3 reasons to invest in a Pinterest IPO

Now that Facebook and Twitter are maturing, it’s natural for investors to start searching for the next big thing. Here’s why Pinterest should be at the top of the list.

Now that Facebook and Twitter are maturing, it’s natural for investors to start searching for the next big thing. Pinterest is – or should be – at the top of the list. The invite-only “pinboard” site lets users create collections of photos and text to share with others. The idea has caught on, and Pinterest is growing faster than any other standalone Web site in the history of the Internet, according to comScore.

Just nine months after launching, Pinterest hit more than 10 million unique visitors a month (and the site did it in January of 2012). In March of 2012, Compete reports that the site hit 18 million visitors. It’s not just growth that has investors excited about Pinterest’s future. Here are three more reasons why a Pinterest is tantalizing:

1) Pinterest isn’t like Twitter. One of the biggest complaints about Twitter is its lack of a viable revenue model. That’s not the case with Pinterest.

“It’s so commerce and goods driven,” an investor told BusinessInsider. In essence, the site’s community is creating perfect marketing mini-sites. They save pages and pages of photos and descriptions that are tightly tied to an idea, product or piece of merchandise. Pinterest could later leverage those pages for profit through partnerships, affiliate deals and paid ad placements.

The site’s serious about finding the right revenue model, too, as it recently hired Facebook’s former director of monetization, Tim Kendall.

2) Businesses and marketers love Pinterest, too. As the site’s notoriety has grown, businesses, bloggers and marketers have started wading onto Pinterest and creating their own pinboards. Businesses can use their pinboards to channel traffic to their Web site, Facebook page or Youtube channel, and if other Pinterest users like what they see, they can pin a business’s posts to their own pinboards (drumming up even more interest in the process).

Big brands have already started building formidable followings on the site. Whole Foods, for instance, has 26,000+ followers and Nordstrom has 14,823.

Much like LinkedIn offers premium services for recruiters, Pinterest could do the same with promoted pinboards. However, they’ll have to carefully tread the line between marketing and alienating their enthusiastic fanbase.

3) Investors see Pinterest’s potential. Secondmarket is an online marketplace where wealthy investors can buy and sell stock in private companies. While Pinterest doesn’t have any shares on the exchange, yet, Secondmarket’s community of investors is clearly excited about the site. The number of “watchers” on Secondmarket (investors who want to know when they can get access to Pinterest shares) shot up 641 percent in Q4 2011. Pinterest is clearly the new darling of the VC community – even outshining exciting sites like Kickstarter:

If only we could get our hands on some shares in the start-up… That would definitely be worth pinning.


A new way to invest in private companies with CircleUp

A new way of investing: CircleUp could prove to be the leader in crowdfunding if the SEC gives it its blessing.

It’s tantalizing to imagine getting shares in a start-up that might go on to become the next Google. That’s part of what draws us to sites like Kickstarter.com where everyday people can pledge cash investments in start-up projects in exchange for recognition and swag.

Still, it’d be nice to get more than swag for laying hard-earned cash on the line. That’s the idea behind crowdfunding – fundraising for private companies in exchange for a stake in the company. Unfortunately, wide-scale crowdfunding is yet to materialize due to complex regulatory issues set by the SEC and other securities agencies.

At the moment, investing in private businesses is limited to what the SEC calls “accredited investors.” That includes banks, investment companies and wealthy investors. The idea is that since private companies don’t have to publicly disclose their earnings information, retail investors could get duped into dumping cash into a bottomless pit. By setting rules for accredited investors, the SEC limits investing in private companies to savvier investors and institutions since they should be more familiar with the unique risks that start-ups bring.

Whether or not that’s true, it seems like the onus should be on the buyer, not the government to tell us what we can and can’t investment in. Passage of the JOBS Act has crowdfunding fans hopeful things are about to change, too.

And there’s one company in particular that’s leading the charge: CircleUp.com. CircleUp vets consumer and retail start-ups that are looking to raise up to $1 million. If that start-up meets CircleUp’s criteria and has $1 to $5 million a year in revenue, CircleUp opens up investment opportunities in that company.

Right now, CircleUp is limited to accredited investors, but “the site may open to unaccredited investors,” per reports from AllThingsDigital. Expect a big surge in interest if that happens.

CircleUp’s model differs from that of competitors like SharesPost and SecondMarket in that it limits offerings to companies that are actually generating revenue. Companies listed on SharesPost and SecondMarket might not have made a dime in the past, and perhaps they won’t ever generate cash in the future.

“Private investments in small businesses are the next step in the evolution that began fifteen years ago with simple consumer transactions on eBay, and have continued with very personal matchmaking for housing and dating on sites like Craigslist and financial transactions through investment brokerage firms and online banking,” CircleUp said in a recent statement.

Gartner Research estimates that crowdfunding will be a $6.2 billion market by 2013. If things go well, expect CircleUp to capture a fair chunk of that pie.


3 reasons to invest in a Kickstarter IPO

Kickstarter is moving from the geeky fringe into mainstream consciousness, and that has investors taking note. Here are three reasons to consider investing in a Kickstarter IPO if and when we see one.

It’s hard to walk a few steps at my office without hearing someone talking about the latest business idea they saw on Kickstarter.com. It’s a sign the site’s moving from the geeky fringe into mainstream consciousness. And it makes me wish I had the opportunity to buy Kickstarter stock. Here are three reasons to consider investing in a Kickstarter IPO (if and when we see one):

1) A built-in revenue stream. Cash flow is one of the biggest problems with tech start-ups. Couple a high-growth tech company with actual revenue, then, and you’ve got a hot commodity in the Silicon Valley.

Kickstarter has a simple way of raking in cash, too: it takes 5 percent of whatever gets raised. Now that we’ve seen a project pull in more than $6 million in days, Kickstarter’s generating real greenbacks.

2) Phenomenal growth. Kickstarter helped fund 3,910 projects in 2010. That was good for $27,638,318 dollars pledged, and a project success rate of 43 percent (per Kickstarter’s blog). One year later in 2011, Kickstarter funded 46 percent of its posted projects for a total of 11,836 projects worth $99,344,381. Kickstarter’s cut in 2011? $4.97 million.

Per VentureBeat, “Kickstarter is on pace to raise around $300 million this year, triple what it did in 2011.” $15 million of that would go straight to Kickstarter.

3) Investor interest. Deep-pocketed venture capitalists are excited about Kickstarter. When asked what private companies he was eyeing now that Facebook’s going public, Jason Jones, managing partner of High Step Capital, named three companies: Kickstarter, Etsy and Quora (per InsideIPO).

Kickstarter shares aren’t yet available on Secondmarket – a site where wealthy investors can buy and sell shares in private companies – but investors are excited for them to arrive. Interest in Kickstarter shares grew by more than 93 percent in 2011, Secondmarket says.

All that said, the only thing better than a Kickerstarter IPO might be an announcement that the company’s turning itself into a non-profit. That would keep costs down and goodwill up in the years to come. If we don’t get that, though, I’ll take the next best thing: Kickstarter stock.


How to earn $100,000 at age 15

Gumroad’s founder isn’t shy. And that’s part of what’s so fascinating about him. He could have stayed at Pinboard and perhaps gotten rich in the process. Instead, he walked away to found his own start-up.

I’m not sure which is better: earning $100,000 by age 15 or having a story written about you titled “The Most Interesting Teenager In Silicon Valley.” Sahil Lavingia’s done both. The 19 year old was on the team that helped launch Pinterest (the fastest-growing Web site of all time).

Before that, he was a 15-year-old kid designing iPhone apps on the weekends and selling them on Flippa.com.

“I built a to-do list app,” Lavingia said in an interview with Alyson Shontell. “I built this thing that let you create Facebook walls but for Twitter before Twitter had any kind of conversation aspect. I built this tool that let users send automatic, customized direct messages on Twitter.”

He contracted out the coding work, then sold the apps for $1,000+. Things accelerated when Lavingia took up iPhone app development. He says he leaned how to build Apple apps in two weeks thanks to Stanford videos.

“I was financially independent when I was 15,” Lavingia said. “I never really tell anyone that because it doesn’t feel relevant, but looking back I think, Oh, starting a company might have actually made sense. I have been doing okay for a while. My bank account when I was 15 or 16 was over $100,000.”

Lavingia’s clearly not shy. And that’s part of what’s so fascinating about him. Sure, he could have stayed at Pinboard and perhaps gotten rich in the process. Instead, he walked away to found his own start-up: an online payment processing site called Gumroad.

Gumroad officially launched on Feb. 8, 2012, and it did so thanks in part to $1.1 million in seed money from a number of venture capitalists including the heavyweight VC firm Accel Partners.

Why all the hype for Gumroad?

Gumroad has one over-riding goal: making it easy to buy and sell things online. It does that by giving sellers a simple form to fill out. After hitting submit, the seller than gets a link to share with others who want to buy a particular product.

“Lavingia thinks that Facebook and Twitter can become the new marketplace/store-front and thus, in his view, Gumroad has the potential to be a huge sustainable (even billion dollar) company,” writes Alexia Tsotsis at Techcrunch. “Gumroad obviously disrupts the traditional and current online distribution systems, allowing artists with massive Twitter followings like Kanye and Gaga to sell directly to their followers, for example.”

If Gumroad pans out, it could open the world of online sales to a whole new audience – and help transform commerce on the Web in the process.


Millennial Media IPO: The future of mobile advertising?

If Millennial does indeed have an IPO, here are three reasons to consider buying in.

The rumors have been confirmed. Kind of. A fresh report from Bloomberg cites two un-named sources that claim Baltimore-based Millennial Media, Inc. is in talks with several banks regarding a possible IPO. Millennial’s managed to carve out its own niche in the face of intense competition with heavyweights, Google Inc. (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL), and they’ve had quite a bit of success.

Despite owning just 6.8 percent of the market, Millennial’s ranked as the third-largest mobile ad company in the country. If Millennial does indeed go public, here are three reasons to consider buying in:

1) Phenomenal growth. The mobile advertising market is one of the latest and greatest gold rushes in Tech Bubble 2.0. IDC estimates that the U.S. mobile ad market was worth $877 million last year, and it expects revenue to exceed $1 billion in 2011. The market’s dominated by Google and Apple, but there’s plenty of pie to go around. Millennial’s revenue tripled in 2010, and the company grew its market share by 1.4 percent to capture 6.8 percent of all mobile-ad revenue in the U.S. They’re not doing it with lightweight, fly-by-night advertisers, either. They’ve inked ad deals with some of the most recognizable brands in the world including Lexus, McDonald’s and Ikea. All told, Millennial’s network reaches more than 91 million unique U.S. mobile users every month. That’s roughly 30 percent of the entire population in the U.S.

2) Partnerships. Google and Apple dominate the mobile advertising space thanks to some prescient acquisitions. In Google’s case, the company dropped $700 million to buy AdMob last year. Apple also ponied up an undisclosed sum for the Quattro Wireless ad network last year. That leaves Millennial as the last indie standing, and the company’s already been in talks with potential suitors (Microsoft, anyone?). Indeed, the biggest threat to a Millennial IPO is the possibility that a Microsoft, Yahoo! or AOL might swoop in and make an offer for the company that’s just too good to refuse.

3) Local campaigns. The most intriguing facet of mobile advertising is the ability to target Web surfers based on where they’re accessing the Web from. Indeed, 42 percent of the ads Millennial served last quarter were targeted locally. That was a jump of 24 percent in a single quarter! The appeal is obvious: serve someone an ad for a burger when they’re driving or walking by your restaurant, and you’re a lot more likely to get them through your front door.

All told, Millennial’s ad network reaches consumers on more than 5,500 mobile devices in over 250 countries and territories. Advertisers are taking notice, and they’re doing it most specifically in a handful of industries: restaurants, automotive and finance. Here’s where Millennial showed the biggest year-over-year growth in revenue between Q1 2010 and Q1 2011:

That’s the sort of growth that’s given Millennial valuation estimates near $1 billion. Expect that valuation to keep growing, too, as smart phones cannibalize traditional cellphones. Millennial’s in a sweet spot, and I suspect investors wouldn’t mind buying shares in the company and going along for the ride.



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3 reasons to buy stock in Zillow’s IPO

Zillow’s IPO looks attractive thanks to the company’s focus on social media, mobile apps and a marketing niche with very deep pockets. Here are three solid reasons to consider adding Zillow stock to your portfolio.

With a database chock full of more than 1 million houses, it’s safe to say Zillow’s close to logging data on every house in the country. As of the 2009 census, there were 129,969,653 “housing units” in the U.S. (and that figure includes apartments and mobile homes).

That depth of data has made Zillow one of the most popular Web sites on the Internet. Alexa.com ranks Zillow as the 138th most-visited Web site in the country and the 677th most-visited site in the world. It’s safe to assume that a sizable chunk of the site’s 19 million+ monthly unique visitors are in the market for a house, and that makes Zillow a real estate agent’s wet dream.

On the heels of Zillow’s IPO filing yesterday, here are three reasons to consider adding the company’s shares to your portfolio when they hit the exchange:

1) It’s a buyer’s market? Even as we slog through one of the worst housing markets in decades, revenue at Zillow jumped 74 percent last year to $30.5 million. The company’s still not profitable as it booked losses of $6.8 million last year. Still, those losses are getting smaller. In 2009, Zillow lost $12.9 million. In 2008, the damage was $21.8 million. Should the housing market recover in the next few years, Zillow should quickly vault into the green and stay there for good.

2) Bountiful traffic. Based on March’s numbers (19.4 million unique visitors online and via apps), Zillow’s traffic is on pace for year-over-year gains of more than 90 percent. In a recent post titled Should you invest in a Zillow IPO? I pointed out just how dominate the company is in the real estate listing space:

Zillow’s biggest competition for eyeballs probably comes from Craigslist.org – a free classifieds site that doesn’t even sell ads. On top of that, Craigslist seems to cater more to apartments and rentals. That makes Zillow one of the primary stepping off points for home buyers. It’s getting to the point where it will soon be indispensable to Realtors – if it isn’t there already.

3) Zesty acquisitions. Five weeks ago, Zillow announced that it had acquired Postlets.com. Postlets helps sellers post their properties and rentals on 13 popular classified and social networking sites including Craigslist and Facebook.

Postlet’s had more than 500,000 users as of January 2010, and the site offers a freemium model that could drive up Zillow’s number of paying subscribers. Founded in 2005, Postlets quickly became the de facto tool for agents, property managers and landlords looking for free ways to promote their listings. Expect more acquisitions down the pike as Zillow looks to solidify it’s spot as the Web’s No. 1 real estate listing site.

Despite the company’s promising trends, some investors are scratching their heads about the timing of the IPO.

“There had been a lot of people who were hoping that Zillow, at some point, would go public,” Scott Sweet, senior managing partner of IPOBoutique.com, tells ABC News. “It is not a particularly good time right now.”

Fred’s Best Guess: If you’ve never spent time on Zillow looking up how valuable the homes of your friends and family are, I’d be willing to bet you’ll be just that bored sometime in the future. The verb “Zillowing” will never have the cachet of “Googling” someone, but it’s undeniable that Zillow’s quickly become a leader in the online real estate listing business. The company’s got experienced leadership, too, in CEO Spencer Rascoff who helped Hotwire.com grow itself into a $675 million acquisition in 2003. Expect Rascoff to continue making smart acquisitions that focus on social media. That should help Zillow stay ahead of its competition and continue pulling in ever-larger piles of cash.

Zillow might not be as sexy as a RenRen.com, but it targets a niche with very deep wallets. I expect the company to become profitable quickly and to continue growing rapidly for several years. Couple that with a housing recovery in the next few years, and you’re probably looking at some phenomenal growth rates. All that said, I just don’t see shares in Zillow rising in a straight line – particularly since it may take three or four quarters for the company to turn a profit. Give it three to six months to sell-off after its IPO and buy.

Note: Fred’s Best Guess is just that: a complete guess. It does NOT constitute investment advice and should NEVER be construed as such.



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How to make money with AppMakr and an iPhone app

How to make money with AppMakr and an iPhone app

Three keys to making money off an iPhone, Android or Windows 7 Phone App. The first? Don’t pay someone to make your app for you. Use AppMakr instead!

The biggest hurdle to getting a business idea off the ground isn’t necessarily drumming up cash; it’s knowing what to do with the cash you have. I learned this the hard way. My first failed business idea was to launch a Web site that charged users to have email correspondence with strangers.

Looking back, it wasn’t the best idea in the world. Users would pay a monthly fee, then be guaranteed responses (and anonymity) to any email they sent to the Web site. I spent weeks building a Web site with fancy graphics and various tiered payment options, then sat around and waited for someone to sign up. After realizing I wasn’t going to get any takers without heavy marketing, I started spending boatloads of cash on Google Ads.

My ads generated click-throughs, but users browsed my site and quickly left. Before long my bank account was drained. I had to close up shop. Not only did my idea fail, I wasted a whole lot of money on Google Ads in the process. That’s when I decided that whatever business venture I started in the future, I was going to spend the least amount of cash humanly possible – at least until I started getting money back in return.

Too many people come up with business ideas, fork out tens of thousands of dollars to Web or App developers and publish a Web site only to realize that no one really cares. See, it’s actually the idea itself (and the marketing behind it) that determines whether or not your business is successful. It’s not the slickness of your Web site or Android App; it’s your unique value proposition – that little twist on old offerings that makes people want to defect over to your business.

The quality of your Web site has little to do with it. That’s what’s got me so excited about a San Francisco software start-up called AppMakr. The company lets anyone with a Web browser build their own iPhone App, Android App or Windows Phone 7 app without any prior programming knowledge – and they do it for free!

As of January, AppMakr’s software had helped build more than 1 percent of all the apps listed in Apple’s App Store, according to Entrepreneur magazine.

“We’ve eliminated the complexity from the creative process,” AppMakr’s founder and president, Sean Shadmand, tells the magazine. “We give you all the tools you need, and then we get out of the way. We don’t tell users what to do, but we are here to help them.”

And that “helping” part is where AppMakr makes its money. The company offers paid phone support for users who run into problems or need help with a particular problem while building their app. It’s a brilliant example of the freemium model: giving away your goods to most people (and generating lots of press and goodwill in the process) while making money off your heaviest enterprise clients.

Best of all, AppMakr gives would-be appmakers with a business idea a simple way to see if their app drums up interest. If it doesn’t, you’re only out the amount of time it took you to make the app. If it does, well, then you can go out and hire a software company that will build you a world-class app.

Three keys to making money off an iPhone, Android or Windows 7 Phone App

1) If at all possible, don’t dump much money into your app up front. Better yet, build it for free with AppMakr’s browser-based tools. If the app fails, you’ll be a lot happier with yourself.

2) The day you release your app is the day your work really begins. You’re going to have to spend more time marketing and driving traffic to your app than you did building it in the first place. With more than 300,000 apps in the iTunes App Store, it’s too easy to get lost in the shuffle. Promote your app via every free marketing channel you can.

3) Keep improving your offerings. Remember: AppMakr’s software is free! If your first app doesn’t succeed, try again! And again and again and again. Rovio (the company behind Angry Birds) built 51 apps for clients before they decided to try building their own app. All that experience paid off as their app’s turned into a global phenomenon with more than 40 million users. Who’s to say your idea isn’t next?



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