Pinterest Pitches Its 'Safe’ Social Network

The firm expands on its plans for its IPO as other social media sites face tough times. Why now?

At first glance, this doesn’t look like a good time for a social network to ask for money from investors. For months, the likes of Facebook, Twitter, and others have been beset with issues around graphic content, false information, data privacy, and other controversial topics. But this week, Pinterest announced that it intends to go through with its public offering, hoping to raise around $1.5 billion when its shares start trading later this spring.

Why would the company and its leaders wade into the public markets now? Experts say the reason is straightforward: Investors, at least for now, view Pinterest is a different type of social network than the ones facing all the tough headlines. Rather than disseminate controversial news stories or get into arguments with other people, most Pinterest users just want to share a few photos of food, furniture or other products they really like. 

It’s not seeking to be a world changing product, experts say, but has found a humble path that can nonetheless succeed. “Pinterest is really known as a scrap booking site, rather than a way to push controversial information, so ,” says Barbara Rosen, a Korn Ferry senior client partner and global accounts lead for the Technology practice. “The users that they attract don’t attract a high volume of those who want to promote fake news.” 

Pinterest started in 2010 and its founders didn’t view it as a direct competitor to Facebook. Its users can “pin,” i.e. bookmark, images of recipes, home designs, furniture or anything else that they like, and then share those images with other users. As the years have gone by Pinterest has made it easier for users to discover how to cook a recipe, remodel a bathroom or other task. That shift got the attention of companies that want to put ads in front of users while the users are thinking about buying something.

The company has 250 million users, a large fanbase, for sure, but nowhere near the size of the billions who use Facebook, Twitter and YouTube. Pinterest may not have the growth prospects of other social networks or other potential IPOs such as Uber (it’s also not profitable yet). But the company has differentiated itself by being less controversial. The company banned several users that promoted anti-vaccination theories and has limited searches of what the company considers “polluted” terms, such as vaccination or suicide.

“We are seeing those tech companies with a more precise customer value proposition are more easily getting the funding they need,” says Korn Ferry senior partner Jamen Graves. “Their leaders recognize and leverage the fact that they have a different risk profile compared to other tech giants like Facebook.”

For its part, Pinterest is taking a conservative approach to its IPO. Its amended IPO prospectus, filed Monday, values the company several hundred million dollars less than its current private market value of $12 billion. With so many potential options to chose from this year, dampening expectations is a smart move, Graves says. “Pinterest is not going to revolutionize how we share our images of things we like, but it could greatly enhance this capability or feature as part of a larger solution.” 

The lesson for leaders, Graves says, is that they don’t always have to have a world-changing idea;  a well-designed product or service backed up with a vision could attract investors all the same.