Pinterest joins the billion-dollar club

Screenshot of Pinterest. The social media scrapbooking site is the latest startup to be valued at over a $1 billion.

Tess Vigeland: What we're talking about today is Pinterest. This is a social network where users create online scrapbooks. It's been touted as the next Facebook.

And if it can just up its value by another $99 billion, give or take, it may have a shot. But right now, it's not so bad being Pinterest. Yesterday, the company nabbed $100 million in financing, and that puts its paper value at $1.5 billion, for a company that has yet to earn a profit.

Seems to be a lot of that going around these days. Sally Herships has our story.


Sally Herships: Ben Silbermann is a co-founder of Pinterest. And you know his mom pinned up his $1.5 billion news on Pinterest. That’s what people do there –- tack up digital pictures of things they like, anything from fried string cheese to your favorite T-shirt from Urban Outfitters. But these are just pictures -- so where does the big money come in?

Scott Meadow: It certainly has nothing to do with any economic value that any rational economist could justify.

Scott Meadow teaches entrepreneurship at the University of Chicago. He says Pinterest’s valuation is based on where we spend our time -– or a good chunk of it. Online. And yes, I’m talking about Facebook. Meadow says imagine it as your neighborhood, but digital.

Meadow: That neighborhood needs infrastructure, that neighborhood needs marketing, that neighborhood needs all kinds of things.

Like bulletin boards. And so companies like Pinterest, whose users are multiplying by the millions look promising to investors. So does the marketing potential. Every time someone posts a picture of a product, that’s free advertising and a possible sale.

Ben Schachter is an Internet analyst at McQuarie.

Ben Schachter: You used to get home around dinner time, you’d eat dinner and then kind of plop yourself on the couch and you were not on the Internet.

Now Schachter says we’re still on the couch, but with our phones, laptops, or tablets -- which means more opportunities for shopping online. Pinterest got that $100 million investment from Japanese e-retailer Rakuten. The plan is to expand Pinterest globally.

In New York, I’m Sally Herships for Marketplace.

About the author

Sally Herships is a regular contributor to Marketplace.

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