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A Tale of Two Start-Ups: Pinterest Grows While Zynga Stumbles



pinterest zyngaThe internet is a fickle mistress. One day you’re begging people to listen to your idea, then suddenly a wave of traffic overwhelms your server. You ramp up, move to a bigger server, hire more people and start taking call after call from the media. Then, just as suddenly, you have a room full of employees all living on Ramen noodles because the money’s gone along with 90% of the users. All that’s left behind are 1,000′s of profiles that haven’t been updated in the last six months.

This is how internet ghost towns are born.

Yesterday, The Wall Street Journal and the New York Times both ran a piece about the future of a hot, internet start-up. WSJ profiled the every-growing Pinterest while the Times looked at what went wrong with the faltering Zynga.

Two years ago, Zynga was the king of social gaming. FarmVille, CityVille, Mafia Wars – if people were playing it, Zynga made it. The problem as I see it, is that they hitched their farm wagon too tightly to Facebook leaving them no choice but to go where they were lead. Eventually, people started seeing these games as “Facebook games” not “Zynga games” and they lost valuable brand recognition.

Last year, they made the move away from Facebook and began looking more seriously a mobile. That may be too little too late.

Mark Pincus, Zynga’s founder and chief executive said in an interview;

“Do I wish that we would have gone all-in on mobile and made a bigger commitment to it earlier? Yes.”

Two years ago Zynga was valued at 20 billion. The just released fourth-quarter results? 2 billion, which analysts say is still better than expected.

Zynga may have stumbled but they still have their fans. In spite of the devaluation, stocks still rose this week by 7%.

Pinterest Rises Up

Pinterest is in talks for a new round of funding and they’re probably going to get everything they need. This photo scrapbook site exploded last year to become one of the hottest trends in social media. Not only did consumers come on the run, but businesses have carved out their own space using the site to promote brand awareness and community and some even run contests challenging folks to build their own pinboards.

The one area Pinterest hasn’t cracked is the revenue portion. They have the traffic but they haven’t found a way to turn people into cash. That’s what they’ll be working on in the coming months.

Since October, Pinterest has created a team of four people whose job it is to interact daily with companies, learning about what is working—and what is not—online. In November, Pinterest rolled out “business” accounts that allow companies to use their corporate name on their pinboard and to verify that they link to an official corporate website. Pinterest has also told businesses it will introduce new data-analytics tools, so companies can keep better track of their Pinterest traffic and how users are interacting with the content.

The Wall Street Journal article says that Pinterest is working on a feature called “suggestions.” You pin a picture of your puppy and the site suggests additional pins such as cute doggy clothes or photos of a pet hotel. This is a nice way to force discovery but it still doesn’t lead to sales.

On the upside, Pinterest content has a longer shelf-life than either Twitter or Facebook. A single repin of an old photo can bring that photo back to the top of the stream where other users will grab it and repin it. This is especially true of seasonal photos. The flower companies who pinned photos of Valentine’s bouquets last year, could see those photos popping up again in the coming week.

If you needed more proof that Pinterest is on trend, look at these numbers from Hearst Media:

In December, Hearst got more online traffic through Pinterest than Facebook and Twitter combined. Overall, 3% to 5% of traffic to Hearst’s various brands was through Pinterest that month, with about 1.5% from Facebook and 1.5% from Twitter.

Where do we go from here? Will Pinterest find a way to become a solid performer and a contender for social media dominance? Will lightening strike Zynga a second time once they get mobile? Or will both of these companies be a footnote in internet history twenty years from now? Looking at past history, it could go either way.