It's unfortunate that potential LPs can't be trusted to keep these kinds of things secret, because it makes it harder for founders to trust them in the future.

As an occasional LP myself, I always consider financial documents like this just as secret as my own bank statements and health records.

This is an embarrassing question... what's an LP?

Limited Partner. I.e. the people with the money behind the venture capital firms. The big VC firms solicit money from LPs to fund startups which the VC managing partners select.

wow

you must be rich.

Oh honey, he's teasing you. Nobody has two television sets.

The clear solution is to give each LP different revenue numbers. That will make it trivial to identify the leaker.

Then by that same logic, can't the LPs just leak slightly modified number so they're not identified?

You monster

Not a bad idea, except that it's illegal. If they invest on your phony numbers then they can sue you later for lying to them.

you never met a lawyer.

send notice to LP #1. subtract value from sending that note. send new value on a note to lp #2. subtract cost... put a note on all notes that they may be an hour out of date but represent the values as accurately as the law demands for that day.

Even if only a few cents?

What if you give everyone the same numbers in a different order? Or one spelling mistake in each release?

Those other options would probably be more legal but less likely to "propagate" to the leak.

"Number watermarking" is a very good solution against many different kinds of leaks. I wonder whether there exist services for big companies to "watermark" internal documents with very insignificant errors.

Why do they need to be secret? If secrecy is such a large concern, why not go the TPP route and keep the available copy in a locked room under supervision?

I had this discussion with my manager once. I was of the opinion that there is no need for secrecy, which is why we were very forthcoming with the stats about reddit. However, he had one pretty good reason to keep financials and other stats secrets: It gives your competitors information they may not otherwise have.

For example, one stat is cost per unit. If your competitor knows that your cost per unit is say only 1% more than theirs, then they know how to undercut you to hurt your business.

I can see the logic in the case of a cut-throat competition. I want to argue that if you find yourself in a business keeping 1% secrets, it might be time to look for other solutions to your problem.

Part of the reason a company stays private is to have more control over the release of financial information. Why would a company that values privacy choose to do business with a firm (a16z) that it can't trust?

That doesn't give a motivation for the secrecy.

I don't know why someone would or would not do business with a16z. Was a particular contact breached here? I don't remember reading such an allegation, but I may have missed it.

Privacy is a reasonable thing to expect in basically all business transactions, regardless of whether it's listed specifically in a contract. Firms that want to maintain good relations with the startup community want to be seen as trustworthy.

I'm reading lots of justification, but no reason for why the secrecy is desired.

Competitive advantage is the reason for secrecy.

Interesting. Do you know of any ways to compute the competitive advantage of holding a given secret?

$90 million revenue run rate this year and an $11 billion valuation...

Are VCs trying to rush everything onto the public while they can, or what? Slightly disconcerting when people say VCs aren't trying to do things like they did in the last boom.

Yes, I really don't think you can justify a valuation like that. It all depends on Pinterest having the popularity of Facebook in a few years, which is an incredible lie.

It's all based on growth. You can't value it like an established company.

"When Twitter went public in 2013, it was valued at $24B — 12 times higher than Times market cap. Twitter was losing money while the Times earned $133M the same year. Why do startups have such big valuations? The answer is: cash flow. It is different between high-growth startups and low-growth businesses. Startups would usually be profitable in the future. Startup’s main metric is growth."[1]

[1] https://medium.com/@paulmillr/zero-to-one-summary-8dbda22e15...

How're people who valued Twitter at $24B feeling about that number now?

But the forecasts given in the article most certainly could support that 9 billion valuation (i.e. 2.8 billion in revenue in 2018). Looking at the 90 million run rate is pretty meaningless given that Pinterest only relatively recently started advertising.

I think there are plenty of completely absurd valuations in the tech scene right now, but if anything Pinterest has probably the easiest revenue story to tell.

Not really. Advertising as a way of monetization might be easy to understand, but harder to actually implement and sustain. It is not like 'just put ads on it', then money will flow by itself.

It will take some non-trivial efforts for Pinterest to actually make their model working. The competition is out there: Facebook has one of the biggest and richest demographic data in the world, and it could easily leverage that to drive sales on Instagram, make it more appealing to advertisers, which I think Pinterest should be afraid of.

> TechCrunch has obtained documents that show Pinterest has been forecasting $169 million in revenue this year and $2.8 billion in annual revenue by 2018.

So in three years, they'll have to grow revenues by 16.5X. These sort of outlandish growth assumptions necessary to substantiate their valuation is exhibit A as to why the a16z valuation is extremely suspect.

Of course, 16.5X growth is doable when you are starting from a low number, but $169MM ain't spit.

And all the being said, $169MM for 2015 is just a forecast, so if they miss on Q4 numbers, the 16.5X assumption can easily be 20-25X.

On the plus side, their revenues per active user target of $9.34 is relatively modest, and I think doable as FB does $4.18 per user per quarter in revenue.

Just some more data to support your point. Some research by Institutional Venture Partners in 2013 showed that in companies over $150M in revenue, around 30% revenue growth per year was the median, so 155% per year (16.5x growth over 3 years) is incredibly keen.

Advertising platforms can scale that fast. What if they are only monetizing 5% of pin boards at the moment? Going to 100% coverage would be 20x. Devil is in the details but order of magnitude growth isn't out of the question.

The 2018 projection of $2.8 billion revenue with 329 MAU for Pinterest is roughly what Twitter will achieve in 2016.

Twitter has a market cap of 20B vs 11B for Pinterest, so there is plenty of upside if Pinterest hits 2018 numbers and goes public. That is assuming Twitter's current valuation is reasonable which is debatable.

It's not clear at all that 1 Twitter MAU = 1 Pinterest MAU. The really hardcore Twitter users spend all day on Twitter (@pmarca comes to mind, it seems Twitter is his full time job). I'm not sure the same is the case for Pinterest (although this might just be my ignorance of Pinterest speaking). So maybe Twitter gets more money out of each MAU because the users spend more time on the site. But maybe a Pinterest MAU is worth more - I don't know. Intuitively it feels more susceptible to "native" advertising - my little impression of Pinterest is that it consists of lots of curated glossy photos scrolling by of aspirational consumerist things. Seems very monetizable.

In any case, in order to apply your logic, the epistemic burden is on you to show that a Pinterest MAU should be financially treated the same as a Twitter MAU. I don't see that as being straightforward at all.

Heaven help us if Twitter becomes the standard ruler for sane valuations.

Both Pinterest and Twitter are getting hammered by Instagram in popularity over the past 2 years.

Have a look at Google Trends [1].

[1] https://www.google.com/trends/explore#q=instagram%2C%20twitt...

If those are navigational searches then it might indicate people don't have the service's app installed. That's fine for Twitter and Pinterest as they're accessible from the web, but it'd be bad for Instagram as a web search isn't an entry point to their service.

Anyone know if there's data on their expenses or is it all just a report on one side of the profit curve?

What stops Pinterest being sued by the magazines/photographers whose photos are being ripped off?

The DMCA.

Who knows what revenue numbers Pinterest will hit. Lucky for them their competition is nil.

Instagram is pretty close to be their competitor.

True but the ability to buy stuff on Pinterest is pretty cool.

instagram is a completely different dynamic than pinterist. Besides, if they do compete, it's not zero sum. People use both (and use them differently).

Promoted Pins

anybody who's ever tried them knows that pinterest is doing very well

Sometimes I use pinterest when I'm looking for cooking inspiration. It is absolutely nothing like 4chan, I have no idea what you are talking about.

Well Pintrest and 4Chan are quite similar in their underlying ideas, both are twitter (yes i know 4chan predates twitter) with images basically.

There are quite a few differences but they aren't that far apart as people think.

Forget the "quality" of content and trolling for a moment, you can't really say that these 2 do not look similar.

http://boards.4chan.org/ck/catalog

https://uk.pinterest.com/categories/food_drink/

IMHO with pinterest the long-term memory aspect is quite important (collect things and look through them later), which 4chan is completely missing.

One is a catalog of images with description.

The other forces login or an app download.

I see what you did there, kudos :)

I don't get the 4chan comparison in any way.

Pinterest helps people catalogue things they find inspiring or are shortlisting to buy. They're right there between someone with an intent and a product for sale.

That's a valuable position to be in.

What similarity do you see between pinterest and 4chan?

"They both run on HTML."

Both use images as the primary subject of the post and media, posting structure is also quite similar (although Pintrest introduced poster pages/aggregation).

Facebook was just a better myspace. Google was just a better askjeeves/altavista/etc.

A Boeing 747 is a better donkey.

But it's a way better donkey.

Considering this revenue number, it really can't be valued at 10Billion dollars.