Pinterest, the social pinning website that has been public less than two months is to be valued at $500 million, so says private financial data companyPrivCo. Little back story first before we go into why this is what will be proven as the Tech company that causes the bubble to burst in Silicone Valley.
Pinterest is a virtual pinboard. Pinterest allows you to organize and share all the beautiful things you find on the web. You can browse pinboards created by other people to discover new things and get inspiration from people who share your interests.
More after the break…
While the company has been around since 2010, it has only been open to the public for a short time, and in that time has taken the world by storm. Not only has Pinterest seen growth that has never been seen before, but major VC’s are trying to invest in it with no vision of a viable revenue model yet. With its latest round of funding, they have raise over $35.5 million from investors with power houses such as Andreessen Horowitz and Ron Conway leading the way.
The site has already came under some backlash from the way it was trying to create a revenue with it’s links by using a third-party service called Skimlinks which has now stopped.
Skimlinks puts links into the website, and than when a user buys something from that site. Skimlinks is sent a check, which in turns sends a percentage back to Pinterest.
Besides what looked like a scam for a revenue model, Pinterest has also come under scrutiny for copyright infringement. In dealing with the photos users Pin to the site. They now have had to release an API in which websites could put into there own to prevent Pinning of a photo.
Now onto why this means the bubble is about to burst. The site has no clear revenue, has already have had multiple back lashes against it. And once more, no revenue except for going with ads. Also, lets not remember what happened with Color and all the funding they got which was over $50 million only to release a product no one used, and those who used hated from day one. With validations so quick, and funding as well, there isn’t any place to go but down. We’ve seen this before in the early 2000’s and that bubble hit hard. Could we be seeing the start of that now as well? I surely believe so, but this time unlike than, our economy might not be able to help those like it did before.
Source: Venture Beat