Despite the company's protests to the contrary, Pinterest already knows how to make money, and may already have a model that would work for users, retailers, and itself.
Over the past few weeks, we've seen Pinterest rise out of the pack of next-next-next-gen social networks after humming along in relative obscurity for a couple of years. We presented our take on the visual bookmarking site a few days ago. Along with the explosion of interest, the company's sole source of revenue came into the spotlight: affiliate links. Pinterest had been using a service called SkimLinks, which is helmed by Australian native, Alicia Navarro, and which, has been in business itself for several years without a bunch of hoopla. SkimLinks' software looks at links users post to websites, determines if there is an affiliate program to which they can be linked, and appends a code that ensures Pinterest gets credit for (and data from) the referral.
To be honest, I don't see much wrong with this practice. The only people it could possibly hurt are merchants who are posting things to Pinterest and then having people click through the site, picking up an affiliate code that costs them a small percentage of the sale. For the average user, it's a non-invasive way to generate revenue for a site they like that doesn't require putting up with advertising.
Nonetheless, once the story broke that Pinterest was quietly making money off its users (the horror!), the company started to backpedal on its practices. That reached full bloom in a Wall Street Journal article yesterday in which various Pinterest parties (CEO, board member) fell all over themselves to declaim that the company knew anything about making money.
"Pinterest's monetization strategy isn't in the oven and it's not even off the baking table. We have one hundred ideas but no execution as of yet," Jeremy Levine, a board member of Pinterest and a venture capitalist at Bessemer Venture Partners, told the WSJ.
Ben Silberman, Pinterest's CEO, struck the same "Money, well, golly?!" chord. "My hope is that if we build a service that a lot of people use to plan and discover things, that will be really valuable," Silberman said.
Now, all of this is pretty standard Silicon Valley speak. They pretend that they don't care about making money off of users and we users pretend that we aren't the product. It's all about "building value" and "creating a better experience" and all that. Which is fine and good. I find the Valley's deep and starry-eyed belief that money flows to all the right people to be very endearing.
But let's get real here: Silberman's company had been happily using and making money with SkimLinks for 2 YEARS. Then, suddenly, $37 million of venture capital falls into their hands and suddenly all they care about is building that "a lot of people use to plan and discover things."