$90 million revenue run rate this year and an $11 billion valuation...
Are VCs trying to rush everything onto the public while they can, or what? Slightly disconcerting when people say VCs aren't trying to do things like they did in the last boom.
Yes, I really don't think you can justify a valuation like that. It all depends on Pinterest having the popularity of Facebook in a few years, which is an incredible lie.
It's all based on growth. You can't value it like an established company.
"When Twitter went public in 2013, it was valued at $24B — 12 times higher than Times market cap. Twitter was losing money while the Times earned $133M the same year. Why do startups have such big valuations?
The answer is: cash flow. It is different between high-growth startups and low-growth businesses. Startups would usually be profitable in the future. Startup’s main metric is growth."[1]
But the forecasts given in the article most certainly could support that 9 billion valuation (i.e. 2.8 billion in revenue in 2018). Looking at the 90 million run rate is pretty meaningless given that Pinterest only relatively recently started advertising.
I think there are plenty of completely absurd valuations in the tech scene right now, but if anything Pinterest has probably the easiest revenue story to tell.
Not really. Advertising as a way of monetization might be easy to understand, but harder to actually implement and sustain. It is not like 'just put ads on it', then money will flow by itself.
It will take some non-trivial efforts for Pinterest to actually make their model working. The competition is out there: Facebook has one of the biggest and richest demographic data in the world, and it could easily leverage that to drive sales on Instagram, make it more appealing to advertisers, which I think Pinterest should be afraid of.
Are VCs trying to rush everything onto the public while they can, or what? Slightly disconcerting when people say VCs aren't trying to do things like they did in the last boom.
Yes, I really don't think you can justify a valuation like that. It all depends on Pinterest having the popularity of Facebook in a few years, which is an incredible lie.