BILLIONAIRE BRANDS: CASE STUDY 3 - THE RISE OF PINTEREST

25 July 2016


Introduction

Ben Silbermann was an avid collector of things like bugs, stamps and leaves while growing up in Des Moines, Iowa.

Years later, his childhood hobby became the inspiration for Pinterest, the digital bookmarking and image-sharing site.

In 2010, Silbermann founded Pinterest Inc. with Evan Sharp, the creative brains behind the service’s design and Paul Sciarra, a classmate from Yale who left the company two years later.

Investors were slow to get on board, nervous that the concept of collecting images was out of step with the trend of real-time communication platforms like Twitter and Facebook.

A few months after it launched the service took off first among the arts and crafts crowd in the Midwest, then expanded to home decorators, home cooks and young brides who collect or “pin” images ranging from do-it-yourself projects to cupcake recipes and favourite wedding hairstyles.


Company Growth

Pinterest’s content library has grown to over 30 billion unique pins, and doubling every nine months.

Magazine brands including “Elle” and retailers such as Target Corp. have amassed their own followings on Pinterest, which drives traffic back to their own sites.

Now, first-time entrepreneurs Silbermann and Sharp find themselves in charge of one of the fastest-growing start-ups in the world.

According to comScore, Pinterest had about 78.8 million unique visitors in the U.S. in January, up 37% from the same period a year earlier. The company now has over 500 employees. But it’s still early days for Pinterest, which only began making revenue in January when it opened up its advertising program to all brands.

Pinterest’s push puts it against social media companies like Facebook, Twitter and Instagram, rivals with more established ad products.

Pinterest says it offers a compelling case because its users’ pinning activity reveals what they might be interested in buying.


Funding

In early 2011, the company secured a $10 million USD Series A financing led by Jeremy Levine and Sarah Tavel of Bessemer Venture Partners.

In October 2011, after an introduction from Kevin Hartz and Jeremy Stoppelman, the company secured $27 million USD in funding from Andreessen Horowitz, which valued the company at $200 million USD.

Retail companies use Pinterest for advertising and style trending.

Pinterest intends the web design to support "style conscious retailers," where customers can visualize products within a consumer context.

Companies like The Gap, Chobani, Nordstrom, and West Elm use Pinterest to gather online referrals that link users with similar interests to a company.

The Gap has arguably taken the biggest initiative in their use of Pinterest, employing their own themed pinboards such as: "Denim Icons" and "Everybody in Gap."

Baynote founder Scott Brave sees Pinterest as an ideal environment to collect affinity data; a resource that holds the potential for substantial demand and income. This data "reveals valuable relationships between consumer behaviours, products and content," where it can be collected and sold as marketing analysis.

In May 2012, Pinterest was valued at $1.5 billion. In February 2013, it was valued at $2.5 billion. In October 2013, it was valued at $3.8 billion. In May 2014, it was valued at $5 billion. In June 2015, it was valued at 11 billion. In June 2015, Pinterest added the "Buy" button to its mobile app.


Growth Strategies

Unlike some of the other biggest sites on the Internet today, Pinterest did not launch with an immense amount of hype behind it. Instead, it was a home-grown program launched by some passionate thinkers who ultimately had to go back and incorporate some smart growth-hacking methods into the program once it had already been set free.

One of the most important ways Pinterest incorporated growth hacking into its marketing scheme is its signup process.

In order to join Pinterest, users can’t just visit the website and join.

Instead, they have to request an invitation to the site, making it feel like an exclusive club to which you actually want to belong.

People always want to be a part of something that they’re not initially included in, right?

After new users request an invitation, they receive one by email a few days later, making it feel like they have been approved for a special offer or accepted into an exclusive group.

This makes Pinterest seem like a privilege to use right off the bat, enhancing its reputation as a site that people covet. The invitation email uses strategic wording and content, as well, to help bolster its image, calling Pinterest a small community and offering rules about how to behave while there.

In addition to its joining process, one of the Pinterest’s other most successful growth-hacking techniques is its initial automatic link with Facebook.

Once users join the community, Pinterest instantly gives them the option to sign up with their Facebook account, making it easy for users to start using the site without jumping through a million hoops and more likely that they’ll start using the site right away as opposed to putting off use because of all the bureaucratic stuff.

This also connects users to their Facebook friends immediately, so that they don’t start with an empty social media profile page.

Rather, Pinterest’s Facebook connection allows new users to see a page full of people they know, which is an incentive to keep using and exploring further.

Another growth-hacking technique that happens when a user first starts using Pinterest is its interest survey.

Pinterest shows users a variety of images and asks which ones appeal to them. Based on a user’s responses, it follows some related and popular boards that match the user’s choices, automatically generating content and information that makes users feel like they are already part of a community and in turn, encourages them to explore the site further.

Pinterest’s growth hacks go beyond simply what it requires or offers a user right at the get-go. In fact, one of Pinterest’s principal growth hacks is its user interface (UI), which allows a user to perform almost every possible Pinterest function from their one, main page.

Not only can users comment, re-pin or check out another board from their main feed, but they can also follow new friends, check out the website from which a pin came, share a pin through other social media networks, or edit their own profile or pin boards.

The easy usability of Pinterest makes it extremely popular with users, not only through word of mouth, but also through the direct ability to share the site via simple buttons that connect to email and social media networks.

Another element of Pinterest’s design that has helped make it so popular is its infinite scrollability.

Users can continuously scroll down their feed without ever reaching bottom and having to click a new button to get more information. This allows for ease of use, and even encourages losing track of time while browsing, ultimately upping time spent on the page and in turn, boosting its SEO ranking.

The growth hackers behind Pinterest also took advantage of email in order to help it go viral.

Every function and action on Pinterest is linked with an email alert, which, when sent to users, keeps them up to date on what’s happening on the site and reminds them to go and engage themselves.

While emails are optional, the immediate opt-in feature helps keep users engaged and interested with very little effort on the part of either the user or the company.

Ultimately, Pinterest is such a success story because it combines two things, a really great product with an equally great scheme for viral marketing.

Its growth hackers have done an incredible job of attracting new customers and keeping them engaged, which is important for growing the company and attracting more users. The product is also one that is extremely well designed and useful for both individuals and companies.

Today, Pinterest is used by companies because it has a 50 percent higher conversion rate than any other site that directs people to products, and Pinterest users regularly spend more money, more often than any of the other top four social media sites (Facebook, Twitter, YouTube, Google+).

In fact, Pinterest currently generates four times more revenue per click than Twitter does and nearly three times more than Facebook.

If you’re an entrepreneur who believes in your product, and you are looking to grow your business virally online, you should pay heed to the strategy behind Pinterest’s growth.

Not only has it created a popular site that is entertaining and helpful for promoting social interaction, but one that has also helped changed the way business is conducted online.

PS. tune in next week for Case Study 4 in order to discover how this billionaire brand disrupted the hotel economy.

Any guesses? ;)

PPS. If you have a success story you want to share I would love to hear about it and feature it on my blog!

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