Pinterest, the popular social-media site that allows users to "pin" images from the web on a virtual billboard, has secured $100 million in new financing, a deal that values the company at a cool $1.5 billion. While that's well short of Facebook's $100 billion value, Pinterest's new investors apparently believe that the site, which has never turned a profit, can transform itself into a money-making machine. Revenue often seems like an afterthought in the tech world these days — just think of Facebook's $1 billion purchase of the business-model-less photo app Instagram — but does Pinterest actually have the potential to be a cash cow?
Absolutely. It's already a boon for companies: The Pinterest effect is already "reverberating through e-commerce sites," says Nidhi Subbaraman at Fast Company. The pinned images serve as glowing advertisements for various products, and data shows that Pinterest inspires its 20 million users to buy an impressive amount of stuff. And Pinterest users "shop big — the average price tag is double that of a buy from a Facebook user." With that kind of a platform, it's easy to see how Pinterest could set up an advertising revenue model.
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