After receiving a $100 million investment from Japanese e-commerce site Rakuten, the "next Facebook," got a valuation 50 percent bigger than the already unbelievable price of Instagram. Meanwhile Facebook still needs to convince advertisers and investors that it's worth as much as it is as readies itself to IPO tomorrow. Facebook at least has a business model. Pinterest, admittedly, does not. Hear that bubble?
Before this round of funding, Pinterest was just hoping its popularity would turn into profits. It had a kind of a money from magic mentality. "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," Pinterest CEO Ben Silberman told the Wall Street Journal back in February. It had some vague ideas for how to make real dollars back then, but since the company has yet to implement anything. This latest round of funding put money toward this still moneyless company.
But, Pinterest does have some hope beyond Internet advertising -- that ill-fated money-maker, which is now failing Facebook and brought the demise of the dot-com bubble. The social network thinks it can tap the Internet shopping market. "The traffic coming from Pinterest probably will have a very high conversion rate," Hiroshi Mikitani, chief executive of Rakuten, told the Financial Times's Tim Bradshaw, justifying his investment. Yet, he doesn't sound too convicing, using a lot of qualifiers, like that word "probably" up there. Or when asked if "social discovery" could ever drive shopping, Mikitani reponded: "We don’t know. It’s too early to tell." This all sounds very murky, right?