Is Pinterest Silicon Valley's Next Big Hit?

Illustration by Topos Graphics

One reason people like social media so much better than TV is that with the tube you just sit there on your couch, but with social media you can be part of the show. Sites like Facebook, Twitter, Instagram, and Google+ are basically performance spaces where ordinary people can entertain friends and strangers alike. Not surprisingly, these days a lot of new Web companies seem more like TV shows than like tech companies. These sites cost relatively little to launch, and though most languish, a lucky few catch fire for a while as an audience rushes in to see what all the excitement is about.

The latest "hit show" from Silicon Valley is Pinterest, a site that's been around since 2010 but is just now taking off. The site drew 12 million unique visitors in January, up from 1 million in July, and is on track to draw 20 million in February, which represents faster growth than any other site in history, according to Andrew Lipsman, an analyst at the market-research firm comScore. Pinterest employs only a few dozen people but has raised $37.5 million in funding and was recently valued at $200 million. That seems rich, but remember that a few years ago people looked crazy buying Facebook shares at a $500 million valuation, and now Facebook is about to go public at a valuation approaching $100 billion.

Pinterest is based on a single incredibly simple idea. You find photos you like and "pin" them to a digital pinboard. You install a "Pin It" button in your Web browser, and when you see a photo you like, you click the button and send it to your Pinterest page. You can create multiple categories, like "Dishes I Want to Cook" or "Vacation Ideas." Then you can spend countless hours perusing the pinboards that other people have created. Basically it's a digital version of scrapbooking, and it's all the rage with women, who by some estimates make up more than 90 percent of all users.

How Pinterest will make money remains a bit cloudy. So far the revenue has come from identifying pinboard photos that link to e-commerce sites, then adding code to those links so that if someone clicks through and makes a purchase, Pinterest gets a little kickback. To really get big, Pinterest will need to attract big brands that want to reach the audience it has assembled. That seems easy enough. It's an attractive audience, since many members are already looking to buy things and are using Pinterest as a shopping tool. But some hurdles remain. One is the small but growing amount of objectionable content found on Pinterest, stuff that advertisers don't like to put their brands next to, like softcore porn, pro-anorexia boards, and copyrighted material that has been grabbed without permission.

But it's still early, and no doubt Pinterest will find ways to address those issues. One huge thing that Pinterest has in its favor is the amount of time its members spend on the site. In January the average user spent 89 minutes there, more than on any other social network except for Facebook and Tumblr. "This is not just a flash in the pan," Lipsman says. "Users are spending a ton of time there."

The larger question is what kind of "show" Pinterest is building. Is this a hit that can run for years and keep generating millions in syndication, like Seinfeld or Friends? Or is it one of those shows, like Jersey Shore, that's fun for a season or two and then starts to fade? If it's the former, the folks who invested last fall just got in on the bargain of a lifetime.