform’s first build. He once said:

“Pinterest is about who you want to become. It helps you build the life you want to lead, brick by brick.”[10]

Gradually, Pinterest users also bought into this idea; its users were using the site to curate their own collections of things that interested and inspired them. They were telling the world how they wanted their life to be. Although Pinterest didn’t experience the unbelievable growth of some online platforms – the social networking app, Path, for example, received over one million downloads in its first two weeks [11] – a number of smart moves enabled the company to build momentum and now finds itself firmly within the top 100 most visited websites globally. [12]

A Slow Start

Three months from launch Pinterest had a mere 3000 registered users. [13]Compared to many successful start-ups this was extraordinarily slow growth. But Silbermann, and co-founder Sciarra [14], refused to quit because “the idea of telling everyone [they] blew it was just so embarrassing” and Silbermann even thought that Google wouldn't let him back in if he tried to get his job back. [15]Fortunately, he had a key motivation. In an interview with Forbes, he noted that “the few people who used it” – himself included – “actually really enjoyed it”. So instead of changing things up drastically, he felt it was best to “find more people like [him]”. [16]To secure his initial user base and establish the foundation community for Pinterest he decided to take an extremely personal approach. Not only did he send each of the first 5000 users personalised messages, but he even handed out his phone number and met with many of them in person. [17]Through this he created a robust brand loyalty that worked as a catalyst for incredible growth.

Image via web.archive.org [18]

“Three words come to mind: Inspiration, Sharing, Storing. Pinterest is a great way to find new designs and inspiration (things I would probably not find otherwise). It is also great way to share what you like with likeminded people. For me Pinterest makes it possible to store images and links to things I like and, unlike my old bookmarks, I can actually find the objects again!” [19]

In July 2010, Pinterest hosted their very first meet up in California, with the help of a blogger (Victoria from sfgirlbybay.com), a store (raredevice.net), and the artist Leah Giberson. From the Pinterest Blog, Silbermann wrote that the event had been a great success and that he had received “lots of bug reports [sic] suggestions”, which he hoped to “turn into improvements on the site soon”. [20] It was from these events that Silbermann effectively found people similar to him who could benefit from and enjoy the platform.

People like Silbermann

One group of people that Silbermann and Sciarra managed to attract to the platform in its early days were interior designers and home decorators. [21] Pinterest made it easier to communicate ideas to clients about how they should furnish their house through inspirational images and facilitated the purchase of these items through a simple click-through that took them to the source website. Before Pinterest, these interior designers had to save huge files on their computers, email the relevant stores to collaborate, and eventually do their best to retrace their steps back to the original source.

"I like to save images of everything for a client in one place, so Pinterest is a great way to organize by product category and by job. Sometimes a great lamp just isn’t so great with a particular sofa, so as we’re working we can really use the pinboards to see how everything is coming together. It’s perfect for the way we collaborate, too." [22]

Image via web.archive.org [23]

Building Traction

Pin-It Forward

Throughout 2010, Pinterest’s marketing plan was slowly gathering pace. Among these marketing efforts was the pin-it forward campaign, which encouraged users who participated in the campaign to make their own ‘pinboard’ (collection) based on what ‘home meant to them’. [24] Bloggers and online journalists were primarily targeted to join the pin-it forward campaign because they held the key to on-boarding some particularly niche communities of people. To do this, Pinterest encouraged the participants to write a blog post about their pinboard and link the relevant images back to where they were located on Pinterest. [25] To make the pin-it forward idea work the bloggers were able to access the full list of registered pin-it forward participants so they could link their blog to the next blogger on the list and, in addition, to the blogger that preceded them. Through this Pinterest had concocted an extremely successful influencer marketing campaign and led them to use the idea again for a second time in 2013. Joy Cho (ohjoy.blogs.com), one of the original Pin-It Forward bloggers wrote this on her blog:

“… you may have heard rumblings about a new image bookmarking site called Pinterest. Similar in idea to Ffffound, but way more organized, Pinterest is like a virtual inspiration board where instead of pinning things to your wall, they are pinned to boards on your own account that can be viewed by and shared with others.” [26]

Exclusivity

If you want to generate a buzz about something, exclusivity is a good way to go about it. By making the sign up process appear exclusive – by not allowing users instant access to the platform when they join – Pinterest triggered a psychological reaction in potential users that often arises when faced with something scarce. In essence, by making people think that Pinterest was a scarce resource they were able to increase its value and believe that they were part of an exclusive club once they were in. The privilege users felt by gaining access led them to becoming a more valuable user; that is, a user that frequently returns to the platform. Once someone requested an invitation to Pinterest they would receive an email a few days later that makes them feel they had been selected and approved to login. The email’s reference to their “small community” (see below) also demonstrated the idea that they were special to have been hand-selected to join the community.

Image via sparkpage.com [27]

Pinterest’s exclusivity also gave rise to an interesting story. In 2010, the co-founder and chairman of Eventbrite, Kevin Hartz [28] - who has successfully invest in PayPal, Airbnb, and Uber – became the key angel investor for Pinterest. [29] In 2011, Hartz attempted to use his powerful investors network to raise additional funds, and approached the former OpenTable CEO Jeff Jordan [30] multiple times to check the platform out. However, at that stage, Pinterest still required people to request to join, which meant he was unable to access the platform straight away leaving the door firmly shut on one of the leading venture capitalists in Silicon Valley until he received the official email invite.

Product Channel Fit

By 2011, Pinterest’s growth skyrocketed, which was partly the result of a successful product channel fit. Put another way, Pinterest had found a distribution channel that fitted and moulded to their product perfectly. They used Facebook APIs to facilitate viral sharing of posts that users had pinned to their boards. Their friends and followers then saw Pinterest posts on their home feed directing them to the platform. However, near the end of 2012 Facebook shut down the APIs that allowed the viral sharing of Pinterest posts, and many people reported that the Pinterest hype was receding. [31] Many companies would have panicked at this stage, but the team remained calm and smoothly transitioned to a User Generated Content (UGC) SEO channel that still propels their growth today. By encouraging users to upload more products, link to more websites, and create more pinboards, Pinterest was endlessly producing unique content that significantly improved their SEO rankings. The result was unbelievable growth:

Image via statista.com [32]

The Boom

From June 2011 to October 2011 the number of page views Pinterest was receiving grew 2000 percent from approximately 20 million page views to over 420 million page views. Etsy, the already established online platform for handmade and crafted goods, also grew significantly during this period, [33] but failed to keep up with Pinterest. In comparison, Etsy had about 70 million fewer page views in November 2011 despite growing at nearly 50 percent month on month since June that year. The users that Pinterest pulled in also stayed for a significant amount of time every month, with reports that they generated 130 page views per user each month at the end of the year. [34] Pinterest was addictive. The American angel investor and philanthropist, Roy Conway [35], said that Pinterest was growing like 2006 Facebook. [36] However, Pinterest was actually doing better than 2006 Facebook. Early growth for Facebook reached about 15 percent monthly growth, but Pinterest was reaching an astonishing 45 percent monthly growth. [37]

Image via techcrunch.com [38]

“I like Pinterest because of it’s creativity and the visualization of it. I can see my future and things I want to create from this site. I see the new and developing technologies, I see the puppies I want, I see the wedding pictures I know I will want to try and I see the recipes I know I will love.” [39]

During that year Silbermann and Sciarra hired Facebook designer Evan Sharp to transform the way the platform looked and, in the process, gained himself co-founder status. Some reports suggest he was able to get the status of co-founder, despite joining three years late, because he had been working on the platform all along while at Facebook. Even in an interview with Mashable he admitted that “myself and two of my friends were all working on the site at the end of 2009, more as a fun project than as an aspirational startup” [40]. Once he was officially on the Pinterest team he tasked himself with designing the grid layout of the site – what you call a bulletin board. In that same interview with Mashable, he said that it was the “thing I spent by farthe most time working on” and noted it was the “visual hallmark” of Pinterest. [41] Time Magazine subsequently listed Pinterest in its ‘50 Best Websites of 2011’. [42]

Image via mashable.com [43]

It wasn’t long before Pinterest was getting some serious interest from investors within the Silicon Valley and beyond. After failed attempts by Silbermann to sell the relatively young platform [44], Bessemer Venture Partnersinvested $10 million in the company giving it a $40 million valuation. Others, such as SV Angel, quickly followed this investment. [45] Perhaps the most significant investment came from the investment fund Andreessen Horowitz, who invested $27 million in Pinterest having been persuaded by Kevin Hartz and Jeremy Stoppelman (the CEO of Yelp) [46]. This increased the company’s valuation by $160 million, allowing the team to buy a proper office in Palo Alto.

Maintaining Growth

An unexpected even then occurs: in April 2012, Paul Sciarra, the CEO of Pinterest at the time, decided to leave the company. Ben Silbermann then took over the role of CEO [47] and worked to ensure Pinterest continued to grow quickly. In 2012 a number of key events helped boost the number of users coming to the platform:

· During the time of the 2012 US presidential election, Ann Romney (the wife of Mitt Romney) [48] and Michelle Obama (the ex-First Lady of the United States) [49] began to pin on Pinterest. This did not go unnoticed and contributed to the visibility of the site.

· The Japanese e-commerce giant, Rakuten, joined the investment round, contributing $100 million. This investment increased Pinterest’s valuation to 1.5 billion dollars securing the platform’s international status. [50]

· To secure the international status of Pinterest further they developed local versions of the platform, including translating the content. Initially they translated it into French, German, Portuguese, Spanish, and Japanese. [51]

· On August 10, 2012, Pinterest opens the platform in full, removing the requirement to request an invitation to create an account. [52]

· On August 14, 2012, a Pinterest application is released to iPad and Android users. This is particularly significant given the fact that over three-quarters of their web traffic comes from tablets and smartphones. [53]

Image via pinterest.com [54]

The 8 employees at Pinterest quickly grew to 30. They aggressively hired a number of talented individuals, with many of them coming from other hot startups. Three engineers came from Livestar (the live-streaming app) in January 2013, two came from VisualGraph to improve the image recognition and visual search technology in January 2014, and the Spanish co-founders of Iceberg (a system of visual bookmarks, project organisation, and sharing content organised into blocks) joined in June 2014. [55] In this time, they successfully raised a further $200 million in February 2013 [56], $225 million in October 2013 [57], and another $200 million in May 2014, bring the company’s value to $5 billion. [58] Pinterest’s last round of funding came last year (2017) where they raised an additional $150 million giving the platform its current valuation of $12.3 billion. [59]

Monetisation

Silbermann and Sharp decided it was time to start generating income. Quietly Pinterest began generating some income by monetising pins using affiliate links to e-commerce sites. If someone made a pin that linked to a website that has an affiliate platform, Pinterest would add their own affiliate tracking code to that pin so they make money if anyone clicks the pin and purchases the product. [60] These links were automatically added to relevant pins using a service called Skimlinks (skimlinks.com) and Pinterest never publicly disclosed this activity to its users. An example of one of these links can be seen below:

Image via llsocial.com [61]

However, this has since been abandoned. Pinterest shifted towards the introduction of non-intrusive ads on the platform. Following a test period, sponsored/promoted pins have been available to all brands since January 2015. According to Pinterest, “promoted pins are just like normal Pins, only you pay to have them seen by more people. These ads perform just as well, if not better, than your other Pins, helping people discover and save better”. [62] In 2017, Pinterest upgraded their advertising by implementing its visual search technology to ensure users only see adverts that interest them based on what they have previously seen and liked. At TechCrunch Disrupt NY 2017, Tim Kendall said “we’re able to understand the combined affect people find appealing, even when it can’t be communicated in words.” [63] In other words, Pinterest know what their users like and can integrate their ads seamlessly because of that.

“For the brands and partners we’re working with, Promoted Pins will enable them to reach a lot more people than they have been able to reach in the past. We’re expecting it to be a great success and we’re seeing great results in the US where we’ve had promoted pins up and running for a while now.” [64]

Social Shopping: The ‘Buy Button’

However, Pinterest’s most interesting idea in their plans to boost their revenue came in mid-2015 when they introduced a ‘buy button’, enabling users to purchase items they see while browsing the site. Large retailers like Macy’s, Neiman Marcus, and Nordstrom partnered with Pinterest to stock the platform with millions of products. [65] Alongside them, thousands of smaller stores were able to add buyable pins to the platform, as long as they had a Shopify store. [66] With 87 percent of Pinterest users saying they had purchased something they saw while browsing Pinterest it seemed as though this would be a big hit. [67]

Image via andrewmacarthy.com [68]

This was not the case. Buyable pins never really took off, and appeared to be following a similar path to the Facebook and Twitter buy buttons that were subsequently discontinued. [69] According to Sucharita Mulpuru [70], the principal analyst for Forrester, “there is too much information on Pinterest, Instagram and other discovery engines, so any piece of content gets very little visibility, and even less conversion”. [71] The only way social shopping can work – and will work – is if there is a proper, dedicated, shopping platform that has carefully integrated social features. For example, Impulse is an “intelligent, personalised, and adventurous community” [72] that helps progressive shoppers find beautiful products from across the globe. Mulpuru further noted that “the intersection between what people want to buy and what is available to buy is huge”. [73] Impulse offers the simple solution to this issue by ensuring its users can buy everything they see while scrolling through a psychologically pleasing feed and profile pages. Nevertheless, Pinterest users still spend more money, more often, than any of the top four social media sites (Facebook, Twitter, YouTube, and Google+). [74]

Image via weareimpulse.co [75]

The Future

Beyond 2018, Silbermann and Sharp want Pinterest to remain the central site in the field of visual discovery and daily inspiration. Recently Pinterest has worked on its trendspotting data, finding from its users (using one example) that the latest meat substitute is jackfruit. [76] This data will help Pinterest to know what informaton is relevant to its users and help shape its marketing. Avocados have also been at the forefront of Pinterest’s future in recent weeks. [77] The team have been working on viual AI, which is a technology used to identify objects through photography. On this topic, Silbermann said that he believes “the camera will be the next keyboard. It will be a fundamental tool you use to query the world around you, discover things around you, or visualise how something might fit into your life”. [78] Finally, Pinterest are looking to go public. Plans for an IPO have been postponed after missing its $500 million revenue target in 2017 (despite this, their revenue increased by an estimated 64 percent over the previous year). [79] Some predict that Pinterest could fetch a valuation that exceeds Snap’s $20 billion valuation if it goes through with the IPO. [80] However, a company spokesperson told Recode that they “don’t have any current plans for an IPO right now because [they’re] focused on growing the business”. [81]

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