Editor's Note: Inc. Magazine announced its pick for Company of the Year on Monday, November 23. It's Slack! See which one Inc. readers chose as their favorite company of 2015. Here, we spotlight Pinterest, one of the contenders for the title in 2015.
Social-media platform Pinterest may have humble beginnings as an "online scrapbook," but in 2015, the $11 billion company proved its potential to generate cash for customers is anything but paper-thin.
This year, Pinterest more than doubled its valuation, thanks to raising an additional $550 million in a Series G round from investors. It also made headlines for an ambitious plan to increase hiring rates for minority and female engineers.
It was the San Francisco-based company's June release of its "Buyable Pins" feature that really turned heads. The new feature allows Pinterest users to purchase more than 60 million products through thousands of retailers, such as Nordstrom, Neiman Marcus, and Macy's, without ever having to leave the Pinterest app. That's helped Pinterest finally live up to its potential as a site that can compete with e-commerce giants.
Since Pinterest launched in 2010, analysts have raved about the social platform's potential to transform consumers' online shopping experiences. While Amazon and eBay are geared toward people who already know that they want to buy a French press, Pinterest offers a "browser friendly" experience that allows users to stumble upon a French press while searching for recipes.
"We shop because we want things," says Ian Schafer, CEO of advertising agency Deep Focus. "And Pinterest is a tool to curate those wants."
Not to mention that many of the subjects--home-improvement projects, wedding decorations, dream vacations--that dominate the pin boards of the site's more than 100 million monthly active users cost money. As Inc.'s Jeff Bercovici pointed out earlier this year, "you can't say the same about reading breaking news on Twitter or looking through a friend's baby photos on Facebook."
But as investors, advertisers, and analysts have been salivating over Pinterest's potential to transform e-commerce, co-founders Evan Sharp and Ben Silbermann have often been mum about just how deep they'll swim into the online shopping game. As of now, Pinterest only generates revenue from advertisements, primarily its "Promoted Pins." It hasn't begun monetizing its Buyable Pins, and exact plans have yet to be revealed.
The founders say Pinterest, at its core, is product oriented, not necessarily revenue driven. As Silbermann told The Wall Street Journal last year, "Pinterest from the beginning was not meant to be a shopping service. It was meant to be a service about your future and your interests. Obviously, products and services are a subset of that."
Pinterest's e-commerce experiment is still very much that--a subset. The 60 million products users can currently buy on Pinterest represent only a fraction of what might one day be for sale. The site regularly features content, such as recipes or photos of travel destinations, that doesn't necessarily involve a physical product that could fetch a price (and a commission for Pinterest) down the road, for instance.
Nonetheless, the buzz around Pinterest's potential remains strong. According to an October survey of advertising executives from market research company eMarketer, Pinterest was bested only by Facebook as the social platform with the best ROI. According to leaked financial documents obtained by TechCrunch, Pinterest forecasts that it could be booking as much as $2.8 billion in annual revenue by 2018, should it begin charging a commission on sales generated through its Buyable Pins.
As Schafer of Deep Focus puts it, the company is on the verge of making a serious impact on e-commerce and the internet overall. "Pinterest did a great job of almost getting there," he says. "Now, it's starting to close that loop."