Business Model Canvas - Pinterest

The following is an executive summary for Pinterest that I have prepared using the Business Model Canvas tool.   

 

Executive Summary Pinterest

Current Status: Launched in 2010 by Ben Silbermann, Pinterest currently has over 50 million users and one of the fastest growing websites in the world. 

Summary of Business: Pinterest provides users with their own online cork board; a place to collect a share their favorite things. Additionally it provides business with an online cork board to highlight promotions, best products, and work. 

Customer: The primary customer is wide reaching. Using Pinterest is easy and anyone with a basic understanding of web browsing or social media use can use. Pinterest users skew towards the 15 – 30 years old, however use among the 30 – 40 year old crowd is also common. Women tend to be more active users, and “pin” more frequently than men.[1]

Value Proposition: Pinterest is the place users can collect their favorite things, share ideas, and generate new ones. Users can better organize and connect with people around the things that interest them most. From the business perspective Pinterest gives retailors and commercial businesses specific insight into their customer wants and needs. 

Products: The main product for users is an online board for collecting one’s favorite things. On the business side products can range from paid advertisements to specific customer information.  

Market Advantage: The primary advantage of Pinterest is that it is easy and mindless, in a good way, to use. Unlike Facebook or Twitter where users actually have to think of new content, Pinterest users don’t have to think, they only have to feel. Nor does the content need to be current, it can be both past or current. In addition the information collected via Pinterest is specific and focused. On Facebook one might like the company Seven Jeans. But, on Pinterest one could “like” modern, dark denim, boot-cut jeans on a barefoot person walking on the beach. As a user’s Pinterest board grows and develops a clear picture of that users tastes and interests starts to form. 

Issues: The web, and social media specifically, is fast paced and highly competitive. Whether it be user fatigue, as Facebook is experiencing, failure to develop new popular products, as Zynga is experiencing, or new site competition like IHeartIt, staying in front of users is always an issue and can quickly hurt a sites popularity. Pinterest can however mitigate this issue because of its simple to uses interface and the fact that it relies primarily on photo sharing; a concept that has existed since the camera was first built.   

Revenue Streams: Current revenue streams are limited. However, there is the potential to make money through ad revenue and the deep customer insight collected through user pin boards.  

Channels: Reaching customers continues to get easier and easier with the continued growth of smartphones, tablets, and overall computer usage. 

Strategic Partners: VC Firms and Business customers

Competitors: Key competitors are Facebook, Twitter, Vimeo, YouTube, IHeartIt. Though none of these companies offer the same product as Pinterest, these companies do reach huge audiences and have the potential to change or add new services. Additional competition is from the next new company; the rise to success in this industry can happen fast, a couple years in some cases. The next potential competitors may not even exist. 

Company Metrics

Full Time Employees: 80+
Users: 50M +
Re-Pins: Over 80% of pins are re-pinned, by contrast only 1.4% of tweets are retweeted [2]
Unique Users Per Day: 4M/
Estimated Company Value: $2.5B

Revenues & Profits: The fast growth and feverish interest in Pinterst will continue to drive users and provide unique in depth information on users. Developing revenue models is a work in progress; however it is clear that the information collected through Pinterest is valuable to commercial businesses and certain users. Developing ways to monetize this information without hurting the user base is being developed.

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[1] http://socialmediatoday.com/leaderswest/1415581/study-women-get-more-re-pins-pinterest-men-get-more-followers

[2] http://blog.rjmetrics.com/pinterest-data-analysis-an-inside-look/

Thoughts and Completed Tasks - Week 5

For the fifth week I completed the business analysis toolkit assignment and read

1.       Completed the required readings plus watched The History of the Internet Video.

2.       Read The Future of the Internet III

3.       Read Advertisers get a Trove of Clues in Smartphones 3. Other

4.       Watched Kimberly Clark and Virtual Reality Simulation

Business Model Canvas Excel Toolkit: I found the business model canvas toolkit to be a good tool for providing a simplified view of any company. The tool has limitations, specifically with the in depth side of a business analysis, but I can see if being useful for building ones brief company pitch. What I liked most about the tool is that it made me think about the different revenue sources and what channels that company takes to earn that revenue. I performed the analysis for one department of by business, HVAC, but plan to use it for the plumbing and drain side as well.

Changes to the Internet: One changing aspect of the internet that I find to be really interesting is the change in online personal data: how much of it we choose or are forced to give out, and what's being done with this information. I tend to be a conservative in terms of how much personal information I want to give people, but at the same time I understanding that the world is changing and one needs to stay with the times; deciding to simply not build and online presence or share my personal information to a certain degree may put e behind the times and even hurt my career advancement.  The article "The Future of the Internet III talks quite a bit about people's changing perception of the internet and sharing personal information online.  The article claims that people are slowly becoming more responsible in terms of the content they post and at the same time more forgiving of others past indiscretions. I agree with this however I think assuming your past indiscretions will be quickly forgiven as people become more transparent with their online postings might be a bit too forgiving and shouldn't be taken too much to heart; reputation are a tricky thing and still matter a lot.

My last thought on this week is the idea of the line between professional time and personal time blurring and that this shift is OK. Technology really has done a lot for our lives in terms of freeing us from the mundane office setting and giving us the ability to check in a stay connected at all times. Case in point I take my daughter to swim practice twice a week at 3:00 in the afternoon. Ten years ago I likely would not have been able to get away with being out of the office this early in the day. But, with technology advancements I can easily sit there watching my daughters swim practice while completing some of the more mundane work tasks for the day. In this way I love technology. But, as we move more and towards a blurring of the professional-personal time blurring it gets hard and hard to step away and completely detach. In my opinion there is a certain base line level of stress that comes with knowing I'm "on the clock" and could be contacted to take care of a work related matter. The feeling of being truly disconnected fro work is gets harder and harder to achieve as we build more towards a completely connected world. So in a sense I'm not sure is "OK" that the professional time personal time line blurring.

Business Model Canvas and Executive Summary

The following is an executive summary I prepared  after using the Business Model Canvas tool to evaluate my own company. I hope you find it interesting. 

Click here to view my Business Model Canvas on Google Docs

Executive Summary Bellows Plumbing, Heating, & Air

Current Status: Bellows Plumbing, Heating, & Air (Bellows) was incorporated in 2005 and is currently in operation in Santa Clara, Santa Cruz, and Monterey County. The company has recently negotiated several contracts with OSH and Costco to sell through various retail location and is looking to expand and grow over the several years.

Summary of Business: Bellows provides a variety of pluming, HVAC and drain repairs and installations. The current focus for growth and expansion is in their recently added HVAC department. The company currently installs, repairs, and services residential furnace, air conditioners, and filtration equipment. 

Customer: The company targets to sell to the 725,000 homes and their associated homeowners that occupy the Santa Clara, Santa Cruz, and Monterey County. Most of their customers are individual residential property owners however a portion of these homes are managed by property managers who Bellows also caters to. 

Value Proposition: Bellows local reputation has helped the company grow to be one of the largest HVAC providers in its region. The recent partnership with Costco and OSH to sell Lennox brand equipment and repairs through these retailors provides Bellows with an expanded list of customers to sell to that trust the brand association. Additionally with new equipment offerings and a strong sales force Bellows can help to reduce homeowner energy costs, improve efficiency, and reliability of HVAC equipment. 

Products: Bellows provides install of Lennox and Bryant brand HVAC and air filtration products. Additional products such as smart and remote thermostats are also installed. The company provides repair service on all makes and model HVAC equipment. Maintenance services include duct cleaning, carbon monoxide testing, and filter change outs. 

Market Advantage: The primary advantage for Bellows is size and partnerships. The highest margin work comes from residential install and repair which is highly competitive. Bellows has been able to hire on a large staff of installers and service techs due to various contracts with the local utility companies and public works. These contracts give the company the ability to retain employees through slow periods, but respond quickly and gain new business when times get busy. In addition propriety in house sales training and technology gives the company an advantage over most contractors.  

Concerns & Issues: Competition from unlicensed plumbers and HVAC contractors can be an issue. Unlicensed contractors offer cheaper prices that sometime win customer contracts. 

Revenue Streams: The current revenue streams are new HVAC installation offering margins between 60 and 35%, repair and service revenue with margins between 50% and 25%, and maintenance services offering margins between 40% and 0%.  

Channels: The primary target customer is a residential home owner. This customer can be reached through various channels. A strong network and referral network are the primary source of new business. Sales are also set though the internet, sales people, and various home shows and kiosk booths. 

Strategic Partners: Costco, Pacific Gas & Electric, OSH, various property managers

Competitors: Key competitors are large franchise companies such as One Hour Air, Service Experts, and Benjamin Franklin. 

Company Metrics

Full Time Employees: 24
Part Time Employees: 5
Customers: 10,000+
2012 Installed HVAC Units: 2,650

Revenues & Profits: Through its strategic partners and established reputation and network Bellows can drive sales to approximately $14 million in revenue with a projected profit of $3.5 million. These figures are based on a 750,000 home market with a modest .5% new install rate, 1% repair service rate, and 2% maintenance service rate.