Pinterest

With co-founders coming from former positions at Facebook and Google Adsense, it is no surprise that Pinterest combines the social networking aspects of one with the search options of the other.  What remains to be seen is how to make that a profitable combination.  In only its third year of operations, Pinterest has grown at an incredible rate and now boasts over 80 employees and nearly 50 million users, yet the company freely admits that it has not settled on a business model (yet).  Primarily operating on huge sums of [P]investment funding, it appears that many are confident that the company can find a way to generate substantial revenue.  I agree.

I think the “best” alternative depends on which direction the company decides to aim, but there are several options for Pinterest to begin generating revenue.  Obviously the company can sell on-site advertising, but I think this may not be the best option.  The site is already loaded down with business accounts promoting themselves.  If banner ads and sidebars become commonplace, this may be ad overload for users.   

Pinterest can also sell data at a premium price.  The interesting thing about Pinterest that separates it from Twitter, Facebook, Instagram, and other social networking sites, is that users are already segmenting and categorizing themselves.  The boards they create SCREAM the products/brand, even the lifestyle that they are interested in, and Pinterest can mine that data to update companies on what’s in, what’s trendy, and what direction users are moving in.  In addition, the company may generate some side revenue by charging a fee for business  accounts.  I think a lot of businesses would bite, for a small fee.  Whichever direction Pinterest decides to head, it will be interesting to see in the upcoming year how it plans to model its business to start generating revenue independent of investors.