[cylinder]

Those valuations are really not that significant. We don't know the motivations of the investors. They are buying a small piece of the company at a certain price, often for strategic purposes other than simply the investment itself. So, if I buy 3 shares of YCombinator at a price that would value YC at $5 billion, because I want to make connections or explore a strategic partnership with them, does that mean PG could sell YC for $5 billion tomorrow? No way.

If Instagram were to sell 100% of itself today, who would buy it, other than Facebook? There are only a handful of players who can afford $3 billion+ for a speculative acquisition of a company with 0 cash flow. They definitely would not be able to IPO anytime soon, and waiting that long involves a significant amount of risk (by the time they are mature they could be abandoned and worthless). And remember, even if you do IPO, you can't just dump your shares right when the lockup period ends, if you're an executive or insider. You need to disclose your sales and if you're still involved with the company and try to sell all your shares, the stock will likely plummet. The best you can do is buy insurance on the value or borrow against shares.

Same goes for Pinterest. Who would all of the company at that valuation or anywhere near it? Other than maybe Facebook, I can't imagine anyone else.

[mtrimpe]

Pinterest's demographic is women who are looking for stuff to buy or making mood boards to get inspiration for what to buy.

I'd say they should be able to monetize that quite well.

[sharkweek]

I work in marketing -- trust me, we're all salivating for Pinterest ads to go live

[jonnathanson]

This.

Pinterest is the greatest cash cow in the making that nobody's talking about. (I mean, they're talking about it. But nobody's talking about it the way they're talking about Snapchat, which is kind of nuts. Pinterest is the perfect ad platform, outside of Google, for a demographic almost every major consumer brand cares deeply about.)

[001sky]

This is a great point, and for advertisers it seems absolutely correct. In part because the purpose of the use and her mindset and the advertisers are in synch. Perhaps somewhat similar is linkedin (now worth ~$20B). FB, Instagram, Snapchat, and Twitter have emerged to be far more disruptive socially as communications platforms. This puts advertsing and the user experience at something of a conflict in terms of functionality (& ignoring here the privacy/data collection debate, which is a different issue). So the reason snapchat is 'hot' right now to FB and VCs is this disruptive potential to entities with deep pockets.

What is interesting, IMHO, is to see if the network effect is really critical, or if the service can be repicated by a thrid party. What I think we will see soon is that people will maintain a network on one site and not necessarily use it; they will turn to other platforms to communicate on an ad-hoc basis. The ad-hoc platforms will have significant value, but wheras instagram and twitter were additional platforms for audience aggregation, the next wave will be service layers where you communicate to your network by "porting over" your contact base, as needed. The only reason I'm bothering to ramble on is that I'm not sure FB wins the game buy buying out SnapChat. That worked for instagram, which had a sticky network and people didn't leave it. For SnapChat, the whole premise is LNT...so why feel stuck to it? Once FB owns it they will track the hell out of everyone using it, so the LNT value prop dies. But the demand will surely remain if the service can be cloned.

[DSingularity]

I think all they want to say to advertisers is "we have the most active social platform". They can figure out, given enough time and assuming they have patience, how to effectively monetize the snapchat users.

[toomuchtodo]

Adblock Plus doesn't work in Pintrest yet?

[conradfr]

It would be interesting to know ADB's users' demographics

[cpeterso]

I think differentiating Pinterest ads from content will be tough. The company had previously been rewriting pinned product URLs to include Pinterest's own referrer code. (Users didn't like that.)

[clarky07]

Same does not go for Pinterest. Pinterest will be able to make money and lots of it very easily. It is the perfect social site. It is a site for women to tag things they want to buy. It doesn't get any better than that except for maybe google. If I could invest in Pinterest today or anytime in the last few years I'd do it in a heartbeat. The same cannot be said for snapchat.

[radicalbyte]

It's amazing, I never saw the point of Pinterest until I saw my wife using it.

Snapchat on the other hand? I can understand the key selling point - it's basically the naked girl app. And I'd wager that a good proportion of their traffic could get the receivers arrested...

I'd have been all over it when I was a teenager, though.