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Pinterest to Test Advertising – Search for Business Models and Profit Pools

Last evening I watched this news on Bloomberg TV on Pinterest. This is really where the core lies. The search for Business Models and Profit Pools and where the real value capture is.

Pinterest to Test Advertising with Promoted Pins
http://www.businessweek.com/videos/2013-09-19/pinterest-to-test-advertising-with-promoted-pins#r=nav-f-video

A little while ago there was an interesting article on the valuation.

Why Is Pinterest A $2.5 Billion Company? An Early Investor Explains…
http://www.forbes.com/sites/jjcolao/2013/05/08/why-is-pinterest-a-2-5-billion-company-an-early-investor-explains/

The real challenge is very apt like how Professor Michael Rappa describes the search for business models.

“Business models are perhaps the most discussed and least understood aspect of the web. There is so much talk about how the web changes traditional business models. But there is little clear-cut evidence of exactly what this means.”

http://digitalenterprise.org/models/models.html

The real challenge facing most startups and especially post the mobile app ecosystem today is the lack of business models that move inventory of the company. The businesses that have the least Cash Conversion Cycles, Highest Stock Turns and Gross Margin Per Stock Turn, really make a difference in their business ecosystems. This is where the rule of 3 plays out.

How to map your industry’s profit pool (Profit-pool mapping reveals the location and size of profit concentrations within an industry and sheds light on how those concentrations might shift. In this video, article co-author Orit Gadiesh discusses the importance of understanding profit sources)

The music industry is a great example and how Steve Jobs with a marketplace business model disrupted the industry.

Cutting through the digital fog
http://205.134.84.25/bainweb/PDFs/cms/Public/BB_Cutting_through_digital_fog.pdf

End of the day, some very smart people out there are working over time. As you can see the core is the business model and that is where the battleground lies, of how to find the smartest people, create the teams and IP and execute to be a sustainable and scalable business. This is the real value and what makes it exciting for the entrepreneurial ecosystem.

Valuations don’t matter, the making a real difference does and the fundamentals are what that count.

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