Pinterest Has a Chance

Everyone seemed to forget about Pinterest. Including the people running it. It should be one of the best businesses on the internet, but it has utterly failed to fulfill its promise. Look at all the things it has going for it:

• People explicitly go to the website with the intent to window-shop.
• Its product initially gained traction with the most valuable consumer demographic (women ages 20-60 who drive 70%+ of consumer spending).
• It boasts a wholly different engagement modality from other sites.

Despite all of these advantages, the business has been a dud. The stock price is down 8% since its public-market debut three years ago, the product has been fairly stagnant, and the company has churned many of the users that it gained during Covid.

Recently there have been signs of life. The company got a new CEO in June, its total monthly active users grew above its Q3 2021 mark of 445M, and a feed change generated a 6%+ increase in engagement. There may be a little bit of magic left. There may even be, dare I say it, an argument for optimism about the company.

However, it’s hard to be anything other than realistic about Pinterest. It should have been much bigger than it is, and while there are some encouraging signals, it is still a company that has failed to meet its potential. Is this latest improvement the last gasp of a dying unicorn, or the start of something new?

It’s funny to type, but this $15B company is an underdog. 435M users makes you a relatively minor player on the scale of the global internet. If they can figure it out, maybe other businesses can also figure out how to exist under the existential threat of Big Ad (Google, Meta, and Amazon). Pinterest has a chance to be a 100B company and they appear to finally be on the path to become one. 

What is this product?

Analyst reports on Pinterest typically position it as a “social media company.” It’s better to think of it as a factory that takes in raw goods and outputs a finished product. Users—ranging from Mormon mommy bloggers in Utah to sleek ecommerce brands in Brooklyn—upload pictures of their products or interests as inputs. The factory interacts with this raw material in two ways: It labels the content with metadata that allows it to be sorted on its website and rank well on Google’s Image Search. It then distributes the inputs as Pins within its internal content discovery engine. Inside the factory stand its 435M users waiting to sort these inputs into the appropriate digital scrapbook. Pinterest calls this a board. Crucially to the model of the company, all of this user labor is free.